Report on performance

The maritime and land transport industries operate in a robust and stable regulatory environment

The Australian Government's shipping policy seeks to balance the interests of the Australian shipping industry through a preference for Australian licensed vessels in the carriage of coastal cargoes, and meeting the interests of exporters and importers by ensuring access to efficient international shipping services. On behalf of the government, the department:

• registered agreements enabling ocean liner carriers to collaborate to provide regular cargo shipping services to importers and exporters
• administered legislation governing the coastal trade.

The department supports the government's and COAG's efforts to deliver land transport reforms such as uniform and efficient regulatory arrangements across the states and territories. The department supported a range of national road and rail regulatory reforms through the National Transport Commission (NTC) (page 95).

Trade Practices Act application to international liner cargo shipping

Liner cargo shipping carried almost half of Australia's seaborne exports and over three-quarters of Australia's seaborne imports in 2004-05, valued at over $47 billion and $86 billion, respectively (latest figures available).

Part X of the Trade Practices Act 1974 gives ocean liner cargo carriers immunity from certain parts of Australia's trade practices laws. It permits them to form conference agreements to provide regular scheduled cargo shipping services. At 30 June 2006, similar exemptions were provided by the USA, the European Union, Japan, Korea, Canada and New Zealand.

Agreements registered with the department under the Act are wide-ranging, each specific to an individual trade route. In 2005-06 the department:

• registered more agreements and variations to existing agreements than in 2004-05 (see Table 3.8)
• registered all agreements and variations within 14 days of receipt.

A review of Part X of the Trade Practices Act 1974 commenced in 2004 as a result of shippers' concerns about liner discussion agreements. The government's response to the report of the Productivity Commission on its review of Part X is expected to be released shortly.

Coastal cargo

Coastal shipping, which performs 26.5 per cent of Australia's domestic freight task (measured in tonne-kilometres), is vital to the nation's economy.

The Navigation Act 1912 requires all vessels trading interstate to be licensed or to have a coastal permit to carry cargo or passengers. The volume of applications for licences and permits fluctuates from year to year with demand for coastal shipping services (see Table 3.8). In 2005-06 the department, through the Operations Centre of the Office of Transport Security, issued all permits within target time frames. This included more:

• coastal trading licences than in previous years-;these can be issued to any vessel provided that Australian wages are paid to the crew while it is engaged in coastal trade
• single voyage and continuing voyage permits to foreign ships-;permits may be issued where no licensed ship is available or the service provided by such ships is not adequate.

National and international reform supported

The Navigation Act 1912 is the major legislation regulating maritime safety. In 2005-06 the department supported the government in meeting its commitments under the COAG Competition Principles Agreement (CPA) by:

• commencing work to implement the recommendations from the CPA reviews of the Navigation Act 1912 and the Shipping Registration Act 1981 to remove unnecessary regulation, to enhance the development of a safety culture in the shipping industry and to give a higher priority to Port State Control to protect mariners and the marine environment from unseaworthy vessels
• continuing discussions with state maritime authorities aimed at simplifying and clarifying jurisdictional responsibility for maritime safety regulation of vessels between the Australian Government and the states and the Northern Territory.

It is expected that these processes will be completed in 2006-07.

In addition to contributing to the reviews mentioned above, in 2005-06 the department:

• completed a detailed review of governance of the Australian Maritime Safety Authority (AMSA) in response to the Uhrig report
• participated in NTC working groups on compliance and enforcement, driver health and fatigue, heavy vehicle charges and performance-based standards, and rail reform (see National Transport Commission (page 95)
• delivered funding on behalf of the Australian Government to help establish the Transport and Logistics Centre of Excellence (page 101).

We also supported bodies including the:

• International Maritime Organisation (IMO) and the OECD Transport Research programme, by contributing to the development of international standards for maritime safety and protection of the marine environment. For contributions to international organisations administered under this output (see Table 3.9. page 103)
• ATC and its supporting Standing Committee on Transport through the provision of secretariat services
• Australian Logistics Council, a partnership between the Australian Government and senior industry leaders created to drive the Australian Logistics Industry Strategy. The department coordinated the financial support of the Australian Government for the council and engaged directly in the council's work programme.

