Shipping Australia considers that the so-called “strategic fleet” policy is bad policy.
With the report of the Taskforce released, considered, and agreed to by the Federal Government before anyone else has had a chance to consider the report of the Taskforce, the Government is ignoring the fact that – and as has been repeatedly explained and demonstrated with evidence, this kind of policy has been tried several times in Australia.
It has always failed.
The Federal government-owned fleet, Commonwealth Lines, failed (1928). The WA-owned Stateships failed (1995). The WA government subsidised service to replace Stateships also failed (2013). Another national government owned company failed (several times in fact; it last failed in 1998). The Coastal Trading Act (2012) had six objectives to boost Australian shipping but it succeeded in destroying it, driving ships, jobs, and industry away from Australia. It failed.
The current Federal Labor Government is just recycling policies that we already know has failed in the past.
The Strategic Failure Fleet
It has failed so often that we can give an appropriate label to this recycled policy – it’s the Strategic Failure Fleet.
The Strategic Failure Fleet failed in the past, as it will fail in the future, because its premises are so utterly flawed.
The Strategic Failure Fleet will fail because:
- It will not be an economic success; history shows that such ventures waste public money.
- It will not add to economic sovereignty; Australia is already economically sovereign.
- It will not add meaningful capacity; the numbers of the Strategic Fleet are small and the international shipping industry is comparatively vast.
- It will not provide value for money; the Productivity Commission pointed out that “capacity could be acquired as needed from the international market without the costs involved in supporting a strategic fleet. The shipping charter market provides access to a wide variety of vessels that could be used to address specialist case by case needs… the Australian Government could use financial instruments to underpin capacity… for example, the government could write options contracts with large cargo owners or shipping lines to ‘buy out’ their capacity in times of great need,” said the Productivity Commission (AMLS, pages 37 and 38).
- It will not cut costs; Australia is a high cost country – this proposal has the potential to drive up costs during a cost of living crisis, especially if a possible levy is actually imposed on shipping.
- It will not boost choice of services; Recommendation 6 of the “Strategic Fleet Taskforce Final Report” (p11) has the potential to drive up costs and exclude international shipping so that shippers will find that costs are likely to increase and competitors will be driven out. There are severe concerns about the effect of Recommendation 6, a recommendation to which the Federal Government has already agreed. Another undesirable effect is that it could help drive a modal shift of cargo to road and rail, or even to import substitution; Australia has already suffered a shift to road and rail because of Albanese’s Coastal Trading Act. This recycled policy makes a bad situation worse.
- It will not meaningfully add to domestic skilling; as the Productivity Commission pointed out in its “Australia’s maritime logistics system” report: “it is best addressed through immigration and cadetship programs without additional government intervention” (see AMLS, p32). And that’s before we even start discussing future technologies such as remote-controlled and autonomous ships.
- It will not boost domestic maritime logistics; crises don’t discriminate by flag. If there is a nationwide problem, then any national fleet, and the international fleet, would be caught up in the same problem. We saw this during COVID – ships of every nation were caught up in port queues around the world. Ships flying the Australian flag would not have been exempt from the crisis. This point was explicitly made by the Productivity Commission in the Australian Maritime Logistics System report: “[T]he strategic fleet would likely face the same disruptions as other commercial shipping operations,” the report says on page 31. Really, you can’t have it stated more clearly than that.
- It will not boost our supply chain resilience; throughout history, time-and-time again in crisis-after-crisis, shipping has sailed through every problem and continued to deliver the goods. International shipping has never been stopped – not by disease, not by war, or strikes, or piracy. Nothing stops international shipping from delivering the goods.
Lack of evidence-based policy-making, proper consultation, and transparency
The Albanese government talks of evidence-based policy-making, consultation, and transparency.
But this policy-making process has ignored ample historical evidence, analysis from the independent economic analysts, and industry input. We can only conclude that this policy-making process clearly had a pre-determined outcome: to manufacture a justification for a Strategic Failure Fleet.
There was little transparency (the work of the Taskforce has been shrouded in secrecy and there was no open and transparent selection process to the membership of the Taskforce). There was incomplete consultation as the report of the Taskforce was not released to the public until earlier this week. On the very same day that the Taskforce Report was released, the Government had already agreed to many of its recommendations. So no-one got a chance to review, or comment upon, the work of the Taskforce before the Government accepted the recommendations of the Taskforce. That’s a predetermined outcome and it’s bad process in policy-making.
At best the Strategic Failure Fleet will add next-to-no extra capacity while being a costly waste of resources. At worst, the Strategic Failure Fleet will increase costs during a cost-of-living crisis.
The Strategic Failure Fleet is bad policy. It ought not to proceed.
