Report on performance

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

Regulatory responsibilities for maritime transport were effectively implemented, with the Australian Government agreeing to significant pro-competitive reforms to the regulatory framework for liner shipping.

The Department cooperated closely with the National Transport Commission and state and territory governments to progress regulatory improvements that delivered a range of efficiency and broader benefits for the Australian community. In the area of heavy vehicle transport, examples included harmonising regulations, developing a driver fatigue policy and introducing measures to improve road law compliance.

The COAG national reform agenda for transport is actively progressed in conjunction with all Australian governments

The Department worked with state and territory officials to develop a phased transport reform programme aimed at promoting the more efficient, productive and sustainable provision and use of freight infrastructure, and to obtain Council of Australian Governments (COAG) agreement to the programme.

The Department also engaged closely in the development of Australian Transport Council reforms, including the promotion of innovative vehicles and development of a B-triple network.

Exposure to environmental impacts from maritime and land transport operations is reduced

The Department provided leadership on ship safety and marine environment protection, including the finalisation of significant pieces of legislation.

The Department worked with the Australian Taxation Office to introduce fuel tax credits for heavy vehicles linked to environmental performance, and worked with COAG parties to prepare a report to COAG on vehicle fuel efficiency issues.

$12.1 million

The actual price of the output in 2006-07 was $13.3m.

Overall performance

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

Trade Practices Act reform of shipping regulation

Part X of the Trade Practices Act 1974 gives ocean liner cargo carriers immunity from certain parts of Australia's competition laws. It permits them to collaborate to provide regular, scheduled cargo shipping services. At 30 June 2007, similar immunities were provided by many of our major trading partners, including Canada, the European Union, Japan, Korea, New Zealand and the United States.

Following a review of Part X by the Productivity Commission, the Australian Government announced that it would amend Part X to promote competitive reform of the ocean liner cargo shipping sector in Australia. The amendments to Part X will:

• clarify its objectives;
• remove discussion agreements from its scope;
• protect individual confidential service contracts between carriers and shippers; and
• introduce a range of penalties for breaches of its procedural provisions.

These reforms will provide a pro-competitive boost to the regulatory environment in which liner shipping operates.

Competition Principles Agreement reform of shipping regulation

In 2006-07 the Department supported reform of maritime regulation under the Council of Australian Governments (COAG) Competition Principles Agreement (CPA), by:

• progressing work to consider implementation of 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; and
• continuing discussions aimed at simplifying and clarifying jurisdictional responsibility for maritime safety regulation of vessels between the Australian Government and the maritime authorities of the states and the Northern Territory.

It is expected that decisions on these processes will be finalised in 2007-08.

Regulation of coastal shipping

The Navigation Act 1912 requires all vessels carrying cargo or passengers interstate to be licensed or to have a coastal permit.

The Department administers the granting of licences, and the issuing of coasting trade permits to unlicensed vessels when there is no Australian licensed ship available or where the service provided by licensed ships is not adequate to the needs of shippers and it is in the public interest to issue a permit. In 2006-07 100 per cent of permits continued to be issued within the targeted time frames.

The volume of applications for licences or permits fluctuates from year to year, as shown in Table 3.30.

Regulation of heavy vehicle transport

In 2006-07 the Department participated in National Transport Commission (NTC) working groups on heavy vehicle compliance and enforcement, driver health and fatigue, heavy vehicle charges, assessment of innovative vehicles under the performance-based standards, and rail reform (see National Transport Commission page 127).

The Department also provided secretariat services to the Australian Transport Council (ATC). The ATC is a forum for Commonwealth, state and territory transport ministers and their New Zealand counterparts to consult on a range of coordination and integration of transport and road policy issues. The Standing Committee on Transport (SCOT), a committee of officials from the Australian Government and state and territory governments and the New Zealand Government, supports the ATC and provides advice on a range of agenda and policy matters.

