Legislative Council Tuesday 21 November, 2017
Ms FORREST (Murchison ) - Mr Deputy President, I move -
That the Legislative Council Government Administration Committee A report on King Island shipping and freight services be considered and noted.
In noting this report, I begin by acknowledging the hard work of the staff. I did it with the previous committee but we had a couple of changes of committee secretary during this process. The staff have all worked very hard to get what is a very comprehensive and good report together.
I particularly acknowledge the work of Natasha Exel, Jenny Mannering and Allison Waddington, who all took on various tasks during the period. It was not easy at times, with people chopping and changing and having to pick up where the secretary had not been around and hearing all the evidence but still working closely with us to prepare a report.
I wish to speak about the main points raised in this committee report. There were a lot of points raised in this report but I will not go into them too much because a lot of other matters were raised that were relevant to shipping and freight but were not a key focus of the committee. I encourage members to read all of the report - I am sure the Government has - because there are many issues the Government can take a leadership role on and address some of the real challenges for our islands generally.
Members would be aware that in 2011 a committee of inquiry, chaired by the then member for Apsley, looked at island transport across to King Island, Flinders Island, the Furneaux Group and Bruny Island. That was more focused on the challenges at that time around the Flinders Island shipping. At the time, King Island was going along fine but we knew coming down the line the Toll ship being run on that service would eventually be replaced. It had been made very clear that when that vessel was replaced, it would be replaced with a bigger vessel. The Searoad Mersey going into King Island at the time was too large for the port and had to have special pilotage licensing arrangements to get into the port. That was on a good day; some days they could not get in. Most of the time it did, but it had to have a special pilot to enable that.
We knew that was coming, but it was not a key focus of that inquiry. Here we are, six years later, and much has changed on King Island. The abattoir closed, which meant that all the cattle had to go off on the hoof to be slaughtered. At that time sheep could also be slaughtered on mainland Tasmania, but since then that has changed. There is no small animal chain on the Tasmanian mainland now, so we have seen a significant change to the freight task there. The Searoad Mersey that was providing the service at the time was taken off the run and replaced. It was very timely that this inquiry was held because the community was very concerned, and still remains concerned - not quite to the same level but it seemed to be left to the absolute last minute before a genuine solution was found. Even then, the solution that was found, and that was about to be replaced again, was hardly adequate.
All witnesses agreed that a reliable, regular, suitable and sustainable shipping service to and from King Island is essential. Future services must include a link to and from the Australian mainland as well as the Tasmanian mainland. That is the bottom line. It has to be a service that goes to and from Victoria to King Island, and to and from the Tasmanian mainland to King Island.
The other challenge with this is that the freight task is quite diverse and seasonal on King Island. It is quite a small freight task in the big scheme of things, one that presents its own challenges because economies of scale make it more difficult. It is important we remember the previous service was run as a commercial operation without a government subsidy. The only line item in the budget was enough to make it clear that if the ship sunk, the government would do something to ensure a shipping service. All freight goes by sea and some by air to King Island. You cannot ship large, weighty items by air. The planes that go to King Island are generally small. The biggest one that lands there is the Rex flight, a Saab aircraft. You cannot take livestock on those planes - the seats are not big enough.
At the moment, all commercial passenger transport is by air. You cannot book a passage on a vessel to get there and that is a barrier to the residents of King Island and also to people who wish to travel there. Some people do not like small planes. They are bigger than they used to be when I first started going over there on a six-seater and I would choose to fly at the front, sometimes in the copilot's seat and was told what I was not allowed to touch. I thought, 'I am happy not touch things because everyone wants to be friends in this and survive the trip'. They were very small planes. It is slightly bigger with the Sharp Airlines that now provide that service and the Rex plane from Melbourne.
It is one of those things where you need to take a long-term view. We need to look at what opportunities there are for King Island as a part of Tasmania. The Government's own policy regarding tourism is to grow the tourist numbers significantly and we have seen the economic benefits MONA and other tourism opportunities have brought to the south of the state. King Island is bursting with opportunity, if only we could get the infrastructure right - not only the infrastructure but also the costs of getting items on and off the island.
The long-term plan, as the report identifies, must include suitable passenger transport and passenger facilities at each end if we are going to look to the future. The golf tourism has exploded on the island. I drove on a buggy around the Cape Wickham course and it was not a windy day, the day I was there.
