Wednesday, 30 April 2014

Australian federal budget 2014. Some suggestions from a humble shipping bloke.

On the 13 of May the new Australian Government hands down the Australian Federal Budget 2014. The speculation as to what will be in it seems bigger than ever in the media. While in no way do I consider myself an economist, at very best perhaps a bush economist, I'd like to enter the fray with a couple of suggestions for the Treasurer, Joe Hockey.

I think most Australians accept our country is now back in debt and it needs to be addressed. Generally I think we are prepared to take some pain rather than go the way of other countries whose debt grew to such an overwhelming level that their economies became dysfunctional. The Australian government must raise tax revenue, cut costs and help our exporters. Pure and simple.



With my background and qualifications in international trade and customs I think one area that government should use is with import duties. An increase in import duty of just 1 or 2%, on imported goods from countries that Australia does not have a free trade agreement with, would generate huge revenue and also help protect our local jobs and manufacturers who are rapidly disappearing with increasing global competition. Furthermore it would make imported goods slightly more expensive and hopefully slow imports down and thus improve our balance of payments. Such an increase to import duty is easy to apply and cheap to administer as Customs have the IT infrastructure to do this already.

Back in my college days, about 25 years ago, I wrote my final paper suggesting that protectionist policy had had it's day and we would see free trade between nations and trading blocks emerge. I was severely marked down on this at the time as my lecturer had a strong protectionist and differing view. Essentially what I predicted is what has come to pass though. 

I have not been a protectionist for all of my working life however I now think in the next 5-10 years we may go full circle and we will start implementing protectionist policy once again. I believe many other countries in the west will be forced to as they cannot compete with other other countries and keep their population employed. So as global competition is intensifying I am gradually becoming a protectionist conditional upon import duties imposed being kept to a bare minimum. In my mind an absolute maximum of 5% as we do not want our local industry to become complacent or reliant on import duty for survival.

The other area is GST. While I do not profess to know the finer points of Canadian taxation, it seems to me that the Canucks are doing it pretty well and adjust the rate of GST up or down accordingly to act as another economic lever. During the GFC they lowered their GST progressively from 9% to 5% where it is now which in effect helped stimulate the economy by making things cheaper.

In Australia the main and seemingly only lever we use is interest rates to slow down or to stimulate economy. Pretty crude approach in comparison to our Canadian mates who have very similar economy to ours with mining, tourism and agriculture being key drivers and two levers to pull economically. We should follow their lead.

Apart from that, help is on the way to our exporters. This month the government increased expenditure on Export Market Development Grants and simplified the process. A positive initiative that will certainly assist.

If only the AUD would weaken to sensible levels for our exporters then we'd be knocking down that foreign debt in no time.

I'm happy to take your call Mr Hockey if you'd like a few more suggestions...

All for now,

+Brad Skelton 

Tuesday, 22 April 2014

Floating nuclear power plants at sea

Since the earthquake and tsunami that hit the Fukushima nuclear power plant the industry has started looking at offshore alternatives that they believe will be much safer.

In fact, Russia is already building the first floating plant called the "Akademic Lomonosov"(pictured) which will be operating by 2016. This is essentially a vessel that will be docked at a wharf in Vilyuchinsk and will be connected to the local electricity grid and steam lines. The vessel can be easily mobilised in the event of a mishap away from the town.


Russian nuclear power concept

Akademic Lomonosov under construction
In the USA, MIT has another floating nuclear power plant concept that is thought will be tsunami and earthquake proof. The MIT design stations much bigger nuclear power plants much further offshore much like a floating oil platform. In the event of an incident it is further away from major population centres and there is also sea water available that could be used to cool rods and stop them melting down.

Despite major incidents like Fukushima and Chernobyl, it appears that nuclear power is here to stay and our oceans and shipping industry are about to start playing a role in meeting our energy needs.

All for now,

Friday, 18 April 2014

Cheaper Australian coastal shipping services ahead...finally!

Back in June 2012 I posted this blog about the then Federal Government's changes to shipping legislation that they somehow thought would revitalise shipping in Australia and lead to more coastal services. 

I reported in that post that the new legislation was actually having the reverse affect as many ship owners ceased their Australian coastal shipping services. That legislation lead to them being burdened with additional government charges, increased salaries for foreign crew who had to be paid at Australian award rates and significantly more red tape and paperwork to deal with. The few carriers that still offered a service were forced to pass on these costs and rates were hiked making shipping some cargo by sea more expensive than road or rail.

The bottom line was that my clients businesses were burdened with additional transportation costs that they could ill afford and Australian shipping wasn't revitalised one iota and indeed it regressed in my opinion.

This month the new Liberal Government announced a review of this legislation and released this option paper entitled "Approaches to regulating Australian Coast Shipping".



Sensibly this options paper contemplates removing all regulation of coastal shipping and to actively minimise all industry burden and costs.

Depth Logistics' is already gearing up our Australian Coastal Shipping Service in preparedness for our clients directing more of their domestic cargo back to sea. Furthermore we will be making a submission firmly advocating, on behalf of our clients, the negative impacts the current legislation has had on them and explaining why it MUST go. If you would like any particular concern, idea or view you may have expressed on you or your companies behalf, then please either make a comment in this blog post or contact us.

Stay tuned to this blog or follow +Depth Logistics or +Brad Skelton on Google+ for updates as this review unfolds. 

Rest assured Depth's team and I will do everything we can to influence the right outcome for our clients and industry.

All for now,

+Brad Skelton