During 2006-07 the Department participated in the development of ATC-approved reforms to advance heavy vehicle efficiency, including:

• development and trialling of performance-based standards;
• creation and extension of high-productivity heavy vehicle road networks, including the development of a national network for B-triples (vehicles based on a standard B-double, with an extra A-type trailer);
• approval of increased use of quad-axle trailers, and of additional front axle mass for certain compliant heavy vehicles; and
• reform of driver fatigue regulations.

Review of the Australian Logistics Industry Strategy

The Department supports the Australian Logistics Council (ALC), a partnership between the Australian Government and senior industry leaders, created to lead the development of the freight logistics industry in Australia.

In 2006-07 the Department facilitated an independent review of the Freight Logistics Industry Action Agenda, better known as the Australian Logistics Industry Strategy. The review concluded that the strategy had gone as far as it could in its current form as a framework to enhance the efficiency of the logistics industry, and recommended that it be finalised and replaced with a new industry-developed strategy.

The Minister for Transport and Regional Services, in accepting the findings of the review, charged the ALC with the task of developing a new strategy and leading its implementation.

Other activities

The Department's other activities to promote a robust and stable regulatory environment in 2006-07 included:

• contributing to the development of international standards for maritime safety and protection of the marine environment, through the International Maritime Organization (IMO) and the Organisation for Economic Cooperation and Development Transport Research Programme;
• contributing to the Australian Government's decision to support the integration of the Australian Maritime College with the University of Tasmania, announced in the 2007-08 Budget; and
• engaging a consultant to conduct a review of the Disability Standards for Accessible Public Transport, commencing in April 2007.

The COAG national reform agenda for transport is actively progressed in conjunction with all Australian governments

Scope of the reform agenda

In February 2006, COAG agreed on a significant national reform agenda that encompasses many sectors of the Australian economy, including transport. This development significantly shaped the Department's work in 2006-07. In addition to recommitting to reforms already being progressed by the ATC, COAG asked the ATC to progress a number of transport-specific initiatives. These transport reforms were reaffirmed at the 13 April 2007 COAG meeting.

The projects in the transport reform agenda include identifying options for efficient road and rail freight infrastructure pricing that maximises net benefits to the community. They also include reform of road and rail regulation to improve access and safety, the completion of the AusLink corridor strategies, and a review of urban congestion trends, impacts and solutions.

Milestones achieved

In 2006-07 the Department supported the ATC in delivering the COAG transport reform agenda, by providing secretariat services to the ATC as well as policy support and advice. The Department also participated in the COAG working group on competition and regulation, which comprises representatives from all Australian governments and consults with a wide range of stakeholders.

In 2006-07 key milestones included:

• developing and trialling guidelines and rules for the administration of performance-based standards for heavy vehicles;
• developing a heavy vehicle driver fatigue reform package;
• identifying suitable routes for establishing a national B-triple network;
• obtaining approval for a national policy for the increased use of quad-axle trailers on heavy combination vehicles;
• developing a national policy to allow 500 kilograms of additional front-axle mass on heavy vehicles that comply with certain safety and emissions standards; and
• providing guidance and support for the Board of Transport Certification Australia to facilitate the delivery of the intelligent access programme (a voluntary programme to remotely monitor heavy vehicles to ensure compliance with enhanced operating conditions).

Road freight reform programme

State and territory governments were assisted in obtaining COAG agreement to a phased transport reform programme to improve road freight transport productivity and efficiency through measures such as:

• continued ATC-approved heavy vehicle efficiency measures;
• improved frameworks for investment decision making;
• charging reforms to provide better pricing signals for transport freight infrastructure providers; and
• a research and future policy reform agenda that will consider alternative models of road pricing and funding.

Infrastructure pricing inquiry

On behalf of government, the Department took a leading role in facilitating the preparation of the COAG response to the recommendations of the Productivity Commission inquiry into road and rail freight infrastructure pricing. COAG initiated the inquiry to ensure that the objectives of the transport reform agenda will deliver the best available impetus to improved productivity and efficiency gains for the transport sector and the Australian economy more generally.

