The Strategic Shipping Fleet proposes tax incentives for selected shipping owners to flag vessels in Australia and employ Australian crews. The plan aims to ensure these ships remain near Australia for potential repurposing during supply crises to maintain essential goods supply.
One Nation supports this proposal, however the published plan lacks detail, particularly regarding the types of freight that would provide commercial viability while keeping these ships nearby. It appears that implementation of this idea is still far off.
The allocated budget only covers planning for another 5 years, yet the Department indicated that the budget did have an allocation for implementation, but that the details were not for disclosure. Publishing such budget information can help guide tendering companies on bid amounts, but it can also be misleading if funding isn’t actually available.
Despite the Minister’s assurance of implementation within 5 years, I remain unconvinced.
Transcript
Senator ROBERTS: Thank you for being here this evening. I’d like to ask some broad questions on the scoping of the strategic shipping fleet that Labor has announced and that we support. It’s been something we’ve been pushing for a while. Then I’d like to ask a few questions that build on what Senator O’Sullivan’s been talking about. Queensland should be a big winner out of the proposal for a strategic fleet, with a long coastline currently underserved by road and rail transport. A national rail circuit would help that too, and I’ll ask about that later. However, the idea is to encourage private ownership of ships to service the Australian coastline and the Pacific which could then be requisitioned in the event of an emergency, like the next virus or whatever. The report doesn’t go into detail about where the freight will come from, so we don’t know if it’s commercially viable— specifically which companies and how many containers. Do you have any information on where the containers are going to come from to keep container vessels commercially engaged in the scheme? What’s the volume of cargo? Or is it just very early days?
Mr Johnson: The planned approach in terms of selecting the vessels for the strategic fleet is to approach the market, and there are questions for that marketplace about both the capability of vessels they might put forward to join the strategic fleet and the commerciality of those vessels, which really goes to what freight they’re moving currently and how they propose their vessels will fit into the commercial marketplace. That’ll give us the information on the volumes of cargo and those sorts of things that would be moved on a normal day-to-day basis. But the vessel would be Australian flagged and crewed and therefore, as part of the arrangements to join the strategic fleet, would be available for that requisition.
Senator ROBERTS: Am I right in assessing then, Mr Johnson, that it’s very loose, maybe deliberately so— and maybe commendably so—and the arrangement at the moment hasn’t been fleshed out?
Mr Johnson: Part of what we’re looking at in terms of how the fleet’s established is to get the industry to come forward with those views on how that capability might be provided and what’s commercial in the marketplace, rather than us trying to identify what’s commercial. Then the industry would provide that in the proposals put forward to join the fleet, which we would then match up with the capabilities and capacities of the fleet that would suit the purposes for requisition later. So it’d be work with industry to join the two through theapproach to market process.
Senator ROBERTS: The funding in this budget is $21.7 million over five years, which seems enough to keep a small team of bureaucrats busy but little else. Does that not seem to include funding for the tax incentives and other costs in the scheme once operational? Can you confirm whether the funding is pre-operational only?
Mr Johnson: You’re correct; that is the funding to support the administration of the strategic fleet—
Senator ROBERTS: Ongoing.
Mr Johnson: and implementation of the other recommendations in the strategic fleet taskforce report. The amount of funding to actually support implementation of the fleet has been allocated but hasn’t been announced.
Senator ROBERTS: Has been allocated but not announced.
Mr Johnson: Yes.
Ms Purvis-Smith: It is not for publication, and that is so it doesn’t prejudice the government getting negotiations with market players so that we can get value for money.
Senator ROBERTS: Thank you. I know that during COVID our fuel reserves got down to just two days, which is very poor governance in my opinion. This does illustrate why we need a strategic fleet, but the delay worries me. Can you confirm that, within the next five years, there will not be one extra ship with Australian crew operational in Australia as a result of the scheme?
Mr Johnson: The intention is to have the three vessels announced in the budget by the government operational within the next five years.
Senator ROBERTS: Minister, I’ve had the maritime union and a shipping operator on the phone asking for more details—actually asking for a meeting with the department and the minister to see how they can respond to this development and swing freight over to the strategic fleet. Should I tell them to come back in five years or will you meet with them to get the ball rolling on planning new freight routes for container transport?
Senator Chisholm: I’m sure that people would be happy to take a request for a meeting. But, as you heard just then from Mr Johnson, we are keen to get this operating sooner than five years.
Senator ROBERTS: Thank you.