A national reform agenda for transport systems is developed and implemented

In 2005-06 the department contributed to the government's review of national competition policy that led to COAG establishing the National Reform Agenda in February 2006, which included a commitment to new and continuing national transport reforms.

Exposure to environmental damage from maritime and land transport is reduced

Leadership on ship safety and marine environment protection

Australia's heavy reliance on its sea lanes and port operations results in a continual risk of pollution to the marine environment. In 2005-06 the department worked on behalf of the government to:

• contribute to the management of marine pests and ballast water issues through participation in the National Introduced Marine Pests Coordination Group project teams and the Oversight Group
• progress the development of domestic legislation to give effect to the following international conventions associated with shipping:
  • the Bunkers Convention, which makes ship owners liable for oil spill damages when oil is carried as fuel in a ship's bunker
  • Convention for the Prevention of Pollution from Ships (Annex VI), which sets limits on sulphur and nitrogen oxide in ship exhausts and prohibits deliberate emission of ozone-depleting substances
  • Revised Annex 1 (prevention of pollution by oil) and Revised Annex II (prevention of pollution by noxious liquid substances) to the International Convention for the Prevention of Pollution from Ships
  • Protocol of 2003 to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992 (the Supplementary Fund)
  • International Anti-Fouling Systems on Ships Convention, which prohibits the use of environmentally harmful anti-fouling systems on ships entering Australian ports from 1 January 2008. This legislation was introduced on 22 June 2006
• continued consultation with industry and government stakeholders to develop an Australian position on accession to the Torremolinos Protocol on the safety of fishing vessels and the Standards of Training, Certification and Watch keeping-;Fishing for fishing crews.

For a comprehensive list of relevant treaties and legislation on protection of the sea, visit www.amsa.gov.au.

New emissions standards and guidelines in place

Motor vehicles remain a significant contributor to urban air pollution and greenhouse gas emissions, although cleaner fuels and engines have reduced levels of harmful pollutants.

In 2005-06 the government continued to work with other agencies and the broader community to reduce emissions from Australia's 13.1 million vehicles, by:

• finalising new emission standards for light and heavy vehicles, which will deliver significant reductions in emissions from new vehicles from 2007 onwards
• upgrading and promoting the Green Vehicle Guide website -;the website's usage rate has continued to grow since its launch in mid 2004
• publishing guidelines on the environmental performance criteria for heavy diesel vehicles. Operators must meet these criteria in order to receive fuel excise credits from 1 July 2006 (see case study at page 91).

$12.2m

The actual price of this output in 2005-06 was $12.9 million.

Overall performance

Price of output

n/a

n/a

$10.7m

$12.9m

$13.3m

Shipping conference agreements registered

21

12

9

26

No set
targets

Variations to existing agreements registered

22

29

15

26

Agreements registered within 14 days

100%

100%

100%

100%

100%

Coastal shipping licences issued

56

60

63

62

No set
targets

Single voyage permits issued

803^a

669

687

742

Continuing voyage permits issued

105

126

166

149

Permits issued within target time frames^b

100%

100%

100%

100%

100%

Entities levied

Not reported

Not reported

6

-

Payments made in respect of fund

-$0.5m

-$12.1m

$2.3m

-

$2.0m

Shippers assisted^d

1300

1376

1300

1341

No set
targets

Claims paid

5,377

5,871

6,377

6,831

Cost of programme^e

$77.2m

$83.6m

$89.3m

$92.3m

$89.4m

Tonnes of wheat shipped

55,587

73,469

27,433

-

No set
targets

Shipments

10

10

4

-

Cost of programme

$1.2m

$1.2m

$0.6m

$0.0m

$1.1m

Vehicles shipped

219 000

228 300

216 986

209 187

Cost of programme

$31.8m

$34.3m

$32.4m

$31.1m

$36.0m

Payments made

$1.2m

$2.4m

$2.5m

$2.5m

$2.6m

The cost of sea travel across Bass Strait is alleviated for passengers accompanying a vehicle

This scheme lessens the cost of seagoing travel for eligible passengers by reducing the cost disadvantage associated with transporting passenger vehicles across Bass Strait.

