Freight report delayed

The Senate Tasmanian Freight Equalisation Scheme (TFES) inquiry committee, established in August, was due to present its final report by 26 November 2024. However, the Senate agreed last week to extend the Select Committee report to 20 December 2024.

The committee held the first hearing in Currie on 14 October and in mid-November hearings were held in Longford and Hobart.

The committee chair, Senator Tammy Tyrrell, Independent Senator for Tasmania Independent Senator Tammy Tyrrell stressed that high freight costs disproportionately affect remote communities, such as King and Flinders Islands, driving up the cost of groceries, supplies, and housing. “It’s clear from the evidence we heard that Tasmania’s freight equalisation scheme equalises nothing… Witnesses at the King Island hearing spoke about how they have to pay freight costs upfront and then go through a clunky process for reimbursement, but they can only be reimbursed for some goods, and only for items that travel by sea”. 

King Island's testimonies evidenced the need for ‘air’ to be included in the scheme due to perishables requiring air transport to meet cold chain regulations and requirements. Other witnesses documented inequitable shipping costs when transporting to and from mainland Australia and the additional Tasmania leg, which increased costs and introduced market access restrictions; product rebate eligibility and how the scheme impacts and disadvantages King Island. 

Mayor Marcus Blackie said the “management of freight is a long-term and significant issue for our community and our economy”.

Mayor Blackie argued that all goods shipped to and from the Bass Strait Islands to be eligible for TFES assistance.

“Limiting the classification of goods eligible for TFES assistance further disadvantages the Bass Strait Islands over their mainland counterparts, as it ignores the impossibility of significant manufacture or processing in our island,” Mr Blackie said.

“Simply put, we are reliant on over-sea freight for the vast majority of products needed by our community and economy daily.”

In mainland Tasmanian hearings, Tasmania’s peak farming body, TasFarmers called for major reform arguing that it no longer effectively offsets the high costs of shipping for farmers. The representatives emphasised the scheme's shortcomings and its growing disconnect from the realities of modern agriculture and trade. 

TasFarmers CEO Nathan Calman explained that the scheme, introduced in the 1970s, has failed to keep pace with the real costs of freight, leaving farmers at a competitive disadvantage. The current subsidy operates as a "wharf-to-wharf" rebate rather than covering the full cost of delivery.”… we consider the scheme to be in essence the equivalent of our highway one. The underfunding of that scheme and the drift away from cost recovery for farmers over time is probably equivalent to the underfunding of the National Highway.” 

TasFarmers believes the subsidy rate should be reviewed annually and adjusted so that the final freight cost for Tasmanian producers is no higher than it would be for an equivalent journey on mainland Australia, from point of dispatch to destination.

"Considering the actual point-to-point, from dispatch to delivery cost over the last 30 years, the annual increase would have been well ahead of inflation,” Mr Calman said. “So, I don't think comparing or increasing the rebate on inflation every year is necessarily the right measure.” 

TasFarmers member Matt Ryan criticised the commodity rate system on Bass Strait, stating it unfairly favours certain products and industries. He also noted the cost of shipping to Sydney surpasses shipping to Spain, deterring investment in Tasmania.

Tasmanian Transport Minister Eric Abetz echoed concerns about the scheme’s inadequacies, noting it hasn’t seen significant updates since 1998. He advocated for a no-worse-off guarantee and reforms to address inconsistencies, particularly for King and Flinders Islands.