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Dr Edward N. Eadie[2]
During the last decade or so substantial reform of the Australian shipping industry has been achieved through cooperation between shipowners, unions, and government, although also this reform has taken place during a period of change in the international competitive environment (Shipping Industry Reform Authority 1994, Attachment A, pp. 2-6). The reform has included a large reduction in average crewing levels on Australian ships to less than the world average and that for OECD countries, and has been made possible by the introduction of modem ships and changed work practices, voluntary retirements, and the retraining of ratings.
In spite of these reforms there remained a competitive gap of around two million dollars a year between an average Australian flagged vessel and a less expensive similar vessel under representative open registry Liberian flag. An important factor contributing to the competitive gap is the high crewing cost of Australian shipping compared with that of ships operated by other developed countries, and the proportion of rating costs to total crew costs is substantially higher for Australian ships than for those of other countries (Apelbaum Consulting Group 1994, p. 3). In recent years many of Australia’s competitors in the international shipping trades found it necessary to employ foreign seafarers in order to remain competitive, and it is no longer sufficient to regard the level of costs for OECD ships employing national crews as the benchmark for reform (Shipping Industry Reform Authority 1994, Attachment A, p. 6).
The purpose of the present series of three articles is to examine the issues involved in the employment of foreign seafarers on Australian controlled ships as that should provide a means of reducing or eliminating the competitive gap, making Australian shipping more competitive in the international trades, facilitating an expansion in the Australian shipping fleet, and enabling a greater proportion of Australia’s international trade to be carried in Australian controlled ships. The question of employing foreign seafarers on Australian controlled ships represents a new situation with broad ramifications, and requires the consideration of a wide range of diverse issues that form the subject of this study. These include shipping registration options, legislative considerations, industrial aspects, and matters related to mixed nationality crewing.
The shipping registration options discussed in this article comprise the traditional register, a second register, and a flag of convenience. The matter of employing foreign seafarers on Australian controlled ships has relevance and significance in relation to existing Australian statutory law, and the provisions of several Australian statutes are examined in that context. Industrial matters involving Australian industrial legislation and maritime awards that incorporate the engagement system for ratings, international conventions of the International Labour Organisation and the International Maritime Organisation, and the role of the International Transport Workers’ Federation will be considered in the next article. A range of issues related to mixed nationality crewing involving the employment of Australian officers and foreign ratings will be explored in the third article, and these cover cultural matters, language and safety, diet and catering, training and certification, recruitment and availability, wages and conditions of employment, and potential crew supply countries.
The study involves the examination of a great many issues that will need to be addressed by Australian shipowners, unions, and government if foreign seafarers are to be employed on Australian controlled ships, and is timely in relation to the possible future direction of Australian shipping in the international trades. The research forming the basis of the study required a detailed and critical assessment of a large volume of legislation, regulations, conventions, agreements, awards, books, reports, papers, and articles that have (or might have had) a bearing on issues associated with employing foreign seafarers on Australian controlled ships.
Finally, mention should be made that the practice of employing foreign seafarers in international shipping is part of a more general internationalisation of the labour market. Indeed, there has been considerable temporary international movement of labour (Industries Assistance Commission 1989(a), pp. 33-34) into the markets of the European Economic Community, United States, Middle East, and industrialised countries of Asia. Furthermore, several major Australian companies involved in exploration, mining, processing, fabricating, and manufacturing have operations overseas that employ domestic labour to earn profit and generate income for Australia. It may well be that the employment of foreign seafarers on Australian controlled ships can provide the key to an expansion of Australian shipping in the international trades, and in consequence contribute to a successful future for the Australian shipping industry generally.
This section provides information relevant to the ship registration options to be considered in conjunction with the employment of foreign seafarers on Australian controlled ships. These options comprise the traditional register, establishment of a second register, and the use of a flag of convenience.
Registration confers nationality on a ship (Gaskell, Debattista & Swatton 1987, pp. 19-20, 26-28). In the case of a traditional register there is a ‘genuine link’ between the nationality of the ship and the country of its ownership or control. The legal position in relation to Australian ships registered under the Shipping Registration Act 1981 is outlined later in this article, and it is seen that the matter of crew nationality is not addressed.
