Pilotage (Amendment) Bill



About this Item
SpeakersMurray Mr John; Page Mr Donald; Thompson Mr George
BusinessBill, Second Reading

PILOTAGE (AMENDMENT) BILL
Second Reading

Debate resumed from 26th February.

Mr J. H. MURRAY (Drummoyne) [4.12]: At the outset, the Opposition wishes it to be made known that it is totally and strenuously opposed to the Pilotage (Amendment) Bill, basically because it is just another example of the dogma and improper philosophy being expressed in this Chamber by the Government. It believes that all public sector functions undertaken by the Government are inefficient and, as a consequence, must be undertaken by private enterprise. That is the case with this piece of legislation. It will certainly be to the detriment of the taxpayers of New South Wales. The Minister for Transport, in his second reading speech, painted an extraordinary picture of the Maritime Services Board at the time his Government came to power. Question time after question time, Ministers have come to the table giving a similar diatribe.

Mr Baird: But it is true.

Mr J. H. MURRAY: The Minister says that it is true. If he sits around for five minutes, I will show him why it is not true. I will quote to him his own utterances from years gone by when he agreed that many of the actions of the Maritime Services Board were quite applicable and that certainly he supported them. I have struggled for some time to understand the amazing situation whereby an organisation floating upon a confused sea of inefficiency, overstaffing and outmoded business practices could be allowed to have survived for as long as it did. Taking into account the Minister's utterances, he is shown to be inefficient. It is only when one sees the myriad documents that tend to fall off the back of government trucks and land in the laps of Opposition spokespeople that one gets an understanding of the confusion and inability of this Government and this Minister to get on top of the portfolio. A totally different picture from the picture which the Minister so graphically painted in his second reading speech emerges when one peruses these documents. Indeed, so different is the picture that a less generous soul than the member for Drummoyne might be led to the awful conclusion that the Minister might have been a little selective and economical with the truth.

If one looks at these documents, one sees a more accurate picture of the Maritime Services Board. First, let us look at the work force as outlined in the documents that the Minister conveniently decided not to refer to when delivering his second reading speech to this House. Between 1986 and 1988, MSB full-time staff numbers fell from just under 3,500 to 3,000, a fall of more than 15 per cent. This was part of a process that was set in place with the boards, unions and staff. It was transforming the organisation into a most efficient port authority. A continuing fall was already built in. A measure had already been put in place to process that achievement. As a result of this process, revenue per employee in the five years to 1988 had risen by 40 per cent, a figure the Minister cannot put to this House for the period from 1988 onwards. In that same five-year period, MSB charges had fallen by 32 per cent in real terms, providing a massive benefit to the exporting industries of New South Wales. Indeed, charges to the New South Wales coal industry had fallen by an even greater proportion. From 1984 to 1988, the number of staff who were computer literate went from a low of 40 to nearly 100. This was the highest comparative level of computer literacy in the New South Wales public service. That is not a bad effort for a ship without a rudder.

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Port safety did not escape attention either from this so-called rudderless ship. For the first time an adequate emergency response was provided, with three new fire-fighting tugs and fire monitors fitted to all commercial tugs in New South Wales ports. In 1988 the MSB was funding a capital expenditure program of nearly $60 million annually entirely from internally generated funds. The total level of borrowings between 1987 and 1988 fell by $132 million, and the board's debt to the Treasury fell by $86 million between 1984 and 1988. The Minister could not quote those figures because they would have been embarrassing. The retirement of this foreign debt was decided on not by the current Minister but by the previous board. The board had also appointed specialist private sector fund managers and had achieved a major shift from foreign currency to Australian currency loans. In accident prevention and rehabilitation, the MSB was leading the entire public service in Australia. In the two years from 1986 to 1988, the cost of workers' compensation claims fell by 60 per cent. It was a massive decrease from $2.5 million to $1 million. The board was able to become one of the few holders of a workers' compensation, self-insurers licence.

