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2016-2017
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
COASTAL TRADING (REVITALISING AUSTRALIAN SHIPPING) AMENDMENT
BILL 2017
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Infrastructure and Transport,
the Honourable Darren Chester, MP)
COASTAL TRADING (REVITALISING AUSTRALIAN SHIPPING) BILL 2017
OUTLINE
The Coastal Trading (Revitalising Australian Shipping) Bill 2017 (the Bill) will amend the
Coastal Trading (Revitalising Australian Shipping) Act 2012 (the Coastal Trading Act) to
simplify coastal trading regulation, to reduce the administrative impost associated with the
current regime, to expand the coverage of the Coastal Trading Act, and to provide clarity on a
number of minor technical matters.
In particular the Bill will:
remove the five-voyage minimum requirement to apply for a temporary licence;
provide the Minister the power to determine that the movement of certain kinds of
cargoes and passengers must be consulted on when applied for under a temporary
licence or a variation to a temporary licence;
streamline the processes for making changes to temporary licences by creating a
single variation process;
amend voyage notification requirements so that notifications are only required when
voyage details have changed from that approved on the licence;
amend the tolerance provisions for temporary licence voyages to better reflect
industry practice;
allow for temporary licences to be issued in emergency situations;
amend the definition of coastal trading to include voyages commencing and
concluding at the same port;
amend the definition of coastal trading to include ships engaged in dry-docking;
amend the definition of coastal trading to include voyages between ports and other
defined places in Australian waters such as offshore facilities;
allow vessels to be covered by a coastal trading licence while dry-docking;
clarify that applications for a variation to a temporary licence must be made by the
temporary licence holder;
require temporary licence holders to provide a vessel's International Maritime
Organization (IMO) number to assist with easy identification of vessels.
FINANCIAL IMPACT STATEMENT
There will be no impact on Commonwealth expenditure.
REGULATORY IMPACT STATEMENT
The Office of Best Practice Regulation has been consulted in relation to the proposed
amendments and a Regulatory Impact Statement (RIS) has been assessed to be consistent
with best practice.
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Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Coastal Trading (Revitalising Australian Shipping) Bill 2017
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the Bill
The Coastal Trading (Revitalising Australian Shipping) Bill 2017 (the Bill):
a) removes the five-voyage minimum requirement to apply for a temporary licence;
b) provides the Minister the power to determine that the movement of certain kinds of
cargoes and passengers must be consulted on when applied for under a temporary
licence or a variation to a temporary licence;
c) streamlines the processes for making changes to temporary licences;
d) removes the need for temporary licence holders to provide voyage notifications in
certain circumstances;
e) amends the tolerance provisions for temporary licences;
f) changes the way in which licences are issued in emergency situations;
g) amends the definition of coastal trading to include voyages commencing and
concluding at the same port, ships engaged in dry-docking, and voyages between
ports and other defined places;
h) clarifies that applications for a variation to a temporary licence must be made by the
temporary licence holder;
i) clarifies that agents can apply for a temporary licence on behalf of vessel owners or
masters; and,
j) requires temporary licence holders to include a vessel's International Maritime
Organization (IMO) number in voyage reports.
This Bill is consistent with international maritime practices under World Trade Organisation
and Free Trade Agreement provisions which provide States with the ability to reserve its
coastal trade and cabotage provisions.
Human rights implications
This Bill does not engage any of the applicable rights or freedoms.
Conclusion
This Bill is compatible with human rights as it does not raise any human rights issues.
Minister for Infrastructure and Transport,
The Honourable Darren Chester MP
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COASTAL TRADING (REVITALISING AUSTRALIAN SHIPPING)
AMENDMENT BILL 2017.
NOTES ON CLAUSES
Clause 1: Short Title
This clause provides for the Bill, when enacted, to be cited as the Coastal Trading
(Revitalising Australian Shipping) Amendment Act 2017.
Clause 2: Commencement
Subclause (1) provides that each provision of this Bill specified in column 1 of the table
commences, or is taken to have commenced, on the day or at the time specified in column
2 of the table.
Item 1 of the table provides that Sections 1 to 3 and anything in this Bill not elsewhere
covered by the table will commence on the day on which the Bill receives the Royal
Assent.
Item 2 of the table provides that Schedules 1 and 2 will commence on a single day to be
fixed by proclamation. However if the provisions do not commence within 6 months
beginning on the day of Royal Assent, then the provisions will commence the day after
the end of that period.
Subclause (2) provides that column 3 is for additional information that is not part of this
Act.
Clause 3: Schedules
This clause is the formal enabling provision for the Schedules to the Act, providing that
each Act specified in a Schedule is amended in accordance with the applicable items of
the Schedule. In Schedule 1, the Coastal Trading (Revitalising Australian Shipping) Act
2012 is being amended. In Schedule 2, the Occupational Health and Safety (Maritime
Industry) Act 1993 and the Seafarers Rehabilitation and Compensation Act 1992 are
being amended.
The clause also provides that the other items of the Schedules have effect according
to their terms. This is a standard enabling clause for transitional, savings and
application items in amending legislation.
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SCHEDULE 1 - MAIN AMENDMENTS
Coastal Trading (Revitalising Australian Shipping) Act 2012
Item 1- Paragraph 3(2)(b)
Item 1 amends paragraph (b) of subsection 3(2) by omitting "licence;" and substituting
"licence." This is to ensure that the paragraph has punctuation consistent with the repeal
of paragraph (c) of subsection 3(2).
Item 2 - Paragraph 3(2)(c)
Item 2 repeals paragraph (c) of subsection 3(2) as the category of emergency licences is
being removed from the Coastal Trading Act (see Item 61).
Item 3 - Section 5
Item 3 amends Section 5 (the simplified outline) to reflect that licences can be granted for
vessels carrying liquid fuel products from offshore facilities to ports in Australia. This
reflects the changes to the definition of coastal trading at Item 18.
Item 4 - Section 5
Item 4 amends Section 5 (the simplified outline) to reflect the repeal of Division 3, which
removes the category of emergency licences in the Coastal Trading Act (see Item 54).
Item 5 - Subsection 6(1) (paragraphs (a) and (b) of the definition of acceptable tolerance
limits)
Item 5 amends the definition of acceptable tolerance limits in relation to cargo or
passengers authorised to be carried on a vessel under a temporary licence. The amended
definition of acceptable tolerance limits is not more than 200% more, or 100% less, than
the volume of cargo or number of passengers authorised to be carried under a temporary
licence. The tolerance limits have been increased from not more than 20% more or less of
the authorised cargo or number of passengers.
The following example illustrates how these tolerance limits will operate in practice with
regard to one particular scenario. A temporary licence is approved for the agent of vessel
A to transport four shipping containers from Newcastle to Melbourne for a customer. If
the order is changed, and the customer wants to send five shipping containers instead of
four, the previous tolerance limits meant that the agent of vessel A would have to apply
for a variation to their temporary licence to allow the carriage of the additional container.
The amended tolerance limits in Item 5 would negate the need for an application to vary
the temporary licence for vessel A's voyage, because vessel A could take up to 12
containers without needing to apply for a variation.
Item 6 - Subsection 6(1) (paragraph (c) of the definition of acceptable tolerance limits)
Item 6 amends the definition of acceptable tolerance limits in relation to loading dates
from 5 days to 30 days before or after the loading date authorised on a temporary licence.
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This will allow temporary licence holders to load cargo, passengers or liquid fuel from an
offshore facility up to 30 days before or after the original loading date approved on the
temporary licence.
Item 7- Subsection 6(1)
Item 7 inserts a definition of docked for service into subsection 6(1). A vessel is docked
for service if it is:
in dry dock; or
docked for maintenance, repairs, cleaning or painting and not engaged on a
voyage.
The definition of docked for service is required as temporary licence holders will be able
to dock their vessel for service and be afforded the statutory presumption against
importation by section 112 of the Coastal Trading Act. The purpose of this clause is to
encourage vessel owners and operators to utilise dry docking services in Australia by
removing the significant financial disincentive that customs importation represents.
Item 8 - Subsection 6(1) (definition of emergency licence)
Item 8 repeals the definition of emergency licence as the category of emergency licences
is being removed from the Coastal Trading Act. Temporary licences will be available in
emergency situations (see Item 21).
Item 9 - Subsection 6(1) (definition of energy security situation)
Item 9 repeals the definition of energy security situation, detailed at Subsection 6(1A)
(see Item 16). Temporary licence variations will be available in emergency situations (see
Item 21).
Item 10 - Subsection 6(1)
Item 10 inserts a definition for the IMO number of a vessel. IMO numbers are the
numbers assigned to a vessel by the International Maritime Organization (IMO). A
definition for IMO numbers is required at subsection 6(1) as all temporary licence holders
will be required to include a vessel's IMO number in temporary licence applications
(where known - see Item 23), in voyage notifications (see Item 47) and in all voyage
reports (see Item 50).
The current Coastal Trading Act does not require the provision of a vessel's IMO number
for a temporary licence application, voyage notification, or voyage report. The
requirement to provide an IMO number adds no burden to industry and it is considered a
key identifier that could be useful to the Department of Infrastructure and Regional
Development (the Department) and other Commonwealth agencies undertaking
compliance activities.
Item 11 - Subsection 6(1) (definition of licence)
Item 11 amends the definition of a licence to reflect the removal of emergency licences
from the Coastal Trading Act (see Item 54). The amended subsection 6(1) will refer to
general licences and temporary licences only.
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Item 12 - Subsection 6(1)
Item 12 inserts a definition for an offshore facility. The definition given is the same as
that in the Maritime Transport and Offshore Facilities Security Act 2003. The inclusion
of this definition is required because of Item 18, which will extend the coverage of the
Coastal Trading Act to allow ships transporting liquid fuel products from offshore
facilities to the mainland to be covered by coastal trading licences.
Item 13 - Subsection 6(1) (definition of offshore industry vessel)
Item 13 amends the definition of an offshore industry vessel to ensure that offshore
industry vessels engaged in coastal trading as defined at paragraph 7(1)(d) (see Item 18)
are covered by the Coastal Trading Act. All other offshore industry vessels will remain
excluded from coverage by Section 10.
Item 14 - Subsection 6(1) (definition of port)
Item 14 amends the definition of a port to include a reference to subsection 6(3), which
clarifies how the Coastal Trading Act determines if a port is in a State or Territory (see
Item 17).
Item 15 - Subsection 6(1) (definition of voyage)
Item 15 amends the definition of a voyage to reflect the changes made to subsection 7(1)
by Item 18. Item 15 also extends the definition of a voyage to include voyages that
commence from and conclude at the same port. The purpose of this amendment is to open
the coastal trading regime to chartered recreational vessels that typically embark and
disembark at the same port, and wish to apply to the Minister for a declaration under
section 12 of the Coastal Trading Act. A declaration under section 12 of the Coastal
Trading Act allows vessels engaged in intrastate voyages to be covered by coastal trading
licences, thereby being afforded protection from importation by section 112 of the Act.