There is a long history of seafarers from one country being employed on the ships of another such as those of British, French, and Dutch registry (Northrup & Rowan 1983, p. 96, International Shipping Federation 1990, p. 1). Indeed, in the case of British ships there are no legislative restrictions on the employment of aliens except in the capacity of Master and Chief Engineer (Goss 1993, p. 95), while in the case of Australian registered ships the employment of foreign seafarers appears permissible under the Navigation Act 1912 as discussed later, although the employment of foreign ratings on such ships seems incompatible with the current maritime awards that incorporate provisions governing the engagement system for ratings, as will be seen in the next article. The previously prevailing freedom in the international shipping world to employ foreign seafarers on traditionally registered ships has been subject to greater restriction in more recent times by legislative provisions and union agreements that place limitations on the nationality of crew (International Shipping Federation 1990, p. 1), and this has resulted in shipowners transferring their ships from traditional registers to open registers (flags of convenience) and second registers offering greater flexibility in relation to crew nationality in order to reduce costs, as will be discussed later.
Even though there is a general tendency for governments to maintain a ‘level playing field’ internally as advocated by Goss (1993, pp. 93-94), under the Westminster system of government that operates in Australia, the parliament is unfettered in its legislative powers, though influenced by political restraints, and through legislation could provide for any desired international shipping regime to apply to Australian ships on the traditional register without resort to a second register, although the latter is a possible option. Indeed, a great deal of Australian legislation making special provisions for particular industries already exists, and in the case of shipping this covers matters such as subsidies, taxation, and cargo reservation. Thus, any variation in the conditions of operation for Australian international shipping could be achieved in conjunction with the traditional register.
It is interesting to observe (Lewarn & Hawkins 1994, p. 14) that low costs are not the sole factor determining decision-making in the shipping industry as evidenced by the fact that great shipowners such as P&O, Nedlloyd, Hapag Lloyd, and CGM have remained proudly patriotic to the British, Dutch, German, and French traditional registers respectively even though they are high cost operators. Further, even though Norway has established the Norwegian International Ship Register (NIS) as a second register, Meyrick (1994, pp. 99-101) points out that the overall cost of operations for bulk and container ships on that register are not greatly different to those applying to similar types of ship on the Australian traditional register, and that the success of the NIS in bringing about the transfer of many Norwegian controlled foreign crewed ships from open registers to the Norwegian flag reflects the attractive cost-quality mix provided by the NIS. This offers some encouragement for the future of Australian international shipping (whether on the traditional register or a second register) as it can provide high standards of safety and environmental protection that could be coupled with a reduction in operating costs through the employment of foreign ratings. In the case of Japan, difficulties associated with the high cost of employing Japanese seafarers as well as a shortage of such seafarers was alleviated (Sien 1994, p. 3) by an agreement in 1989 with the All Japan Seaman’s Union (JSU) regarding the adoption of ‘mixed manning’ on ‘Maru ships’ that enabled foreign seafarers, mostly ratings, to be employed on Japanese flagged or owned ships, and this resulted in a large influx of foreign seafarers to serve on Japanese ships. Indeed, by September 1993 there were 87 Japanese ships with ‘mixed manning’ employing around 800 Japanese seafarers together with more than 1100 Filipino and a small number of other nationality seafarers (Sien 1994, p. 3), and the introduction of mixed nationality crewing on Japanese ships followed a programme of reduced manning such as took place on Australian ships.
The role of a second register in international shipping is examined by Sletmo and Holste (1993, pp. 243-255) and considered in Shipping Industry Reform Authority (1994, Attachment A, Attachment 3, pp. i-iii, Tables 5-6). Further, detailed information on specific second registers is contained in International Shipping Federation and Lloyd’s Ship Manager (1996, pp. 56-67).
Second registers have been set up by various governments in an attempt to incorporate advantages of both the traditional register and an open register frequently referred to as a flag of convenience. Indeed, the aim has been to combine (Sletmo & Holste 1993, p. 249) the locational advantages of developed industrialised countries that include access to capital markets and specialised maritime knowledge with the more liberal conditions in relation to the fiscal regime and crewing requirements offered by flag of convenience countries. In the case of a second register there is usually a ‘genuine link’ between the ship and state of registry as with a traditional register, but regulations relating to nationality of manning, wage rates, taxation, and company location are designed to be more flexible than those of the traditional register (Sletmo & Holste 1993, p. 249). Moreover, second registers empower traditional maritime administrations to ensure compliance with flag obligations in relation to international conventions (Shipping Industry Reform Authority 1994, Attachment A, Attachment 3, p. ii).
The term second register on the one hand includes offshore or dependency registers such as those of the Isle of Man and the Kerguelen Islands that are associated with Britain and France respectively, while on the other covers alternative or international registers such as those of Norway and Denmark as described by Sletmo & Holste (1993, pp. 249-251). Even though the latter are referred to as international registries, they are in practice identified with traditional maritime countries. Indeed, it is seen in Shipping Industry Reform Authority (1994, Attachment A, Attachment 3, Table 6) that at the end of 1992, 94% of the tonnage on the Norwegian second register was owned by Norwegian nationals and 100% of the tonnage on the Danish second register was owned by Danish nationals. In the case of both these registers, namely the Norwegian International Ship Register (NIS) established in 1987 and the Danish International Ship Register (DIS) established in 1988 (International Shipping Federation and Lloyd’s Ship Manager 1996, pp. 56-58, 64-67), there are no restrictions on the nationality of crew for ships on these registers except that the Master must be a Norwegian or Danish citizen respectively, and even this requirement is subject to dispensation.
