TH PRESS MONDAY, APRIL 23, 1984. Ships across the Tasman

Press, 23 April 1984, Page 14

TH PRESS MONDAY, APRIL 23, 1984. Ships across the Tasman

New Zealand’s High Commissioner to Australia, Sir Laurie Francis, gave a broad hint last week that the Governments of the two countries might co-operate soon in an endeavour to reduce freight rates for cargo shipped across the Tasman Sea. The Australian Chartered Institute of Transport chose Sir Laurie to give its William Fraser Memorial Lecture in Canberra. Sir Laurie used the occasion to warn of the need for “radical surgery” on the shipping arrangements between the two countries. He spoke also of the need to use political pressure to dispel the concept of the Tasman Sea being the dearest lake in the world for the transport of goods. His address was a distillation of views expressed in the last 18 months or so by spokesmen for both Governments. As a forecast, it is unlikely to be far wide of the mark.

Sea freight rates between Australia and New Zealand, when compared with many other routes, are higher than a simple calculation of tonnage and distance would suggest. The rates are higher than shippers in New Zealand or Australia like or believe justified, although they have a particular axe to grind. The implementation of the closer economic relations agreement between the two countries has increased the importance of trans-Tasman freight rates. New Zealand has more two-way trade with Australia than with any other country. This trade is meant to increase under the impact of C.E.R., with greater co-operation between industries on either side of the Tasman. The biggest single block to increased trade — and to full realisation of the potential of C.E.R. — would be prohibitive costs for the carriage of goods.

The need for efficiency and realistic charges on trans-Tasman shipping services has been apparent for some years. The advent of C.E.R. has not thrown up a novel problem in trade between New Zealand and Australia, but has brought the issue into sharper focus and added urgency to the need for resolution. The time is opportune for a concerted effort by both countries. The revitalisation of Australia’s shipping services resulting from the series of studies and Government-appointed task forces there, culminating in the Crawford Report and a reorganisation of the industry, is taking shape. In New Zealand, a new Shipping Act is expected during the next session of Parliament as a result of the White Paper on shipping that the New Zealand Government released late last year. Events in Australia in the last 20 months or so could hold pertinent lessons for the industry in New Zealand.

Sir Laurie Francis’s reference to the Tasman Sea as a “dear lake to cross” is a case in point. The Tasman Sea is a wide body of water, but to all intents and purposes it is a private lake when it comes to trans-Tasman trade. Policies adopted by the maritime unions

in Australia and New Zealand have developed what amounts to a system of cargo reservation in the trans-Tasman trade. For several years the maritime unions have excluded flag carriers of other countries from carrying cargo across the Tasman, allowing only New Zealand or Australian-manned vessels to ply the route. Manning costs and manning levels in force in both countries have been cited regularly by the shipping companies as a significant contributor to high freight rates. Monopolistic elements in trans-Tasman shipping have also been cited as a cause of high freight rates. It should not be forgotten, however, that union policies have helped to bring about a restriction on trans-Tasman services; only New Zealand or Australian-based shipping companies are prepared to meet the manning levels demanded by the unions. As it is, both of the New Zealand-based shipping organisations with trans-Tasman capability, and the Australian National Line, play a part in the trade. The joint service offered by the Shipping Corporation of New Zealand and the Australian National Line uses an Australian vessel. An attempt to introduce a New Zealand vessel last August foundered when negotiations with the maritime unions failed to get an agreement on manning levels before the option to buy the vessel expired. Signs of improvement can be seen, however. They can be discerned on both sides of the Tasman but are, perhaps, more advanced in Australia where an earlier start was made to reaching a new understanding on manning levels and on the creation of more jobs at sea. The Australian Government has assisted by offering financial inducements. Ship operators in Australia may be eligible for financial help if they can demonstrate that reasonable manning provisions, have been negotiated for a particular vessel. Reduced manning provisions should improve efficiency and increase productivity. The Australian maritime unions have accepted that this is an appropriate method — in the long run — of preserving and even increasing the number of jobs available to their members. Some uniformity in measures such as this might achieve stable trans-Tasman freight costs. Whether they could achieve enough in time to prevent freight costs from impairing the workings of C.E.R. and from slowing economic recovery, particularly in New Zealand, is doubtful. More positive steps are likely to be needed. The New Zealand Government has declared itself unwilling to restrict the shipping industry, preferring instead to “provide a suitable framework” within which the industry can govern itself. What constitutes a suitable framework is open to interpretation. Given the example of the Government’s willingness to place curbs on interest rates, wage rises, and so on, the shipping industry could not be surprised by a curb on trans-Tasman freight rates.