Item 16 - Subsection 6(1A)
Item 16 repeals subsection 6(1A), which details the definition of an energy security
situation, which allowed an application to vary existing voyages in the specific
circumstances of such a situation. Subsection 6(1A) prescribes that an energy security
situation exists if a vessel is carrying liquid fuel on a voyage authorised by a temporary
licence, and there are special circumstances (as prescribed by the Regulations) that
require the vessel to unload liquid fuel at a port not authorised by the licence. The
Regulations prescribe very specific circumstances for an energy security situation,
including shortfalls in supply from overseas, shutdowns of refineries, failure of energy
supply to a refinery, unsuitable fuel, or a severe weather event.
In practice, subsection 6(1A) and its interaction with the regulations is overly restrictive,
and is not sufficiently flexible to allow for the loading and unloading of fuel in
circumstances not prescribed by the regulations but which may nonetheless threaten
energy security. Because subsection 6(1A) only applies to vessels that are already
engaged on a voyage authorised by a temporary licence, and are already carrying liquid
fuel, it precludes the rapid authorisation of a vessel to engage in coastal trading in genuine
energy security situations.
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The Minister will be provided with the flexibility to respond quickly to energy security
situations through the mechanism of granting a temporary licence in an emergency
situation (see Item 21).
Item 17 - At the end of section (6)
Item 17 inserts a subsection to provide clarity on how the Coastal Trading Act determines
if a port is in a State or Territory. Subsection 6(3) is intended to provide clarity that ports
such as roadsteads, which are often connected with a State or Territory but not strictly
within its waters, can be considered to be 'in' a State or Territory for the purposes of the
Coastal Trading Act. A roadstead that has a demonstrable (although not necessarily
physical) connection with a port within the waters of a State or Territory can be
considered to be 'in a State or Territory' for the purposes of the Coastal Trading Act,
even if the roadstead is not wholly within the limits of a State or Territory. The stronger a
connection between a roadstead and a State or Territory, the more likely it is that it can be
considered to be 'in' that State or Territory.
Item 18 - At the end of subsection 7(1)
Item 18 broadens the definition of coastal trading to include vessels that transport liquid
fuel product between offshore facilities and ports in States or Territories where some or
all of the fuel product is unloaded. This extends the reach of the Coastal Trading Act to
include vessels undertaking voyages between Floating Product, Storage and Offtake
(FPSO) units and Floating Storage Units (FSUs) and Australian ports. The lack of
coverage of coastal trading licences for these movements has resulted in shipments of
crude oil being sent to international refineries instead of Australian refineries for
processing. The inclusion of certain voyages between FPSOs and FSUs (as defined by
Item 18) is intended to support the use of Australian refineries where possible.
Item 19 - Paragraph 12(2)(a)
Section 12(2) provides that the Minister can declare in writing that the Coastal Trading
Act applies to vessels undertaking intrastate voyages. Item 19 amends paragraph 12(2)(a)
to specify that the Minister can make a declaration in relation to intrastate voyages where
a vessel takes on board liquid fuel product from an offshore facility in a State or
Territory. This will allow the granting of declarations under section 12 where a vessel
takes on board liquid fuel product from an offshore facility in a State or Territory.
Item 20 - After paragraph 27(1)(b)(ii)
Subsection 27(1) specifies the information that general licence holders must include in
voyage reports. The amendment in Item 20 requires that the details of voyages to
transport liquid fuel from offshore facilities to ports in Australian States and Territories
be included in the information that general licence holders provide.
Item 21 - After subsection 28(1)
Item 21 amends subsection 28(1) to include an additional subsection 28(1A), which
permits certain persons such as owners, charterers, masters or agents of vessels, or
shippers, to apply for a temporary licence to be used in an emergency situation, as
prescribed by the Regulations. This item is required because the category of emergency
7
licences has been removed from the Coastal Trading Act (see Item 54) and this new
provision will allow for the expedited consideration of applications in certain emergency
circumstances. It is intended that this amendment will make it easier for the Minister to
respond promptly to emergency situations including where the emergency relates to
energy security. This licence will be valid for 65 days to allow sufficient time to respond
to the relevant emergency. Item 31 specifies the required timeframes for Ministerial
decisions on the granting of temporary licences in emergency situations.
Item 22 - Paragraph 28(2)(a)
Item 22 amends the number of voyages required to be specified on a temporary licence
application. Under the current regime, a temporary licence cannot be obtained for a single
voyage, and applicants must know in advance the details of at least five voyages. This
makes the system impractical for some operators, for example international shipping
companies, which might otherwise conduct coastal trade at the end of an international
voyage to Australia before departing.
Item 22 allows an application for a temporary licence to consist of a single voyage.
Shipping stakeholders, in their feedback during the consultation process associated with
this Bill, were of the view that this change would improve flexibility for their operations.
Item 23 - Paragraph 28(2)(ea)
Item 23 requires that temporary licence applications must specify the IMO number of a
vessel, where it is known which vessel will be conducting the voyage. The requirement to
provide an IMO number adds no significant burden to industry and it is considered a key
identifier that could be useful to the Department and other Commonwealth agencies
undertaking compliance activities.
Item 24 - Paragraph 28(2)(f)
Paragraph 28(2)(f) provides that temporary licence applications must include information
regarding the ports at which passengers or cargo are expected to be taken on board. Item
24 provides for the paragraph to apply to voyages involving the transportation of liquid
fuel products from offshore facilities to ports in Australian States and Territories.
Item 25 - After paragraph 28(2)(g)
Item 25 creates a requirement for applications for temporary licences in emergency
situations to include information regarding the emergency situation that necessitates the
licence application. This item is required as the category of emergency licences is being
removed from the Coastal Trading Act as per Item 54.
Item 26 - Section 30 (heading)
Item 26 changes the heading of section 30 from 'Publication and notification of
application' to 'Consultation'. This reflects the amendments made to section 30 by Items
27, 28 and 29.
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Item 27 - Section 30
Item 27 is a technical amendment to create subsection 30(1) from the contents of section
30, which is required due to the insertion of subsection 30(2) at Item 29.
Item 28 - Section 30
Section 30 requires that the Minister publish details of relevant temporary licence
applications on the Department's website within 2 business days after the receipt of the
application. Item 28 is an amendment required due to the insertion of subsection 30(2) at
Item 29. This is because not all temporary licence applications will need to be published
and persons notified under paragraphs 30(1)(a) and (b) of the amended Coastal Trading
Act.
Item 29 - At the end of section 30
Item 29 inserts subsection 30(2), which gives the Minister the power to determine for
which kinds of cargo or passengers the persons listed in paragraph 30(1)(b) of the
amended Coastal Trading Act must be consulted. This is intended to promote efficiency
in the coastal trading regime and remove the need for unnecessary consultation where
there are no relevant general licensed ships. The Determination is a Legislative
Instrument.
At present, there are no Australian ships operating across a number of sectors in
Australian waters, such as oil or gas tankers. It is therefore inefficient and unnecessary to
consult all general licence holders for every temporary licence application that is
received. This amendment allows the Minister to designate cargo and passenger types
where consultation must take place, thereby limiting consultation to those sectors where
Australian vessels can provide competition to foreign flagged vessels. This reduces the
impost and uncertainty caused to industry due to unnecessary consultation and allows for
the more efficient consideration of licence applications.
Item 30 - Paragraph 34(3)(c)
Item 30 amends subsection 34(3)(c) of the Coastal Trading Act to reflect the new
tolerance limits (see Item 6). This provision will allow the Minister to have regard to
whether passengers or cargo can be carried on the expected loading dates or within 30
days before or after the relevant date when considering an application which has received
one or more notices in response.
Item 31 - Subsection 34(4)
Item 31 amends the timeframes in which the Minister must decide applications for
temporary licences to 10 business days for applications made under subsection 28(1), and
3 business days for applications made under subsection 28(1A). It is intended that
reducing the required time for the Minister to decide an application for a temporary
licence under subsection 28(1) will provide additional certainty to the shipping industry
and reduce the costs associated with time delays.
The insertion of the 3 day decision time for applications made under subsection 28(1A)
means that temporary licence applications made for a vessel to engage in coastal trading
9
in an emergency situation must be decided within the same timeframe that was previously
specified for emergency licences under subsection 66(4). Due to the proposed removal of
the emergency licence category at Item 54, and the insertion of subsection 28(1A) at Item
21, it is necessary to specify a decision time for temporary licence applications in
emergency situations to allow a response to an emergency situation to occur in a timely
manner, while still allowing a mandated consultation process to take place if required.
Item 32 - Paragraph 35(1)(a)
Subsection 35(1) details the length of time for which a temporary licence is valid.
Item 32 amends the subsection to insert a validity period for temporary licences
granted in emergency situations. Under the amended Coastal Trading Act, temporary
licences granted for non-emergency situations will be valid for 12 months, while
temporary licences granted for emergency situations will be valid for 65 days.
Item 33 - Paragraph 35(2)(g)
Subsection 35(2) provides that if the Minister grants an application for a temporary
licence, the Minister must cause certain information regarding the licence to be published
on the Department's website. The amendment in this item will ensure that the details of
voyages to transport liquid fuel from offshore facilities must be included in the
information that is published.
Item 34 - Section 36
Item 34 amends section 36 as it is unnecessary to stipulate that when the Minister is taken
to have approved a licence, that they have also taken to have determined 'that the matters
specified in the application are authorised by the licence', since the very purpose of
issuing a licence is to authorise the matters specified within the application. Item 34
removes this unnecessary wording.
Item 35 - Subsection 37(2)(k)
Subsection 37(2) lists the information that a temporary licence must specify. The
amendment in this item will ensure that the details of voyages to transport liquid fuel
from offshore facilities must be specified in a licence.
Item 36 - Subdivision C of Division 2 of Part 4 (heading)
Item 36 is a technical amendment that replaces the heading of subdivision C to reflect the
changes made at Item 38.
Item 37 - Section 43 (heading)
Item 37 is a technical amendment that replaces the heading of section 43 to reflect the
changes made at Item 38.
Item 38 - Subsection 43(1)
The amendments in Items 38 and 45 consolidate the addition of new voyages and the
variation of existing voyages into one application to vary a temporary licence, instead of
10
having these two types of variations within separate subdivisions. Item 38 also clarifies
that it is the 'holder of a temporary licence' that can apply to vary the licence, not just any
person. This streamlines the processes of the Act.
Item 39 - Paragraphs 43(2)(b) and (ba)
Item 39 repeals these paragraphs to remove references to variation of matters authorised
by licences and references to applying for a variation that relates to an energy security
situation, and replaces them with a single paragraph that reflects the consolidation of new
matters and the variation of authorised matters into one application to vary a temporary
licence. There will no longer be an ability to vary a licence specifically in relation to an
energy security situation (Item 21 refers).
Item 40 - Subsection 43(3)
Subsection 43(3) currently sets out the time limits within which an application to vary
matters authorised by a temporary licence may be made, depending upon whether the
application has occurred in the context of an energy security situation. Item 40 repeals the
subsection to remove references to energy security situations as these are being removed
from the Coastal Trading Act as per Items 9 and 16. This amendment also allows voyages
to be varied even if already notified, as long as the voyage itself has not commenced.