In 1984 the Maritime Services Board had an unfunded superannuation liability of $73.4 million. By 1988 it had entirely funded that liability at the same time as it was funding all capital expenditure without borrowing, and reducing charges by 32 per cent in real terms. I understand that this is embarrassing for the Minister for Transport and he cannot sit at the table and listen to these statistics which are truthful and show that the information he presents to the Parliament is always coloured and has been entirely skewed. During this time this supposedly dreadfully inefficient organisation had pulled off one of the greatest property coups of the 1980s. It turned a moribund set of old and dilapidated buildings valued at about $19 million into a new head office development valued at about $100 million to the board and reduced its operating costs by $4 million a year. In addition the board achieved the realisation of $65 million for its old head office building, which is now being put forward for use for the public benefit. A major program of disposing of surplus land and buildings had also delivered $80 million in revenue to the board and additional realisations had been put in place for 1989 that would have delivered a further $70 million. While the board has achieved all of these gains it has been able also to reduce its operating costs by 28 per cent. All I can say to the Minister is that he was wrong, wrong, wrong again.

Mr Hartcher: We have heard that before.

Mr J. H. MURRAY: That is right, but in this case it is being said by the Opposition and is effective and truthful. As I said, while the board was achieving these gains it was able to reduce operating costs by 28 per cent. The major pricing reform for which the present Government is happy to claim credit was commenced under the administration of the former Labor Government in 1985 and was virtually completed by the time of the change of government. So revolutionary was that change that by 1988 it had already earned its author high praise from the United Nations as a model for the South-east Asia region. The Minister seems to have had convenient amnesia about this magnificent list of reforms; or perhaps he has selective blindness. Let me quote what the Minister said on 30th August, 1989, when speaking about the previous board and management:
      In five years they changed the organisation from being centralised and engineering oriented and set the foundations for a new commercial outlet.

It was kind of the Minister for Transport to mention that so that I could have it recorded in Hansard. I am disappointed that he selectively forgot to mention it in his second
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reading speech. He went on to say that the former general manager of the Maritime Services Board, Les McDonald, had with distinction fulfilled his brief to reform the MSB. They were the Minister's words. He went on to say as follows:
      There are numerous poorly managed government organisations desperately in need of his talents. It is my hope that he will accept the offer of a more highly paid position to reform one of those organisations in the same way as he has rebuilt the MSB.

The Minister cannot have it both ways. He cannot denigrate the Maritime Services Board in this House and indicate to the people of New South Wales that it is inefficient and ineffective when in 1989 he said exactly the opposite. The Minister seems to have changed his mind somewhat. In his second reading speech he said:
      The task of restructuring the Maritime Services Board has not been an easy one, and this is probably the reason previous governments chose to ignore the problem.

I tell the Minister that previous governments did not choose to ignore the problem; they went about dealing with it in an efficient and effective manner. I have spoken already about some of the microeconomic reforms achieved by the board. A great number of them have been the result of the positive role played by the unions. I shall go through some of them. The MSB has improved staff productivity based on revenue per employee from $96,000 per annum in 1989 to $153,000 per annum in 1991. Further improvement in productivity is expected to be about an additional $46,000 per employee this financial year. That is not bad for a group of employees who under the provisions of this bill will get the axe, will be shafted and have their jobs handed over to private enterprise. The unions are at present in the process of negotiating further restructuring, which will reduce costs by up to $1 million for Port Jackson and Botany Bay pilot operations. Once again these people are doing something for the people of New South Wales, and what will be their return? The return will be that they will be told "Thanks very much, but we are going to privatise you. See you later". The Seamen's Union of Australia, for example, has been prepared to sit down and discuss the MSB proposal to reduce further the crew sizes of pilot vessels, but the MSB has not been willing to discuss the matter. That proposal would save another $400,000 a year, yet the Minister, who claims to be an efficiency expert, who claims to be the guru, will not sit down with the people involved at the workface who can point to a saving of $400,000. He will not talk to them.

The Merchant Service Guild of Australia also is negotiating reductions in pilot numbers. That would save another $300,000 a year. When the so-called loss is the Minister's major reason for privatisation, why has he chosen not to make the Parliament aware of this information? I shall tell honourable members the reason the Minister has not told the Parliament that negotiations are being undertaken that would save the pilot program $300,000 a year. It is because there is a hidden agenda. This legislation has as its hidden agenda to offload the pilot system on to one of the Government's mates. It will be somebody in the maritime industry, and this State will finish up with a vertical integrated monopoly. When a boat comes into Sydney Harbour it will have to go to the same firm for pilotage services, demurrage, wharf charges and everything else, and the Maritime Services Board will be at the end of the table. That is just not good enough. It will lead to inefficiency. I can say truthfully to the Minister that there are occasions when the Opposition believes that privatisation will benefit the taxpayers of New South Wales and provide for better services. But what the Minister is proposing does not fit into that category. It does not come within cooee of any of the major criteria for efficiency. He is going to hand over a government service that runs effectively and provides a safety factor for the people of New South Wales and Australia. He is going to hand it over to private enterprise without there being any real government control. I tell him that he will get problems. As I said, that is the hidden agenda.

