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Australia – The End Of Cabotage? National Commission Of Audit Recommends Abolishing The Coastal Trading Regime.

7 May, 2014

 

Legal News & Analysis – Asia Pacific – Australia – Shipping, Maritime & Aviation

 

What You Need To Know

 

  • The National Commission of Audit has released Phase 2 of its report “Towards Responsible Government“, in which it is recommended that the cabotage policy be abolished. 
  • This recommendation endorses certain policy options that were proposed in the Commonwealth Government’s recent Options Paper on how the Australian coastal trading market should be regulated.

 
What You Need To Do

 

  • Submissions on the Options Paper’s policy proposals will continue to be accepted until 31 May 2014.


The National Commission of Audit (NCOA) has released Phase 2 of its report Towards Responsible Government (available from the NCOA’s website). One of the issues considered by the NCOA in its report is the improvement of national transport regulation. This consideration is timely as the Commonwealth Government has only recently released an options paper on how to regulate Australia’s coastal trade (Options Paper).

 
National Commission Of Audit Report

 
In late 2013, the Commonwealth Government announced that it had established the NCOA as an independent body to review and report on the performance, functions and roles of the Commonwealth Government. The terms of reference for this review were broad and enabled the NCOA to conduct a wide ranging review and produce the Towards Responsible Government report.

 
Improving National Transport Regulation

 
In Towards Responsible Government, the NCOA considered Australia’s domestic freight statistics, specifically the respective distance travelled and tonnage carried by road, rail and costal shipping. The NCOA considered these statistics evidenced a lack of growth in coastal shipping, which in turn, was considered to be reflective of (among other things) the impact of regulatory policies. Of particular focus were the cabotage rules, which the NCOA were of the opinion effectively provide industry assistance by increasing costs and reducing competition.

 
Against this background, the NCOA proposes that an efficient and well regulated transport system is critical to the cost structure and competitiveness of Australian business. To achieve this, the NCOA recommends the abolition of the cabotage policy in its entirety.

 
Options Paper For Regulating Coastal Trading

 
The NCOA’s recommendation that cabotage be abolished is both significant and timely. Only last month the Commonwealth Government released the Options Paper.

 
In light of the NCOA’s recommendation, it is worthwhile revisiting the three policy options put forward to address regulating vessel access to the coastal trading market in the Options Paper which are as follows:

 
1. removing all regulation of access to coastal trading (Option 1);

 
2. removing all regulation of access to coastal trading and enacting legislation to deal with the effects of other Australian laws (Option 2); and

 
3. continuing to regulate coastal trade, but minimising industry burden and costs (Option 3).

 

The NCOA’s recommendation that cabotage be abolished evidences the NCOA’s support of either or both of Option 1 and Option 2 as the preferred policy approach to the regulation of accessing the coastal trading market.

 
Implications

 
The NCOA’s recommendation is likely to be taken into consideration by the Commonwealth Government as it formulates its preferred approach to the regulation of coastal trade. With this in mind, industry stakeholders should consider making submissions reflecting their perspectives to the Department of Infrastructure and Regional Development on the policy options proposed in the Options Paper. Submissions will be accepted until 31 May 2014.

 

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For further information, please contact:

 

Paul Newman, Partner, Ashurst
paul.newman@ashurst.com

 
Shane Bosma, Ashurst
shane.bosma@ashurst.com

 

David Morgans, Ashurst
david.morgans@ashurst.com

 

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