Exposure to environmental impacts from maritime and land transport operations is reduced

Shipping and environmental protection

In 2006-07 the Department worked to assist the Australian Government to finalise the development of Australian legislation to give effect to the following international conventions associated with shipping:

• International 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;
• Harmful 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; and
• Revised Annex I (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.

The development of Australian legislation to give effect to two other international shipping conventions was also taken forward:

• the Bunkers Convention, which makes ship owners liable for oil spill damages when oil is carried as fuel in a ship's bunker; and
• the Protocol of 2003 to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1992 (the Supplementary Fund).

To inform and develop Australia's participation in international efforts to reduce the environmental impacts of maritime transport, and improve maritime safety, the Department:

• worked with industry and government stakeholders to help develop an Australian position on international maritime conventions and instruments including the Harmful and Noxious Substances Convention, the Torremolinos Protocol on the safety of fishing vessels, and the Standards of Training, Certification and Watch keeping-Fishing for fishing crews Convention; and
• participated in relevant IMO meetings, including two sessions of the Legal Committee, three sessions of the International Oil Pollution Compensation Fund, one session of the Marine Environment Protection Committee and one session of the Bulk Liquids and Gases Subcommittee.

Australia contributed to management of marine pests and ballast water issues by participating in the National Introduced Marine Pests Coordination Group and its working groups, and the group oversighting the implementation of the National Ballast Water Management Arrangements.

The Department also continued to oversight the operations of the Australian Maritime Safety Authority, which is responsible for administering Australian Government maritime safety and environmental regulation.

Motor vehicles and environmental protection

In 2006-07 environmental impacts of motor vehicles were reduced in conjunction with other agencies by:

• upgrading the emissions standards for heavy vehicles to bring them into line with international best practice; and
• promoting the Green Vehicle Guide website, www.greenvehicleguide.gov.au There have been more than 470,000 visits to the site since its launch in 2004.

From the commencement of new fuel tax credit arrangements on 1 July 2006, the Department assisted the Australian Taxation Office to implement the arrangements, and responded to enquiries from heavy vehicle operators seeking to understand their obligations under the environmental criteria which affect eligibility for the credit. A set of guidelines, published in hard copy is also available online at www.dotars.gov.au/roads/environment/fuel_tax_credit/index.aspx. Industry feedback indicates that the environmental criteria are reasonable and the maintenance requirements they include are consistent with good practice.

In response to a report provided in 2006-07 by the Department and other agencies, COAG requested the development of a detailed package of measures to improve vehicle fuel efficiency and reduce greenhouse gas emissions from vehicles, consistent with international best practice. The Department will work with state and territory environment, transport and industry officials to develop the package in 2007-08.

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

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

The rebate payable for each crossing depends on the vehicle type. In 2006-07 rebates ranged from $21 for a bicycle to $300 for a motor home or a vehicle towing a caravan; up to $150 was payable for cars.

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

The rebate was provided as 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 vehicles may be 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. In 2006-07 the major recipient continued to be TT-Line, which operates the passenger ferries between Devonport and Melbourne.

All claims were paid within seven days of receipt from the service operators ^a. On average it took three days to process claims.

$32.0 million

In 2006-07 a fall in the number of passengers travelling by sea saw the actual cost of the scheme fall, from $31.1 million in 2005-06 to $28.4 million in 2006-07.

This is a demand-driven programme. Costs vary with the number and mix of vehicles shipped across Bass Strait. Sea travel has continued to decline, with growth between Tasmania and the mainland being focused on air travel.

Overall performance

The Interstate Road Transport Fees programme establishes a registration scheme that provides a viable alternative to State and Territory based registration schemes for heavy vehicles^a

Under this programme, the Department receives registration revenue from states and territories for vehicles registered under the Federal Interstate Registration Scheme (FIRS), and redistributes that revenue to states and territories under an agreed formula.