The actual amount of rebate payable for each crossing is up to $150 for a car, up to $300 for a motor home or vehicle towing a caravan, up to $75 for a motorcycle and $21 for a bicycle.

The impact of the scheme is monitored annually by the BTRE within the department. Reports can be obtained from the BTRE website at www.btre.gov.au.

Eligible passengers receive a rebate on their fare within 30 working days of submitting a claim

The rebate is provided in the form of a reduction in the fare charged by ferry operators to the drivers of eligible passenger vehicles. Drivers who fly across Bass Strait but ship their vehicle are also eligible for a rebate if they:

• are unable to travel by sea because of a disability

or

• are travelling between Melbourne and King Island, as the ferry operator on this route carries vehicles only.

The ferry operator is reimbursed for the total rebate provided to eligible passengers under the scheme. In 2005-06 the major recipient continued to be TT-Line, which operates the major passenger ferries between Devonport and Melbourne/Sydney.

$35.0m (down from $41.0m at Budget)

The scheme is demand-driven. Its costs vary with the number and mix of vehicles shipped across Bass Strait. In 2005-06, a fall in the number of passengers travelling by sea saw the actual cost of the scheme fall from $32.4 million in 2004-05 to $31.1 million in 2005-06.

Overall performance

Uniform charges and operating conditions apply for heavy vehicles engaged solely in interstate operations

In 1987, the Australian Government established the Federal Interstate Registration Scheme (FIRS) as an alternative to state-based registration for heavy vehicles weighing 4.5 tonnes or more, to provide uniform charges and operating conditions for heavy vehicles engaged solely in interstate operations.

In 2005-06 around three per cent of Australia's heavy vehicles, approximately 8,000 vehicles and 9,000 trailers, were registered through the scheme.

In 2006-07 the government will complete a review of the future of the scheme in line with its commitments under the AusLink bilateral agreements.

Payments are redistributed to state and territory governments in line with an agreed formula designed to meet the cost of damage to roads caused by heavy vehicles

Revenue from registration charges on FIRS vehicles is collected by state and territory authorities and forwarded to the Australian Government. This revenue is redistributed fully to all states and territories, based on an agreed formula designed to meet the costs of damage to roads caused by FIRS heavy vehicles (see Figure 3.3).

$48.0m

The actual cost of this programme in 2005-06 was $48.0 million.

Overall performance

Emergency towage and maritime salvage capabilities are maintained

The Maritime Emergency Towage Programme provided assured levels of emergency towage capability to commercial shipping around the Australian coastline in 2005-06, pending the introduction of the National Maritime Emergency Response Arrangements (NMERA), which was implemented in late 2005-06 (see case study on emergency towage, page 88).

Two organisations provided services during 2005-06:

• United Salvage Pty Ltd, a subsidiary of Adsteam Marine Limited
• RiverWijs Pty Ltd, a joint venture between the SvitzerWijsmuller Salvage Group and Riverside Marine.

Risk to human life and the marine environment are reduced

Although there have been no major shipping accidents in Australian waters in many years, the risk of a catastrophic incident remains:

• around 3,300 ships (excluding vessels that do not leave the Australian coast) enter Australian waters each year, making more than 23,000 calls at 70 major ports
• depending on its type, each ship may carry up to 3,800 people or 300,000 tonnes of crude oil.

Around the Australian coastline

The programme ensures a minimum level of emergency towage is available in strategic regions around the Australian coastline, including the Great Barrier Reef and Torres Strait. This encompasses over 70 ports around the Australian coastline.

$4.3m (up from $0m at Budget)

The actual cost of this programme in 2005-06 was $4.3 million.

