AUSTRALIA's shipping industry is in crisis, putting the nation’s economic, environmental, and national security at risk, but urgent government reform could address the issues and deliver a multi-billion dollar benefit to the economy, according to the Maritime Union of Australia (MUA).

The union today presented a detailed proposal to the Senate Rural and Regional Affairs and Transport References Committee inquiry into the Australian shipping industry in Melbourne, including recommendations that the Australian Government:

• provide tax incentives to support investment in ships, ship-related infrastructure, and local seafarers;
• reform the seafarer visa system to improve maritime security and support skills investment;
• reform legislation and regulations governing coastal trading;
• create a national strategic fleet to guarantee fuel security and enhance the nation’s economic security;
• develop a strategic approach to maritime workforce development; and
• introduce better ship safety and pollution reduction measures to protect Australia’s coastlines, tourism industry and oceans.

“There’s no question that Australian shipping is in crisis,” MUA national secretary Paddy Crumlin said.

“Since 2013, we’ve lost more than half our remaining coastal fleet, leaving the country with just 12 large trading vessels to carry our growing coastal cargoes.

“With the right political leadership and policy settings, this dramatic decline can be arrested and our shipping industry can be rebuilt.”

Mr Crumlin said ongoing political inaction was causing a serious drain to the nation’s economy.

“Each Australian vessel that is lost is replaced by foreign ships that don’t pay tax here, don’t employ local seafarers, and don’t support local maintenance and service businesses,” Mr Crumlin said.

“The result is a major drain on the economy, with the use of foreign vessels to transport Australian resource and agricultural exports, along with coastal cargoes, estimated to be costing the nation more than $8 billion a year.

“Our research suggests that current coastal cargoes are sufficient to sustain between 50 and 60 additional Australian ships, but we need the political will and right policy settings if Australia is to once again become a shipping nation.”

Mr Crumlin outlined the union’s vision to save Australian maritime industries through both reforming cabotage laws and creation of a new national strategic fleet.

This would be achieved by expanding on the nation’s expertise and innovation in a range of maritime sectors, including:

• offshore oil and gas exploration, construction, production and transportation;
• opportunities in the emerging offshore wind farm sector;
• defence shipbuilding arising from the Federal Government’s existing $80 billion investment in the sector;
• civilian shipbuilding, particularly aluminium hulled ships;
• expedition cruise shipping and other forms of marine tourism; and
• marine and oceanographic research.

This would result in a maritime cluster that would be a significant economic boost to the nation, the MUA reported.

“At its core, government policy must aim to maintain and grow Australian maritime skills,” Mr Crumlin said.

“As an island nation, we depend on maritime skills to operate our ports, our regulatory and safety agencies, our freight and logistics sectors, tourism, and offshore oil and gas industries.

“This must include industry incentives that encourage investment in modern and efficient ships that are owned and operated by Australians.

“The introduction of purpose-built Australian ships would create a more productive freight network for Australia, delivering businesses greater flexibility, reliability, efficiency and productivity.

“This national strategic fleet will also protecting our environmental, fuel, and national security by providing greater control over the vessels that operate in our national waters.

“But before any of this can be achieved, we need clear vision and leadership from government.”

www.mua.org.au

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FOUNDED in 2017 by comedian and entertainer George McEncroe, women-only ride-sharing service Shebah has since recorded growth of 190 percent, turning over $1.8 million in 2018, up from $500,000 in 2017.  

The company began its equity crowdfunding campaign two weeks ago aiming to raise $3 million. The capital raised will enable the company to grow its geographical footprint in Australia, launch into New Zealand and further develop the user experience on the app since its rapid growth in 2018.

So far the investment campaign has made history raising close to $1 million of which 95 percent has come from female investors. This is significantly higher than the average 17 percent that capital funding platform Birchal has seen on its platform to-date.  Majority of the company’s new investors are becoming shareholders for the first time having experienced the Shebah service first-hand.

According to CEO George McEncroe,"We wanted to offer the fruits of our future success to the women who helped us grow, so we went out to the community of drivers and our passengers first.  We were mindful that on average less than 3 percent of VC investment goes to female-led businesses in Australia and New-Zealand, a statistic we hope to see change. So starting with our loyal base made sense as they believe in our core purpose and in potential to grow."

A recent Forbes and TINYPulse report showed that, startup companies with female founders at the helm almost universally outperformed and are the fastest growing companies. Investors are starting to recognise this and growth in female-led businesses is set to increase.

The company’s founder also acknowledged the diversity within its new investor group and the reasons behind investor support.

"We seem to have started a social movement of sorts, something that women in particular feel strongly about and a service they believe is needed. Our investment group is incredibly diverse, including politicians, experienced investors (male and female) and mothers throughout Australia."

The exclusive community-only investment period has now closed and investment is open to the public, with only 18 days remaining.  The company aims to reach its goal of $3m in the coming weeks, at which point it will embark on an accelerated growth phase for the coming years.

The Australian rideshare industry is worth $290 million and the taxi industry is worth $6 billion, with the market growing at 14 percent year-on-year, this is forecast to continue for a decade.

www.shebah.com.au

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MORTGAGE CHOICE chief executive officer, Susan Mitchell, has welcomed the Federal Government’s decision today to maintain trail commissions on new loans and undertake a review in three years. 