Item 41 - Subsection 45(1)
Subsection 45(1) sets out the responsibility of the Minister to consult with certain persons
in relation to applications to vary a temporary licence. Item 41 amends subsection 45(1)
to remove references to energy security situation variations, which are being removed
from the Coastal Trading Act as per Items 9 and 16. It also amends subsection 45(1) so
that the Minister must only engage in consultation when an application to vary a
temporary licence relates to the carriage of people, cargo or liquid fuel from offshore
facilities determined under the proposed subsection 30(2). In practice, this will mean that
if a temporary licence holder wishes to vary their licence, and their cargo has not been
determined by the Minister under subsection 30(2), there will be no requirement for the
Minister to consult on variations to the voyage. This is consistent with the intention of
Item 29, which is to improve efficiency by limiting consultation to sectors where there is
a genuine opportunity for Australian vessels to compete with foreign-flagged vessels.
Item 42 - Paragraph 46(2)(b)
Under section 46(2)(b), the Coastal Trading Act currently requires the Minister to have
regard to whether an applicant has previously applied for a variation of a temporary
licence, and specifies that this can be either under subdivision C or subdivision D . Item
42 removes the reference to subdivision D that is no longer required due to the repeal of
subdivision D at Item 45. The Minister will still be required to have regard to whether the
applicant has previously applied for a variation of a temporary licence.
Item 43 - Subsection 46(4)
Subsection 46(4) sets out the timeframes for decision making in relation to an application
to vary a temporary licence made under Subdivision C. The Coastal Trading Act currently
requires that the Minister decide an application for a variation within 2 business days after
11
the day the application is made, except for in energy security situations where a 24 hour
time limit applies. Item 43 removes the reference to energy security situation variations as
these are being repealed as per Items 9 and 16. The proposed changes are that all
applications to vary a temporary licence must be decided within 2 business days after the
day the application is made.
Item 44 - Section 47A
Section 47A currently states that if the Minister has not decided an application to vary a
temporary licence in relation to an energy security situation within 24 hours after the
application is made, then the application is taken to have been granted and all matters
specified in the application to be authorised. Item 44 repeals section 47A as it is no longer
required due to the removal of energy security situation variation applications from the
Coastal Trading Act.
Item 45 - Subdivision D of Division 2 of Part 4
Subdivision D provides for requirements relating to applications to vary a temporary
licence to include new matters (new voyages). Item 45 repeals subdivision D as it is no
longer required. This is due to the consolidation of new matters and variation of
authorised matters into variations to temporary licences under subsection C (see Item 38).
Item 46 - Section 61
Item 46 is a technical amendment that creates subsection 61(1) from the contents of the
current section due to the proposed insertion of subsection 61(2) under Item 49.
Item 47 - After paragraph 61(a)
Temporary licence holders are required to provide notification of voyages to the Minister
in writing at least 2 business days before the actual loading date for a voyage. Section 61
specifies the information temporary licence holders are required to include in voyage
notifications. Item 47 amends Section 61 to include a vessel's IMO number in the list of
information required for voyage notifications as the provision of this information will
allow vessels to be more readily identified.
Item 48 - Paragraph 61(e)
The amendment in this item will ensure that the details of voyages to transport liquid fuel
from offshore facilities must be included in the information that is provided as part of the
voyage notification process.
Item 49 - At the end of section 61
Section 61 specifies the information that temporary licence holders must include in
voyage notifications. Item 49 exempts temporary licence holders from the voyage
notification requirements listed in subsection 61(1) when that information has already
been provided as part of a temporary licence application or an application to vary a
temporary licence. In practice, this means that if a temporary licence holder has already
provided complete and accurate information regarding voyages, and intends to undertake
12
those voyages as specified in the temporary licence, then there is no need to provide a
notification to the Minister.
Currently voyage notifications must be lodged two business days before the loading date
for a voyage, even when the details have not changed from the authorised voyage on the
licence. In many cases, licence applications provide all of the information required by
section 61 and notification in those instances is considered redundant. Changing this
requirement to only apply to voyages if there are changes to details that were previously
provided in the application will reduce the regulatory impost on industry.
Item 50 - After paragraph 62(1)(a)
Temporary licence holders are required to provide reports on voyages to the Minister in
writing within 10 business days of a voyage being undertaken. Section 62 specifies the
information temporary licence holders are required to include in voyage reports. Item 50
amends subsection 62(1) to include a vessel's IMO number in the list of information
required to be included in voyage reports.
Item 51 - Subparagraph 62(1)(d)(iii)
The amendment in this item will ensure that the details of voyages to transport liquid fuel
from offshore facilities must be included in the information that is provided as part of the
voyage report process.
Item 52 - Paragraph 63(1)(c)
Subsection 63(1) stipulates what elements the Minister should have regard to when
considering whether a temporary licence is being used in a way that circumvents the
object of the Coastal Trading Act. This item allows the Minister to have regard to the
offshore facilities at which liquid fuel is taken on board.
Item 53 - Paragraph 63(1)(e)
This item is a technical amendment to remove a reference to subdivision D which is being
repealed as per Item 44.
Item 54 - Division 3 of Part 4
Division 3 of Part 4 provides for the requirements relating to emergency licences.
Emergency licences are being removed from the Coastal Trading Act, so Division 3 is no
longer required. Item 54 repeals the whole of Division 3 of Part 4.
Item 55 - Section 76 (heading)
This item replaces the current heading for Section 76 to reflect the removal of emergency
licences from the Coastal Trading Act (see Item 54).
Item 56 - Subsection 76(1)
This item removes a reference to section 64, which relates to emergency licences. Section
64 falls within Division 3 of Part 4, which is being repealed.
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Item 57 - Subsection 76(3)
This item removes a reference to section 66, which relates to emergency licences. Section
66 falls within Division 3 of Part 4, which is being repealed.
Item 58 - Subsection 77(1)
On occasion, the Minister may require additional information in order to decide an
application for a temporary licence, whether that application relates to a new temporary
licence, or a temporary licence that has been varied to include a new voyage or voyages.
Subsection 77(1) specifies the people from whom the Minister may request additional
information.
Item 58 removes a reference from subsection 77(1) to section 51, which relates to
variation of a licence to include new matters. Section 51 falls within Subdivision D of
Part 4 which is being repealed. Item 58 replaces the reference to section 51 with a
reference to section 43 to reflect the consolidation of temporary licence variations under
Items 38 and 45. The changes under Item 58 are required so that the Minister may
continue to request further information from specified persons when an application has
been submitted to vary a temporary licence.
Item 59 - Subsection 77(4)
Subsection 77(4) specifies which days are to be counted as business days for the
timeframes that apply to decisions on new temporary licence applications and
applications to vary temporary licences.
Item 59 replaces a reference to section 54 with a reference to subsection 46(4) to reflect
the consolidation of temporary licence variations under Items 38 and 45, and the repeal of
Subdivision D of Part 4. The changes under Item 59 are required so that the subsection
continues to apply to licences varied under the changes made at Items 38 and 45.
Item 60 - Paragraph 78(a)
This item removes a reference to the current section 73, which relates to emergency
licences. Section 73 falls within Division 3 of Part 4, which is being repealed.
Item 61 - Subsection 107(3)
Subsection 107(3) provides the right of review through the Administrative Appeals
Tribunal for persons who have applied for a variation of a temporary licence.
Item 61 replaces a reference to section 51 with a reference to subsection 43 to reflect the
consolidation of temporary licence variations under Items 38 and 45, and the repeal of
Subdivision D of Part 4. The changes under Item 61 are required so that the right of
review continues to apply to the persons listed in subsections 107(3).
Item 62 - Subsection 107(3)
Item 62 replaces a reference to section 58 with a reference to subsection 49 to reflect the
consolidation of temporary licence variations under Items 38 and 45, and the repeal of
14
Subdivision D of Part 4. The changes under Item 62 are required so that the right of
review continues to apply to the persons listed in subsections 107(3).
Item 63 - Subsection 107(5)
Subsection 107(5) provides the right of review through the Administrative Appeals
Tribunal for holders of general licences who have filed a notice in response to an
application to vary a temporary licence made under section 51. The right of review is
afforded for decisions by the Minister to grant the application under section 55 (paragraph
107(5)(a)) and to have taken to have granted the application under section 56 (paragraph
107(5)(b)).
Item 63 repeals this subsection 107(5) and replaces it with a provision that references
sections 43 and 47 to reflect the consolidation of temporary licence variations under Items
38 and 45, and the repeal of Subdivision D of Part 4. The changes under Item 63 are
required so that the right of review continues to apply to the persons listed in subsection
107(5) in regards to applications to vary temporary licences. A reference to section 56 is
no longer required as there is no longer an automatic grant provision for variation
applications.
Item 64 - Section 112
This item removes a reference to an emergency licence as the category of emergency
licence is being removed from the Coastal Trading Act (see Item 54).
The amendment relating to 'docked for service' will allow for the statutory presumption
against importation provided by section 112 to extend to vessels that engage in dry-
docking. This means that a vessel that is authorised to conduct a voyage under a
temporary licence will be able to dry-dock and not be imported only by reason of that fact
while the licence is still valid.
Item 65 - Application of amendments
Subitem 65(1) ensures that all the conditions for licences under the amended Coastal
Trading Act will apply to any temporary licence, regardless of whether they were granted
before, on, or after the commencement of the amended regime. Licences as varied are
included in the operation of this section.
Subitem 2 ensures that this Schedule applies in relation to applications for a licence
pending immediately before commencement of the new regime. As per subitem 1, if these
applications are granted, then the new law will apply to these licences.
Subitem 3 provides that the requirements for licence variation applications under the new
law will apply in relation to any application made to vary a licence, regardless of when
the licence was approved.
Subitem 4 provides that applications to vary a licence made under section 43 or 51 of the
Coastal Trading Act that were pending immediately before the commencement of the new
law will be taken to be applications to vary a licence under section 43 of the amended
Coastal Trading Act. In practice, this means that new matters and authorised matters
applications pending at the time the amended Coastal Trading Act commences will be
15
treated as applications to vary a licence under section 43 of the amended Coastal Trading
Act.
Subitem 5 provides that applications for emergency licences under Section 64 of the
Coastal Trading Act that are pending at the time of the commencement of the amended
Coastal Trading Act will be taken to be applications for a temporary licence made under
subsection 28(1A) of the new law.
Item 66 - Transitional provision
This item provides a transitional arrangement to allow an emergency licence that is in
force immediately before the commencement of this Act to continue in force despite the
repeal of Division 3 of Part 4.
SCHEDULE 2 -
Occupational Health and Safety (Maritime Industry) Act 1993
Item 1 - Section 4 (definition of emergency licence)
This item removes a reference to an emergency licence in the Occupational Health and
Safety (Maritime Industry) Act 1993 as the category of emergency licence is being
removed from the Coastal Trading Act (see Item 54 of Schedule 1).
Item 2 - Paragraph 6(3A)(b)
This item ensures that the paragraph has punctuation consistent with the repeal of
paragraph 6(3A)(c) in the Occupational Health and Safety (Maritime Industry) Act 1993.
Item 3 - Paragraph 6(3A)(c)
This item removes a reference to an emergency licence in the Occupational Health and
Safety (Maritime Industry) Act 1993 as the category of emergency licence is being
removed from the Coastal Trading Act (see Item 54 of Schedule 1).