Mr Willie - I am very much looking forward to getting over there at some stage. I can't even get on my local course anymore.
Ms FORREST - Good luck with all 18 holes. You are meant to take a whole swag of balls because you will lose many. I could not fathom how people could play on it and not go mad.
Mr Willie - Don't hit the ball very far.
Ms FORREST - You do not get a good score that way. We know a lot of golfers like to travel with their own clubs; they are big, weighty things and there are luggage weight restrictions on small aircraft. This opens up the opportunities for the golf tourism or people taking their own vehicles over and driving around the island themselves and all other manner of opportunities. If the people of the island were able to get off on a boat and or a high-speed vessel into Victoria or into Tasmania in a couple of hours, that would make it very competitive with airlines. I think competition is good.
Mr Valentine - Reduces their isolation, too.
Ms FORREST - Absolutely, it does. That is what needs to be looked at for the future.
Another point I will raise that was of particular concern for the islanders was having a suitable vessel. A suitable vessel is one that can handle the sea conditions but is not too big to get into the port. The Government made it pretty clear, and TasPorts too, that there were no plans to upgrade the King Island port. We know it is a challenging port. We know that the weather conditions make it a particularly challenging port at times, but there are size limitations getting into the port. That is not just the physical size of the vessel; it is the operations of the vessel.
We heard from various shipping people who have great knowledge in this area that depending on how the vessel manoeuvres will determine whether it can get into the port. It is not just size alone. We talked to Incat about how their vessels manoeuvre. Even one of their bigger catamarans could safely get in and manoeuvre in the port because of the way they manoeuvre. We need to keep a really open mind as to what is the most suitable vessel. Size is one aspect, but there are other aspects.
The King Island community has been very disappointed over time with the lack of engagement from the government. They feel they have not been listened to. They feel that their needs have been overlooked, that there is an 'anything is good enough' type approach - as long as we get you a ship it will be all okay. I have been hearing about this for years, not just during the committee. We heard that if you put a vehicle, a car or a tractor on the boat and it has an open deck, it might be a black vehicle when it leaves Melbourne or the Tasmanian mainland, but it will be white by the time it gets there. The metal will start to go rusty because these vehicles are not protected on an open deck. These sorts of things are important to the people.
With regard to that direct link to Victoria, nearly all the business relationships are established with Victorian businesses. Almost every foodstuff and other item comes from Victoria, with the exception of potatoes, which are bought from the Tasmanian mainland. When those relationships have been established over many years, having the freight go to and from King Island and then get another link from Victoria is clearly not economical and not easy. Yes, it was only an interim solution but it created great concern and angst for the community at the time.
The community has continuing concerns even with the new interim vessel. Yes, it is bigger. Yes, it has greater capacity. Yes, it would probably be able to manage the seasonal demands in terms of fertiliser and things like that, but they are not sure. We know it is just an interim service, it is not the permanent solution. The permanent solution should not be a government-operated business. It should be a commercially operated business and provide a whole range of potential opportunities for the future of the island.
One of the recommendations related to engaging with the community to ensure that the community is fully consulted on what is the most appropriate permanent or long term solution - nothing is ever permanent in this world. I know that there has been a bit more engagement of late since the committee started on this, and I can only hope that that will continue and be really constructive and meaningful.
The other particular issue that everyone who is involved in the agriculture sector spoke about - and that is the majority of people on the island - was the cost of freight, particularly as it related to fertiliser. The really odd thing about this is there is a significant discrepancy in the price of getting fertiliser from Victoria to King Island, Victoria to Flinders Island, and Victoria to Circular Head. All regional communities have an interest in the freight task, but no-one could explain why it is so different. In the committee report, you will note on page 24 that the fertiliser cost is outlined on table 1 there. This is the fertiliser freight, depot to wharf, and then out. There are aspects of land transport or sea transport here, but we are talking about what it costs farmers to get fertiliser to their paddocks.
From Melbourne, ex Geelong depot, to Burnie, a 20-foot container is $46 per metric tonne. Bridport, ex Scottsdale depot, to Lady Barren and this comes in one tonne bulker bags, $61 a metric tonne. Melbourne, ex Geelong depot to Grassy, in a 20-foot container the same as it comes to Burnie, Burnie was $46. King Island is $135. That is a significant difference and no one could explain it.