Mention should be made that Sletmo & Holste (1993, pp. 250-251, 254-255) regard the Norwegian second register, which provides an attractive combination of characteristics applying to the international registry with important national attributes that include an exceptional maritime tradition, as the most successful of the alternative registries. Further, they argue that a nation wishing to maintain and develop its presence in international shipping not only must have access to factors of production at competitive prices, but must also give priority to support of a shipping milieu that embodies a cluster of related activities of which an international register is one element. Indeed, it is observed by Sletmo & Holste (1993, pp. 251-252) that the introduction of an international register is not sufficient to ensure the future of a national fleet, and the preparedness of shipowners to reflag if conditions change is an indication of the fragility of such a register, as evidenced by moves towards the resumption of flagging out in the case of the German second register following an announcement early in 1992 regarding elimination of subsidies and increase in taxation that were to apply to all German registered ships.
A proposal of the Shipping Industry Reform Authority (1994, pp. 10-16) for the establishment of a second register for Australian shipping is outlined and discussed below, and the position of the International Transport Workers’ Federation (ITF) in relation to second registers is examined in a subsequent article. In addition, some consideration is given in that article to agreements between shipowners and unions regarding foreign seafarers employed on ships of the Norwegian and Danish second registers.
The historical development of the ‘Flag of Convenience’ as an open register for international shipping is described by Doganis and Metaxas (1976, pp. 7-34) and by Metaxas (1985, pp. 57-61, 68-71). More recent discussion of matters relating to flag of convenience shipping is contained in Sletmo and Holste (1993, pp. 243-255) and in Shipping Industry Reform Authority (1994, Attachment A, Attachment 3, pp. i-iii, Tables 5-7). In addition, detailed information on specific open registers is recorded in International Shipping Federation and Lloyd’s Ship Manager (1996, pp. 7-55).
According to Sletmo & Holste (1993, p. 249) the main advantages for a shipowner in registering ships under a flag of convenience arise from favourable conditions in relation to taxation, crew costs, and manning regulations. Indeed, it is suggested in Organisation for Economic Co-operation and Development (1991, p. 31) that the cost advantage of flagging ships under open registries cannot be fully matched by second registers even though both open and second registers have the freedom to recruit seafarers from developing countries at low wage levels. In general there is not a ‘genuine link’ between the ship and state of registry in the case of a flag of convenience, and in times of political conflict use of a flag of convenience can facilitate the avoidance of boycott action against certain flags (Sletmo & Holste 1993, pp. 247 and 249).
It is shown in International Shipping Federation and Lloyd’s Ship Manager (1996, p. 3) that in 1995 the four largest open and second ship registers in the world in terms of tonnage were the open registers of Panama, Liberia, Cyprus, and the Bahamas. Each of these was larger than the Norwegian International Ship Register which was the fifth largest of the open and second registers and the largest of the second registers. At the end of 1992 virtually none of the tonnage on the registers of Panama, Liberia, and the Bahamas was owned by nationals of those countries, while in the case of Cyprus 9% of the tonnage was owned by nationals of that country. In the case of ships registered in Panama, Liberia, and the Bahamas there were no nationality requirements in relation to the crew, while for a ship registered in Cyprus 15% of the crew had to be Cypriots (Shipping Industry Reform Authority 1994, Attachment A, Attachment 3, Tables 5 & 6). Even though the United Nations Convention for the Registration of Ships that stipulates there should be a ‘genuine link’ between a ship and its flag was adopted in 1986, the low level of ratification by 1991 (amounting to less than 1% of world tonnage) suggests (Sletmo & Holste 1993, p. 247) that there is strong support among shipping nations for continuation of the flag of convenience system and the economic advantages associated with it.
Some legal considerations relevant to the registration of shipping under a flag of convenience are outlined below, and the campaign by the International Transport Workers’ Federation (ITF) against flag of convenience shipping is discussed in a subsequent article. In addition, an examination is made in that article of the issue of wage levels for seafarers.
In this section the legislative provisions of a number of Australian Statutes are considered in relation to their relevance and significance to the employment of foreign seafarers on Australian controlled ships, and where appropriate some related matters are included in the discussion. The Statutes examined are the Navigation Act 1912, Shipping Registration Act 1981, Migration Act 1958, Racial Discrimination Act 1975, Ships (Capital Grants) Act 1987, Seafarers Rehabilitation and Compensation Act 1992, and Occupational. Health and Safety (Maritime Industry) Act 1993. Other Statutes such as the Industrial Relations Act 1988 that deal more specifically with industrial issues are considered in the next article.