Seafarers Rehabilitation and Compensation Act 1992
Item 4 - Section 3 (definition of emergency licence)
This item removes a reference to an emergency licence in the Seafarers Rehabilitation
and Compensation Act 1992 as the category of emergency licence is being removed from
the Coastal Trading Act (see Item 54 of Schedule 1).
Item 5 - Subsection 19(1AA)
This item removes a reference to an emergency licence in the Seafarers Rehabilitation
and Compensation Act 1992 as the category of emergency licence is being removed from
the Coastal Trading Act (see Item 54 of Schedule 1).
16
Item 6 - Transitional provision
This item is a transitional provision that allows for provisions repealed by this Schedule
to continue to apply in relation to an emergency licence in force immediately before
commencement of the new law as if those repeals had not happened.
17
Regulation Impact Statement
Coastal Trading (Revitalising Australian
Shipping) Amendment Bill 2017
© Commonwealth of Australia 2017
ISBN : 978-1-925531-70-1
September 2017 / INFRA-3360
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Website: www.infrastructure.gov.au
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Contents
THE REGULATION IMPACT STATEMENT PROCESS ............................................................................ 5
EXECUTIVE SUMMARY ........................................................................................................................ 6
1. OVERVIEW OF PROBLEM .................................................................................................... 9
2. OBJECTIVES OF GOVERNMENT ACTION ............................................................................ 12
3. POLICY OPTIONS............................................................................................................... 13
I. Option 1: Maintain the status quo with no changes to the regulatory regime ................... 13
II. Option 2: Introduce amendments to the current regulatory framework .......................... 14
III. Option 3: Progress seafarer training initiatives ............................................................... 14
4. IMPACT ANALYSIS ............................................................................................................ 16
I. Option 1 - Status quo ..................................................................................................... 16
II. Option 2 - Introduce amendments to the current regulatory framework ......................... 18
III. Option 3 - Progress seafarer training initiatives ............................................................. 22
5. CONSULTATION ................................................................................................................ 23
Consultation - Discussions with Stakeholders ........................................................................... 24
Consultation - Discussion Paper Process .................................................................................. 24
Further Planned Consultation ................................................................................................... 26
6. RECOMMENDED OPTION ...................................................................................................... 26
7. IMPLEMENTATION AND REVIEW...................................................................................... 27
Implementation........................................................................................................................ 27
Evaluation ................................................................................................................................ 27
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Definitions
Australian General Sometimes referred to as the 'first register', the Australian General Register is
Register where Australian ships seeking to engage in both domestic and international
trade are registered. The General Register is established through the Shipping
Registration Act 1981. This Act of Parliament is the responsibility of the
Minister for Infrastructure and Transport.
Australian International Sometimes referred to as the 'second register', the Australian International
Shipping Register (AISR) Shipping Register is where Australian ships seeking to primarily operate
overseas may elect to register. This register was introduced as a part of the
2012 reform package. The AISR offers reduced regulatory burden and allows
the use of foreign labour in some circumstances but requires the ship to spend
at least 51% of its time engaging in international voyages. The AISR is
established through the Shipping Registration Act 1981. This Act of Parliament
is the responsibility of the Minister for Infrastructure and Transport.
Coastal shipping/ The carriage of domestic passengers or cargo on purely domestic voyages.
coastal trading
Domestic voyage A voyage carrying goods or passengers between two ports in Australian
territory. A domestic voyage does not include a voyage not carrying cargo or
passengers.
Emergency Licence An Emergency Licence may be granted to a shipper, or the owner, charterer,
master or agent of a vessel registered in the Australian General Shipping
Register, the AISR or under a law of a foreign country to respond to significant
national emergencies, as outlined in the Coastal Trading (Revitalising Australian
Shipping) Regulation 2012, for a period of no more than 30 days.
Foreign ship A ship registered under the laws of a country other than Australia.
General Licence (GL) A General Licence is available under the Coastal Trading (Revitalising Australian
Shipping) Act 2012 to vessels on the Australian General Shipping Register and
provides unrestricted access to engage in coastal trading in Australian waters
for five years.
Seagoing Industry The modern award covering the seagoing industry which provides for minimum
Award 2010 pay rates and employment conditions.
Temporary Licence (TL) A Temporary Licence may be granted to a shipper, or the owner, charterer,
master or agent of a vessel registered on the AISR or under a law of a foreign
country and provides restricted access to engage in specific coastal trading
voyages over a 12 month period.
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The Regulation Impact Statement Process
This Regulation Impact Statement (RIS) has been prepared by the Department of Infrastructure and
Regional Development (the Department) in accordance with the Australian Government Guide to
Regulation handbook (2016) and guidance notes issued by the Office of Best Practice Regulation (OBPR).
The purpose of this RIS is to recommend a preferred option to reform coastal shipping regulation in
Australia through reducing regulatory burden and red tape.
The RIS identifies the nature of the problem to be solved, outlines the policy options considered and
assesses the costs and benefits of each option. It also presents rationale for a preferred option. In doing so,
the document addresses the seven RIS questions:
1. What is the policy problem to be solved?
2. Why is government action needed?
3. What policy options are being considered?
4. What is the likely net benefit of each option?
5. Who will be consulted and how?
6. What is the best option from those considered?
7. How will the chosen option be evaluated and implemented?
This RIS will be used by the Australian Government to inform its decision making on reforms to coastal
shipping regulation.
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Executive Summary
Cabotage regulation reserves domestic trading opportunities for a nation's own registered carriers. In
Australia, maritime cabotage is regulated through the Coastal Trading (Revitalising Australian Shipping) Act
2012 (Coastal Trading Act) which was introduced in 2012 and replaced Part VI of the Navigation Act 1912.
The purpose of cabotage is inherently protectionist in nature, i.e. it ensures that domestic cargoes and
passengers are carried by domestic vessels which are usually crewed by citizens of that country.
The Coastal Trading Act was intended to promote a viable Australian shipping industry and enhance its
efficiency and reliability as part of the national transport system by regulating Australian and foreign ships
through a licensing regime. The existing regime's intent was to strike a balance between the interests of
users of shipping services with the interests of the Australian flagged fleet. The regime allows Australian
flagged vessels unrestricted access to the coast and gives them the opportunity to contest voyages applied
for by foreign ships, thereby providing them with an advantage. The framework therefore had the intent of
generally permitting the use of foreign ships where suitable Australian ships are not available to carry cargo
or passengers.
Since the implementation of the current regime in 2012, the decline in the number of Australian flagged
vessels has continued. The fleet of major Australian registered vessels with coastal licences has declined
from 30 vessels in 2006-07 to 14 in 2015-16, and many ageing Australian registered vessels are not being
replaced. Vessel owners have advised the Department of Infrastructure and Regional Development (the
Department) that high crew costs and low standards of vessel maintenance make it unattractive to replace
Australian flagged General Licensed (GL) vessels as they age. The coastal shipping freight task fell by 8
percent between 2004-2005 and 2014-2015, while the total domestic freight task grew by 55 percent. As a
result, coastal shipping moved around 15 percent of Australia's domestic freight in 2014-15, down from
25 percent in 2004-051. No ships have been registered on the Australian International Shipping Register
since its establishment in 2012. There is an oversupply of Australian seafarers, both ratings and officers,
and a lack of training berths on Australian vessels.
In 2015, following extensive consultation with industry that highlighted the failings with the current system,
the Government attempted to reform the coastal shipping sector through the Shipping Legislation
Amendment Bill 2015 (the Bill). This Bill would have created a streamlined single permit system aimed at
making the coastal shipping sector more competitive and economically viable. The Bill was defeated in the
Senate in November 2015.
While consultation has indicated significant flaws with the current system, given the defeat of the Bill,
pursuing a complete overhaul of the framework is not viable. Stakeholders have indicated that regulatory
certainty and bipartisanship at the political level are essential for investment in the coastal shipping sector
and for shippers to plan and invest based on using coastal shipping. As a result, a new consultation and
policy development process was launched with the aim of pursuing regulatory reform within the
framework of the current regime.
1
The total freight task grew from 463.2 billon tkm in 2004-05 to 719.1 billion tkm in 2014-15. The coastal shipping task fell from 114.1 billion tkm to 105.2
billion tkm over the same period.
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In 2016, the Minister for Infrastructure and Transport, the Hon Darren Chester MP, (the Minister)
undertook consultation with representatives from various sectors of the maritime industry. A key message
from the consultations was that the current regulation of coastal shipping creates a number of
administrative issues for shipping companies and Australian businesses reliant on coastal shipping, resulting
in substantial regulatory burden. These issues were reported as raising costs and stifling economic activity in
the Australian maritime sector and industries using shipping for the movement of freight. Stakeholders
claimed that increased regulation and red tape introduced with the Coastal Trading Act was damaging
sectors directly and indirectly reliant on shipping as a result of higher shipping costs. Stakeholders requested
that the Coastal Trading Act be amended to reduce red tape and the inflexibility within the current
licence framework. Industry generally views the administrative requirements around the current
framework as being a substantial issue discouraging the use of coastal shipping.
There is scope to make coastal trading regulation more effective in ensuring safe, secure and efficient
coastal shipping as part of Australia's national transport system. Given Australia's export oriented
economy, a competitive shipping industry including a sustainable coastal trading sector where imports are
moved domestically before sale is critical to the ongoing prosperity of the nation.
Consultation
In order to address industry concerns, the Minister released the Coastal Shipping Reforms Discussion Paper
(the Discussion Paper) on 21 March 2017 seeking stakeholder comment on a series of proposed legislative
amendments to the regulatory regime and seafarer training initiatives. The Discussion Paper signalled the
Australian Government's intention to introduce legislation to amend the Coastal Trading Act in order to
ensure safe, secure and efficient coastal shipping. It put forward proposed amendments that would reduce
red tape by removing the aspects of the coastal trading regime reported as unreasonably limiting, inflexible
or onerous for stakeholders.
Submissions were encouraged from stakeholders including, but not limited to: ship owners and operators,
employee and employer representatives, users of shipping services, industry associations, maritime unions,
government agencies, and interested members of the public.
The Department received 67 submissions in total, with the majority of stakeholder responses agreeing that
addressing administrative issues associated with the current regime would reduce regulatory burden.
The policy development process for the proposed changes examines three options for the purpose of the
RIS. They are as follows:
Option 1: maintaining the status quo with no changes to the current regulatory settings.
Option 2: introduce amendments to remove aspects of the regulatory framework reported as being
unreasonably limiting, inflexible or onerous for industry without fundamentally changing the basic
structure of the regulatory regime.
Option 3: a non-regulatory option - progress the proposed seafarer training initiatives aimed at
developing and retaining critical maritime skills, which form part of the coastal shipping reform
package. This option does not alter the current regulatory settings.
Of the options considered, Option 2 is the preferred option. This option would retain major elements of the
current coastal trading licence framework with amendments to regulatory settings to minimise industry
7|P a g e
burden and costs. Easing the current regulatory burden on the maritime industry will provide greater
flexibility to buyers and suppliers of shipping services, and the broader Australian economy, consistent with
the Australian Government's deregulation agenda.
Option 2 has a regulatory burden saving of $1.35 million per year. This annual regulatory saving was
estimated using the Regulatory Burden Measurement framework and has been agreed to by OBPR. The
preferred option will be implemented by progressing the proposed legislative amendments to the Coastal
Trading Act. The preferred option will be evaluated through a range of mechanisms including regular
reviews under the regulator performance framework, monitoring by the Cabinet Implementation Unit and
internal reviews and audits within the Department.
