Shipping Australia Limited

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					                                                                                Shipping Australia Limited
                                                                                           ABN 61 096 012 574

                                                                    Level 1, 101 Sussex Street, Sydney NSW 2000
                                                                                PO Box Q388, Sydney NSW 1230
                                                                                            Tel: (02) 9266 9900
                                                                                            Fax: (02) 9279 1471

Shipping Australia's Submission on the Fair Work Act Review

Shipping Australia is pleased to have the opportunity to provide comments relating to this review
and the comments are generally in accordance with the Terms of Reference for the review.
Shipping Australia is a peak shipowner body representing 38 shipowners and shipping agents
who would be involved with over 80% of Australia’s container and motor vehicle trade as well as
over 60% of our bulk and break bulk shipping trade (membership list attached).

Our interest in industrial relations relates primarily to services provided within our seaports being
stevedores, linesmen, crew on board tugs, pilot cutters, staff of various Port Corporations,
whether they be privatised or government owned. We also have an interest in terms of the
broader logistics chains involving the trucking and railway industries as far as they impact on
delivery of cargo to seaports and the delivery of cargo from seaports.

An issue that is not in the terms of reference but has been a major concern to the shipping
industry over the last few years since the Act was introduced, has been the application of PART
B of the modernised Australian seagoing award to foreign flag vessels carrying Australian
domestic cargo under permits issued by the Australian Government. These rates and
conditions are much higher than those applying to the International Transport Federation
agreements whereas technically one container of domestic cargo carried along with 3,000
international containers still requires the vessel to pay these higher wages and conditions. We
appreciate that this issue is not part of the review but we wanted to simply make the point that
this has been the cause of a considerable increase in the costs of carrying Australian domestic
cargo and in a number of cases withdrawal of previous shipping services available.

The review panel has sought specific data and statistics supporting comments and submissions.
The Department would have available detailed statistics on the increase in waterfront
disputation since the Act was introduced at least as far back as 1998. For almost 11 years
there was relative peace on the Australian waterfront but over the last two years, in particular,
we have witnessed a considerable increase in stoppages or work bans and other work
limitations in both the container and general stevedoring areas. Whilst this protected industrial
action has been taken during re-negotiation of Enterprise Based Agreements, this was not the
case for the previous 11 years when EBA’s were re-negotiated.

Patrick container stevedoring business, has, for example, been subject to threats of work bans
and limitations as well as actual stoppages over a twelve month period last year as they
endeavoured to reach an agreement with the Maritime Union of Australia. Similarly, DP World
had a similar experience as they followed Patricks in trying to reach agreement.

A general stevedore has been in negotiations for over 13 months and the issues have still not
been resolved. This has involved many joint meetings and site visits. This (and the container
stevedoring disruptions) have caused serious cost impacts on the operations of our members,
the lower cost impact being around the $30,000 per day cost for the vessel and SAL has
received many complaints from our members and importantly their customers, the importers
and exporters of Australia regarding these delays.
During these protracted negotiations there was a noticeable lowering of productivity generally
which exacerbated an emerging serious congestion issue especially in Sydney and in
Fremantle. Shipping lines had to pay substantial increases in fuel costs to try and recover some
schedule integrity and some ports both in Australia and overseas had to be bypassed. Whilst
this port congestion arose from other causes as well as industrial issues, the impact of the
stoppages and work bans put serious road blocks in the path of efforts to recover some
reasonable level of efficiency.

Shipping Australia believes that there should be criteria in the Act or in supporting regulations
that set out the criteria for “bargaining in good faith”. In our view, the test should be whether the
negotiating process has been exhausted and whether protected industrial action has been
taken prematurely. We have been advised by one company that if they had accepted the
claims by the union which had caused the strikes, then the company would have gone out of
business. It is difficult to believe this is bargaining in good faith.

SAL would recommend that the criteria also include whether both parties to the negotiation have
complied fully with the terms of the current EBA which is the focus of the negotiation. This
comment has specific reference to issue 29 under bargaining and agreement-making on page
19 of the background paper which was issued last January.

SAL believes it is particularly difficult to understand how authorised protected industrial action
can be undertaken before the good faith bargaining process has actually commenced. If this is
correct, we would urge the Government to remedy what must be an anomaly in the Act.

Individual Employment Contracts

Shipping Australia believes that EBA’s should contain the Fair Work Act’s model flexibility term
that is currently included in all modern awards but there should be a requirement that the
mandatory flexibility terms in enterprise agreements genuinely meet the flexibility needs of both
the employer and employee.

Under such individual flexibility arrangements, the parties should be able to agree that no
protected industrial action will occur during the life of that arrangement and neither party should
be able to unilaterally terminate the arrangement within its term except by mutual agreement.

