Proposed shipping reforms would also boost airlines
Is this shipping news that would be good news for Qantas, and Virgin Australia?
The Federal government is proposing a set of reforms for the all-but-dead Australian shipping industry that could play a huge role in the future survival of its airlines.
Almost 18 months to the day when these reforms were first promised by the government before the last national elections, they have now been significantly cut back but put up for public discussion in a form which would still help level the playing fields, or if you wish, slaughter fields, for flag carriers Qantas and Virgin Australia.
This is today’s media release:
The Gillard Labor Government is seeking feedback from industry on the major element of its historic package of reforms to the Australian shipping industry.
The tax reforms will stimulate investment in Australian shipping and encourage Australian ownership of ships and ship operations. They include:
· an income tax exemption where Australian shipping operators will not pay any income tax on core shipping activities
· an accelerated rate of depreciation for ships so that they can be written off in ten years rather than the current average twenty years, including roll-over relief from income tax if a replacement ship is purchased
· a refundable tax offset for companies employing Australian seafarers on international voyages.
The Australian shipping industry has been operating at a substantial disadvantage compared to operators who register in many other countries around the world and have access to beneficial tax, regulatory and employment arrangements.
These reforms will address the current decline in the Australian shipping industry – in 1995 there were 55 Australian operated ships – now there are only 22.
The Tax reforms are part of a broader shipping reform package which aims to:
· foster global competitiveness in a simplified three-tier licensing framework for participation in the coastal trade
· establish an Australian International Shipping Register to put Australian companies on a level footing with their international competitors
· establish a Maritime Workforce Development Forum to progress key maritime skills and training priorities.
These are the original reform proposals:
A re-elected Gillard Labor Government will introduce measures to strengthen Australia’s shipping industry for our economy and our environment.
We will implement international best practice measures to reduce costs for Australian ships and place our shipping industry on a sustainable footing with its international competitors as well as other modes of transport domestically.
As a trading island nation, we are reliant on shipping for 99 per cent of our trade by volume while Australia makes up 10 per cent of the world’s entire seaborne trade.
In 2008, more than 834 million tonnes of international cargo moved across Australian wharves on 4,000 ships in more than 11,000 voyages.
Yet, there are only 30 Australian registered major trading ships today – down from 55 ships in 1995.
Without action, Australia faces the continued decline of its shipping fleet and the loss of the maritime skills base.
Australian companies using Australian registered ships will be able to pay a new tonnage tax (a low flat tax based on the weight of the vessel) or remain with the current tax regime which will be bolstered through accelerated depreciation arrangements.
Tonnage taxes are used in the United States, the United Kingdom, France, Germany and other nations.
The Government will also make changes to income tax arrangements for Australian-resident international seafarers to remove disincentives for companies employing Australians.
In order to facilitate Australian participation in international shipping, Federal Labor will establish an Australian International Shipping Register.
Federal Labor will also establish a Maritime Workforce Development Forum of industry, unions and education providers to improve and increase access to maritime training. This forum will be supported from within the existing departmental resources.
We will also effectively apply existing coastal shipping principles consistent with the Navigation Act so that it trade is undertaken by Australian operated companies and crewed by Australian residents, with the capacity to utilise foreign flagged and crewed vessels to supplement the Australian fleet.
We will also introduce mandatory training requirements in order for shipping companies to be eligible for the new tonnage tax.
The implementation of these measures will be conditional on a compact between industry and unions to deliver labour productivity and efficiency reforms.
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As a nation we need to stop pursuing all this level playing field mythology.
Every other country protects their national interests to some degree.
by interesting on Feb 20, 2012 at 6:28 pm
The question is whether shipping to and from Australia has decreased in proportion to the decrease in Australian-registered ships? If so, the government would have a cause for action. In the aviation world, it does not appear that the market is suffering a dearth of seats and service, despite the ebbs and flows of which airlines are providing various services, at the moment. And it doesn’t help that the flag carrier and one or more others which might benefit from such “protection” (but is it, really?) have alienated both the politicians and the populace which would be required to support such a measure.
by TomTom on Feb 20, 2012 at 6:45 pm
I think this bit of taxpayer largesse has more to do with Labor’s over-represented union hacks from the maritime unions than any good macro-economic policy. Dollar for dollar, it would make much more sense to apply to to the aviation industry, as you intimate Ben. Could the airline’s get something similar eg. even just the depreciation rate? Perhaps, if as part of a backroom on-the-quiet agreement, Qantas agreed not to close down Qantas International in return for something like the accelerated depreciation. Well worth a stab by Joyce/Borghetti.
by Lofi on Feb 21, 2012 at 8:01 pm