If you look at livestock freight in the next table, this is after the TFES, Burnie to Melbourne, which includes delivery of a 100 kilometre radius from Melbourne, is $78 per head; Flinders Island to Tasmanian processor/feedlot, $77 per head; King Island to Tasmanian processor/feedlot, $126 per head; King Island to Melbourne via Burnie, which includes the 100 kilometre delivery radius from Melbourne, $233 per head. Do not tell me that King Island is getting it easy here. There is a real difference. We discussed this with almost every witness. We discussed it with the minister and Mr Garcia from Infrastructure Tasmania. The minister said this should be cheaper, but no one could provide an answer.
Mr Brett McGlone from Incitec Pivot commented specifically on freight options for fertiliser and bulk versus containerised and fertiliser freight costs. He said -
We are happy to run with a container vessel, but we are just battling when superphosphate is worth $300 a tonne with the farmers paying $160 tonne. All of a sudden he is paying $460 a tonne for superphosphate on his farm, whereas a Circular Head farmer is probably paying slightly over $300 a tonne for the same product. They are very similar farming types and climates so the King Island farmer is paying a huge ...
As you will see, and members would have noticed, one of our recommendations was that there is a real need to look at this to try to find out what is going on and where the costs are. Some of the costs would immediately disappear if there is a direct link between the Victorian mainland and King Island and back. It is not just the freight coming onto the island; it is also some of the freight going off. This is particularly the livestock. The sheep have to go to Victoria and we were told by a sheep farmer on the island that they lose about 2.5 kilos in bodyweight when they have to come to Tassie first, be spelled and then go to Victoria. The additional cost of having that extra leg of transport meant that this particular farmer's business was losing about $60 000 a year and that becomes unsustainable.
Mr Valentine - No freight equalisation.
Ms FORREST - That includes the freight equalisation. You cannot keep doing that. It is resulting in poor animal welfare outcomes. The sheep lose weight and they are not in good condition, the meat is not as good, the value is not there and the farmer loses. Again, if they had just the one leg they would lose a little bit as they always do, but nothing like they are losing at the moment.
We also heard some particularly sad stories from a beef farmer on the island who breeds stud bulls, particularly for the Queensland market. Some of these bulls are worth $20 000 a head. Some of these, when he had shipped them, had to come off King Island to the Tasmanian mainland and then had to be off-loaded because the same vessel does not go on. When the Searoad Mersey was doing that route you could leave them on board and then keep going. When you get a bull out of a truck like that and put it in an unfamiliar environment where there are other cattle around they are not happy campers. It is no camping trip for them and they react badly. They become very aggressive and cause themselves physical harm, to the point where a number of his highly prized and valued stud bulls require veterinarian care. During the committee process one was still under veterinary care and one had to be put down, so do not tell me farmers are not losing in this. If the committee had not looked at these things we could have ended up with a much less suitable solution in the long term. The Government had to act when the Port and Coastal Marine Services arrangement fell over, for reasons which are a bit hard to get to the bottom of, but the reality is the interim service they put in place was not adequate. The new interim service, unless it does the to-and-fro Victoria and to-and-fro mainland Tasmania is inadequate as well.
Mr Gaffney - It reflected on their reliability in the product.
Ms FORREST - That is right. While we were on King Island a builder said hello and was talking about the cost of getting a door. He was putting in a standard, normal door any of us could lift, and the freight was $140 for the door which worth about $40. The only way he could make it pay was to order 1000 doors, but he is not going to build 1000 houses there at the moment. There are a whole heap of challenges in freight, so I hope the Government particularly takes that recommendation very seriously. There is a significant discrepancy and it is not okay to say that is the way it is. That has been going on for far too long. TasPorts say they have not increased their own freight costs, the overall cost is made up of a number of charges and they say they have not changed. They did include an additional container hire fee. This problem is not just related to the change in the shipping arrangements. It has been going on for much longer and this is the time to address and fix it and I encourage the Government to do that.
The recommendations spell out what we believe the Government should do. I have already mentioned the engagement of stakeholders. Recommendation 3 -
The Government, with stakeholders and the King Island community, regularly review and publicly report on the freight requirements of the island to ensure current, changing and emerging freight needs are identified and addressed.