The Australian Government established FIRS in 1987 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 2006-07 around 3 per cent of Australia's heavy vehicles-approximately 10,000 vehicles and 11,000 trailers-were registered through the scheme.

In December 2006 the Australian Government completed a review of the future of FIRS, in line with its commitments under the AusLink bilateral agreements. The government decided to retain the scheme.

Fees are collected and dispersed to States and Territories in an efficient manner that meets audit requirements in line with an agreed formula based on meeting the cost of damage to roads caused by heavy vehicles^a

As noted above, revenue from FIRS registration charges is collected by state and territory authorities, paid to the Australian Government and subsequently redistributed to all states and territories, based on an agreed formula designed to meet the costs of damage to roads caused by FIRS-registered heavy vehicles (see Figure 3.4).

$52.0 million

The actual cost of the programme in 2006-07 was $50.7 million.

This is an activity-driven programme. Expenses are based on fees collected from heavy vehicles and trailers registered by state and territory registration authorities which are then dispersed back to state and territories based on an agreed formula.

Overall performance

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

The Department delivers the Australian Government's funding contribution to the National Transport Commission (NTC)-the independent statutory body that 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 Australian Government contributes 35 per cent of the NTC's annual operating budget.

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:

• major safety reform, through new national heavy vehicle driver fatigue rules developed over several years with extensive stakeholder consultation;
• development of the Australian Dangerous Goods Code Seventh Edition, which aligns with international best practice and was approved by the Australian Transport Council (ATC);
• development and implementation of the Australian Road Rules Amendment Regulations 2007; and
• completion of:
  • a five-year effectiveness review of the Australian Road Rules;
  • an evaluation of the implementation of the vehicle standards; and
  • reviews of the National Heavy Vehicle Registration Scheme, the National Driver Licensing Scheme, and regulations covering loading, oversize and over-mass vehicles and restricted-access vehicles.

The NTC also contributed to increased productivity and efficiency reforms through the ATC. These included the agreement to develop an initial B-triple network; agreement to adopt more general use of quad-axle groups in semi-trailers and B-doubles; approval for higher weights for twin-steer trucks with semi-trailers; and approval of a 500 kilogram mass increase on single-steer vehicles that meet tougher environmental and safety standards.

The NTC also further developed the initiative to introduce performance-based standards, ahead of a final vote on the policy by the ATC scheduled to occur in late 2007.

More information about the NTC and its activities is available from the commission's website, www.ntc.gov.au.

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

In 2006-07 the NTC received the full amount payable, in quarterly instalments.

$2.6 million

The actual cost of the programme in 2006-07 was $2.6 million, to meet the Australian Government's obligations under the Act. A separate payment of $0.3 million was also made to the NTC in 2006-07 in accordance with the Australian Government's commitment under a memorandum of understanding between the ATC and the Code Management Company.

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 spill caused by 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 is approximately $160 million.

Where the cost of compensation resulting from an oil spill exceeds the tanker owner's liability or the owner is unable to pay the costs for some other reason, compensation is payable from the International Oil Pollution Compensation (IOPC) Funds, if the damage occurs in a nation that is a member of the funds. The IOPC Funds are financed by industry levies collected by member nations.

Total compensation of up to approximately $360 million may 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 International Oil Pollution Compensation Fund

In 2006-07 the Department collected levies from all entities that receive more than 150,000 tonnes of crude or heavy fuel oil by sea in a calendar year, based on the expected costs of compensation and overheads of the funds in the coming year.

Eight companies-Alcan Gove Pty Ltd, BHP Billiton Ltd, BHP Billiton Petroleum Ltd, BP Australia Ltd, Caltex Australia Pty Ltd, Mobil Oil Australia Ltd, Queensland Nickel Pty Ltd and the Shell Company of Australia Ltd-were contributors to the fund.