Benefits of preferred option
Benefits of the preferred option (Option 2) include the following:
This option will ensure industry is afforded more choice and flexibility in how it moves freight around
Australia and will allow businesses to better manage their supply chains due to the improved viability of
the coastal shipping sector:
o Companies will be able to use spot hire at short notice for passengers or cargo as only a single
voyage is required to apply for a new TL;
o Application processes will be streamlined to remove unnecessary delays and inefficiencies such
as the need to consult when there are no relevant GL holders and the need to submit different
types of variation applications with differing consultation timeframes;
o Voyage notification requirements will be streamlined and tolerance limits increased to alleviate
unnecessary administrative burden on industry.
Australian refineries and dry-dock facilities will be provided with more work as they are brought under
the coverage of the regulatory framework, removing the risk of importation under the Customs Act
1901.
Unclear aspects for the legislation will be clarified, allowing greater transparency and understanding by
industry, as well as assisting Government administration.
The reforms are expected to gradually exert downward pressure on freight costs creating incentives for
business to utilise coastal trading. This change in transport mode should drive an increase in capacity as
more vessels would be available to carry cargo on coastal trading voyages, which in turn should create
more competition, further applying downward pressure on freight costs. These impacts will be
expected to develop over time as industry changes and adapts their business practices to take
advantage of the new regime.
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1. Overview of Problem
The Coastal Trading Act implements a tiered licensing structure which requires all vessels that undertake
coastal trading to conduct voyages under a licence. Australian flagged vessels operate under a General
Licence (GL) which gives them unrestricted access to the Australian coast, whereas foreign vessels operate
under a Temporary Licence (TL) which provides restricted access to engage in specific coastal trading
voyages for one year. Emergency Licences are also available for vessels to respond to significant national
emergencies; this licence is valid for no more than 30 days.
The current system has various conditions for licence holders and requirements to be met before a licence is
granted. GLs are relatively straightforward to obtain provided the vessel is Australian flagged. The
conditions placed on a GL holder are also not stringent; reporting is done on an aggregate basis annually
and individual voyages do not have to be applied for. Conversely, the requirements for and conditions
placed on a TL are more stringent. The owner, charterer, master or agent of a vessel, or a shipper must
apply for a minimum of 5 voyages to be eligible for a TL. These voyages must specify the number of voyages,
the number of passengers or volume of cargo to be carried, the expected loading dates, the type and
size of vessel (if known), the name of the vessel (if known), the ports of embarkation and
disembarkation and whether the cargo contains any dangerous goods. In addition, once granted a licence,
notification of certain details about each individual voyage must be provided 2 business days before loading
and a final report on each voyage submitted 10 business days after completion.
It is important to note that there is a significant cost disadvantage to shippers if compelled to use an
Australian ship over a foreign ship. The cost of an Australian crew is in the order of $4 million more per
annum than foreign crew. In addition, the demurrage charged by an Australian ship is approximately
$27,000 per day compared to approximately $10,000 per day for a foreign-flagged ship. The cost of
shipping services in Australia have also risen in recent times, against the global trend. Between 2012 and
2016, nominal shipping rates in Australia rose from 3.02 cents per net tonne kilometre to 3.14 cents per net
tonne kilometre (excluding Tasmania).2 Publically available information suggests that globally, spot freight
market rates for containers fell in all freight markets between 2009 and 20153 and the price of shipping dry
bulk has dropped substantially between 2014 and 20164. These factors mean that the increased presence
of foreign ships could allow Australian shippers to be more competitive.
The Coastal Trading Act, however, creates a range of administrative issues for businesses reliant on
shipping services (e.g. manufacturers, resource companies, primary producers and exporters) and shipping
companies seeking to engage in coastal shipping and requiring a TL. The significant administrative burden
created by the current framework makes it unattractive for foreign ships to enter the coastal trading
2
Bureau of Infrastructure, Transport and Regional Economics (2017), Freight Rates in Australia BITRE, Canberra - page 2
3
UNCTAD Review of Maritime Transport 2016 (UNCTAD/RMT/2016) page 52.
4
UNCTAD Review of Maritime Transport 2016 (UNCTAD/RMT/2016) page 56.
9|P a g e
sector. Concerns raised by stakeholders included the 'inflexible' and 'cumbersome' nature of the licensing
system and the lack of competitiveness for Australian shippers. Many stakeholders argued that the
combination of these issues generate unnecessary costs for shippers, and consumers. The administrative
issues are outlined below:
Minimum voyage number limitation: A TL cannot be obtained for a single voyage, so applicants must
know in advance the details of five voyages. In some cases, this makes the system impractical for
international shipping companies which might otherwise conduct coastal trade at the end of an
international voyage to Australia before departing. This requirement also tends to impact Australian
businesses seeking to use spot hire (tramp traders), or other vessels under contracts of affreightment,
at short notice for passengers or cargo. As opposed to liner shipping, tramp ships trade on the spot
market with no fixed schedule or itinerary of ports of call. This minimum voyage requirement means
that shippers may be compelled to use other modes of transportation instead of shipping, which may
not be as cost effective. For example the cost of moving freight by road is 9.08 cents per net tonne
kilometre, as opposed to the 3.14 cent rate for shipping (excluding Tasmania).5 Similarly, the price of
rail is higher than that of shipping at 4.32 cents per net tonne kilometre.6 Despite a global oversupply
of shipping services and the price of moving the major raw materials by sea reaching its lowest level
ever in 2016, Australian shippers cannot take advantage of cheaper shipping services.
Consultations on TL applications: The licensing framework for new TLs involves in-built delays (a
minimum 48 hours) even when there are no Australian licensed ships that are suitable to carry the
cargo or transport the passengers (for example, there are no Australian LPG tankers). This process
creates costs for businesses due to uncertainty and delays in the consideration of their application. In a
dynamic industry such as shipping, even small delays can be quite significant and costly. The Australian
Institute of Petroleum (AIP) for example, submitted that the current legislation makes it difficult for
Australian fuel suppliers to make short-term decisions to optimise the Australian fuel supply chain to
meet fuel supply needs. AIP attributes this difficulty to the lengthy approval times, the complex
approval process and the excessive paperwork around the current licensing system. The petroleum
industry is therefore one example of a sector that would benefit from streamlining consultation where
there are no Australian ships, as there are no Australian oil or gas tankers.
Information about all new voyages or variations to TL applications are provided by the Department to
GL holders and other interested parties, allowing them to provide notice that a GL vessel is available to
conduct any of the notified voyages. This triggers a mandatory consultation process between the
applicant and the GL holder that may be arbitrated by the Department and can further delay decisions
on applications.
Licence variations: The uncertainties associated with commercial operations of the industries that rely
on coastal shipping mean that the plans of shippers frequently change, for reasons that range from
factors driving the production decisions of raw material suppliers to uncertainties associated with
consumer demand. TL applicants must nominate voyages in advance for approval, and therefore
5
Bureau of Infrastructure, Transport and Regional Economics (2017), Freight Rates in Australia BITRE, Canberra - page 2
6
Ibid.
10 | P a g e
frequently need to seek variations to the authorised cargo types or volumes carried, the loading and
discharge ports, and/or the dates voyages are to be undertaken. The Department estimates the
aggregate regulatory cost of licence variations as being $83,135 for industry per year. In 2015-16, the
Department received 1370 application to add or alter existing voyages, which had a combined licensing
cost of $373,800.
Once the updated information is known, the TL holder is required to lodge an application for a variation
at any time before two business days of sailing. An application to vary authorised voyages costs a
further $200 per application, and applications to vary TLs to include new matters cost an additional
$400 per application. These requirements of the Coastal Trading Act impose additional regulatory
burdens on businesses that use shipping without any clear benefits for Australian licensed shipping.
These requirements also lead to costs for businesses due to delays in moving cargo while waiting for
licence approvals.
Voyage notification requirements: under the current regime, licence holders are required to notify the
Department of the details of a voyage before the vessel begins loading. These voyage notifications must
be provided 2 business days before a voyage with the same information also to be reported 10
days after the voyage is conducted. There is scope for this requirement to be streamlined to reduce the
regulatory burden on industry. The regulatory cost of voyage notifications has been estimated by the
Department as being $48,625 for industry each year.
Tolerance limits: under the current regime there is a tolerance window of 5 days for the loading date
stipulated on a licence and a tolerance window of 20% for the volume amount stipulated in a TL. For
example, if a licence authorises a voyage to carry 100 containers on 20 May 2017, a vessel can load
between 80-120 containers between 15-25 May 2017 without breaching a condition of the licence.
These tolerance limits were intended to allow for industry to adapt to unforeseen or unplanned changes
to cargo or vessel movements, but have been the most regular cause of breaches of the legislation
as they do not reflect industry's operating model. Complying with these tolerance limits can
have significant costs to industry, for example when unable to carry additional cargo to avoid breaching
the legislation. Tolerance limits also impose an indirect cost on industry, as licence holders are forced to
apply for and wait for variation applications to be granted to prevent tolerance breaches. The
Department estimates that the current application delay cost is approximately $2.6 million for industry
per year. This cost is partially reflective of the uncertainty and potentials delays associated with
tolerance limits.
Other problems with the current framework:
Tiered licensing system: the current regime provides for a tiered licensing system consisting of GL, TL
and Emergency Licences. An Emergency Licence has never been granted under the current system as
the required criteria has never been met. Given an Emergency Licence has never been granted over the
history of the regime, this category is largely redundant, and it would make more administrative sense
to allow for GLs and TLs to be granted in certain emergency situations. This will have the effect of
streamlining the tiered licensing system and making it more simple to use and administer.
The current geographical reach of the Coastal Trading Act: the current regime does not extend to
offshore facilities. As a result, the carriage of petroleum products from offshore installations in
11 | P a g e
Australian territory to the mainland is not covered. Without the shield from Customs importation that a
TL provides, petroleum companies are discouraged from bringing petroleum products to Australian
refineries and instead ship these products to refineries overseas.
Dry docking: the current definition of coastal trading in the legislation does not extend to dry-docking.
This discourages vessels from docking for service in Australia to undertake repairs, cleaning or painting
as they would need to be imported by Customs if they choose to dock for service. As a result, foreign
vessels are not bringing business to the Australian dry-docking industry. The current coastal trading
regime is one barrier to Australian dry-dock facilities reaching their potential; an amendment to the
legislation will allow these businesses to grow.
Certain aspects of the legislation require clarification so minor technical amendments have been
proposed to assist with administration of the regime. As they currently stand, these provisions cause
costs to Government stemming from administrative difficulty, and costs to industry due to a lack of
transparency and clarity in what is required by the legislation. Potential clarifications include:
o Clarifying that the 'person' referred to in section 43 (1) of the Coastal Trading Act must be a
holder of a TL;
o Clarifying what constitutes a 'port in a State or Territory' in section 6 of the Coastal Trading
Act;
o and
o Requiring the provision of an International Maritime Organization (IMO) number in voyage
reports to assist with identifying vessels.