It is very important everyone is on the front foot here, that opportunities are identified and we do not have to be playing catch-up. In all things we need to take a much more long-term strategic focus.
The committee is keen to see the Government initiate and fund a feasibility study that considers - this is for the more permanent or longer term solution - the design of the vessel. That would include the speed and manoeuvrability of the vessel; the deck space to meet future freight requirements and opportunities; the capability of catering for a diverse cargo - and we acknowledge it is a diverse cargo; the appropriate protection for all freight, which means undercover cargo holds for vehicles and other sensitive cargo and animals; appropriate tourist passenger accommodation and facilities to make sure we can maximise all opportunities; and the necessary sea handling capacity. We know Bass Strait can be treacherous and not everyone wants to travel by sea, particularly on a vessel that bobs around like a cork, so it needs to be something suitable for the purpose.
The study also needs to include port suitability and infrastructure, including passenger transport facilities. One of the limitations currently is there is no crane at Grassy harbour. We were told the port infrastructure did not provide enough structural strength to put a crane on it. It costs a lot of money to get one over there, and the challenges of getting it there in the first place. That does need to be revisited. If it is appropriate to have a crane to enable different vessels to come in and service the island, it may require a crane and that could be part of the future. It needs to look at animal welfare issues and consider what a commercially viable service looks like, because that is what we had in the past.
Other matters were asking the minister to review the eligibility and application of the agricultural vehicle registration exemption, which was a limitation for farmers. That needs to go through a COAG process. We were told it had been raised in the past but we did not get to the bottom of whether it had progressed through COAG or not. The committee is suggesting that continues on its way. If this has been discussed, what was the outcome, and maybe the Government can respond in due course.
The fertiliser storage shed was another issue. If anyone has been to Grassy and Incitec Pivot, they will see the fertiliser is pretty ferocious and the current building is basically eaten away. It is unsafe. It has some asbestos in it. Yes, it is a bit of job to take it down, but needs to be removed.
TasPorts is keen to work with the local community on this, ensuring a new fertiliser storage shed facility can be built, which will help with seasonal demand.
The land around the port outside the secure port area could be utilised because this would make it much easier for the farmers there to access fertiliser and to put in a stockpile in case there is a missed sailing because of the weather conditions.
The committee looked at how much it was costing to run this interim service. I acknowledge and accept TasPorts took on the task at short notice. We will have the GBEs in a couple of weeks' time so there will be more questions asked then.
They certainly took on a big challenge to deliver a shipping service. It was never really clear why TT-Line, which already ran a shipping service, did not take it on - why it was TasPorts. There were a number of people who had real concerns about the conflict associated there with the port operator also providing a shipping service and seeming to have a foot in both camps.
Bass Island Line, as it is called, is running at a significant loss. They spent $900 000, just short of $1 million, in the interim period between the withdrawal of the Searoad Mersey 1 and the commencement of the Investigator as that was sourced from Darwin.
The minister told us that was paid for out of the 'emergency shipping fund'. I could not find the emergency shipping fund. In the Section 19 report a little while ago, we were told it was from an internal shifting around of funds in the passenger transport area, which is fine. There is nothing wrong with that.
The fact is when we subsequently got correspondence - which was attached to the report from Mr Ferguson as acting minister, maybe the minister, Mr Hidding, was on leave that day - the point is the minister had told us on 10 August the money had come from the 'emergency shipping fund'. Then in a subsequent letter the request for additional funding had been made well before then and the decision to transfer internally from the passenger transport funding was made well before 21 June because it was signed off by the Treasurer on recommendation from the Minister for Infrastructure on 21 June.
Either the minister forgot or he did not know. I hope he did know because in a subsequent letter he told us he did know. It was originally a request for additional funding, then it was a shifting around within a department and not this emergency shipping fund.
The emergency shipping fund does not have anywhere that it sits. It is a line item which, from memory, is about $24 or $30 000. It was never going to cover it, obviously.