The Navigation Act 1912 applies to trading ships engaged on overseas and interstate voyages, but not intrastate voyages, as deduced from S2 of the Act.
A perusal of the provisions of the Navigation Act 1912 reveals that there are only two Parts of the Act, namely Part II - Masters and Seamen and Part VI - The Coasting Trade, that require more detailed examination within the context of the present study, and the provisions in each of these Parts are considered to ascertain whether they have any special significance in relation to the employment of foreign seafarers on Australian controlled ships.
Part II of the Navigation Act 1912 deals with masters and seamen, and applies only to ships registered in Australia, other ships engaged in the coasting trade, and ships other than each of these where the majority of the crew are residents of Australia and they are operated by persons, firms, or companies that are residents of or incorporated in, or have the principal place of business in Australia, as specified in S10. The last category of ships would include foreign ships on demise charter to Australian based operators that are permitted, but not required, by the Shipping Registration Act 1981 S14(d) to be registered in Australia, and are not so registered.
There are no residential or nationality requirements for crew specified in the Navigation Act 1912. Indeed, the provisions applying Part II of the Act to an Australian operated ship of which the majority of the crew are residents of Australia imply the validity of employing non-resident crew members on Australian controlled ships. Further, the Shipping Registration Act 1981 under which ships are registered in Australia deals with ships, not their crews, and makes no provision in relation to the nationality or residence of seamen.
Even though the Navigation Act 1912 does not make stipulations regarding the nationality or residence of seamen, the absence of such requirements is qualified by S15 under which provision is made for the specification by regulation of standards of competence or other conditions in relation to the qualifications of masters, officers, and seamen. The conditions specified in the regulations may include conditions as to nationality, citizenship, or residence as well as to age, character, and health as set out in S15(2). However, such regulations could be used, if necessary, to facilitate the employment of foreign seamen on ships covered by Part II of the Act. Further, in S15(2)(e) provision is made for the making of regulations dealing with the recognition of certificates and other documents held by crew members including seamen issued under the laws of countries other than Australia, and this provides a suitable mechanism, if required, to allow the acceptance of suitable overseas qualifications and enable foreign seamen to serve on ships to which Part II of the Act applies.
Under S50 of the Navigation Act 1912 dealing with the period of agreements for the engagement of seamen it is specified that an agreement under S46 covering the engagement of seamen may be made for a voyage, or if voyages average less than six months duration, may extend over two or more voyages when it is referred to as a running agreement. However, a running agreement is not permitted to extend beyond six months. This indicates that foreign seamen employed on ships covered by Part II of the Act would need to be discharged after serving for a period of around six months unless the Act is amended.
In order to facilitate the employment of foreign seafarers on ships covered by Part II of the Navigation Act 1912 it might be necessary to make special arrangements covering the medical examination and issue of certificates of fitness in relation to the proposed engagement of foreign seamen. This could be done, if required, by means of regulation as provided for in S124.
A list of Regulations and Orders made under the Navigation Act 1912 prepared by the Australian Maritime Safety Authority is reproduced in the ‘Ships of Shame’ report (House of Representatives Standing Committee on Transport, Communications and Infrastructure 1992, Appendix 6, pp. 135-136). The Regulations listed include Navigation (Master and Seamen) Regulations, and the Orders include Seagoing Qualifications (Part 3), Health-Medical Fitness (Part 9), and Accommodation (Part 14). Subsequently, an Order covering Employment of Crews (Part 53) was made in 1993 as seen in Marine Orders (1981-1995). Other Regulations and Orders made under the Navigation Act 1912 do not appear relevant to the present study.
More detailed consideration is given to the Regulations and Orders made under the Navigation Act 1912 that might have some special significance in connection with the employment of foreign seafarers, namely the Navigation (Master and Seamen) Regulations and Marine Orders Parts 3, 9, 14, and 53 dealing with Seagoing Qualifications, Health-Medical Fitness, Accommodation, and Employment of Crews, and this indicates that only the Order on seagoing qualifications (Marine Orders Part 3) contains provisions that have a direct bearing on the issue of employing foreign seafarers.
In Marine Orders Part 3 (Issue 4, p. 6) there is a stipulation in Provision 6.4 that a person shall not be qualified to serve on a ship unless that person is sufficiently familiar with the English language to enable a full understanding of directions in relation to the performance of duties, and this requirement needs to be taken into account in connection with the employment of foreign seafarers.