Overall performance

The NTC is able to assist governments to increase transport productivity and sustainability through consistent and effective road and rail regulation

An independent statutory body, the NTC advises Australian transport ministers on regulatory and operational reforms for road, rail and intermodal transport, with a particular focus on productivity, safety, efficiency and sustainability. The NTC is established under the National Transport Commission Act 2003.

The NTC collaborated with all governments, industry bodies, regulators and police during the year to develop practical national solutions and monitor their implementation. Among other outputs, it delivered:

• A bus operator handbook. Developed in cooperation with the bus industry, the handbook provides information on issues such as national road transport laws and health and safety requirements
• Rail safety model Bill. The model Bill will assist in achieving national uniformity for rail safety and provide improved rail safety outcomes across Australia
• Rest area guidelines. The guidelines, to be used in planning, constructing and upgrading rest areas, will assist in the management of driver fatigue
• Twice the task. This report responds to forecasts that Australia's freight transport task will double during the period 2000 to 2020
• Model legislation to support the Intelligent Access Programme (IAP). The IAP is a voluntary programme that will use vehicle telematics to remotely monitor heavy vehicles, through certified IAP service providers, for the purpose of ensuring compliance with agreed operating conditions. It will allow road authorities to offer increased or extended heavy vehicle road access under existing concessions, permits and schemes
• A national middle tier of mass limits for accredited heavy vehicles. Heavy vehicles accredited under the National Heavy Vehicle Accreditation Scheme Mass Management module benefited from increased mass limits on general access routes on 1 July 2006. Under the reform, the mass limit for a 6-axle semi-trailer increased by one tonne to 43.5 tonnes, while the mass limit for a 9-axle B-double increased by 2 tonnes to 64.5 tonnes.

For more information about the NTC and the initiatives identified above, visit www.ntc.gov.au.

Payments are made in line with the Australian Government's obligations under the National Transport Commission Act 2003

The Australian Government contributes 35 per cent of the NTC's annual operating budget. In 2005-06 the NTC received, in quarterly instalments, the full amount payable.

$2.5m (down from $2.6m at Budget)

The actual cost of this programme in 2005-06 was $2.5 million, similar to 2004-05.

Overall performance

Compensation is available for the costs of an oil spill in the event that these costs exceed the tanker owner's ability to pay

The owners of oil tankers must take out insurance to cover the cost of any oil spilled from their tankers. However, owners do not have unlimited liability. Their liability depends on the size of their tanker-;the bigger the tanker, the larger the liability. The maximum liability for the biggest tanker is approximately $170 million. Actual compensation limits are expressed in Standard Drawing Rights, which is an artificial currency managed by the International Monetary Fund.

Where the cost of compensation resulting from an oil spill exceeds the tanker owner's liability or the owner is unable to pay these costs for some other reason, compensation is payable from International Oil Pollution Compensation (IOPC) funds.

Total compensation of up to approximately $390 million would be payable by the tanker owner and IOPC funds in the event of a major spill. No payment has ever been made by the IOPC funds for an incident in Australian waters, as no spill has ever exceeded the tanker owner's liability/ability to pay.

All persons (including oil companies) that receive more than 150,000 tonnes of crude or heavy oil by sea make contributions to the fund

Levies are collected from all entities that receive more than 150,000 tonnes of crude or heavy fuel oil in a calendar year by sea, based on the expected costs of compensation and overheads of the funds in the coming year.

Six companies-;Alcan Gove Pty Ltd, BHP Billiton, BP Australia Ltd, Caltex Australia Pty Ltd, Mobil Oil Australia Ltd and the Shell Company of Australia Ltd-;are the major contributors to the fund.

Payments are passed on to the International Oil Pollution Compensation (IOPC) fund in line with Australia's obligations under the International Oil Pollution Compensation Convention

Payments to the IOPC funds, which relate to the quantities of oil received by the oil companies, were delivered in line with Australia's obligations as a party to the IOPC Fund Convention.

$2.0m

The actual cost of this programme in 2005-06 was nil. The negative cost is due to the reversal of accruals from 2004-05 because the IOPC fund deferred the levies on oil companies for the 2005 annual contribution.