The Bass Island Line continues to lose money. It lost $1.4 million effectively in 12 weeks of operation. It was set up in March, started operating in April, so from 7 April to 30 June, which is 12 weeks, there was a $1.7 million loss. I imagine that TasPorts does not want to continue to sustain that level of loss. I would be surprised if they do. It is taxpayer money ultimately, so it is important that the Government works to ensure that the next solution, which is a long-term, suitable, sustainable solution, is a commercial operation so that Tasmanian taxpayers do not have to keep propping up a service that was operating commercially until this happened. Everyone would be pleased with that. In the interim we accept that Bass Island Line is providing the service and will continue to do so until that is done.
It should not be, as some people on the island fear, that the new interim solution is going to continue on and on and become the permanent or long-term solution. To them, that is not what it is. I do not think we can be out of the space, and for a port operator to be delivering a shipping service makes it difficult to understand where all of those costs are falling and why.
I commend the report to all members and look forward to hearing the Government's contribution. I know it will not be a full response as it was only tabled last week, but in due course. Again, I hope we see some policy decisions in the long-term planning for a shipping service to King Island - and other islands, too, because they all rely on shipping for their freight and passengers. You cannot think, let the next government deal with it. That is what happened last time.
Ms FORREST (Murchison ) - Mr Deputy President, it is a shame some members do not want to stay and listen to my response to that.
I thank the Government for such a comprehensive response. I was not expecting a full assessment of our findings and recommendations. Clearly, the committee has focused their attention, which is fabulous. That is the intention of any committee inquiry: to focus the Government's attention on a matter that really matters to a sector or various sectors of our community. This really matters to the people of King Island. It still really matters to the people of King Island, despite of some comments made in a couple of contributions - and I thank all members for their contributions. There is still concern on the island. As the local member, I have a direct line over there. I hear the positive things, I hear the negative things and I hear the things they are pleased about and the things they believe need more attention.
Overall, I am pleased to hear the Government basically accepts almost all of the findings and recommendations. I acknowledge the work that has been done to prepare such a comprehensive response so promptly, and I appreciate that.
To pick up on a few points: it was interesting the member for Huon talked about the cost of livestock freight from Bruny Island being $50 per head. For King Island, it is $233 per head - it is significantly different. Yes, Bruny Island is closer to mainland Tasmania and you can get across on a barge and people travel on it every day. To Flinders Island, it is $77 per head. There is a significant discrepancy and I think a lot of that relates to the fact they have to go to and fro - they cannot go directly into the market. If sheep were being transported from Bruny Island, I would guarantee the costs would be higher then, too, because you cannot process sheep on mainland Tasmania. They have to go to Victoria. We have to compare apples with apples in that regard. There are significant discrepancies. The Government saying it is not going to look at that is disappointing because it has been a matter that has been raised for a long time. Even the minister himself said it should be cheaper. He acknowledged that and now he is saying the Government is not going to look at it.
Mrs Hiscutt - He gave his reasons.
Ms FORREST - Did he? I think it is disappointing. If a more suitable shipping service were put in place, it would remove the need for animals particularly to be transported to the Tasmanian mainland to go into the Victorian market and freight costs for that will drop. There are very legitimate reasons why the freight costs are higher but overall, when you compare like with like - and when the Leader suggested the committee was not doing that, that is not true - and you look at the basket of groceries - the basic assessment that was done on page 31 of the report, looking at other regional communities - you cannot deny there is a much higher price to get things to King Island, a regional community.
If you look at fuel prices on page 27 - in other parts of Tasmania you have a low and a high - on King Island you have the highest price all the time. It is one of those things that could be addressed by a more suitable and appropriate shipping service. It does not have to go so far to get where it is going if it is a more direct route. That will fix some of those problems. We will see what happens with the new interim service, and hopefully there will be a more long term solution at a later time. This House can always initiate another inquiry should we need to do that if it is not making the difference it should.
I note the Government commits to continuing to engage. There are some on the island who think that has only just happened more recently. It is good that is happening and I think the committee helped focus the attention there as well. The freight task will continue to evolve and change.
Now that Greenhams have decided to buy the old vessel lying in the Tamar River, good luck to them with that. I am sure they have a bit of work to do on it, but all power to them for doing it. That will change the freight task. It will change the direction of the transport of some of the cattle; hopefully, make it more economical for some of the shipping tasks there for the livestock.
