2016-02-11
Senator RICE: I want to continue on with the line of questioning from Senator Conroy and Senator Sterle. In the case of the MV Portland and the Federal Court findings, I understand that the Federal Court found that the minister did not follow the requirements of the Coastal Trading Act in that particular instance, despite finding in favour of the minister, so am I correct in characterising the court's findings in that way?
Mr Mrdak: No. My understanding is that the court certainly found that there had been an administrative error by the department in the way in which we placed material on our website, which has subsequently been corrected, but the court found that that did not, of itself, invalidate the issue of the temporary licence.
Senator RICE: Is there anything from the Federal Court's findings that has caused the department to change the way that it deals with temporary licences?
Mr Mrdak: We have made changes to the way in which we publish the application on our website. That was the finding of the court, but in this instance my officers did not correctly publish on the website the application. However, to my knowledge and understanding, on the advice that I have from my officers, all other processes of the act were found to be valid by the court. I will check with Mr Sutton.
Mr Sutton: That is correct.
Senator RICE: So there has been no other review of the way that you consider the temporary licence applications?
Mr Mrdak: We have, as Mr Sutton has indicated, over the last few years there has been a body of Federal Court judgments to which we have amended our processes to make sure that we are always consistent with both the act and the precedent created by those judgments. In this situation the court did find that under section 30(a), the way in which we published the application on the website was not in accordance with the requirements and we have made changes to our internal processes to ensure that happens. The court ruled that that, of itself, did not invalidate the issue of the licence.
Senator RICE: Can you tell me how many temporary licence applications you received in the last year?
Mr Sutton: If you will bear with me I will just check my papers. Since 1 July 2012 we have received, just going through actual temporary licences, 220, under the act.
Senator RICE: Two hundred and twenty applications have been made or you have issued 220? Mr Sutton: No, 220 applications have been made and 191 have been approved, so that gets back to the earlier question about how many had been refused. There are also variation processes for temporary licences which have been issued, what are called New Matters Applications, which is like adding additional voyages. There have been 674 applications since 1 July 2012; 631 of those have been approved and, with authorised matters, which are changes to approved voyages, there have been 2,491 applications and 2,326 of those applications have been approved. This is correct as of 13 January 2016.
Senator RICE: So that is covering the last three and a half years?
Mr Sutton: Correct, yes.
Senator RICE: What has the trend been in those temporary licence applications? Can you give us the figures for each year? Are we seeing an increase? Mr Sutton: I might have to take that one on notice, but we can certainly provide that information for you.
Senator RICE: So a small number have been rejected. There are 220, of which 191 have been approved; so nine have been rejected. What grounds have they been rejected on?
Mr Sutton: That would be 29.
Senator RICE: Yes, that is correct.
Mr Sutton: I will have to take that on notice to give you a detailed breakdown of the reasons for rejection. I can point out that, of those 220 applications, 10 notices in response have been received, but I should say that I have been in the job about 15 months now and no notices in response have been received in that period.
Senator EDWARDS: Just a clarification, what is the number of voyages on any application? Mr Sutton: It varies. It is a minimum of five. The legislation specifies that it is a minimum of five but it can be up to however many. A temporary licence lasts a year and it is not necessarily the same ship that is covered by a TL. We have heard cases of 30-odd on one application. That would not be the norm, but it is of that order of magnitude. You can certainly see significant numbers of those.
CHAIR: So, in the overall application of licences for which you say a minimum of five trips, how many of the trips are made under the system which is the product of this government and the previous government on Australian wages? How many do you get in paying Australian wages? What is the number of trips? Do you know that?
Mr Sutton: I would have to take that on notice. What happens is that a vessel on the third voyage in a year triggers the Fair Work Act provisions which specify that part B wages be paid under the—
CHAIR: What I am really asking is how do you know that happens, because we are dealing with anyone from Columbian cocaine runners to the Middle East? God knows who owns the ships. How will you ever know what they pay the crew. Even though under the act they are obliged to pay after the third trip Australian wages, how do you know that they ever do?
Mr Sutton: The department itself does not have any checking mechanisms associated with the administration of the scheme but certainly AMSA, as part of its port state control regime, one of the issues that it looks at relates to compliance with provisions of the Coastal Trading Act and the Fair Work Act.
CHAIR: My problem is we do not necessarily know who owns the ship. How do you ever see the books of a ship if you do not know who owns the damn thing to see whether they are paying the crew threepence or 300?
Mr Sutton: AMSA, with its port state control responsibilities, when it inspects a vessel it goes through all the documentation associated with the ship and part of that documentation since Australia ratified the Maritime Labor Convention relates to documentation relating to seafarer wages and conditions.
CHAIR: So, they have a set of books where you can say the cook was paid so much?
Mr Sutton: That is correct.
Senator RICE: Can I continue?
CHAIR: Yes, in a moment. So, going back to my original question, you have no idea or do you have an idea how the foreign owners are tricking the system in terms of the third voyage? Are half the voyages around the coast paid on Australian wages or we do not know?
Mr Sutton: As I said, we will take that question on notice.
Senator RICE: Up until what date were those figures with the 220 applications?
Mr Sutton: It is 13 January 2016.
Senator RICE: Can you tell me how many temporary licences have been applied for in the past three months?
Mr Sutton: No. We do not have those specific figures but we can easily get them for you on notice.
Senator RICE: Which companies have made those applications in the past three months? Can you provide that to us as well?
Mr Sutton: Yes, we can provide that information.