Provision 7.18 of Marine Orders Part 3 (Issue 4, pp. 15-16) covers the recognition of certificates issued by overseas administrations, but appears to apply only to certificates of competency listed in 6. 1 (a). The eligibility requirements for the issue of a certificate of recognition are covered in 7.18.2, and these include in 7.18.2(e) that an applicant must be (i) an Australian citizen, or (ii) a permanent resident of Australia, or (iii) produce evidence that he or she is to be employed in a ship to which Part II of the Navigation Act applies. It seems that a foreign seafarer with appropriate qualifications and the opportunity of employment could be covered by 7.18.2(e)(iii) for the purpose of being issued with a certificate of recognition. However, such a certificate of recognition would not be required by a foreign seafarer serving on a ship to which Part II of the Navigation Act does not apply.
Provision 14.1 of Marine Orders Part 3 (Issue 4, p. 23) allows for the recognition of a qualification equivalent to a certificate of rating listed in 6.1(c) issued by or under the authority of an approved body, and possibly this could include a qualification of rating issued by an overseas administration, as is the case of a qualification in 6.1(a) for which a certificate of recognition is issued under provision 7.18. However, there does not appear to be any provision for the recognition of a qualification equivalent to that of a certificate of proficiency as Integrated Rating shown in 6.1(b).
Many detailed provisions with relevance to crews are contained in the Navigation (Master and Seamen) Regulations and in Marine Orders Parts 3, 9, 14, and 53 made under the Navigation Act 1912, but these do not appear to present an impediment to the employment of foreign seafarers on Australian controlled ships. In any event such Regulations and Orders could be varied without great difficulty should that be desirable or necessary in connection with such employment.
It is seen from S10 of the Navigation Act 1912, discussed earlier, that Part II of the Act applies to a ship registered in Australia even though it was not engaged in the coasting trade and did not have a majority of crew residents of Australia. However, Part II of the Act would not apply to an Australian-operated ship not registered in Australia, not engaged in the coasting trade, and not having a majority of crew residents of Australia. The latter situation could arise where a ship was on demise charter to Australian-based operators that have possession and control of the ship including the right to appoint the master and crew of the ship. It is interesting to observe that in the case of three representative vessel types comprising a large dry bulk carrier, a crude tanker, and a liner ship registered in each of seven countries analysed by Apelbaum (1994, p. 134), all the fifteen ships registered in Japan, Germany, Norway, Liberia, and Singapore as well as the liner vessel registered in the United Kingdom were assumed (presumably on a factual basis) to have a crew comprising a majority of nonnationals compared with an all-national crew for each of the three Australian registered ships and two of those registered in the United Kingdom.
Part VI of the Navigation Act 1912 covers the coasting trade, and applies (except where otherwise expressed) to all ships, including those to which Part 11 does not apply, as provided for in S284.
In general the Australian coasting trade is reserved for ships licensed to engage in that trade as prescribed in S288, and seamen employed on a ship engaged in the coasting trade are entitled to wages at the current rates ruling in Australia during the period the ship is so engaged as provided for in S289. However, when no licensed ship is available, or the service provided by a licensed ship or ships is inadequate to meet the needs of the trade, the Minister for Transport may if desirable in the public interest allow unlicensed ships to be granted permits to engage in the coasting trade, and such permits can be either unconditional or subject to conditions as prescribed in S286(1). It is important to note that such unlicensed ships operating in the coastal trade under permit shall not be deemed to be engaging in the coasting trade (S286(2)), so that Australian wage rates would not be payable as required in the case of a licensed ship. A permit may be issued for a single voyage, or may be a continuing permit (S286(3)).
In Department of Transport (1994, pp. 48-49) it was reported that during 1993-94 there was a continuation of the trend of recent years in that the number of single voyage permits issued under the Navigation Act 1912 for the carriage of cargo increased from 307 in 1992-93 to 470 in 1993-94. No continuing voyage permits were issued during 1993-94, while a total of 82 coasting trade licenses were issued during 1993-94 compared with 80 such licenses during 1992-93. A warning was given by Bolitho (1994, pp. 6-7) regarding the dangers to the future of Australian domestic shipping, maritime safety, and the marine environment that could arise from further and very substantial relaxation of the guidelines allowing foreign vessels, particularly substandard vessels with unskilled crews registered under a Flag of Convenience, to enter the coastal trades on single voyage permits or continuing voyage permits on the basis of short term economic criteria alone as suggested, for instance, by the Australian Mining Industry Council.
