Jurisdiction - Australia
Reports and Analysis
Australia – A Seachange For Coastal Trading?

10 April, 2014

 

Options paper on approaches to regulating Australian coastal trading.
What You Need To Know

 

  • On 8 April 2014, the Federal Government released an options paper on approaches to regulating coastal shipping in Australia.
  • Three broad policy proposals are put forward as alternative approaches to regulating access to the Australian coastal trading market.

What You Need To Do

 

  • Consider the policy proposals put forward and industry stakeholders are encouraged to make submissions, which will be accepted until 31 May 2014.

Hot on the heels of the recent judgment of the Full Court of the Federal Court of Australia on the object of the Coastal Trading (Revitalising Australian Shipping) Act 2012 (Cth) (Coastal Trading Act), the Productivity Commission recommending that the Coastal Trading Act be reviewed as soon as possible and the finalisation of the terms of reference for the Government’s ‘root and branch’ review of Australian competition laws and policy, the Federal Government has released an options paper on approaches to regulating coastal shipping in Australia (Options Paper). This Options Paper is available from the Department of Infrastructure and Regional Development’s website here.
Licencing Under The Coastal Trading Act
The Coastal Trading Act is the key piece of Commonwealth legislation that regulates vessels engaging in coastal trading in Australia. This regulation is achieved through a licencing system that provides for the following four types of licences:
1. general licences;
2. transitional general licences;
3. temporary licences; and
4. emergency licences.
Current State Of Australian Shipping
At the outset, the Options Paper acknowledges that a lack of competitiveness of Australian shipping has led to both a decline in Australian shipping participation in international trade and in domestic coastal trade. Whilst this challenge is not solely attributable to the introduction of the Coastal Trading Act, the Options Paper contends that the current regulatory regime, while affording the Australian shipping industry some protection, impacts negatively on both shippers and customers.
It is in this context that the Options Paper calls for views of industry stakeholders about the current operation of the Australian shipping industry, particularly the Coastal Trading Act. The input received in the course of the consultation will be considered together with the Productivity Commission’s recommendations from its inquiry into Tasmanian Shipping and Freight with a view to the Government reducing the regulatory burden on the shipping industry so that Australia is provided access to an efficient and competitive shipping industry.

 

Broad Policy Options
The Options Paper puts forward three available policy options for addressing the regulation of vessel access to the coastal trading market, namely:
1. remove all regulation of access to coastal trading (Option 1);
2. remove all regulation of access to coastal trading and enact legislation to deal with the effects of other Australian laws (Option 2); and
3. continue to regulate coastal trade, but minimise industry burden and costs (Option 3).
The Options Paper states that no one of these three options represents the currently preferred approach and that the final position of the Government will be informed by the submissions received in response to the Options Paper.
Option 1
Under Option 1, while all Australian and foreign flagged vessels participating in the Australian domestic economy would need to continue to comply fully with all applicable Australian laws (such as navigation, ship safety, workplace relations etc), the restrictions imposed by the legislative provisions of the Coastal Trading Act would be repealed in their entirety together with any associated legislative provisions that exist due to the Coastal Trading Act.
The Options Paper notes that to facilitate an effective “deregulation” of Australian coastal trade through Option 1, the amendment of other Commonwealth legislation will be required. An example of this is the Customs Act 1901 (Cth) which would need to be amended so that a foreign vessel engaging in the domestic coastal trade is not considered to be “imported” and therefore required to be entered for home consumption.
Option 2
Option 2 would entail the repeal of the Coastal Trading Act and the introduction of a range of other legislative provisions that ensure open access to the coastal trading market by all vessels.
To implement Option 2 the interaction of vessels with other Commonwealth legislation (such as immigration, workplace relations, and the maintenance of existing regulatory policies in relation to competition, quarantine, safety, security and revenue) would need to be considered and addressed.
Option 3
Option 3 involves retaining but amending the Coastal Trading Act to remove the aspects that unreasonably limit or impose onerous or inflexible obligations upon Australian and foreign stakeholders. This would result in a measure of protection for the Australian flagged coastal fleet being retained yet provide for greater flexibility for the buyers and the Australian and Foreign suppliers of shipping services.
To achieve this balance, the Options Paper proposes the following as possible amendments to the Coastal Trading Act:
a) Extending the geographical reach of the Coastal Trading Act to apply to voyages to other defined places in Australian waters (such as, for example, a voyage from the mainland to an offshore installation).

b) Relaxing or removing the requirement that applicants for new temporary licences under the Coastal Trading Act seek approval for voyages in groups of five or more.
c) Amending the existing temporary licence variation process through, for example, removing the consultation process, limiting the aspects of the voyage that require approval to be varied (such as by fixing the cargo or ship type), or removing the consultation process for voyages conducted using types of vessels not currently operated under general licences.
d) Changing the acceptable tolerance limits for temporary licence voyages under the Coastal Trading Act by, for example, allowing the Minister’s delegate to extend tolerance thresholds where events beyond the control of the licence holder affect their ability to meet tolerance allowances.
Further Discussion Points
Finally, the Options Paper raises a number of further discussion points that the Government is calling for submissions on which are relevant to the Australian shipping industry. These include the Australian International Shipping Register, and the application of the Fair Work Act 2009 (Cth) to coastal trading and tourism and cruise shipping.

 

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For further information, please contact:

 

Paul Newman, Partner, Ashurst
[email protected]

 

Adrian Morris, Partner, Ashurst
[email protected]
David Parker, Partner, Ashurst
[email protected]
Rob Lilburne, Partner, Ashurst
[email protected]
Richard Bunting, Partner, Ashurst
[email protected]


Shane Bosma, Ashurst

[email protected]


David Morgans, Ashurst

[email protected]

 

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