Senator RICE: With the increasing number of temporary licences being issued and the discussion we had before about the decreasing number of ships on the general register, you are saying you could see a future where there would not be any general ships so they would just have the trade only being undertaken by temporary licensed vessels. How could that be consistent—
Mr Mrdak: I do not think that is what Mr Sutton indicated. He talked about the scenarios in the event that there were no ships on the general register. He did not, to be accurate from my reading, say that he foresaw a situation where there would not be ships on the general register.
Mr Sutton: In fact, I said that it would be quite extraordinary if it did.
Senator RICE: I want to return to Senator Conroy's point on the increasing number of temporary licences and the decreasing number of ships on the general register and how the issuing of those temporary licences is consistent with the aims of maximising the use of Australian shipping.
Mr Sutton: Again, I will get back to the comment I made to Senator Conroy that the object of the act has six components, six elements. Certainly the component that you have mentioned is one of them but there is another key element relating to ensuring the efficient movement of passengers and cargo between Australian ports and also promoting competition in coastal trading.
Senator RICE: Have any temporary licence applications been rejected on the grounds that it is inconsistent with maximising the use of Australian shipping?
Mr Sutton: The short answer is no, not on that specific criterion. Decisions on temporary licence applications are made in accordance with section 34 of the act.
Senator RICE: So, it is pretty clear that you are ignoring that sixth criterion. Ms Zielke: It is quite challenging working with the objectives of the act and it has actually been the basis of court challenges previously because the object of the act does not actually give weighting in relation to it. On one hand it is actually saying that you should consider the Australian ships and then an opposing objective is that you need to think about the impact on shippers, those actually trying to get their goods sent around the coast, but it does not tell you which one to give greater weight to, so it can be very complex trying to think about these issues.
Senator RICE: Was consideration given to rejecting the application for temporary licences that replaced the MV Portland and the CSL Melbourne on the basis that it was not maximising the use of Australian shipping, given in both those instances you had ships that were operational and continuing to be operational.
Mr Sutton: The act does not require a general licence holder to use their vessel to carry their cargo if the general licence holder does not consider it is economic to do so. The act relies on commercial decisions by shipping operators whether to use general licensed vessels or temporary licensed vessels and we administer the act in that context. The delegate, or the government, obviously does not provide shipping services; those shipping services are provided by commercial operators.
Senator RICE: When you are considering the economic viability of continuing the use of general licensed ships, do you just take the information that is provided to you on face value or do you do an independent investigation?
Mr Sutton: Is this in terms of whether Alcoa chose to use the MV Portland?
Senator RICE: Yes.
Mr Sutton: As I said, the act relies on commercial decisions. If there is a decision being made by a general licensed operator not to apply to carry a cargo, there is nothing in the act that gives us a power in any way to question why they have made that decision.
Senator RICE: So, you just have to take their information on face value and accept it? Is that your rationale for why you issue a temporary licence?
Mr Sutton: It is not so much their information, it is the fact that they have not sought to carry the cargo which is the critical issue. That is a black and white issue for us. It is not a question of assessing the information; they have made a decision not to put in a notice of response or indeed, in the case of Alcoa, they have made a decision not to use the general licensed vessel, and that is a black and white matter.
Senator RICE: But they do not have to justify that to you; they just made a decision to do it?
Mr Sutton: That is correct. The whole premise of the act is that the act assumes commercial decisions by shipping operators.
Senator RICE: Do you see that you are just going to be overseeing the complete demise of general ships, if that is all you need to do, in a race to the bottom? From the outside it looks like Alcoa, having made that decision, it was certainly a significant factor then in Pacific Aluminium deciding to go down the same way, because if Alcoa could do it then they could do it, too. Mr Sutton: I do not think it is our job to make commercial decisions on behalf of shipping operators.
Senator RICE: But isn't that the whole purpose of having general licensed shipping, that we are meant to have regulation that says that for coastal trading Australian ships are generally to be used?
Mr Sutton: That is on the basis of commercial decisions by general licensed operators. If a general licence operator chooses not to use their vessel or offer their vessel up or make a notice in response to a temporary licence application, then there is nothing in the act that gives the delegate any power to question that decision.
Senator RICE: Would you agree that we are basically just spiralling down as the people that are using Australian crewed and flagged ships will just take the opportunity to say it is not economic because of course it is not economic when you are paying foreign seafarers so much less than Australian seafarers?
CHAIR: You do not have to give an opinion on policy.
Ms Zielke: I am sorry, I was just going to respond with the issues raised by industry since the legislation came into effect in 2012 which actually led to the review of the legislation.
Mr Mrdak: I think, as my officers have indicated, it is a very difficult one, without straying into opinion about the future of the Australian registered fleet. The reality is government cannot mandate the continuation of unviable operations and certainly as a regulator we have regulatory provisions in the legislation. At the end of the day people will make commercial judgments about maintaining Australian registered vessels.
Senator RICE: But you can only do that by ignoring the criteria that are set out. I acknowledge it is one of six criteria to be maximising the use of Australian shipping.
Mr Mrdak: No.
Senator RICE: By continuing to issue temporary licences you are actually undermining the continuing use of Australian shipping because, of course, it will be cheaper to use a foreign flagged ship with crew being paid $2 an hour.
Mr Mrdak: Some Australian operators—
Senator Colbeck: You make the assumption that wages are the only cost indicator in the context of the cost structure of a vessel that is operating. I think that is a fairly narrow view of the world. It is not just about labour. It is one of the factors, without question, although the crews being paid the right amount according to ILO standards are not significantly under Australian wages, and they should not be.
Senator RICE: We will have to agree to disagree. Thank you.