Strategic shipping fleet shrinks despite PM’s election pledge

Anthony Albanese has been accused of failing to deliver on his 2022 election pledge to create a strategic shipping fleet, amid a warning our supply chain is perilously exposed.

Shipping containers are loaded on to cargo ships at the Port of Melbourne. Picture: NewsWire / Aaron Francis

Australia’s diminished national shipping industry has accused the Albanese government of failing to deliver on its 2022 election pledge to rebuild the country’s merchant fleet, warning that the nation’s supply chains are perilously exposed.

When Anthony Albanese promised ahead of the last election to create a “strategic fleet” that could be requisitioned by the government in times of crisis, there were 13 Australian-­registered ships. Now there are nine.

“Three years on, we are four ships down, and that endangers our national security,” Maritime Industry Australia Limited chief executive Angela Gillham said.

Ms Gillham accused the government of “dragging the chain” on implementing its election promise to establish a 12-vessel strategic fleet.

The government set up a Strategic Fleet Taskforce upon coming to government, which in 2023 recommended major taxation changes to make Australian ships competitive with tax haven-­registered foreign vessels.

It is yet to implement the taskforce’s recommendations, instead establishing a five-year pilot program that will directly subsidise just three vessels and which is yet to get underway.

Ms Gillham said it was time to dust-off the taskforce’s report and implement its findings, amid a $5m-$8m-a-year economic advantage for foreign-registered ships. “What we need is a policy environment that gets more Aussie ships on the water,” she said.

“This requires urgent action to put in place tax measures equivalent to that provided by other maritime nations to grow and support a national fleet.

“We need to level the playing field or face the economic cal­amity of an island nation with no national shipping industry.”

The industry says extending corporate and income tax breaks to ship operators would be cheaper than subsidising them, because the government earns very little tax anyway from loss-making shipping companies.

The Prime Minister’s strategic fleet policy was central to Labor’s national security pitch to voters following the Covid-19 pandemic, which underscored the vulnerability of Australia’s supply lines for a raft of strategic products, ­including protective clothing, medicines, food and fuel.

“An Albanese Labor government will strengthen Australia’s economic sovereignty and nat­ional security by building an independent strategic fleet to secure our ongoing access to fuel supplies and other essential imports,” Mr Albanese said at the time.

It followed a decades-long effort by the former transport minister to strengthen the domestic fleet, including through legislative changes during the Gillard government.

The Spirit of Tasmania IV passenger ferry is one of only nine domestically registered ships capable of navigating the high seas.

Opposition transport spokeswoman Bridget McKenzie said the Prime Minister’s shipping industry plans had been “marooned again … His own 2012 legislation failed to increase the number of Australian flagged ships; in fact it has been the catalyst for fewer ships”.

“And now (he) has failed again to deliver on his signature promise of more Australian-flagged vessels,” she said.

“It is often cheaper to ship goods from across the globe than between Australian ports. This perversely drives up the cost of ­locally manufactured goods, decreasing the competitive advantage of local manufacturers.”

Transport Minister Catherine King said the government was delivering on its strategic fleet commitment, with tenders for the pilot program being evaluated and Treasury modelling under way on the taskforce’s tax recommendations. “The pilot will consist of three Australian-flagged and crewed vessels that are privately owned, operated on a commercial basis and are available to the commonwealth for requisition in times of need, crisis or national emergency,” she said.

“The pilot will enable the government to test market interest in participating in the strategic fleet and provide the evidence base for the quantum of funding required to sustain the fleet.”

She said the government was also investing in training for up to 20 seafarers each year to complete sea time required for international certification.

Former chief of navy Tim Barrett, who sits on the industry body’s board, said Australia’s shipping fleet had been in free-fall for decades, placing the nation’s supply lines at risk.

“As a great maritime nation at the end of the global supply chain, that makes us highly vulnerable. And while we commend both parties for acknowledging this is an issue, we need it to be back as a priority,” he said.

“Ultimately, Australia’s security and prosperity is Australia’s responsibility, and to rely entirely on other nations’ ships is fraught with uncertainty.

“There is no prosperity without security and Australian sovereign commercial maritime capability is essential to our ­national security.”