The WA Government has, in a letter to Shipping Australia, demonstrated a gross ignorance of, or indifference to, the point at which two of the most important industries in the Western Australian economy intersect: namely ocean-transport and the iron ore industry.
Imposition of an unfair and outrageous charge
Effective from 1 March 2021, an unfair cash grab will be brought into existence by the Pilbara Ports Authority, which has decreed that vessels exporting iron ore that use the inner harbour of Port Hedland must pay a “Port Hedland Voluntary Buy-Back Scheme” charge.
There is a sliding scale of charges based on a combination of a vessel’s gross registered tonnage and its movements. Charge-liable ships will be slugged once on the way into the port and once again on the way out. Movements inside the harbour are not charged.
A massive revenue earner
The cash grab starts at AUD$1,250 for a 40,000 gross register tonnage* ship and rises to AUD$6,725 for ships over 80,000 GRT. The overwhelming majority of iron ore carriers will fall into the highest bracket as the port predominately loads very large ships. So that will likely cost each iron-ore carrying ship AUD$13,450 to enter and leave the port.
According to the PPA Annual Report 2020, there were 6,346 vessel movements at Port Hedland in the 2019/2020 financial year. Multiplying vessel movements by the likely charge gives a total indicative revenue-raising figure of about AUD$85.4 million.
Letters of objection
Shipping Australia wrote letters of objection to the State Premier and to CEO of Pilbara Ports Authority. In those letters Shipping Australia noted that the purpose of the levy was to fund the Port Hedland Voluntary BuyBack Scheme Port Charge.
Monies raised will be used to buy residential properties near the Port of Port Headland, which will help protect local residents from the harmful effects of breathing in dust.
In our letters, we objected to the charge being levied on ocean shipping companies, the lack of consultation (our members were only informed of the charge a mere three days before Christmas), the blatant breach of the polluter must pay principle, that the beneficiaries of the iron ore trade should pay and that there is no end-date to the charge.
Vital economic fact: sea-borne export of iron ore is vital to WA economy
The import-export trade makes up about 46% to 47% of the national economy as a percentage of GDP.
As the WA Government itself notes, “Western Australia has an export-oriented economy, with almost half of Australia’s annual exports of goods originating from the state including minerals, petroleum, agri-food and specialised manufactured goods”.
Meanwhile, it should be noted that the State Government directly takes a massive cut through the imposition of mineral royalties. In 2019-2020 the iron ore royalty collections in WA stood at AUD$5.43 billion.
Given that 99.92% of all freight imported and exported into and out of Australia, and all of WA’s iron ore trade, moves by sea, it is reasonable to say that ocean-going shipping and international trade is utterly vital to WA’s continued good fortune.
All of which makes it utterly perplexing, and, indeed, worrying, that in the response to Shipping Australia’s letter of objection, Premier McGowan asserted that the charge: “will be levied on all vessels exporting iron ore from the Port of Port Hedland, via their shipping agents, under the expectation that the shipping agents will on-charge the PHVBS Port
Charge to each applicable vessel exporting iron ore or the iron ore producer“.
Astonishing ignorance or indifference
Such a comment either utterly misses the point or betrays an astonishing ignorance of, or indifference to, the fact that putting a charge on ocean-going ships means that the iron ore industry does not pay any of the PHVBS Charge at all!
Here’s why: overseas buyers of iron ore do a deal with iron ore miners for the supply of iron ore via the Port of Port Hedland. The overseas buyers then do a deal with ocean shipping companies to sail a ship to Western Australia and pick up the iron ore for transport to where it is needed. The legal ownership of the iron ore transfers to the overseas buyers the second that the iron ore is loaded onto the ship. At no point does the iron ore mining industry do a deal with the owners / operators of the ships that carry the iron ore.
So the shipping companies will never actually have a chance to pass on the surcharge to the iron ore industry and no iron ore surcharge levied on a ship will ever be paid by an iron ore miner!
The Premier’s comment is therefore worrying because it either misses the point, or betrays a gross ignorance of, or an indifference to, the point at which two of the most important industries in the Western Australian economy intersect: namely the ocean-transport industry and the iron ore industry.
Although the Premier does also say that shipping agents can on-charge to ships, why should shipping operators (the innocent third party in this situation) have to pay to clean up a mess caused by other entities?
Breathtaking breach of the polluter must pay principle
The Premier’s statement is breathtaking in that it implies considerable government support for polluters! It is a basic principle that “the polluter must pay”. In other words, if you make the mess then you clean it up.
Port Hedland has a dry and windy climate. Iron ore is stockpiled in the port precinct and the wind blows dust off the stockpiles and over the town. Until it is loaded, iron ore is normally owned by the miner. The port is owned by the State Government. So we can conclude that the polluter or polluters is any of, or all of, the iron ore mining industry, the port, and the State Government.
Yet the WA Government is making a totally independent and innocent third party, the ocean going shipping industry, pay for the pollution! And that is pollution created by an industry from which the State Government massively profits!
Charging innocent third parties for this pollution is especially galling given that not only does the State Government make billions in profits in the form of mineral royalties but it also makes hundreds of millions more in further profits because the Pilbara Ports Authority (which owns Port Hedland) pays dividends to the State!
It’s hardly a fair go, Premier
Australia is meant to be the land of the Fair Go. But the WA Government’s astonishing charge is unfair and un-Australian!
Shipping Australia calls upon the WA Government to do the right thing and rescind this unfair tax.
*Notes to journalists and editors: GRT, or “gross register tonnage”, is a measure of volume and not weight.