The problems outlined above highlight significant regulatory issues with the regime. Immediate attention is
required from Government to correct these problems to ensure the viability of the coastal shipping sector.
There also remains the issue of ensuring critical maritime skills are developed and maintained in Australia.
As a trading nation and an island, Australia will always require such skills. Regardless of the number of the
vessels in the Australian trading fleet, shore based roles such as harbourmasters, pilots and tug boat
operators in the 70 ports around Australia will be necessary. A declining fleet and the inability of Australian
seafarers to find berths to complete their seafarer training endangers Australia's ability to maintain these
skills. Option 3 is aimed at ensuring that these critical seafarer skills are developed and retained.
2. Objectives of Government Action
Successive governments have recognised the importance of shipping to the Australian economy through its
facilitation of trade, and repeated reviews have sought to craft regulatory solutions to grant Australian
industry access to the most competitive shipping services possible while providing opportunities for the
continuation and development of an Australian flagged fleet.
A steady decline in the number of Australian registered ships providing services on the coast has led to a
situation where demand for services outstrips the available supply. This situation has necessitated the use
of foreign registered ships to carry domestic cargoes in a number of areas. In some cases the only vessels
capable of carrying particular cargo are foreign flagged.
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Coastal shipping therefore has the potential to play an increasingly significant role in our freight transport
network. As freight demands on our national transport network grow, coastal shipping can take long-
distance cargo off our highways and railway lines. Currently, 15 per-cent of Australia's domestic freight is
moved by ship but with Australia's extensive coastline and broad network of ports, there is scope for this
figure to increase. The Australian Government remains committed to reforming the coastal shipping
regulatory regime to ensure this potential is realised. The impacts of the changes should create the
opportunity for onshore Australian industry, including those providing dry-dock services, to over time, build
their business, creating more jobs. It should be noted however that these positive benefits will only be
realised gradually, and any benefits may still be restricted by wider market factors and other issues that
affect the Australian and global shipping industry.
The key objective of the Government's coastal shipping policy is to stimulate growth in maritime transport
with flow on benefits to other industries by removing the existing administrative burden on shippers and
ship operators conducting business in Australia under the Coastal Trading Act. Removing this regulatory
burden will improve the viability of coastal shipping as an option for businesses when deciding which mode
to use to move their freight. Importantly, the Government will remove this regulatory burden while still
maintaining the basic structure of the current regime. As a result, certain rights will still be available to
Australian flagged vessels that are not available to foreign ships, such as the right to contest certain
voyages. By having access to efficient transport services and a genuine choice between the different
modes, Australian businesses will be able to further optimise their business models and save costs.
The reforms are expected to exert downward pressure on freight costs creating incentives for business to
utilise coastal trading. This change in transport mode should drive an increase in capacity as more vessels
would be available to carry cargo on coastal trading voyages, which in turn should create more
competition, further applying downward pressure on freight costs. These impacts will be expected to
develop over time as industry changes and adapts their business practices to take advantage of the new
regime.
3. Policy options
The Department has considered three policy options outlined below, aimed at ensuring coastal shipping
becomes a safe, secure and efficient part of the national transport system.
I. Option 1: Maintain the status quo with no changes to the regulatory regime
This option involves continuing to administer the current framework for coastal shipping without enacting
any legislative changes. This option was considered due to the fact that a small minority of industry
stakeholders consider the current framework to be adequate for the regulation of coastal trading. This
option is not considered viable as there are significant administrative issues with the current regime that
can only be rectified with legislative change. In addition, the majority of stakeholders who have been
consulted want significant changes to the regime that cannot be achieved simply through administrative
changes. These stakeholders are largely users of the system, i.e. licence holders who are regulated by the
Coastal Trading Act. This highlights the fact that industry is impacted by the regulatory burden imposed by
this regime.
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II. Option 2: Introduce amendments to the current regulatory framework
This is the preferred option and involves the introduction of amendments to remove aspects of the
regulatory framework reported as being unreasonably limiting, inflexible or onerous for industry without
fundamentally changing the basic structure of the regulatory regime. The proposed amendments to the
Coastal Trading Act would:
remove the five-voyage minimum requirement for issuing TLs;
streamline the consultation process where no GL vessels are available. This will likely be achieved
by designating certain trades as contestable due to an active Australian flagged vessel being
available, all other trades will be exempted from consultation;
streamline the TL variation process to replace the two different types of licence variation
application with a simplified single process;
amend the voyage notification requirements and the tolerance limits on cargo volume and loading
date variations;
extend the geographical reach of the Coastal Trading Act by amending the definition of 'coastal
trading' to include voyages to and from other defined places within Australian waters such as
offshore installations;
allow dry-docking as part of coastal trading; and
make minor technical amendments to assist with administration including clarifying what
constitutes a port in a state or territory and clarifying that agents can apply for a TL on behalf of
owners and masters of a vessel.
These amendments do not significantly alter the policy intent of the current Coastal Trading Act. They also
do not alter the existing objectives of the legislation . They introduce minimal change to the existing tiered
licence structure by removing the Emergency Licence category and instead allowing for TLs to be issued in
emergency situations. Minor technical amendments will make the framework clearer to industry as well as
assisting Government to administer the regime efficiently and effectively. These amendments have the
potential to reduce costs for shippers and will remove the barriers that currently face many foreign flagged
vessels under the current system.
The application of existing workplace relations laws will be unchanged.
III. Option 3: Progress seafarer training initiatives
This is a non-regulatory option and is aimed at addressing concerns raised by industry about the retention
and development of critical maritime skills in Australia. The option does not address the wider problems
around coastal shipping regulation already identified in the RIS. As a result, this option, unlike the other
two, seeks to highlight a key focus area of improvement in the maritime industry, which if resolved can
contribute to the effectiveness of domestic shipping.
The Coastal Shipping Reforms Discussion Paper canvassed four training initiative options. These were as
follows:
Establish an Industry Maritime Workforce Skills and Training Reference Group
o This working group would be provided with specific Terms of Reference for the
development and implementation of a strategy to establish, train and maintain a
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sustainable maritime workforce that meets the needs of all facets of the Australian
maritime industry now and in the future.
Implement a government maritime training support scheme
o This training support scheme could support courses approved by the Australian Maritime
Safety Authority and recommended by the Industry Maritime Workforce Skills and
Training Reference Group for the training of officers, officer cadets and ratings. The
principal objective of such a scheme would be to meet Australia's economic and strategic
requirements, both at sea and ashore. The SMaRT scheme in the United Kingdom is an
example of a scheme that could be emulated as part of any Australian Government
initiative. The SMaRT scheme funds training towards seafarers' first and second
certificates of competency, watch rating training and also rating to officer conversions.
SMarT covers up to 50% of actual training costs and is paid to the shipping companies
who sponsor the trainees, not to individuals or colleges. Eligible shipping companies must
apply to become a Training Provider before they are able to claim for eligible trainees.
This scheme has been proposed as a model due to it being recommended by industry
bodies as well as the fact that delivering training via a company attempts to ensure the
trainee will secure a berth to complete any practical components (thereby solving issues
relating to lack of berths).
Develop a public-private partnership arrangement with industry
o This public-private partnership would involve an arrangement between government and
industry to fund berths for Australian seafarers. A declining Australian fleet means there
are fewer berths available for Australian trainee seafarers. A public-private partnership
which increases the number of berths available could alleviate this issue. The exact details
of responsibilities under such an arrangement would need to be finalised following
further consultation with industry.
Introduce a maritime workforce census
o This census would be funded and overseen by the Government and would be run at
regular intervals, potentially every three years. The census would provide an evidence
base for workforce and skill demand predictions and workforce planning.
This option would be most effective in a scenario where restrictions to coastal shipping are removed
(Option 2). However, it is possible that these initiatives could be implemented independent of Option 2
being progressed. All of these initiatives will require a funding mechanism to be implemented. One
proposal put forward in the Discussion Paper involved the creation of the fund derived from payments by
shipowners equivalent to wages that would normally be paid to foreign seafarers under Part B of the
Seagoing Industry Award 2010. The training initiatives themselves stemmed from recommendations from a
private consultant as well as a previously government funded maritime body, the Maritime Workforce
Development Forum. Consultation on the initiatives was mixed, and as a result it is not a preferred option
to pursue these initiatives at this time. However, the proposed initiatives provide a strong basis for further
Government action in this area in the near future. The Department will work with other agencies and
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industry with a view to creating a viable seafarer training initiative program with the above initiatives as its
basis.
4. Impact Analysis
I. Option 1 - Status quo
This option would maintain the current regulatory regime which has a range of administrative issues that
cause burden for businesses with no discernible benefit. If this regime continues to remain in place, there is
no viable way in which coastal shipping can play a greater role in the national freight network.
Regulatory Burden Measure
The regulatory burden costs for businesses using the current licence system was calculated at $3.02 million
per year, agreed with OBPR. This figure takes into account the cost of ongoing compliance with the Coastal
Trading Act in terms of licence fees as well as the ongoing time cost, including time spent submitting
applications and training staff on application processes. The figure does not take into account wider costs
to manufacturing, petroleum, tourism, agriculture and other industries that bear the cost of the current
uncompetitive and administratively cumbersome framework. If these factors were taken into account, the
cost of the current framework would likely be substantially higher. The assumptions and underlying data
making up this regulatory burden estimate were informed by revisiting the costing exercise under previous
coastal shipping reform processes with 2015-16 data. The assumptions are as follows:
The labour cost is assumed as being $68.79 per hour, this includes non-wage labour on-costs and
overheads
it takes 1 hour to apply for a new temporary licence, 1 hour to apply for a new matters variation and 30
minutes to apply for an authorised matters variation
it takes 30 minutes to apply for a General Licence and 4 hours to submit an annual General Licence
report
it takes 18 minutes to submit TL voyage reports and TL voyage notifications
It takes 30 minutes for GL holders to monitor consultation applications daily and 90 minutes to deal
with a Notice in Response process
Training (and the associated costs) are required for staff to use the licensing system
A business delay cost when waiting for an application to be granted exists based on demurrage (the
charge payable to a chartered ship owner on failure to load or discharge the ship within the agreed
upon time).
Industry costs and benefits
Description Affected Party Impacts
Status Quo Industry
Costs A range of administrative issues, including:
o TLs cannot be obtained for single voyages or spot charters;
o Consultation is required even when no suitable Australian
vessel is available, which means the consideration of
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Description Affected Party Impacts
applications is delayed. This imposes additional cost for
businesses due to uncertainty and administrative costs;
o Licence variation processes and requirements do not
account for the dynamic nature of the shipping industry;
o Voyage notification requirements are cumbersome leading
to administrative costs for businesses;
o Tolerance limits do not allow flexibility for shippers;
o Elements of the framework are uncertain, such as whether
an agent can apply for a licence on behalf of an eligible
person.
Dry-docking is not covered, as a result vessels are imported if they
engage in dry-docking. This affects both the vessel and any
Australian facilities that provide dry-dock services.
Movements of petroleum products between offshore installations
and the mainland are not covered, which means it is more
profitable for companies to ship these products overseas for
refining. This is due to the lack of protection from Customs
importation which makes using Australian refineries more costly.
Shipping costs in Australia will remain uncompetitive and continue
to discourage businesses from using coastal shipping as a viable
transport option.
