Last week, the Tasmanian Government announced its decision to sign a memorandum of understanding with a Singaporean shipping company to reinstate a direct shipping link to Asia, or rather to one and possibly only two ports in Asia, once a fortnight, or more likely once a month, and the cost to all of us taxpayers will be about $11 million a year for three years.
Some people think this will be a silver bullet, solving all our freight problems. However, most people who have studied the subject think that, rather than this shipping link, the logical solution to Tasmania’s international freight problem would be an extension of the Tasmanian Freight Equalisation Scheme (TFES) to cover exports.
The TFES covers cargo moved across Bass Strait for domestic consumption; that is, by people living in other Australian states and territories. It is supposed to recognise the extra costs that Tasmanian producers face in having to ship across Bass Strait rather than along a similar distance of the Hume or Pacific highways. Having recognised those differences, the TFES is meant to equalise the costs by way of a freight subsidy.
What it does not do is to recognise at the same time that we face exactly the same cost disadvantage when we want to send goods to the Port of Melbourne for export. We are still paying more, much more, than producers who have the comparative luxury of cheap rail and road transport from their point of production to the export port.
Now we are not alone in believing this. The Productivity Commission agrees and said so in its comprehensive report into the scheme this year; six key industry associations agree that the scheme should include goods destined for export: the Tasmanian Logistics Committee, the Tasmanian Minerals and Energy Council, the Tasmanian Industry Group, the Forest Industries Association of Tasmania, the Tasmanian Chamber of Commerce and Industry, the Tasmanian Logistics Committee as well as the Tasmanian Farmers and Graziers Association.
Now that may well be the case, but the state Government stands by its decision to invest $33 million taxpayer dollars in this shipping subsidy – as is its right. Time will tell if they’ve accurately assessed the situation.
The state Government also insists – with justification – that the federal Government has made it clear that is not going to increase funding for the TFES – despite the clear case that has been made over and over again for such an increase.
Recently, media reports have outlined a $300 million federal Government commitment to a 1730km inland rail network linking the NSW north-west to Melbourne and Brisbane. John Anderson, a former Deputy Prime Minister and leader of the National Party, has been appointed to drive this program. He was reported as saying ““The government has made plain that it is a priority. They’re committed to it and they’re going to build it. For the first time, it will join up every capital city in Australia with high-quality, high-speed freight rail.”
Mr Anderson went on to say that “It’s expected New South Wales grain producers will save around $20 a tonne on transport costs, once the rail line is up and running.”
Despite the fact that – last time I looked – Hobart is a capital city, there’s no suggestion that this rail network will include Hobart, or in fact, Tasmania. Nor is there any suggestion that Tasmanian grain growers – or any other businesses – will be provided with an equal leg up.
Clearly, this is yet another example of federal Government discrimination against Tasmanian businesses, consumers and taxpayers. And this is just one of many major road and rail infrastructure projects underway on the mainland.
The annual cost of extending the TFES to include goods destined for export is put at $25 million pa. In the overall scheme of infrastructure funding for roads and rail on the mainland, this is but a drop in the bucket.
It is time our state and federal representatives got together and sorted out a long-term solution to this problem that is clearly holding the whole state back.
As one of the key businesses exporting product from Tasmania, Norske Skog is in the frontline of this cost disadvantage. Their general manager, Rod Bender, said recently:
“… if the current federal and state politicians can’t effectively work together to address the immediate export freight issue, there is little hope for any of us.”
It is hard to argue with that.
TFGA chief executive Jan Davis
