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MacTiernan moots more ships

THE WA Government could face bills of up to $10 million annually under a planned “renaissance” of coastal shipping services.

Planning and Infrastructure Minister Alannah MacTiernan said she would consider raising the $5 million annual subsidy currently paid to Patrick company, Holyman Shipping to increase the frequency of the North West Shipping Service.

Ms MacTiernan would not say how much Government would spend on shipping, however industry sources have told Business News a more regular service than the current 17-20 day interval would demand a second ship and a subsidy of around $10 million.

Ms MacTiernan said a “big picture” approach would assess if it was more cost effective to invest in a “renaissance of coastal shipping” than on increased road maintenance.

She believed services formerly provided by the government-owned State Ships, were best handled by private enterprise now.

“If there is a business case for doing so, we have said we are prepared to fund a second ship, however there would have to be demonstrably strong benefits for the State before we took that step,” Ms MacTiernan said.

Chamber of Commerce and Industry of WA chief executive Lyndon Rowe said the existing subsidy was questionable and a strong economic case was needed to justify tax payers picking up a tab for expanded services.

“I am not aware of the community pushing for this, but it stands to reason that if indeed the demand is there the service must be nearer to commercial viability and able to stand on its own feet,” Mr Rowe said.

“There is also a question of priorities. The government is faced with a tight financial picture and a big shopping list and, despite its election promises, will have to determine its priorities.”

Mr Rowe was referring to a pre-election commitment by the Labor Party to establish a two-year trial of a second vessel to the Pilbara and Kimberley on a 10-day turnaround.

The North West Shipping service is currently provided with a 360 TEU (20 foot containers) capacity vessel, the Kimberley, and calls at the ports of Fremantle, Broome, Wyndham and Darwin.

Holyman’s current three year contract is due to expire in December 2002.

Shipping industry sources estimate the north west service is unlikely to be viable for many years.

Australian Chamber of Shipping WA chairman Simon Luff said a fundamental requirement was to have sufficient two-way cargo, whereas services to the north west historically carried more north bound cargo.

“No I can’t see that new resource projects will result in much extra coastal cargo,” Mr Luff said.

“In the events these projects do generate more cargo it is usually intermittent. Every five or six years a big mining company may renew its rolling stock, however the shipping requirements are usually handled on a charter basis.”

Another factor contributing to potentially higher taxpayer bills for a more frequent service is that a substantial amount of income now derived from Darwin sourced cargo will be lost when the Adelaide to Darwin rail link is completed in 2004.

As Patrick chairman Chris Corrigan told a Sea Freight Council of WA breakfast, “Once this great white elephant goes through the North West Shipping service will require greater subsidies from the WA government.”

Business News asked Patrick representatives to further discuss prospects for a two-ship service along the West Coast, but they declined to comment.

More forthcoming on its plans to bid for a share of this business is the Clunies-Ross family owned company Cocos Traders, which provides a monthly shipping service between Fremantle, Christmas and Cocos Islands and Singapore with the Danish flagged, Thor Kirsten.

Cocos Traders principal Joy Clunies-Ross said proposed projects such as a sewerage plant for Cocos Island and the Asia Pacific Space Centre for Christmas Island presented big opportunities for Western Australian suppliers.

“These projects will treble the shipping requirements to Christmas Island and the provision of a shipping service that starts at Fremantle will ensure WA reaps the benefits of them,” Ms Clunies-Ross said.

“If the service is too infrequent we may find a lot of goods will be sourced from Djakarta.”

The Court Government first invited tenders for the North West Shipping service in 1995 after it closed the loss making 83-year-old State Shipping Service.

The death knell for this govern-ment agency came in June that year after the Government’s decision to award Buckeridge group company, BAAC Pty Ltd with a $2 million stevedoring contract for Stateships sparked a bitter two-week long waterfront dispute.

The abrupt closure of the shipping line, which had long been called for by the Chamber of Commerce and Industry, also resulted in a $1 million compensation bill to BAAC Pty Ltd.

MUA national secretary Paddy Crumlin, who would gain more jobs for members from higher shipping services, said Western Australia with its 13,000 kilometres of coastline was ideally suited to coastal shipping.

The state had a substantial amount of intra state cargo, such as machinery and other industrial equipment, and it was encouraging to see policy initiatives that led to it being carried by Australian flagged ships.

A WA based shipping service was ideally placed to service the Christ-mas and Cocos Island, South East Asia and Zone of Cooperation in the Timor region.

Crumlin said the Howard Govern-ment had politicised and vandalised Australia’s shipping industry and he called for a return to the bi-partisan supportive shipping policy approach that existed before the mid-nineties.

The relaxation of cabotage (regulation requiring Australian vessels to carry goods around our coastline) under the Howard Government had seen Canberra’s Department of Transport dispensing of Continuous and Single Voyage Permits in a way that had led to foreign ships carrying 15 per cent of coastal cargo compared to three per cent six years ago.

A spokesman for Federal Transport Minister John Anderson said the government was keen to support Australian shipping and permits were only granted to foreign ships in the absence of a suitable Australian carrier.

The Australian fleet consists of around 60 ships owned by BHP, CSR bulk commodities, Australian National Line, Patrick company, Holyman and oil majors BP and Shell.

By comparison Australia’s ports host thousands of visiting foreign flag ships each year and many of these offer cheap back loading rates for coastal cargo when travelling between ports.

Ms Clunies Ross, who gained a permit from the Federal Government to use the Danish flagged, Thor Kirsten on the Christmas-Cocos Island route, presents an unlikely supporter of the MUA.

Ms Clunies-Ross, who once battled the MUA over her use of a mixed Danish-Filippino crew, said she now believed the Howard Government had been naïve in its deregulation of coastal shipping and welcomed WA policy initiatives to encourage a local industry.

Her change of heart was the result of a struggle to compete for Christmas Island cargo with a Singaporean based company which called there on inducement.

“I never thought I’d say this but I now see a lot of sense in the arguments made by the MUA regarding the cartage of coastal cargo by Australian flagged vessels,” Ms Clunies-Ross said.

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