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I ask the Minister also why it is that we have to do this for the port of Sydney yet when it comes to Illawarra or the port of Newcastle there is no similar proposal? What the Minister is saying is that the ships that come into Sydney Harbour are different to the ships that go to Newcastle or the Illawarra area. I might be a bit dumb, and sometimes I am easily led, but in reality he cannot tell me that there is a difference in pilot services between the port of Sydney and the other two ports I have mentioned. I will tell honourable members the reason for these actions. This is the first step. This is the introduction of the domino system. The Minister will knock over the port of Sydney and when he has done that, privatised the pilot service and given it to his mates, he will say "Sorry, we have to have conformity throughout New South Wales so the ports of Newcastle and Port Kembla will have to come under that umbrella". The Minister did not mention that in his second reading speech. He did not mention how those two ports have undertaken efficiency campaigns and are working adequately. Those who work in and administer both of those ports believe that privatisation is not appropriate. They have been involved in productivity campaigns and consequently are not interested in privatisation. The real strong man in New South Wales, Mr Moore-Wilton, is standing over the port authority. This weak-kneed Minister is succumbing to that bureaucratic push.

The budget that has been presented to the Minister has been loaded with administrative, maintenance and other costs that are not directly attributable to the pilotage service. Can the Minister explain why a private sector organisation would want to take on this alleged business disaster if it was not profitable to do so? The Minister said that $716,000 went down the drain but he did not mention savings that are in the wings or that costs incurred by other sectors of the port have been loaded in to the income and expenditure statement. That figure of $716,000 is not accurate, and I shall explain why. With the Minister's new view of the old Maritime Services Board having gone out the window, the Government and its administration boast a very poor record. That follows close on the heels of puerile advertisements for which the Government has forced New South Wales taxpayers to pay, advertisements which tell them why they should be grateful for the Government selling their birthright to pay for the Government's mismanagement, waste and ballooning deficit. The Government has no strategy to deal with its own poor administration except to give the problem - and, more important, the profits - to someone else. That is nothing but a cop-out by the Government of its responsibilities. Nothing more clearly illustrates the poverty of the approach to management by a Premier and a Government that have fraudulently - and unsuccessfully - tried to sell themselves to the people of New South Wales as great managers. In The Entrance by-election the Government did poorly, with a 9.4 per cent swing.

Mr Baird: Rubbish! It was a 4.5 per cent swing.

Mr J. H. MURRAY: The Minister should study the final figures, which will be replicated in a State election. The residents of The Entrance had six months prior to the by-election to digest the Government's attitudes and management theories, and expressed their opinions when they voted.

Mr Baird: What did Saulwick say?

Mr J. H. MURRAY: That is a sore point for the Minister but the final result was a 9.4 per cent swing on the two-party preferred system. Nothing could more clearly illustrate what people think about the management approach of the Government. The Minister in his second reading speech explicitly recognised that the pilotage service is a
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natural monopoly. Small wonder that there have been so many expressions of interest in taking it over. What commercial organisation in its right mind would not want to take over a monopoly service, the use of which is enforced by legislation? I ask the Minister: can I get on the bandwaggon? I am in the wrong party for that. Customers have no choice about whether to use a service which has always been provided by the Government. That Government monopoly will be handed over to a private organisation.

To ensure that the monopoly powers inherent in the safety requirements are not exploited, I and the Opposition believe those powers should remain in Government hands. The record of the Thatcher Government and subsequent regulation of such privatised monopolies will not give great heart to the shipping industry using New South Wales ports. I note that the freeze on charges for these services will lapse after only three years: after three years it will be open slather. At question time today, the Minister and the Premier spoke about efficiency and lack of efficiency in the maritime industry, yet the Minister will give a monopoly to a private organisation, which after three years will be able to charge what it wishes. I am not comforted by the Minister's assurance that he will need to approve any increased prices for pilotage services, given the Minister's poor record of having approved massive increases in public transport fares and charges over the past few years. The Minister's record is not good enough. The largest transport charge increases on the Australian continent occurred in New South Wales during the time the Minister has been in a position to approve such charges. The Minister's track record is such that in three years' time any ship entering a port in New South Wales will be hit by hefty charge increases which will represent increased profits for the owners of that monopoly.

