Export and Imports Downunder—The Role of the Maritime Sector: Major Freight and Infrastructure Developments

Speech

WTS001/2013

08 October 2013

PACSHIP 2013 Shipping and Export Leaders' Summit
Sydney Convention Centre, Darling Harbour

This certainly is a big week for all things maritime with the arrival of the Tall Ships as part of the International Fleet Review over the weekend.

Sydney harbour has provided a great prelude for this event.

From the arrival of the First Fleet to today, our ports continue to be important international gateways to the global economy.

Over the past few years I have met with members of the shipping industry many times and I am pleased to be back in the portfolio and joining you today for the PACSHIP 2013 Shipping and Export Leaders' Summit.

I value your considered advocacy and robust championship in support of Australian shipping and the delivery of Australia's critical import/export infrastructure—both portside and around the nation.

As this is my first major address on these issues since the recent federal election I would like to take the opportunity to outline some of the key issues I see around the infrastructure and freight issues impacting on the maritime sector and our ports.

The Prime Minister has made it clear that infrastructure is a top priority for the new government and I am a strong believer in the importance of investment in both urban and regional infrastructure as key elements in driving productivity and economic growth.

Our national infrastructure deficit is large and I suspect will never be fully extinguished even with significant investment by all levels of government, there will still be a need for much greater private sector investment in major infrastructure projects.

This is a goal and a partnership  that we have to pursue with renewed vigour if we are to achieve our objectives.

As we all appreciate, Australia faces significant challenges in meeting the infrastructure needs of our expanding cities; a population estimated to grow to 35 million by 2050; and a freight task set to double over the next 20 years, and treble along the eastern seaboard.

Unless our lifestyle preferences change, most of these extra people will live in our large cities on our coastline.

We must do what we can to encourage Australians to populate our inland, but I expect we will not be very successful.

Our ports and our shipping services should therefore be working to grow their capacity and developing a vision for a much greater role in our domestic as well international freight movement task.

The Freight Task

For instance, by 2030, Australian ports will need to process, as a minimum, more than double the amount of container freight—both international and coastal.

Put your mind to how a port like Sydney will handle double its current volumes. And even that growth does not account for an increased market share the coastal shipping industry must achieve to prevent our land-based transport network—our roads and rail clogging with a rapidly rising task.

In terms of our exports and imports, in 2011–12, Australian ports processed a total of 1,167 million tonnes of cargo, of which 83.4 per cent were international exports and 8.1 per cent were imports.

In the same period, the total value of Australia's sea exports were $236.2 billion, a 6.1 per cent increase on 2010–11 and an average annual growth of 10.2 per cent over recent years.

Our imports by sea were 94.9 million tonnes—worth $182.2 billion.

These are impressive figures and as shippers, importers and exporters, you understand only too well the importance of connectivity of transport infrastructure for securing international competitiveness, boosting productivity and enabling growth across the economy.

The future growth in passenger and freight demand means that international gateways, freight hubs, and trade corridors will become ever more critical in establishing this connectivity which in turn strengthens Australia's ability to trade and access international markets.

Delivering a quality infrastructure network means planning across all modes to optimise opportunities for coordination.

As you would be aware we have announced an ambitious infrastructure agenda.

We will invest in a number of significant road upgrades across the country to enhance key freight routes. In Sydney—with NSW and the private sector—we will build WestConnex and the F3 to M2 link.

We have made similar major project commitments for the road systems in other mainland capitals.

And in regional Australia the Pacific Highway, Bruce, Midland—Perth to Darwin and Warrego highways are all scheduled for major upgrading.

We will also free-up capacity on Australia's freight rail networks by separating freight and passenger traffic to establish dedicated rail freight networks.

With that in mind, the Coalition Government has made a commitment to investigate a new 24/7 dedicated freight connection from the Acacia Ridge Intermodal Terminal to the Port of Brisbane as part of the Melbourne to Brisbane Inland Railway project to which we are committed.

The Government also recognises that developing a network of intermodal terminals in the right places is crucial to supporting investment in rail track so that industry can readily move freight across and between port, rail and road networks and onwards to customers.

Shipping Industry

Looking specifically at shipping, as an island nation it stands to reason that shipping must play a more important role in our freight network.

When I spoke to CEDA in July, I said I believed the Australian shipping industry needed to do more not less.

The shipping industry has the capacity to move large and bulky cargoes across vast distances in an efficient manner.

We need to capitalise on this advantage and work towards ensuring that shipping takes on a greater share of our nation's freight task.

Of course, because we are an island nation, our exporters already rely on shipping to link Australia to its export markets.

It is in Australia’s interests to ensure that exporters have access to safe, reliable and cost effective shipping services.

With all of that in mind, I want to look at Australia’s current regulatory arrangements and work with industry to ensure that we remove unnecessary burden and red-tape and that our regulatory arrangements facilitate rather than hinder competition and productivity.

This is part of our broader election commitment tio reduce the cost of red tape to the Australian economy by $1 billion each year.

At the time the shipping reform package was introduced over twelve months ago I was concerned at the increased red tape imposed on vessels, especially foreign-flagged vessels, trading in Australian coastal waters.

During the parliamentary committee processes many shipping companies raised concerns about increasing red tape under the new requirements and I am determined to put the current system under the microscope to streamline processes and foster a vibrant and sustainable shipping industry in Australia.

This will include looking at the eligibility requirements around the Temporary Licence application process and applications for a variation to a permit.

I know the current system has caused problems for local manufacturers and for the movement of bulk goods around our coast.

Shippers tell me that container rates from Melbourne to Brisbane are almost twice the cost of those from Singapore to Melbourne.

Bulk freight rates on the east-west route have reportedly doubled in the past year.

Transporting sugar from Thailand is cheaper than shipping it from Queensland.

Imported cement from China is threatening local manufacturers.

These reports from industry are gravely concerning. Coastal trading will only be successful and viable into the future if we have a reliable supply of goods to be moved.

If our industry is uncompetitive, board rooms around the country will inevitably consider whether Australia is the right place for their product to be manufactured or whether bulk goods should be shipped straight offshore for processing; or whether materials or products should simply be imported from overseas.

To put it bluntly, there is no point in artificially propping up our coastal shipping industry if it is unable to compete—it will have an impact on our broader economy.

Let me make it clear, I want a strong Australian shipping industry with an increasing market share.

I want vessels to be Australian flagged, but most of all I want an industry that is efficient, reliable, safe and doing the job that its customers expect.

I look forward to working closely with you to determine the best way forward for everyone.

Tasmanian Shipping

The Coalition Government is also working to fulfil our election commitment to establish an inquiry to be undertaken by the Australian Competition and Consumer Commission and the Productivity Commission into Tasmanian shipping.

Broadly the inquiry will look into shipping costs in Tasmania, the competitiveness of Tasmania's broader freight industry structure and economic infrastructure, as well as the Tasmanian Freight Equalisation Scheme and the Bass Strait Passenger Vehicle Equalisation Scheme so that any inefficiencies, inequities and anomalies in the Schemes can be identified and addressed.

Conclusion

As a net exporter of goods, Australia’s economic wellbeing and social sustainability depend on staying a step ahead of the game internationally.

A viable shipping industry is vital to achieving this objective.

In closing today, I am looking forward to working with you to deliver the growth and productivity reforms needed to meet the challenges of the 21st century.

I am happy to take questions…thank you.