Australian Flag of Convenience Inquiry to Continue


By MarEx 2016-09-29 18:55:32

Australia’s inquiry into flag of convenience shipping has resumed after federal elections halted it earlier this year. 

Australia announced a Senate Inquiry into flag of convenience shipping last year after a Four Corners program highlighted the suspicious deaths of three seafarers on board a Japanese-owned ship.

Over a six-week period in 2012, three crew members died working on board the Sage Sagittarius, dubbed the Death Ship, a bulk carrier that carries coal between Australia and Japan.

In its submission to a Senate inquiry, the Australian Council of the Mission to Seafarers said the majority of flag of convenience companies did not abuse crews, but it was concerned about the Sage Sagittarius and a man-overboard incident on the K Pride as the ship was heading to Newcastle, Australia, in 2015.

The Maritime Union of Australia (MUA) has indicated that suicide is 20 times more prevalent for seafarers on flag of convenience vessels.

There were 24 submissions to the Inquiry including one from the Department of Immigration and Border Protection which says the use of flag of convenience ships are more attractive for use in illegal activities. The submission also states that these ships, with complex financial and ownership arrangements, can be shrouded in secrecy making it difficult to hold anyone to account for injuries and deaths on board.

The senate inquiry coincides with a move from by the Australian Federal government to deregulate the Australian shipping. This is raising concerns about the loss of Australian jobs being lost and potential weakening of labor standards. This year, two ships – the MV Portland and the CSL Melbourne – have had their Australian crews sacked and replaced by developing world workers. 

However, in its submission to the Inquiry, the International Chamber of Shipping (ICS) states: “ICS notes that the Senate inquiry concerns so-called ‘Flags of Convenience.’ In the opinion of ICS, this is actually a pejorative term that has its origins with a political/ industrial relations campaign waged by the International Transport Workers’ Federation (ITF) since the 1940s, originally in response to the use by U.S. shipping companies of the Panama and Liberia flags.”

The submission continues: “Ironically, because of the influence of ITF’s industrial relations policy, the pay received by many seafarers from developing countries, serving on ships under a flag designated as ‘FOC’ by ITF, is actually superior to those serving on ships under developing countries’ flags which are not open registers. This is because many seafarers on ‘FOC’ ships are subject to collective bargaining agreements approved by ITF, without which the ships might be subject to boycott action by ITF’s dock worker affiliates worldwide. However, this boycott policy is not usually applied by ITF to ships on what it regards as ‘non-FOC’ flags, even if the employment conditions might be inferior.”

ICS believes that foreign ships have no direct impact on Australia’s minimum employment law standards. Except in those trades where Australian requirements may also apply, foreign seafarers are subject to the employment law of their flag State and their country of residence, as well as the requirements of the ILO Maritime Labour Convention.

The committee published an interim report, and the MUA says it references the concerns of its members:

•    The erosion of the Australian flag through unfair flag of convenience competition
•    Environmental impact from flag of convenience vessels
•    Loss of jobs and erosion of maritime skills base
•    Fuel Security
•    National Security
•    Cabotage
•    Temporary Licenses
•    The Sage Sagittarius deaths
•    The MV Portland dispute

The interim report’s recommendations are:

The committee recommends that the Commonwealth undertake a review of the Australian maritime sector, with a view to building on the 2012 reforms aimed at growing the Australian-flagged shipping industry in the future.

The committee recommends that this review include a comprehensive whole-of-government assessment of the potential security risks posed by flag of convenience vessels and foreign crews.

The committee recommends that this review include consideration of ways to harmonize the operations of the Australian shipping sector across jurisdictions through the Council of Australian Governments to reduce red tape for vessel and port operators, including cargo handling provisions. 

The committee recommends that this review include widespread consultation with the Australian shipping industry to ensure that its findings are relevant and directed to shared objectives for the future of the local maritime sector.

The committee recommends that the Commonwealth immediately tighten the provisions for temporary licenses in Australian maritime law, to flag of convenience vessels being used on permanent coastal freight routes if they fail to pay Australian award wages to their crew.

The committee recommends that the Commonwealth adopt a broader and more rigorous approach to the risk assessment and oversight of seafarers working in Australian waters on maritime visas, and better share this information across relevant Commonwealth and jurisdictional agencies.

The committee recommends that the Australian Government continue to work with international agencies, including the International Labour Organisation, to improve the working conditions, safety standards, and rates of remuneration for seafarers working in international shipping.

The committee recommends that the Australian government look for ways to support the Maritime Labour Convention to make flag of convenience shipping more accountable to international law and, when in Australian waters, to our national regulations.

The committee recommends that the Commonwealth consider ways to improve the early intervention and counselling resources available to crews on international vessels, including those operating on flag of convenience registers.

The report is available here.