If the proposal in relation to a new category of registration for Australian ships outlined in Shipping Industry Reform Authority (1994, p. 13) were adopted, vessels so registered would be unlicensed, but if suitable and available would enjoy priority over foreign ships for the granting of single voyage permits in coastal trades. This would probably require an amendment to Part VI of the Navigation Act 1912 as that governs the coasting trade including the issue of single voyage permits.
In Australia the registration of ships is controlled by the Shipping Registration Act 1981. S12 imposes an obligation on Australian owned ships to be registered under the Act, although an Australian owned ship operated by a foreign resident under a demise charter may be exempt from registration during the term of the charter. Certain types of ships including Government ships specified in S13 are also exempt from registration, although such ships are permitted under S14 to be registered. Further, ships on demise charter to Australian based operators are permitted to be registered under S14(d), but are not required to be registered unless Australian owned. Under S1/ foreign registered ships are not permitted to be registered under the Act.
The Shipping Registration Act 1981 is not concerned with the crewing of ships, which is covered by Part II of the Navigation Act 1912 as discussed previously.
In Shipping Industry Reform Authority (1994, pp. 10-16) the creation of a new category of registration for Australian international ships was put forward as a possible strategy to reduce the competitive gap of around two million dollars a year between an average Australian flag vessel and a less expensive similar vessel under representative open registry Liberian flag. It was proposed in the report that the Shipping Registration Act 1981 be amended to establish a new category of registration for Australian international ships that would be required to have Australian officers, but could have other crew, subject to suitable conditions, recruited from overseas. The ships would not be licensed to participate in the coastal trades, but would be given priority over foreign ships in the issue of single voyage permits (SVPs) in coastal trades. It was further proposed that the terms and conditions of employment on these ships would be subject to enterprise agreement. In the report it was acknowledged that the proposal in relation to a new class of Australian ship had not been agreed by the Australian Institute of Marine and Power Engineers (AIMPE) and that the Maritime Union of Australia (MUA) was totally opposed to it, even though the proposal was designed to protect the employment of Australian seafarers in the domestic market and on existing ships in the international trades as well as provide enhanced career prospects for Australian seafarers through improved competitiveness in international shipping and growth in investment.
It seems the operational conditions associated with the proposed amendment of the Shipping Registration Act 1981 as outlined in Shipping Industry Reform Authority (1994, p. 13), described above, go beyond the present role of the Act in that it does not address the crewing of ships that comes within the province of Part II of the Navigation Act 1912. Further, the matter of the coasting trade and the grant of single voyage permits is covered by Part VI of the Navigation Act 1912, and that would probably need to be amended to give priority in the issue of such permits to a certain class of ship. While amendment of the Shipping Registration Act 1981 would be the appropriate means of establishing a new category of registration for Australian shipping, it would seem that amendment of the Navigation Act 1912 would be the appropriate vehicle for dealing with matters related to crewing and the issue of single voyage permits in connection with the proposed new category of registration.
It is interesting to recall that the Navigation Act 1912 does not appear to be a bar to the employment of foreign seafarers, even though S15 makes provision for regulations dealing with the qualifications of masters, officers and seamen, and allows the regulations to include conditions as to nationality, citizenship or residence. Indeed, S15 could be used to provide by regulation for the employment of foreign seafarers, subject to suitable conditions, and allow for the recognition of their qualifications.
In the event of the law being amended to provide specifically for the employment of crew recruited from abroad, as envisaged in the Shipping Industry Reform Authority proposal for ships under a new category of registration, the matter of employing foreign seafarers on Australian ships would be given a specific legal recognition rather than implied legality as at present. However, in view of the opposition of the Maritime Union of Australia to the proposal of a new category of registration, it would be desirable, if possible, for all issues associated with the proposal to be worked out in an atmosphere of cooperation and negotiation involving shipowners, unions and government to achieve reform as was done in connection with reduced manning levels on ships. Assuming this can be achieved, any legal or other obstacles can be overcome, and the reality is that other developed countries do employ foreign seafarers on their ships including in conjunction with the establishment of a second register.
Under S12 of the Shipping Registration Act 1981 Australian owned ships are required to be registered in Australia, subject to certain exceptions, and under S17 foreign registered ships are not permitted to be registered under the Act. In consequence, Australian owned and controlled ships, unlike those beneficially owned and controlled by other countries such as the United States and Japan, are unable to operate under a Flag of Convenience, and an amendment to the Shipping Registration Act 1981 would be required to allow such an option. However, under existing law, ships registered under a Flag of Convenience could be demise chartered (bareboat chartered) to Australian based operators that have the right to appoint the master and crew of the ship. In this way suitable ships could be chartered at competitive rates in the open market.
