Local fleet idea not so strategic

Controlling costs, including freight costs, by securing the best deals is essential to businesses remaining viable and in a position to maintain jobs. For that reason, businesses that rely on shipping to move products and inputs have reason to be alarmed by a commitment the militant Maritime Union of Australia says it has secured from the opposition. The MUA, an arm of the Construction Forestry Maritime Mining and Energy Union since last year’s merger, told The Australian yesterday that a Labor government would introduce a new “sovereign fleet’’ of Australian-flagged ships, crewed by Australians. These would operate commercially, and the licensing of
foreign ships on domestic routes would be tightened.

Loss of competition in the freight industry would drive up business costs, as Primrose Riordan reports today. Minerals Council of Australia chief executive Tania Constable calculates such regulation would raise shipping costs by as much as $36 million a year, when the outlay involved in moving products around Australia is already comparable with shipping from overseas. Allowing it to soar higher, with the extra costs borne by industry, would discourage investment in fields such as mining, minerals processing, construction and agriculture.

News of the “sovereign fleet’’ follows Bill Shorten and MUA national secretary Paddy Crumlin attacking companies such as BHP for moving away from Australian-flagged and crewed cargo vessels for transporting iron ore from Port Hedland to Port Kembla, in what Mr Crumlin branded “an act of corporate bastardry”. Last week the Opposition Leader accused BHP of jeopardising national security by moving away from Australian vessels. Labor’s “strategic fleet” would be expected to transport products of strategic importance to the economy, including the importation and distribution of crude oil, aviation fuel and diesel. The fleet would also be available to be seconded to the Australian Defence Force during times of crisis.

Business and industry, however, fear Labor’s move and heavier regulation would create a crisis of costs. Last week National Farmers Federation chief executive Tony Mahar backed the Coalition’s push to reduce entry barriers for foreign vessels on domestic routes. He said farmers needed Australian products to move quickly from the farm gate into domestic and overseas markets at a price that delivered a return. Competition, including from overseas players, helps keep costs down.