Overall performance

MIFCo is able to meet its financial obligations in respect of loans to facilitate waterfront reform

The Maritime Industry Finance Company (MIFCo), a wholly owned Australian Government company, was established in 1998 to make redundancy-related payments in support of waterfront reforms. The company:

• provided funding for 1,487 redundancies, finalising all redundancy claims in 2000-01
• funded its obligations through a government-guaranteed loan of $220 million.

In 2005-06 MIFCo continued to repay the loan, with repayments for the year totalling $23.25 million.

Payments are made in line with the Australian Government's obligations

The department collected levies on behalf of the Australian Government from industry to cover the cost of MIFCo loan repayments under the Stevedoring Levy (Collection) Act 1998. Levy revenue totalling $37.4m was passed on to MIFCo in 2005-06.

Interest charges associated with its loan facility totalled $7.429 million and administration costs $0.237 million.

$7.6m ($40.0m in cash payments)

The actual cost of this programme in 2005-06 was $3.9 million ($37.7m in cash payments). The stevedoring levy ceased on 31 May 2006, four years ahead of schedule. The reform and restructuring of the stevedoring sector has been a major factor in improving efficiency on the waterfront, with crane rates increasing from 18.8 containers per hour in March 1998 to 27.7 containers per hour in December 2005. A report by the Australian Competition and Consumer Commission in 2000 concluded that the cost of the levy had been more than offset by savings achieved through workplace reforms in stevedoring. The government has approved the early repayment of the MIFCo borrowings and the voluntary liquidation of the company on completion of these commitments.

Overall performance

Costs are alleviated for businesses shipping containers of goods:

The Tasmanian Freight Equalisation Scheme (TFES) provides rebates to shippers based on the cost of shipping a standard twenty-foot container (TEU-;twenty-foot equivalent unit) between northern Tasmania and Victoria, less the cost of sending it the same distance by road (420 km). This 'sea freight cost disadvantage' is adjusted where goods are:

• transported on routes other than between northern Tasmania and Victoria
• shipped in transport units other than a TEU
• shipped other than on a wharf-to-wharf basis.

The rebate of up to $855 per TEU cannot exceed the actual freight bill paid by the shipper.

• from Tasmania to the mainland for use or sale

Rebates paid on northbound trade in 2005-06 reached $70.2 million, a slight increase on the previous year, with the major northbound items subsidised being:

• paper and paper products, including newsprint ($19.7 million)
• vegetable and vegetable products ($16.6 million)
• timber, wood and cork products ($9.6 million)
• beverages ($4.0 million)
• fish and fish products ($1.9 million)
• metal waste ($0.7 million).

• to Tasmania as an input to a production process

Goods shipped to Tasmania as an input to a production process may also be eligible for assistance. Rebates paid on southbound trade reached $21.7 million in 2005-06, an increase of $2.5 million over the previous year, with raw materials for the manufacturing and mining sectors remaining the major goods shipped.

In 2005-06, the scheme continued to apply to containerised wheat. This resulted in 56,875 tonnes, or 2,318 containers, of wheat being shipped, with $1.7 million paid in assistance.

Claims from shippers are processed efficiently and accurately

Claims from shippers are processed by Centrelink's Hobart office. An internal audit was conducted in 2005-06, and the outcomes will be considered and implemented in 2006-07.

$89.4m

This scheme is demand-driven. Funding is uncapped for existing services between Victoria and Tasmania. An increase in the number of claims saw the cost of the scheme rise from $89.3 million in 2004-05 to $92.3 million in 2005-06. The scheme is expected to cost in the order of $89.4 million in 2006-07.

Overall performance

Costs are alleviated for businesses shipping bulk wheat to Tasmania

The Tasmanian Wheat Freight Scheme ceased at the end of 2003-04, when responsibility for rebates for containerised shipments of wheat transferred to the TFES on 1 July 2004.

In early 2005 the Australian Government agreed to reinstate this scheme for bulk wheat shipments only.

The value of the rebate was capped at $20.65 per tonne in 2005-06.