We can look forward also to a decrease in the relevance of the regulatory function of the New South Wales Department of Transport. The record of such bureaucracies - which are remote from the action and generally have little or no specialist expertise - is not good in this country and has not been good under the tutelage of the Government. I should not let pass the opportunity to make mention of the Minister's proud reference to the so-called great breakthrough in Government administration, which is the brainchild of the Love Boat picture fancier, Gary Sturgess, whom I noticed in the House a moment ago. He must have known I was going to give him a little credit. The separation of regulatory and policy functions from the operations and administration functions is the sum total of the wisdom that Mr Sturgess has been able to extract from the multimillion dollars of taxpayer's money that he has spent on the army of consultants that he regularly feeds. If I come back to this earth and want another job, I will come back as a consultant for the New South Wales Government.

Mr Downy: We would not hire you: you would not get a job.

Mr J. H. MURRAY: The honourable member for Sutherland says I would not get a job. Anyone can get a job as a consultant for the New South Wales Government if excessive charges are claimed. This apparent inspiration came to Mr Sturgess when he realised that his favourite ideology, privatisation, would founder in the face of the need for a number of instrumentalities to exercise a regulatory function for Government. No problems, thought Gary; just take these functions away and give them to any convenient government department in the vicinity. I gather that some similar thought must have crossed his mind when the Government appointed two Ministers for Health, one for policy and the other for implementation. The Minister for implementation -

Mr Price: The Minister for bad news.

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Mr J. H. MURRAY: The Minister for bad news now is taking the Premier apart at openings. The Minister is not concerned about having his name on plaques because he is closing hospitals down rather than opening them. A problem has been created: anyone with any knowledge of the health system is aware of the havoc wrought by Mr Sturgess's little gem of inspiration on health administration and health services in New South Wales. If the proposed legislation is passed, the same philosophy, answers and performance will still be evident. It will be an absolute disaster. The Minister indicated in his second reading speech that the pilot service loses between $500,000 and $700,000 a year on operating costs. This seems to be the single reason for the service to be privatised. Unfortunately, however, the Minister has not offered any justification whatsoever for that figure. In fact, the variance of $200,000 is so vague as to be totally unacceptable and meaningless - and has probably been set aside to employ more consultants. The reality is that the pilotage consolidated income, expenditure and appropriation document of the Maritime Services Board Sydney Ports Authority for the month ended 30th June, 1991, shows a deficit of $716,000. But what else is to be seen in those figures? The reality of the $716,000 loss is that it includes an enormous amount of money paid as wages to people who work in other areas of the business unit and would have dealings with the pilot service as only a segment of their duties or in a supervisory role far removed from the actual running of the organisation.

In the consolidated income, expenditure and appropriation document for the month ended 30th June, 1991, internal expenses are shown as $848,000 and Sydney Ports Authority overheads as $1,012,000. How could overheads of $1,012,000 be included in expenditure for pilot services? If that is an example of how Treasury is organising the Maritime Services Board's accounts, no wonder it can come up with figures to produce a result for the Minister. That is not acceptable. If the Minister wishes to use that one criterion of a loss of $716,000 as a reason for selling the service, the Opposition wants much more intensive and accurate assessment of actual costs, expenditures and incomes rather than this flimsy document which has been thrown around as the answer. The Minister has avoided mentioning the ultimate cost of the people who will be employed in the Department of Transport to take over the regulatory and policy functions.