Benefits Licence holders have put in place processes to comply with the
current legislation. As a result, maintaining the status quo will
mean that these businesses do not have to incur costs to change
their current processes.
Government
Government is spending time and money administering certain
provisions without any discernible benefit. For example:
o Needing to consult on licence applications even when no
suitable Australian vessel is available;
o Overseeing processes for redundant categories of the
Costs tiered licensing system, i.e. Emergency Licences.
Government needs to administer a framework with elements that
remain unchanged, such as what constitutes a port within a State
or Territory.
Government has difficulty identifying vessels without an IMO
number being provided in voyage reports.
Maintaining the status quo will allow the Government to further
use and refine the processes that have already been developed in
Benefits the context of the current legislation.
No changes to existing IT system will be needed if the legislation
remains unchanged.
Community
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Description Affected Party Impacts
Maintaining the status quo will mean that coastal shipping will
continue to be a less viable option in the Australian freight
network. The associated costs to the community of this include
Costs
high shipping costs, the associated high costs of goods, reduced
viability of the manufacturing industry and more stress being
placed on other modes of transport.
Benefits Little to no benefit.
II. Option 2 - Introduce amendments to the current regulatory framework
Option 2 has the strongest links to the Government's key objectives in this area and the most positive
impact. This option would alleviate the most significant regulatory burdens that industry stakeholders have
highlighted with the Coastal Trading Act. It will likely make it easier for businesses to access shipping
services and potentially lead to greater participation of vessels on the Australian coast, making shipping a
viable alternative to road or rail. The significant red tape reduction that this option generates could save
costs for businesses and Government and allow the sector as a whole to become more efficient. The
amendments have the potential to cut costs and reduce burden but the actual savings cannot be quantified
and any forecast of coastal freight volume increases would be speculative. It should also be noted that
concerns regarding the cost of shipping services resulting from workplace relations arrangements will not
be addressed by this option. However, there is a view that the administrative requirements around the
current framework are a substantial part of the industry's issues with coastal shipping in Australia and the
challenges it faces in regulation. This option is likely to resolve these administrative issues.
This option is considered a sensible regulatory change to create the opportunity for business to take
advantage of the expected increased capacity in coastal trading vessels. The operation of foreign flagged
vessels undertaking coastal trading voyages is reliant on a variety of international influences including
factors like fuel costs and forward positioning requirements, but over time it is expected that there will be a
growth in port visits by foreign flagged vessels taking advantage of the decreased regulatory requirements.
The increased visits would mean business has greater flexibility and increased options to move cargo around
the coast.
Regulatory Burden Measure
The regulatory saving for this option was calculated as $1.35 million, confirmed by OBPR for self-
assessment. This figure takes into account the streamlined application process that effectively means that
fewer variation applications would need to be submitted. This saves both application costs and time costs
for industry. The streamlining of the notification process also means that less time is spent on submitting
voyage notifications to the Department. The figure does not take into account the flow on economic
benefits to the manufacturing, agriculture and other shipper based industries that would benefit from a less
cumbersome coastal shipping framework. The figure also does not take into account benefits to the
petroleum and dry docking industry resulting from these options. If these benefits were considered, the net
economic benefit resulting from this option would be far greater than the regulatory savings calculated. In
addition to the assumptions outlined under Option 1 above, a more detailed breakdown of the assumptions
and underlying data making up this regulatory burden saving is as follows:
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The number of TL applications under Option 2 is assumed to increase by 20% compared to the 2015-16
financial year due to the ability to apply for a licence with less than 5 voyages.
Under the proposed changes, new matters and authorised matters variations will be combined into one
Licence Variation application. It is assumed that licence variations to add new voyages (previously new
matters) will decrease by 20% due to the ability to submit TL applications with less than 5 voyages. It is
assumed variations to amend existing voyages (previously authorised matters) will decrease by 50%
due to the proposed widening of the tolerance limits.
Number of voyages (and voyage reports) assumed to increase by 5% compared to 2015-16 FY due to
ability to apply for a Temporary Licence and make a new matters application with less than 5 voyages.
Number of voyage notifications assumed to decrease by 10% as organisations are not required to
submit notifications for voyages where no details change from their licensed voyage.
A reduction in the number of days delay due to waiting for a variation application to be decided has
been assumed as a result of broadened tolerances (down from 3 to 1.5 days per business). In other
words, broader tolerance limits reduce the likelihood of a licence holder needing to submit a variation
application.
Industry costs and benefits
Description Affected Party Impacts
Introduce Licence Holders / Shippers
amendments Businesses may need to change current practices and processes to
to the comply with the new changes to the framework. This may involve
current retraining staff and altering IT systems which could result in minor
regulatory costs to businesses.
framework This option may result in greater participation of vessels on the
Australian coast due to the reduction of administrative barriers.
This may result in certain members of industry experiencing costs
in order to remain competitive in a busier market, e.g. vessel
Costs operators that have not had to compete with many other
operators in their particular category of trade. However, given that
limited consultation still exists under this option, the increased
competition that may disadvantage Australian operators will
be limited.
Shipping's share of the domestic freight task may increase due to
this option. There is a marginal risk that this will negatively affect
businesses involved with other transport modes such as rail and
road. However this impact is unlikely to be significant.
The removal of the five voyage requirement will allow businesses
to use spot hire at short notice and for ships to conduct single
voyages. This will reduce shipping costs for businesses and create
more work for shipping companies. The impacts of the changes
Benefits
will be felt over the long term as downward pressure on costs will
be gradual.
Removing the need to consult when no GL vessel is available will
result in more certainty for businesses and administrative savings.
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Description Affected Party Impacts
Streamlining the TL variation process and amending notification
requirements will save businesses administrative costs.
Amending tolerance provisions will give businesses greater
flexibility that is reflective of the dynamic nature of the shipping
market.
Removing the Emergency Licence category makes the legislation
clearer and simpler for industry.
Extending the geographical reach of the framework will allow
vessels to carry petroleum from offshore installations to the
mainland. This will not only benefit the operators of these vessels,
but also Australian refineries which may be uncompetitive
internationally. By allowing vessels to be shielded from
importation when transporting liquid fuel from offshore facilities
to ports in Australia, this option will make the use of Australian
refineries more viable as operators may be able to minimise tax
and other administrative costs related to importation.
Allowing dry-docking as part of coastal trading will allow vessels to
undergo repairs in Australia without being imported. It may lead
to more work for the Australian dry-dock industry. Encouraging
dry-docking in Australia could lead to positive impacts on the
Australian economy, the Department understands from
stakeholder submissions that expenditure on dry-docking can be
in excess of $15 million per dry-dock. The economic benefits
flowing from dry-docking are a 'best case scenario' and this
economic benefit will be difficult to achieve without additional
growth in dry-dock service sector.
Clarifying that agents can apply for a TL on behalf of owners or
masters of a vessel will simplify administrative processes for
industry.
Foreign shipping companies and Australian shippers will be able to
benefit from the reduced regulatory and administrative burden
that arises out of this option.
Specifically, the reduced regulatory burden placed on industry
may reduce shipping costs overall. This reduction in costs will
benefit shippers such as manufacturers who will find it easier to
move their products for further refining (e.g., it may become
cheaper to move alumina to smelters for refining).
These reduced shipping costs may also benefit consumers, as
businesses will be able to reduce supply chain costs associated
with bringing products to market. For example agricultural
producers may find it cheaper under this option to move their
products to market; this cost saving could then be passed on to
the consumer.
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Description Affected Party Impacts
This option may also result in increased visitation by ships to
Australia. According to the Australian Maritime Safety Authority's
Port State Control 2016 Report, in 2016 there were 27,516 arrivals
by 5719 foreign-flagged ships to Australia. By reducing the
administrative burdens around applying for and holding a
temporary licence, this number may increase. This increase in ship
visitation will subsequently provide more choice for shippers and
will likely lower the price of shipping services, making Australian
businesses more competitive and their operations more cost
effective.
The share of the freight task undertaken by shipping may increase
as a result of this option being progressed. Currently, only around
15 percent of the domestic freight task is moved by ship. There is
scope for this percentage to increase with decreased regulatory
burden on industry making shipping a more viable option
compared to other modes of transport.
Government
There will be an initial cost to Government to create a new or
amended online licensing system that will account for these
legislative changes.
Costs
The Government will need to do additional work to ensure that
new administrative processes are created in line with the
legislative changes.
This option will greatly reduce the processes that Government will
need to undertake to administer the Coastal Trading Act. This will
result in a cost saving to the Government.
The minor technical amendments in this option will assist with the
Department's administration of the framework. Specifically:
o Clarifying that the 'person' referred to in section 43 of the
Benefits
Coastal Trading Act must be a holder of a TL;
o Clarifying what constitutes a port in a State or Territory
under the legislation;
o Requiring TL holders to provide IMO numbers in voyage
reports to assist in readily identifying coastal trading
vessels.
Community
Costs Little to no costs for the community.
This option will ensure that there is more choice for shippers to
move their cargo. This will lead to lower costs for Australian
businesses and the wider community.
Benefits
By encouraging shipping to carry an increased share of the
Australian freight task, there will be less stress placed on other
modes such as road and rail. This will lead to safer roads and a
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Description Affected Party Impacts
more environmentally friendly transport network as shipping is
the mode of freight transport with lowest emissions.
This option will benefit regional communities which will have
better access to shipping to move their goods to market, as well as
encouraging more expedition cruise ship visits to these areas.
An examination of the specific regulatory reductions under this option also highlights the positive impacts
of the proposed amendments. The specific regulatory burden reduction estimates can be broken down as
follows:
Regulatory change Regulatory Burden Reduction Estimate
Streamlining the TL variation process $29,207
Streamlining of voyage notification process $4,869
Amending tolerance requirements (business delay costs due $1.32 million
to waiting for an application be decided)
III. Option 3 - Progress seafarer training initiatives
Option 3 is clearly linked to the Government's objective of supporting the development and retention of
Australian seafarer skills. However, this option does little to address the Government's objective of creating
an efficient and viable coastal shipping sector. As it does not address this critical component of the
Government's priorities, it cannot be considered a viable option in isolation.
Industry costs and benefits
Description Affected Party Impacts
Progress Industry
seafarer Certain aspects of this option would result in direct financial costs
training for industry. The development of a public-private partnership
initiatives would mean that certain industry sectors would have to fund
berths for seafarers.
Costs
Similarly, if the option to fund these initiatives involve a payment
by shipowners equivalent to wages paid under Part B of the
Seagoing Industry Award 2010, then this would also result in a
direct financial cost for industry.
This option will benefit the Australian maritime industry by
ensuring that a well skilled and sustainable maritime workforce is
maintained that will meet all facets of the industry (including the
Benefits
need for pilots, harbourmasters and tug boat operators).
This option would benefit the maritime education industry,
especially in relation to the maritime training support scheme.
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Description Affected Party Impacts
Such a scheme would create more business for institutions
specialising in maritime training.
Government
There will likely be financial costs for Government in setting up
the initiatives outlined in this option. Specifically:
o The establishment of an Industry Maritime Workforce Skills
and Training Reference Group will require resources to set
up the group and remuneration of members;
o implementing a maritime training support scheme would
require significant financial support from the Government
Costs as the scheme involves subsiding education and training
for seafarers;
o developing a public-private partnership will mean that
Government will need to at least partially fund berths for
seafarers;
o introducing a maritime census will require resources and
funding. A census conducted at regular intervals will
impose additional cost.