Payments are passed on to the Fund in line with Australia's obligations under the International Convention for the Establishment of an International Fund for Compensation for Oil Pollution Damage

Payments to the IOPC Fund, 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.

$2.0 million

In 2006-07 the Department reported payments totalling $268,000 in relation to the IOPC Funds. This comprised:

• transfers to the IOPC Funds of levies received from oil companies ($233,000); and
• transfers from the IOPC Funds to oil companies, refunding excess levy imposed by the Funds in previous years ($35,000).

The underspend was due to a low level of major oil pollution incidents.

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 government-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; and
• funded its obligations through a government-guaranteed loan of $220 million.

The Department provided MIFCo with the proceeds of a levy implemented to recover the cost of MIFCo's activities from the stevedoring industry.

The government approved the early repayment of the MIFCo borrowings, with MIFCo finalising the loan agreement on
17 July 2006. The company was placed into voluntary liquidation in November 2006. The liquidation process is expected to be completed in 2007-08.

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

The collection of a levy from industry to cover the cost of MIFCo loan repayments under the Stevedoring Levy (Collection) Act 1998 ceased in 2005-06. Levy revenue totalling $250.7 million was passed on to MIFCo.

In 2006-07 regulations commenced specifying the process for the return of the excess levy revenue.

$1.7 million

The actual cost of the programme in 2006-07 was $1.7 million, of which $1.5 million was returned to industry and $0.2 million was paid in administration costs.

Overall performance

Costs are alleviated for businesses shipping containers of goods from Tasmania to the mainland for use or sale, or to Tasmania as an input to a production process ^a

The Tasmanian Freight Equalisation Scheme, which is administered by the Department, provides rebates to shippers based on the cost of shipping a standard 20-foot container between northern Tasmania and Victoria, less the cost of sending it the same distance (420 kilometres) by road.

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

In total, 7,046 claims were paid and 1,420 shippers were assisted in 2006-07.

The scheme was reviewed by the Productivity Commission during 2006-07. In its response to the inquiry's findings, on 21 June 2007 the Australian Government announced that significant reforms to both the Tasmanian Freight Equalisation Scheme and the Tasmanian Wheat Freight Scheme would be implemented from 1 July 2008.

95 per cent of claims from eligible shippers are processed within 30 days ^a

100 per cent of claims were processed within 30 days (and more than 94 per cent of claims were processed within 15 days) in 2006-07 ^b.

Bass Strait

The programme applied to freight crossing Bass Strait.

Cost

$97.0 million

A decrease in the number of claims saw the cost of the scheme fall, from $92.3 million in 2005-06 to $89.6 million in 2006-07. The scheme is expected to cost in the order of $97.0 million in 2007-08.

The scheme is demand driven. Expenses are determined by eligible claims being lodged by shippers.

Overall performance

Costs are alleviated for businesses shipping bulk wheat to Tasmania

In 2006-07, the Tasmanian Wheat Freight Scheme, which is administered by the Department, provided assistance for shippers collectively moving more than 42,887 tonnes of bulk wheat shipments across Bass Strait. The value of the rebate was capped at $20.65 per tonne in 2006-07.

The scheme was reviewed by the Productivity Commission during 2006-07. In its response to the inquiry's findings, on 21 June 2007 the Australian Government announced that significant reforms to both the Tasmanian Freight Equalisation Scheme and the Tasmanian Wheat Freight Scheme would be implemented from 1 July 2008.

95 per cent of claims from eligible shippers are processed within 30 days ^a

100 per cent of claims were processed within 30 days ^b.

Bass Strait

The programme applied to freight crossing Bass Strait.

$1.1 million

Demand for the programme increased in 2006-07, with bulk wheat shipments recommencing in 2006 and continuing into early 2007. The actual cost of the programme in 2006-07 was $0.6 million. The programme remains capped at $1.05 million for 2007-08.

This is a demand-driven programme. Expenses are determined by eligible claims being lodged by shippers

Overall performance