Cost Benefit Analysis (CBA) of government bill estimates only 88 Australian seafarer jobs will remain under the Department’s preferred option for policy change (table below). This represents a loss of 1,089 Australian seafarer jobs, or 93 per cent of the current workforce.

A submission to the inquiry into Shipping Legislation Amendment Bill 2015 by The Australia Institute commissioned by the Maritime Union of Australia (MUA) assesses the Regulatory Impact Statement and a related Cost Benefit Analysis of the Bill.

The submission found technical shortcomings within the Cost-Benefit-Analysis:
    

     •    It fails to appropriately set the scope of the assessment – in other words, whose costs and benefits count. It appears to include millions  in benefits to foreign-owned companies, with little consideration of Australian workers.
  

    •    It adopts an unorthodox approach to the value of labour, without adequate justification, or quantification of losses to seafarers. While the methodology is unclear, there appears to be an unstated $74 million present value loss to Australian seafarers in the CBA.
  

    •    It is based on very high exchange rates of AUD0.90 and 1.00 to the US dollar. This overstates the benefits of the reform to users of shipping by up to 35 per cent.

“The proposed Shipping Legislation Amendment Bill 2015 is likely to reduce employment for relatively little economic benefit,” Director of Research at The Australia Institute, Rod Campbell said.

What little benefit that is generated will accrue largely to foreign owned shipping and bulk freight using companies.

“Our submission identified major issues, including a narrow-scoped cost-benefit analysis, inaccurate Australian Dollar value and unorthodox approach to the value of labour.”

“The economic reality of Australia’s coastal shipping industry is that it must compete with both heavily subsidised land freight options and international shipping that can use foreign labour while in Australian waters. The free-market ideology behind this bill simply ignores that reality.

“If an Australian coastal shipping industry is to survive, it needs policy support as is found in many other countries,” Campbell said.

Table 1: Australian and mixed crewed ships in major coastal shipping trades under base case and preferred option

Source: Predictive Analytics Group 2015 Cost Benefit Analysis of Regulatory Coastal Shipping Options, Tables 5.5 to 5.15

Note: Mixed crewed means 2 Australian crew and 15-16 foreign crew on each ship i.e. each mixed crew ship is around 78% foreign crewed

Source: The Australia Institute