Carnival Australia to pull cruises from Melbourne over rising port tax

Carnival Australia has pulled several cruises from Melbourne following a steep hike in Victorian government port taxes — an exit that has been tipped to deal a heavy blow to the local economy.

Australia’s largest cruise ship operator will pull several of its visits to Melbourne in protest at the Victorian government’s decision to ­impose a huge increase in port taxes.

The Herald Sun can reveal that Ports Victoria has decided to increase fees and charges at the Port of Melbourne by 15 per cent, adding significant costs to cruise operators and customers. The changes take effect on January 1, and the money raised will go towards ongoing maintenance of Station Pier, used by cruise ships.

As a result, Carnival Australia will go to other docks interstate from 2025, a move that will hit Victoria’s tourism economy.

The line’s chief strategy officer, Teresa Lloyd, said: “We cannot continue to plan voyages to Melbourne should unexpected and substantial fee increases be imposed by port operators.”

More than 65,000 guests are set to pass through the Port of Melbourne in the upcoming cruise season. Picture: Ian Currie

Ms Lloyd said the cruise industry, which planned its trips years in advance, relied on confidence and certainty to operate.

Ports Victoria, a state government authority, made the decision to raise the fees late last week.

“These sorts of steep price rises with very little notice are not something that any business can wear, let alone a business that’s still at such a fragile point of recovery (post Covid),” Ms Lloyd said.

In the 2023-24 cruise season, Carnival Australia will operate 23 cruises that leave from and arrive back in Melbourne. More than 65,000 guests are set to pass through the Port of Melbourne throughout that period on Princess Cruises’ Grand Princess and Cunard’s the Queen Elizabeth – both lines are owned by Carnival.

Carnival Australia will keep some of its cruises out of Melbourne in protest against the rising port tax. Picture: Andrew Henshaw

But the 2025-26 season will look different with both Princess and Cunard rerouting their tours to avoid Melbourne entirely. P & O Cruises, also a Carnival-owned line, is still assessing the viability of home-porting in Melbourne and is yet to make a decision.

This will mean many Victorians will now need to travel to Sydney or Brisbane to board a cruise ship.

It will also jeopardise Melbourne’s title as the “southern gateway” and affect destinations such as Kangaroo Island, South Australia and Tasmania which are typically visited by cruise ships out of Victoria.

Ms Lloyd said the company would be forced to wear the cost of the increased port fees on all cruises that have already been purchased or are currently on sale.

Tourism and Transport Forum Australia chief Margy Osmond said the Victorian government needed to urgently collaborate with cruise companies.

“The loss of Princess Cruises and Cunard from Victoria’s cruise sector is a major blow to the state’s tourism industry,” Ms Osmond said.

“We must address cruise ship operators concerns and ensure they have the support needed to prevent further erosion of the cruise industry.

“The value of cruising cannot be underestimated.”

Ms Osmond said hundreds of thousands of tourists had already been diverted away from Melbourne after the Spirit of Tasmania relocated to Geelong.

Opposition ports and freights spokeswoman Roma Britnell says the Allan government has failed to keep Station Pier up to world standard. Picture: Zoe Phillips

The latest CLIA Value of Cruise Tourism report estimates the total economic benefit to Victoria from cruises is $379.5m per year.

City of Port Phillip councillor Marcus Pearl said the withdrawal of Princess Cruises and Cunard was a “severe blow” to the local economy.

“The recent decision by Ports Victoria to significantly increase fees for the cruise industry lacks foresight and undermines the long-term growth and sustainability of this vital sector,” Mr Pearl said on Wednesday.

“Such measures are devoid of any strategic vision or commitment to small businesses.”

Mr Pearl said there was a lack of engagement and consultation with local stakeholders.

“This substantial tax increase has been implemented without any dialogue with the impacted businesses, particularly those in Bay Street, Port Melbourne, and St Kilda, who heavily rely on the cruise ship industry,” he said.

“This approach reflects a disregard for small tourism operators by the state government.”

Opposition ports and freights spokeswoman Roma Britnell said the Allan government had failed to keep Station Pier up to world standard, which would leave Victorians disadvantaged.

“With cruise liners relocating, families with children or the elderly will now have the added expense of flying interstate,” she said.

The cruise industry is worth close to $400m annually to the Victorian economy. Picture: Brendan Radke

Opposition tourism spokesman Sam Groth said: “The Allan government damaged our reputation as a major events destination with the cancellation of the Commonwealth Games, and this announcement is another blow to Victorian tourism and jobs.”

Victorian Tourism Industry Council chief executive Felicia Mariani said the state lacked a dedicated cruise strategy.

“Taxing cruise ships that are using Melbourne as the home port today, with no commitments or plans to infrastructure improvements, will not guarantee that lines like Disney and Virgin that are home- porting this year will remain here if they get a better offer from the highly improved ­facilities in Sydney in Brisbane,” she said.

Ports and Freights Minister Melissa Horne sought to downplay the significance of the exit on Wednesday.

Ms Horne said the hike imposed on cruise ship passengers would ensure the future of Station Pier.

“I think we need a bit of perspective here — It’s $28.50 per passenger to $32 per passenger, it’s a pretty modest increase,” she said.

“We need to maintain Station Pier. It’s a historic pier that is much beloved by the community but also provides that important berthing for the cruise shipping industry.”

Ms Horne added: “The cruise shipping industry has never been healthier ... This is Carnival making a commercial decision and other operators have well and truly filled the market.”

A Ports Victoria spokesman said: “There has been no ­increase to Port of Melbourne fees in 2½ years, and after careful review we’re issuing a new tariff schedule that will come into effect on January 1.”