In his statement today the Treasurer, Josh Frydenberg, said abolition of trail won’t proceed in 2020 because the government is concerned about the adverse effect on competition in mortgage lending market. He also conceded that abolishing trail would be “a free kick to the banks”.

The government will review trailing commissions in three years time, as well as the feasibility of continuing upfront commission payments. The review will be conducted by the Council of Financial Regulators and the Australian Competition and Consumer Commission (ACCC).

Treasurer Frydenberg acknowledged that mortgage brokers and small lenders are “absolutely critical in the mortgage lending market”. 

Ms Mitchell said, “I wholeheartedly support Treasurer Frydenberg’s announcement to maintain trail commissions. It is clear that abolishing trail would have an adverse effect on the home lending market and would be detrimental to competition.

"Australia’s 17,000 mortgage brokers will applaud the Government’s common sense decision to keep trail commissions. ASIC’s 2017 Review of Mortgage Broking Remuneration Report did not identify trail commissions as directly leading to poor consumer outcomes, nor recommend the removal of trail commissions.

“The figures speak for themselves. The latest data shows that 59.1 percent of home loans originate through the mortgage broking channel, yet Australian Financial Complaints Authority (AFCA) data for the month of November 2018 revealed that of 6,522 complaints against financial service providers,  only 29 related to mortgage brokers. This is less than half of one percent of reported complaints.

“Furthermore, brokers drive competition in the lending market. Proof of this can be seen in Mortgage Choice residential settlement figures, which show that in the past two years the big four banks have lost 10 percent of market share to smaller lenders.

“Maintaining competition in the mortgage industry is of the utmost importance to every borrower in Australia. Mortgage Choice brokers have been helping Australians realise their property ownership goals for 27 years.

"We believe that maintaining trail commission will ensure a strong mortgage broking industry and allow brokers to continue to guide Australian borrowers through what may be the most significant financial commitment of their lives - buying their home,” Ms Mitchell said. 

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THE Federal Government should use next month’s Budget to advance policy commitments to help the financial services sector to get rid of old, substandard legacy products that do not benefit consumers, Financial Services Council CEO Sally Loane said today.

Ms Loane said the FSC had asked the government in its pre-Budget submission to deliver on a commitment to slash the red tape hindering the rationalisation of legacy products right across the financial services sector.

“Many FSC members have legacy products in managed investment schemes, life insurance, and superannuation,” Ms Loane said.  “The FSC has estimated there are at least 600 legacy structures, each of which may contain multiple products, disadvantaging an estimated 2.44 million consumers.

“Our members have modernised their products over time, but customers with older products cannot easily be transferred into newer products. This is for several reasons, including significant tax liabilities triggered by shutting down legacy products, and a ‘better off’ test that is complex and expensive to apply. We have offered solutions to these barriers in our submission.

“Product rationalisation was a recommendation of the Financial Services Inquiry in 2014, which the government accepted. The problems with legacy products were also highlighted this year by the Royal Commission and in the Productivity Commission’s (PC) inquiry into superannuation. The PC estimated about $160 billion in superannuation assets alone were in legacy products in 2017.

“Consumers should not be worse off due to any transition to a newer product and will most likely be substantially better off in modern products with lower fees, better customer service, and improved accessibility.

“The FSC believes a rationalisation scheme should involve a test to ensure a rollover is in the interest of consumers as a whole, and removal of any taxes on the rollover.”

In its Budget submission, the FSC is also continuing calls for the government to implement a zero rate of non-resident withholding tax on Asia Region Funds Passport payments.  This would bolster the success of Australia’s participation in the Funds Passport which started on February 1.

“The Funds Passport allows eligible managed funds to be marketed to retail investors in participating countries, however tax reform needs to take place to maximise its potential,” Ms Loane said.

“The Australian tax regime for managed funds is complicated, with high tax rates and many exemptions – creating the impression our funds are highly taxed even though a very small amount of revenue is raised from the funds. Addressing our complex, uncompetitive tax system will enable the Passport to promote the exports of Australian funds.”

The FSC pre-budget submission also calls on the Federal Government to:

• Negotiate a tax treaty with Luxembourg and Hong Kong; address any financial services issues in existing tax treaties; and ensure that all new Free Trade Agreements are accompanied by a tax treaty.
• Pursue a cut in the overall corporate tax rate to 25 percent, preferably to 22 percent. Prioritise meeting existing commitments to address outstanding Investment Manager Regime (IMR) issues, extend the attribution regime to Investor Directed Portfolio Services, and fix outstanding issues with the Taxation of Financial Arrangements.
• Abandon the proposal to remove the CGT discount at fund level and replace it with a measure targeted at any investors that are inappropriately accessing the CGT discount. If any unfavourable changes to the Offshore Banking Unit (OBU) regime occur, offset the adverse effect of this by abandoning the proposed change to the CGT discount at fund level and proposed changes to the AMIT penalty regime. 

The FSC’s 2019-20 Budget submission can be access here.

About the Financial Services Council

The Financial Services Council (FSC) has over 100 members representing Australia's retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies. The industry is responsible for investing almost $3 trillion on behalf of more than 14.8 million Australians. The pool of funds under management is larger than Australia’s GDP and the capitalisation of the Australian Securities Exchange and is the fourth largest pool of managed funds in the world. The FSC promotes best practice for the financial services industry by setting mandatory Standards for its members and providing Guidance Notes to assist in operational efficiency.

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