Given the way that inner budget sector departments such as the Department of Transport have exploded under this Government, it is a fair bet that all of those savings mentioned by the Minister, and more, will be chewed up in short order by bureaucrats in another area. I can guarantee they will all be on Senior Executive Service payments. There has not been a government department that has not had an explosion in SES personnel since 1988. That has been debated in the Parliament. Every government department that has been mentioned has experienced increases. The Minister seeks to present an impression that New South Wales is simply in accord with an international trend among countries within the Organisation for Economic Co-operation and Development to privatise port services. It is a little like the throwaway line used by the Premier about the debate on privatisation being in the OECD. The suggestion is an utter misrepresentation of the real position. The extent to which privatisation exists in the OECD varies as much as it does anywhere in the world, because of the widely differing starting points and the ideological stance of the government found in that area. Suffice to say that in the more successful - and that is the key word - OECD countries, there is less than complete enthusiasm for wholesale privatisation. They have seen the drawbacks of privatisation.

It is possible to see some slackening of enthusiasm for unadulterated privatisation even in the newly liberated eastern European countries. That is not surprising, as those countries recognise that with their freedom comes the freedom to be unemployed and without a social security net. The Minister's ideological baggage will not allow him to
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understand, no matter how often he is told, that most of the OECD governments regard their ports as valuable means to assist their local industries. Thus they heavily subsidise port operations for their infrastructure programs. This is true in the United States, Japan, West Germany, France, Italy and also in most of the tighter economies in Asia. It is quaint to realise that the Minister can seriously believe his bureaucrats when they say that just by changing the ownership of the Sydney and Botany Bay pilotage service it will be possible to emulate an alleged record of no industrial disputes since 1874 in the Queensland and Torres Strait pilotage service. That is a lot of garbage. That simplistic thinking is characteristic of the level of sophistication brought to complex policy issues by this Government. Whoever operates the pilot service in future will be dealing with the same union whose members now provide pilotage services in New South Wales ports. The outcome is awaited with considerable interest. The Minister is saying: "You only have strikes in the maritime industry if that industry is run by the Government. There are no strikes in the maritime industry if it is run by private enterprise". That is wonderful logic!

The honourable member for Waratah has had considerable experience in the maritime industry, having been a senior ships officer for three years. He can certainly validate what I am saying. Before rushing into this grossly ill-considered piece of legislation, the Minister has a responsibility to advise the Parliament of all the facts surrounding the pilot service. More importantly, he has a responsibility to examine all opportunities to cut overheads and to increase profits. He has a responsibility to enter into restructuring negotiations with the relevant unions. That is under way, but this Minister called the deal off and said, "We are going to privatise". That is just not good enough. The Minister cannot honestly, in all conscience, say that those 1991 figures are the reason for privatisation. In effect he knows they are bodgie figures; but more importantly, a large component of that expenditure is going to change in the next financial year because of the co-operation of the unions. It is no good the Minister saying he does not think it will be possible to resolve this with the unions. It was resolved with exactly the same unions in Newcastle and with exactly the same unions in the Illawarra area; ipso facto, there is no reason that the same result would not be achieved in the Port of Sydney. I have great concern about the amendment to section 25 as proposed in item (14) of schedule 1 which states:
      (2) When a ship is unable, or will in the opinion of the master be unable to enter into a pilotage port within one hour of the time stated for so entering in the application by the owner or master for a pilot, the pilot attending may defer pilotage and cease attendance.

The Opposition has great concern about the legality of that amendment. Who will referee the dispute in such a case where a claim is made on the pilot by the contractor? I am told that it is extremely difficult to determine when and why a vessel is late without actually boarding the vessel. This raises the problem: who will determine any dispute that should - and no doubt will - arise between the authority and the contractor of the pilots? The Minister has a responsibility to advise this Parliament what is meant by that amendment. If it is going to be a body or individual in the Department of Transport, guided by the head of the department, presently Mr Moore-Wilton, honourable members have reason to be concerned. One must also have great concern about the possibility of the successful contractor of the pilot service being granted a monopoly over all of the Sydney ports. One can imagine the granting of the contract to one of the major companies not only to run the pilot service but also to supply the tugs for the vessel, the linesmen and the lines from the vessel to the port. If ever the Minister were looking for a monopoly to strangle a Sydney port, this is just the way to do it. Henry Ford would not have thought he could achieve that, even though he did try.


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Because of the problems of the Government, because the Minister has been inept, the port of Sydney is missing out. Nissan Australia will service its operations through Brisbane. It will not service them through New South Wales. Nissan will do that because the performance of the Minister and his department, and his administration of the Maritime Services Board, have been dismal. The Federal Government has recognised the Minister's poor performance. In the Prime Minister's statement on Wednesday evening he said that additional moneys would be provided for a transport link from Brisbane to port Brisbane - no such luck for New South Wales. The Minister has not grasped the nettle. He does not understand what is necessary to bring about efficiencies in the port of Sydney.

