Back to basics on freight equalisation – TFGA

The Productivity Commission’s draft report into the future of Tasmania’s freight equalisation scheme (TFES) has now been released, and time is needed to study the detail of into this complex matter, Tasmanian farmers said today.

Tasmanian Farmers and Graziers Association chief executive Jan Davis said today that, in looking at the report, analysis and debate has to refocus on the scheme’s original reason for being – there is no road across Bass Strait.

It seems that some people have lost sight of the fact that when the Australian Government introduced the TFES in 1976, it was on the basis of recommendations from the Nimmo Commission of Inquiry aimed at eliminating the freight disadvantage suffered by Tasmanians by Bass strait.

“It was a pretty simple proposition,” Ms Davis said. “Tasmania’s producers could not access their markets by road; they had to use shipping, So the aim was to equalise their costs with those mainland producers who did have the ability of using a road system.

“If it cost $500 to deliver goods across 300 km in Victoria, then it should cost Tasmanian producers no more than $500 as well for the same distance.

“Similarly, the southbound scheme was meant to equalise the cost of production inputs, such as glass bottles for the breweries.”

Ms Davis said that this simple proposition had become lost in a fog of detail, exemptions, and anomalies; and the public debate has moved on to an argument over public vs private ownership of infrastructure, monopolistic behavior by the Melbourne Ports Authority, and changed Australian labour conditions. At the same time, Tasmania had developed an unwieldy infrastructure system of too many ports and inadequate railway maintenance; and global market conditions forced withdrawal of direct international shipping services. To further complicate matters, the rates for the TFES have not been reviewed in decades.

“The bottom line is that all politicians need to stop grandstanding and fingerpointing, and focus on ensuring our island status does not lead to unfair cost disadvantages for the Tasmanian community.

“In the short term, we need to be sure that the freight equalisation scheme works effectively in today’s environment,” Ms Davis said.

“If that’s too hard, or there is some economic rationalist objection to what is being portrayed as yet another hand out to Tasmania, then the federal government should bite the bullet and build us a road across Bass Strait. That will settle the matter once and for all.”
TFGA chief executive Jan Davis