In addition, employers and employees should have the option of agreeing to individual
contractual arrangements that have statutory effect. These individual arrangements would
require a guarantee of minimum entitlements. The failure to provide for statutory individual
contracts should not be part of our industrial relations system nor does it promote innovative
and progressive workplace arrangements underpinned by the guarantee of minimum

The Application of a Public Interest Test

In SAL’s view, protected industrial action should be prohibited where unions are pursuing claims
that don’t satisfy a public interest test. The current ability to take such action over claims that
are clearly contrary to the public interest should be removed and this is particularly the case with
many disputes that disrupt Australia’s international trading relations and facilitation.

In our view, such action should only be available as a last resort after a demonstrated attempt
has been made to exhaust all bargaining options including mediation.

In item 56, under the Heading of Industrial Action on page 21 of the background paper, the
question is raised, should compulsory conciliation play a more prominent role in settling
disputes over the application of enterprise agreements or more especially in the machinery
which governs the settlement of intractable disputes. As noted above, we believe at the right
time, assuming both parties to the negotiation agree, compulsory conciliation could have an
important part to play in resolving those issues which are preventing agreement. Again, failure
to agree to conciliation in those circumstances by one party would make it difficult to understand
that they are negotiating in good faith.

Perhaps a reasonable term (say three or six months) should be set to conclude negotiations
failing which there should be the ability for a party or both parties to refer the matter to FWA for
compulsory conciliation. A reference by one party would oblige the other party to accept such

Public interest issues should include consideration of the size of the wage claim and other
proposed improvements to conditions compared to general industry standards, the rate of
inflation, productivity issues, whether bargaining has been exhausted and the employer’s
capacity to meet the wage and conditions claims.

Restrictions on subject matters in Enterprise Agreements

SAL believes that the objects of the Fair Work Act to facilitate greater productivity in enterprise
bargaining are not being met under the current framework.

It appears to SAL that Unions are currently using the Act to include a wide array of matters and
agreements that could be seen as increasingly related to promoting union rights and privileges
as opposed to the wages and conditions for employees or boosting productivity at the enterprise
level. Similarly, the Fair Work Act purports to prohibit the taking of protected industrial action
where pattern bargaining is occurring which pays no regard to the needs of the enterprise.
However, pattern bargaining continues to be the modus operandi for many unions who then
encourage employees to take protected industrial action to secure a pattern agreement. In our
view, the ability for unions to take such action where they are seen to be engaged in pattern
bargaining should be removed.

We hope these brief comments have been useful to the panel in its review of the Fair Work Act
and we certainly commend for the panel’s consideration much better guidance and criteria to be
employed in the legislation relating to what bargaining in good faith means and urging Fair Work
Australia to avoid granting the right to take protected industrial action where that criteria is not
being met.

If the Department or members of the review panel wish to raise any question in relation to these
comments, we would be most pleased to try and address them and would be grateful if you
could contact me on 02 9266 9903 or email me at

Llew Russell, AM
Chief Executive Officer
Full Members

ANL Container Line Pty Ltd
APL Lines (Australia)
Asiaworld Shipping Services Pty Ltd
Austral Asia Line Pte Ltd
Evergreen Marine Australia Pty Ltd
Five Star Shipping & Agency Co Pty Ltd
Goodman Fielder
Gulf Agency Company (Australia) Pty Ltd
Hamburg Sud Australia Pty Ltd
Hapag-Lloyd Australia Pty Ltd
Hetherington Kingsbury Shipping Agency
Hyundai Merchant Marine
Inchcape Shipping Services
“K” Line (Australia) Pty Ltd
LBH Australia Pty Ltd
Maersk Australia Pty Ltd
Mediterranean Shipping Co (Aust) Pty Ltd
MISC Agencies (Australia) Pty Ltd
Mitsui OSK Lines (Australia) Pty Ltd
Monson Agencies Australia Pty Ltd
NYK Line (Australia) Pty Ltd
OOCL (Australia) Pty Ltd
Pacific Asia Express Pty Ltd
PB Towage
Quay Shipping Australia Pty Ltd
RCL (Australia) Pty Ltd
Royal Caribbean International
Seaway Agencies Pty Ltd
Ship Agency Services Pty Ltd
Svitzer Australia Pty Ltd
The China Navigation Company Pte Ltd
Wallenius Wilhelmsen Logistics
Wilhelmsen Ships Service

Contributing Members

China Shipping Container Lines Co Ltd
Hanjin Shipping
Neptune Shipping Line Pty Ltd
Pacific Forum Line (NZ) Ltd

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