Even though there is recognition in both Art 5 of the Geneva High Seas Convention 1958 and Art 91 of UNCLOS 1982 that a ‘genuine link’ should exist between a ship and its state of registry, an attempt in Art 10 of the UN Convention on Conditions of Registration of Ships 1986 to introduce a ‘genuine link’, and the maintenance since 1948 of a campaign by the International Transport Workers’ Federation (ITF) against Flag of Convenience shipping (Gaskell, Debattista, and Swatton 1987, pp. 28 & 145), the operation of ships under Flag of Convenience registry continued to be wide-spread at the end of 1992 as seen in Shipping Industry Reform Authority (1994, Attachment A, Attachment 3, Tables 6 and 7).
Migration control in relation to the crew of trading ships entering Australia from overseas is provided by S225 and S228 of the Migration Act 1958. Under S228 an obligation is imposed on the Master of a ship that has entered Australia from overseas to report in writing to the appropriate authority at the time of departure the name of any crew member that was on board at the time of arrival, but is absent at the time of departure, and to advise whether the crew member left the ship with or without leave. Further, under S225 the Master may be required by an appropriate authority to muster the crew of a vessel at the time of its arrival or departure, and a crew member may be required to produce identity documents for inspection.
It would be appropriate for the purposes of migration control for foreign seafarers employed on Australian controlled ships involved in international trading to be treated in the same way as the crew of foreign ships engaged in similar international trading activities. Such activities differ from the regular involvement of licensed ships in the coasting trade that can be regarded as performing part of the domestic transport task. In consequence, the employment of foreign seafarers on Australian controlled ships trading internationally should present no migration difficulties, and indeed appropriate control mechanisms already exist.
Under S9 of the Racial Discrimination Act 1975 it is unlawful to discriminate on the basis of race, colour, descent or national or ethnic origin in relation to any human right or fundamental freedom in the political, economic, social, cultural or any other field of public life. In particular, this includes the right to employment dealt with in S15. However, S9 and S15 do not apply by virtue of S9(3) and S15(4) in respect of employment, or application for employment, of a person on a ship not registered in Australia if that person was engaged or applied for employment outside Australia.
In Great Britain the Race Relations Act 1976 made racial discrimination in relation to employment unlawful as did the Racial Discrimination Act 1975 in Australia, and a special exemption was granted by S9 to British shipowners employing personnel who apply for, or are engaged in, employment on board ship outside Great Britain on the grounds that profitability depended on the employment of lower-paid crews from overseas, although S73 provides the Secretary of State with power to repeal the exemption at any time (Gaskell, Debattista, and Swatton 1987, pp. 113-114). Possibly a similar provision would need to be made in the Racial Discrimination Act 1975 for Australian registered ships, particularly if a new category of registration were to be established.
Under the Ships (Capital Grants) Act 1987 grants are payable in relation to the purchase, conversion, or modification of a ship provided certain specified conditions are satisfied. In the context of the present study it should be noted that a grant under subsections (1), (2), or (3) of Section 8 is not payable to a shipowner in respect of the purchase or conversion of a ship unless all members of the ship’s crew or crews after the purchase or conversion were Australian residents, or members in accordance with an approval under subsection 22(7), as specified in subsection 8(4)(f). Further, a grant is not payable to a shipowner in respect of a ship unless the shipowner intends to remain the owner of the ship for a period of at least five years from the payment of the grant, and do all things reasonable, while the owner of the ship, to ensure that all members of its crew will be Australian residents, or members in accordance with an approval under subsection 22(7), as specified in subsections 8(5)(a) and 8(5)(b)(iii). An approval under subsection 22(7) can be obtained in special circumstances for inclusion in the crew of members, who are not Australian residents, and such special circumstances exist where a person with particular skills is required to be a member of the crew, and an Australian resident possessing those skills is not available as specified in subsection 22(8).
Clearly, the provisions of the Ships (Capital Grants) Act 1987 place restrictions on the employment of foreign seafarers on ships for which grants are payable or have been paid. In Shipping Industry Reform Authority (1994, Attachment A, pp. 16-17) it is noted that if the proposed new category of registration for Australian international vessels is adopted, the provisions of the Ships (Capital Grants) Act 1987 would need to be examined to ensure that owners of existing ships for which benefits had been received under the Act, and those who wished to participate in its provisions, were not disadvantaged.
It is interesting to observe that the Ships (Capital Grants) Act 1987 provides in S10 that a grant under S8 may be payable in respect of the purchase, conversion, or modification of a ship even though the construction, purchase, conversion, or modification of the ship took place outside Australia, and this recognises the reality of internationalisation within the shipping industry.