The Government may save costs in the longer term by ensuring
that future essential maritime skills are retained. In other words,
Benefits
this option may prevent a major skills shortage in the future that
the Government would eventually need to address in any case.
Community
While this option will create more qualified seafarers, it may not
necessarily create more seafarer employment opportunities. As a
Costs
result, there is a possibility that this option may not alleviate
issues pertaining to seafarer unemployment.
Current and potential Australian seafarers will have access to
more education and training opportunities.
Seafarers are more likely to be ensured access to training berths
Benefits
to complete the practical components of seafarer training.
Skilled shore-based roles, such as harbourmasters, will have a
supply of skilled seafarers in the future.
5. Consultation
In developing its strategy for amending the Coastal Trading Act, the Government consulted extensively with
industry stakeholders. Consultation included meetings and the circulation of a discussion paper. The
consultation strategy targeted a broad range of stakeholders, including: shippers, ship owners, maritime
industry employees, unions, other Government agencies and business associations.
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The Government has previously attempted to reform the Coastal Trading Act. Earlier consultation for the
Shipping Legislation Amendment Bill 2015 has been considered as part of this consultation process.
Consultation - Discussions with Stakeholders
On 20 April 2016, Minister Chester hosted three individual consultation meetings with:
Maritime Union Australia;
Australian Maritime Officers Union; and
Australian Institute of Marine Power Engineers.
Discussions were centred on maintaining critical Australian maritime skills.
On 27 April 2016, Minister Chester also hosted two meetings, one attended by users of coastal shipping
and the other by stakeholders with passenger shipping interests. Users of coastal shipping were principally
concerned with the red-tape and lack of flexibility in the current regime, resulting in unnecessary costs.
Stakeholders commented that improving the administration of the Coastal Trading Act would have flow-on
benefits for manufacturers, primary industry producers and consumers. Passenger shipping stakeholders
highlighted extending the large cruise ship exemption and the potential exemption of superyachts from
Coastal Trading regulation as important concerns.
Stakeholders attending both meetings commented that policy stability and bipartisan support ensures
commercial stability. Stakeholders also felt that industry could do a better job promoting the value of the
coastal shipping sector to the public.
Minister Chester also held individual consultations with the Australian maritime industry representative
body, Maritime Industry Australia Limited, and the representative of foreign flagged ships operating in
Australia, Shipping Australia Limited.
Consultation - Discussion Paper Process
On 21 March 2017, Minister Chester released the Coastal Shipping Reforms Discussion Paper seeking
stakeholder views on a range of proposed legislative amendments and proposed seafarer training
initiatives. The amendments aim to provide greater flexibility to buyers and suppliers of shipping services
and allow a path forward for coastal shipping reform to be agreed by all relevant parties. The aim of these
proposed amendments is to ensure safe, secure and efficient coastal shipping as part of Australia's national
transport system. The seafarer training initiatives are designed to develop and retain critical maritime skills
in Australia. The amendments were informed by consultation with stakeholders and consultation with
other Government Departments, including: Immigration and Border Protection, Employment and Training
and the Treasury.
The Department received 67 submissions, with the majority in support of the proposed amendments.
Almost all stakeholders expressed concern and dissatisfaction with the current coastal shipping regime.
Shippers, shipping companies and unions agreed that the current regime is expensive, inefficient and fails
to protect maritime skills in Australia. Stakeholders, including Arrium Mining and Minerals Limited,
identified that there were mechanisms within the Coastal Trading Act which could be modified to achieve
greater flexibility and better affordability in Australian shipping. There was clear agreement that the
requirement to nominate five voyages for a TL should be removed and that contestability should be
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removed where there are no GL vessels capable of servicing a sector (as is the case in the petroleum
industry). It has been the experience of stakeholders such as Wilmar Sugar Australia and the Australian
Food and Grocery Council that it is impractical to forecast the dates of five voyages because it is impossible
to accurately predict the timing requirements of future cargo.
Over 57 per-cent of stakeholder responses supported some or all of the proposed amendments. Generally,
the manufacturing sector, the petroleum industry, primary industry stakeholders and shippers were in
favour of amendments designed to reduce red tape and decrease shipping costs. Many stakeholder
submissions recognised, as explained by the Freight and Logistics Council of Western Australia, that the
proposed amendments do not impact the basic structure of the current regulatory regime, but rather seek
to make its application more effective. According to Shipping Australia Limited, adherence to the current
coastal trading licensing regime is time-consuming and complex. Some shipping lines have five separate
desks involved in managing the day-to-day tasks associated with managing coastal trading licensing
obligations. Generally, it was the view of stakeholders that the proposed amendments aimed to streamline
the TL variation process. Amending voyage notification requirements and amending tolerance provisions
will effectively reduce unnecessary bureaucratic burden that fails to achieve any practical aims.
It was also recognised by a majority of stakeholders, including the Maritime Industry Australia Limited, that
abolishing Emergency Licences and modifying the criteria for issuing GLs and TLs to allow for emergency
situations is a sensible change as no Emergency Licences have been granted under the regime to date.
It was the perspective of many stakeholders that extending the geographical reach of the Coastal Trading
Act to include voyages to other defined places within Australian territory will ensure that certain industries,
such as the petroleum industry, are better served by coastal shipping. BP, Mobil Oil and the Australian
Institute of Petroleum agreed that the amendment would likely increase the supply of Australian crude oil
to Australian refineries.
Similarly, most stakeholders agree that the current definition of costal trading, which does not allow for
dry-docking, has significant negative implications on the coastal trading sector. Amending the definition
attracted the in-principle support of a majority of the submissions. Stakeholders agreed that allowing dry-
docking will increase use of Australian facilities and provide certainty to operators of vessels undergoing
scheduled maintenance.
Almost all submissions were supportive of the proposed minor technical amendments, understanding that
they will provide clarification and streamline administration. The 38 supportive submissions are of the view
that the proposed approach to amending the Coastal Trading Act represent a practical first step in reducing
administrative burden. Many expressed the view that further deregulation should be pursued at a later
stage.
Almost 25 per cent of the stakeholder submissions were unrelated to the proposed amendments canvassed
in the Discussion Paper. These submissions advocated for small cruise ship exemptions, tax breaks for
seafarers and other matters only peripherally associated with coastal trading.
Reactions to the proposed seafarer training initiatives were more varied. Approximately 44 per cent of the
submissions put forward were generally supportive of the initiatives. However, a large number of
submissions failed to address the ideas at all, or did not address the proposals in sufficient detail. Given the
mixed reaction to these changes, it is prudent for the Government to not implement these proposals
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immediately. Instead, the Government should use these proposals as a basis for further work on instituting
policies aimed at developing and retaining critical Australian maritime skills.
Further Planned Consultation
If the Minister decides to release an exposure draft of the Bill, the Department will engage in consultation
with those regulated by the Coastal Trading Act. These stakeholders are those eligible to hold a Licence
under the legislation, including: shippers, charters and ship owners as well as those offshore operators who
will be eligible to operate under the amended Act. Following the targeted consultation, further
amendments to the Coastal Trading Act may be considered as appropriate.
6. Recommended Option
The preferred option (Option 2) is considered to provide the most effective and efficient solution to the
stated problem. Although there may be some cost to industry to change its systems to accommodate the
legislative amendments, these will be relatively minor system changes. The overall benefits to industry as
well as the wider community outweigh the costs. Under this framework:
Businesses will be afforded more choice and flexibility in how they move freight around Australia due
to the improved viability of the coastal shipping sector;
Australian business will be able to use spot hire at short notice for passengers or cargo as only a single
voyage is required to apply for a new TL;
Application processes will be streamlined to remove unnecessary delays and inefficiencies such as the
need to consult when there are no relevant GL holders and the need to submit different types of
variation applications with differing consultation timeframes;
Voyage notification requirements will be streamlined to alleviate unnecessary administrative burden on
industry;
Shippers can be more flexible while managing their supply chains due to greater flexibility with
tolerance limits;
Australian refineries will be provided with more work as vessels can move petroleum from offshore
installations to the mainland without being imported;
Australian dry-dock providers will be provided with more work as vessels can dry-dock without being
imported;
Unclear aspects of the legislation will be clarified, allowing greater transparency and understanding by
industry, as well as assisting government administration.
Option 2 does not solve the problems regarding seafarer skills. However, pursuing this option also does not
prevent any further work by the Government in addressing seafarer training issues. Option 2 would
alleviate the non skill related problems outlined in Section 1: "Overview of the Problem" to the extent
possible without fundamentally altering the structure and objectives of the current regime. As a result, this
option should be pursued in order to ensure the viability of the coastal shipping sector as part of the
national transport system.
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7. Implementation and Review
Implementation
Implementation will follow the steps below.
Activity Date
Minister to seek Cabinet's approval to progress legislative August 2017
amendments
Following Minister's approval, draft Bill circulated to September 2017
stakeholders for comment
Further amendments made to Bill based on stakeholder September 2017
comment (if appropriate)
Changes to the Department's administrative processes and IT November 2017 - February 2018
system to reflect legislative changes
Finalisation of the Cost Recovery Implementation Statement for December 2017
the amended coastal trading regime
Communication and consultation with industry and other November 2017 - February 2018
interested stakeholders to explain the effect of legislative
changes
Legislative changes take effect and amended coastal trading March 2018
regime is implemented
Communication with stakeholders regarding the amended Ongoing - before and after
coastal trading regime amended regime takes effect
Evaluation
The Government has existing processes in place to evaluate regulatory frameworks which can be used to
evaluate the effectiveness of the preferred option. The mechanisms that will be used to evaluate the
preferred option include regular reviews under the regulator performance framework, monitoring by the
Cabinet Implementation Unit as well as internal reviews conducted by the Department. The Government
will also ensure to continually engage with users of the system as well as other interested stakeholders to
determine the effectiveness of the preferred option.
Consultation
There is ongoing consultation with various sectors of industry on coastal trading matters. Once changes
have been progressed through Parliament, another consultation phase will commence. An implementation
strategy will inform the details. Specifically, it will involve formal workshops with industry stakeholders to
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explain the changes in the framework. These workshops will also be an opportunity for the Department to
ensure industry understands how the changes will work in practice. It will also assist the Department in
finalising information products for the different elements of the new coastal trading legislation. These
workshops will commence once legislation has passed. Beyond formal consultation workshops, informal
consultation on the amended framework will also be ongoing. The Department is in continuous contact
with licence holders over email and the Shipping Business Unit phone hotline while administering the
legislation. These means of communication also provide an opportunity for the Department to continually
monitor the effectiveness of any amended regime and industry feedback.
Internal Reviews
Internal reviews conducted by the Department will consist of the following:
assessing the effectiveness of any new Departmental processes and their adherence to any legislative
changes two years from the changes taking effect;
assessing feedback from industry on the positive or negative impacts of the amended regime;
highlighting how processes could be further improved to more efficiently administer the new regime;
and
highlighting any potential further improvements to the regime that could be considered by
Government (if applicable).
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