Claims from shippers are processed efficiently and accurately

As with TFES, claims from shippers are processed by Centrelink's Hobart office.

$1.1m

The actual cost of this programme in 2005-06 was nil. There were no claims against the bulk scheme in 2005-06 due, most likely, to the popularity of the containerised wheat shipments and the associated benefits under the TFES. The cost of the programme remains capped at $1.05 million for 2006-07.

Overall performance

Specialist vocational training and information is available to the transport and logistics industry

The transport and logistics sector is facing a skills shortage at the same time as continuing economic growth is driving an increased freight task.

The Transport and Logistics Centre works with the transport and logistics industry to build capability in the sector by enhancing its capacity to attract and retain staff, improving the training and development of staff, and creating and sharing industry knowledge.

The centre was established as a national body in May 2005, following agreement between the Australian and New South Wales governments to provide seed funding for the centre over a two-year period.

Throughout the year the centre has developed and disseminated vocational information packages throughout Australia's schools and has worked with training bodies to generate additional traineeships within the industry. The centre has also worked with a range of industry associations to introduce two new professional certification schemes (Certified Professional Logistician and Certified Transport Planner) that can offer people working in the industry an internationally recognised professional accreditation.

The centre has been working to improve information flows and accessibility within the industry through the development of the Transport Integrated Learning and Information Service-;a web-based information gateway to the transport and logistics sector.

Payments are made in line with the Australian Government's obligations

The Australian Government contributed $4.0 million over two years (2004-05 and 2005-06), with funds being matched by the New South Wales Government.

$2.0m

The actual cost of this programme in 2005-06 was $2.0 million. The centre worked to an agreed work plan, kept the department informed of its activities and produced outputs in line with expectations. The centre provided the Australian Government and the New South Wales Ministry of Transport with an annual report and financial statement as required under the funding agreement.

Overall performance

To minimise repetition, information on the contribution to International Civil Aviation Organization (ICAO) has been included here rather than under Output 1.4.2-;Aviation and Airports, under which this programme is administered.

Australia is able to participate in international discussions on:

The department administers payments to and represents the government at meetings of three key international bodies of which Australia is a member:

• the International Civil Aviation Organization (ICAO)-;an agency of the United Nations (UN) that promotes the safety, regularity and efficiency of international civil aviation
• the International Maritime Organisation (IMO)-;an agency of the UN that promotes 'safe, secure and efficient shipping on clean oceans
• the OECD Transport Research programme-;which focuses on road, rail and intermodal transport research.

In 2005-06, the department:

• civil aviation

• maintained a presence at ICAO headquarters as required, given Australia's status as a Category One member
• represented Australia on the ICAO Council and ICAO Air Navigation Commission
• led Australia's representation at a special ICAO meeting of directors-general of civil aviation (see page 104).

• maritime transport

• contributed to the development of a number of IMO instruments that will promote the aims of the IMO and advance Australia's interests, including:
  • preparation of guidelines on the control and management of ships' ballast water and sediments
  • preparation of a new international convention on wreck removal.

• road, rail and intermodal transport

• represented the Australian Government at international fora on road, rail and intermodal transport issues, such as pricing, safety and asset management.

Payment is made in line with Australia's international obligations

During 2005-06 the department continued to pay Australia's contributions promptly. Payment is made in US dollars, UK pounds or euros depending on the body-;for details see Table 3.9.

$1.3m

Civil aviation

$0.3m

Maritime transport

$0.04m

Road, rail and intermodal transport

Overall performance

- in US dollars

$0.825m

$0.818m

$0.952m

$0.977m

$0.979m

- in Australian dollars

$1.462m

$1.101m

$1.206m

$1.300m

$1.325m

- in UK pounds

£111,311

£113,097

£119,808

£122,594

£129,000

- in Australian dollars

$0.307m

$0.265m

$0.292m

$0.289m

$0.304m

- in euros

0.014m

0.014m

0.015m

0.018m

0.024m

- in Australian dollars

$0.024m

$0.025m

$0.024m

$0.029m

$0.040m