The provisions and operation of the Seafarers Rehabilitation and Compensation Act 1992, which replaced the Seamen’s Compensation Act 1911 and came into effect in June 1993, are described by Fleming (1993). It is seen in Fleming (1993, pp. 7-8) that the Act applies to ships covered by Part II of the Navigation Act 1912, so the provisions of the rehabilitation and compensation scheme apply, in essence, to seafarers employed on Australian registered ships involved in interstate and overseas trading, licensed foreign ships engaged in Australian interstate coasting trade, and ships (other than ships registered in Australia or licensed to engage in the coasting trade) involved in interstate or overseas trading, where a majority of the crew are residents of Australia and the ship is operated by an Australian resident, firm, or company. In addition, a ship engaged in intrastate trades can be covered by the scheme when a declaration in relation to that ship has been made under S8AA of the Navigation Act 1912, which is a substantial departure from the previously existing arrangements (Fleming 1993, p. 8). Foreign seafarers on Australian controlled ships would be covered by the Seafarers Rehabilitation and Compensation Act 1992 in cases where they are employed on ships to which Part II of the Navigation Act 1912 applies, as well as on ships involved in intrastate trading where a declaration has been made, but not in other cases.
It should be noted as observed in Seafarers Safety, Rehabilitation and Compensation Authority (1994, pp. 11-12) that S93 of the Seafarers Rehabilitation and Compensation Act 1992 requires an employer to have a policy of insurance or indemnity in respect of liabilities under the Act, and that from February 1994 the protection and indemnity associations (members of the International Group of Protection and Indemnity Associations) ceased to indemnify employers against liabilities under the Act. In consequence, it has been necessary since that time for all employers to be insured in respect of such liability with insurance companies authorised under the Insurance Act 1973. Compensation entitlements under the Seafarers Rehabilitation and Compensation Act 1992 provide for weekly payments based on the normal weekly earnings of an employee during the period of incapacity, and for lump sum payments in the event of permanent impairment as outlined in Fleming (1993, p. 9).
The Occupational Health and Safety (Maritime Industry) Act 1993 was enacted following the development of proposals by a tripartite working group involving shipowners, unions and government for modem occupational health and safety arrangements for the maritime industry, and came into effect in July 1994 (Australian Shipowners Association 1994, p. 6). The objects of the Act set out in S3 include securing the health, safety and welfare at work of maritime industry employees, and the fostering of a cooperative consultative relationship between maritime industry operators and employees to achieve this. As observed in Australian Maritime Safety Authority (1994, p. 23) the Occupational Health and Safety (Maritime Industry) Act 1993 codifies the common law duty of care for the protection of health and safety of work at sea, and this contrasts with the prescriptive approach of the Navigation Act 1912 in relation to health and safety. However, as specified in S7, the new Act does not affect the operation of the Navigation Act 1912.
The Occupational Health and Safety (Maritime Industry) Act 1993 applies to seafarers working on a ship covered by Part II of the Navigation Act 1912, as in the case of the Seafarers Rehabilitation and Compensation Act 1992, and generally these Acts apply concurrently (Seafarers Safety, Rehabilitation and Compensation Authority 1995, p. 3). Foreign seafarers employed on Australian controlled ships that come within Part II of the Navigation Act 1912 would be covered, and it can be expected that the operation of the Occupational Health and Safety (Maritime Industry) Act 1993 will have a positive effect in reducing claims for compensation under the Seafarers Rehabilitation and Compensation Act 1992.
In connection with workplace arrangements and the selection of health and safety representatives the Occupational Health and Safety (Maritime Industry) Act 1993, S41(1) provides that a health and safety representative may be selected for each designated work group, and S42(c) stipulates that the election of a health and safety representative for a designated work group may be conducted, if there is no union involved in relation to the group, by a person authorised by the Seafarers Safety, Rehabilitation and Compensation Authority to conduct elections under the section. These provisions could be relevant to the employment of foreign seafarers on an Australian controlled ship covered by the Act.
The employment of foreign seafarers needs to be considered as a possible means of achieving improved competitiveness of Australian controlled shipping in the international trades. This could be done using various shipping registration options. Moreover, there do not appear to be any major legislative obstacles to be overcome in order to make it possible.
The author expresses particular thanks to Mr Lachlan Payne of the Australian Shipowners Association for his support and the provision of access to library facilities, to Commodore Sam Bateman of the Centre for Maritime Policy at the University of Wollongong for his encouragement and making possible the publication of the present work, and to Mrs Jillian Stevens of Adelaide for her dedication with the word-processing. The series of three companion articles is based on the thesis of the author that resulted in him becoming in 1997 the first Master of Business (Maritime Management) graduate of the Australian Maritime College.
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[1] This is the first of three major articles by Dr Eadie dealing with the employment of foreign seafarers in Australian ships to be published in successive issues of Maritime Studies.
[2] Research Consultant, Adelaide, South Australia.
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