Submission to Coastal Trading Reform for Cargo Vessels Discussion Paper

The RTBU has provided the following response to the Department of Infrastructure, Transport, Regional Development and Communications' discussion paper on costal trading reform for cargo vessels.


The Rail, Tram and Bus Union (RTBU) represents over 30,000 workers across Australia in the rail freight and passenger transport sectors.  We thank the Department of Infrastructure, Transport, Regional Development and Communications for the opportunity to provide feedback to this discussion paper.

The RTBU supports a strong and healthy Australian coastal shipping industry.  Coastal shipping is a critical part of our broader national transport network.  It is clearly in the national interest for Australia’s coastal shipping industry to work in way that is complementary to our domestic rail, road and aviation industries.  To this end, the RTBU has previously made a submission to the Senate Standing Committee on Rural and Regional Affairs and Transport regarding the Shipping Legislation Amendment Bill 2015.  Our submission in 2015 found that proposed legislative reforms would put at risk hundreds of jobs in the rail freight industry.

The RTBU’s primary concern arising from this discussion paper is the impact that the proposed reforms may have on the rail freight sector, and in particular on intermodal (non-bulk) freight services.  Figures from the Freight on Rail Group (FORG) show that Intermodal (non-bulk) rail freight services employ up to 10,000 people directly and indirectly across Australia, and contribute more than $1 billion to the Australian economy each year.

In essence, any reforms that lead to greater use of overseas-based ships for the transport of domestic freight will undermine the domestic transport industry.  The argument that increasing the use of temporary foreign-flagged vessels for freight services in Australian waters will increase competition ignores the fact that such vessels are not competing on a level playing field, and do not contribute to the Australian economy.  The owners of these vessels do not pay Australian taxes, and do not employ Australian workers.  As such, these vessels undermine the competition that already exists between Australian shipping companies and between the various modes.

The RTBU asserts that a number of reforms suggested in the discussion paper present a risk to the Australian rail freight industry.  The RTBU is particularly concerned about the following recommendations:

  1. Removal of five-voyage minimum for temporary licenses;
  2. Automatic approval of temporary license applications where there is no approved general license route/cargo nomination; and
  3. Removal of tolerance limits for temporary license voyages for routes or cargo types where there are no general license holder route/cargo nominations.

The RTBU is concerned that these proposed reforms would facilitate an increase in temporary license holders operating on routes that compete directly with interstate nob-bulk rail services.

No research appears to have been undertaken to quantify the economic impact that this would have on the rail freight sector.  Moreover, no research appears to have been undertaken on the impact of these reforms on the Federal Government’s broader transport policy objectives, such as its investment in interstate rail infrastructure.

Previous submissions from FORG, however, have summarised the risk from the Federal Government’s previous attempts at coastal trading reform.  In its submission to the March 2017 Discussion Paper, FORG stated that changes to cabotage requirements and tolerance provisions would:

  • Cause a reduction in the market share of rail freight for long haul movements, particularly those between the east coast and Perth and adversely impact the freight rail industry (which is cost competitive, like shipping, over long distances);
  • Encourage dumping practices, i.e. transport services are provided at a price lower than those provided in their home nation, damaging freight pricing and causing a downturn in land transport volume growth;
  • Reduce transit times on sea by increasing the frequency of ships contesting for our domestic volumes;
  • Significantly damage the domestic land freight industry through a loss of volume and revenue stability, and a reduction in the capacity of the rail freight industry to invest in capital; and
  • Increase to rail freight pricing due to the reduced rail volumes and rail efficiency which requires volume/ critical mass in order to recover its fixed operational costs as a result of reduced rail volumes.

Deputy Prime Minister Michael McCormack has labelled the Federal Government’s Inland Rail project as a 1,700km “corridor of commerce” that will underpin the economies of regional communities along the route.  Indeed, the Federal Government promotes Inland Rail as “one of the most significant infrastructure projects in the world.”  To deliver in this vision, however, rail freight must fit into a wholistic national transport plan that ensures transport modes work together in the national interest.  The current siloed approach to transport infrastructure planning and policy, which sees issues such as coastal shipping viewed in isolation from its impacts on rail, is inconsistent with an integrated national strategy.

In other words, if interstate containerised freight services along the east-west and north-south rail corridors are undermined by unfair competition from foreign shippers, then these rail lines will wind up as stranded assets.  The Federal Government’s showpiece Inland Rail project will be at risk of becoming “one of the biggest infrastructure white elephants in the world.”  This must not be allowed to happen.

The RTBU also supports the common-sense reform proposals put forward by the MUA in its response to the discussion paper.  We recommend that the MUA’s proposals form the basis of a new coastal trading reform package.