It is always concerning when a Tasmania-based business such as that expands into Victoria and opens up a big new abattoir there. What does that mean for the Smithton plant? We need to think about that. I do not think JBS Swift was all that committed to Tasmania either, quite frankly. It will not take much for it to pull out, so we could see all livestock going from Tasmania, whether it is King Island or mainland Tasmania, to Victoria for slaughtering at some stage. I hope that is not the case, or maybe another operator will come in. It is always a concern and we need to keep our eyes open on that and not be led into complacency around this.
A bit of good news on King Island is the mixed species abattoir a couple of the committee members visited is operational now. They had a few hassles with approvals and things taking longer than expected, which is always the case with developments. That had final approval and either it has started or is about to any day, which is a really positive thing. Again, it will change, not the huge freight - this is not the big export abattoir been talked about - this is the mixed species, so it is more for the domestic market dealing with wallabies, of which there are an abundance, and cattle unfit to ship, which has been a constant and real concern. If you do not have an abattoir on an island there are always going to be cattle not fit to ship. What do you do, shoot them and leave them in the paddock? That is not a good animal welfare outcome, so this is really positive.
The member for Derwent made the point that the findings and recommendations are all evidence-based. They are all in the evidence. There is nothing not backed up by evidence and the evidence is provided. To say there were people who did not support tourism, there was not much commentary on that. It was outside our terms of reference, but it was raised by a number of people, enough for us to include it in the old catch-all, Other Matters Incidental Thereto.
The general manager of the King Island Council, speaking on behalf of the King Island Council, made a lot of comment around benefits this could bring. I had a number of conversations off the record with islanders who firmly believed this is the next opportunity just waiting to happen on King Island. Mr Fitch, Cheryl and David Kerr's submission, and then we also heard the opportunities for passenger services in regard to the Incat proposal. The committee had no intention to, nor would we, promote a particular business or vessel, because that is not our role within our capacity to do so. There was no suggestion in this report it would be a TasPorts service that would provide passenger services.
You would need to put passenger facilities on the ports and that would be an issue in Grassy because there is nothing there at the moment in terms of passenger facilities. With other ports you use there may or may not be. Certainly many of them do already, particularly the Victorian ports you may be going in and out of. There was significant support for this consideration, and talk about a private operator not being interested in tourists or passenger transport, we were told by Mr Lowrie at Incat he had strong support from an international company who were keen to look at it. It is there. You just have to stop saying it is too hard.
Mr Farrell - He came to the committee because he did not feel he was getting -
Ms FORREST - Getting heard, yes. It beggars belief when a Government supposed to be forward-thinking and thinking about the future of our state throws its hands in the air, skirt over its head, and says, 'It's too hard.' It is not too hard. Go and have a look. We talked to these people who said there is real opportunity. I find that an extraordinarily odd comment to make. It is not too hard. It might just take a little bit of lateral thinking and perhaps a bigger picture view.
This was a private operator. It was not saying the Government should take this on. It was pretty clear the committee would prefer to see the government business out of this if you can have a commercial operator. There have been challenges with the withdrawal of Searoad Mersey to getting that. It should have been addressed beforehand and previous governments should probably have started earlier. You cannot get anything too early and there is bit of a challenge there. When the Government thought they had a solution, it fell over - 'sunk' may be the better word.
They are the main points I wanted to raise in response to the comments made. I appreciate the level of detail in the Leader's response on behalf of the Government. Normally when we table a report it does take up to three months, and this has taken about three days. I acknowledge that because you often do not get that. There have been many committee reports tabled. We have had three today of note. I was pleasantly surprised to get such a detailed report.
I accept the Government might not necessarily agree with all of them, but I would like to think there may be some consideration if freight costs do not alter with a better targeted service, then something odd must be going on. Whether it is the Government to do it, maybe it is not. The people of King Island do suffer significant higher cost of living challenges as a result of this.
Yes, they are a part of Tasmania. If anyone has the gumption to stand up and say, 'Well, they choose to live there,' they had better not say it in front of me, because they have a significant impact in terms of economic benefit to this state, and provide a really important future opportunity for this state in terms of the ongoing beef production, other meat production and tourism. People have been warned.
I note the report and thank the members for their work on the committee. It was good and it was interesting. We heard from some real characters, as you tend to get from people working in those sorts of isolated communities. I note the report.
Motion agreed to.