The Sydney Ports Authority pilot service provided staff to erect emergency booms around a ship that was beached in the port of Eden during a recent storm. I ask the Minister whether he is aware of this? The pilotage service is in a position to take this action because it is a government enterprise. No doubt the member for South Coast would be interested to know whether a privatised service would travel to Eden to deal with matters that arise there. I am sure it would not. Ecological disasters could occur in ports along the entire coast of New South Wales and the pilotage service must be used to deal with such problems. I am sure the shadow minister for environment will elaborate on this matter when she speaks in the debate. The Minister should also explain what contingency plans will be put in place to respond to emergencies such as ships aground, pleasure craft accidents, fires, and even aircraft accidents in Botany Bay.

I understand the unions believe that negotiations currently under way with management have the potential to provide a streamlined and profitable service to the Maritime Services Board. There is a potential to earn income for the Treasury. Private enterprise knows that. That is why people are knocking each other down to take over the business. The budget deficit is ballooning daily yet the Government is throwing away an opportunity to earn additional income. The retention of the pilotage service by the MSB is essential to ensure public safety and the continued protection of the environment. It would appear that the only reason the Government can give for privatising the pilotage service is that the current one loses money and there are not the management skills to fix it. What an admission! Apart from being an accurate assessment of the Government's capabilities, that is so unconvincing that we are led to the inevitable conclusion that the Government is pursuing privatisation not as a matter of efficiency, equity or management pragmatism but purely as a matter of ideology. That hardly constitutes a sound basis for sensible stewardship of the public's assets. I implore the House to reject the bill. As I said earlier, the Opposition will vote against the measure.

Mr D. L. PAGE (Ballina) [4.52]: I am very disappointed that the Opposition does not support the bill, particularly for the reasons given by the honourable member for Drummoyne. Basically, they revolve around the dogma that unfortunately seems to have captivated the Australia Labor Party in New South Wales recently - its anti-privatisation stance. Generally speaking, the honourable member for Drummoyne said that the Opposition would not support the bill as it is not in favour of privatisation. I put it to Opposition members that governments are involved in non-core business activities in which they do not need to be involved. If a service can be delivered to the public at the same price or cheaper, and safety and quality of service are not compromised - and this is what we are talking about here - there is absolutely no good reason for the taxpayer continuing to subsidise, to the tune of hundreds of thousands of dollars, a service that can be perfectly adequately performed by the private sector. The honourable member for Drummoyne does not appear to have read the bill very closely. He talked about the people currently providing the service being disadvantaged. Under proposed new section
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32B the Maritime Services Board has to go to public tender for the provision of the service. If those who currently provide the service want to tender, they will be able to do that.

From the comments of the honourable member for Drummoyne one would think that we are setting the pace in New South Wales. That is not the case. Overseas ports have been privatised. The honourable member for Drummoyne mentioned Nissan going to Brisbane. The port of Brisbane is privatised. The honourable member for Drummoyne seemed to suggest that when we came to government the MSB was very efficiently run and that the achievements introduced under this very competent Minister for Transport are not real. The honourable member for Drummoyne must not have read the annual reports of the MSB over the past three or four years. They show that revenue per employee when Labor was in government was $100,000. Today the figure is $200,000 - an exact doubling of the productivity of the MSB under our stewardship. When we came to office the MSB was heavily in debt, owing $400 million; today it owes $250 million. When we came to government the MSB had 3,100 employees; it now has 1,500 employees.

The MSB has paid a dividend to this Government for the second year in a row. That never happened under the previous administration. Members of the Labor Party have the cheek to cast aspersions on the Minister for not improving the management of the MSB. For the first time the MSB has been streamlined and run on commercial principles. The pilotage service does not need to be publicly owned. It does not fit the core activities of the MSB. Basically the MSB is a landlord for the ports. It is not a player and does not need to be engaged in a publicly funded pilotage service. The service can be contracted out and there is no reason why the taxpayer should have to fund the service. I have no doubt that when the service is provided by private enterprise it will be much more efficient. Safety will not be compromised either. Those people piloting the ships into Sydney Harbour and Botany Bay will have to meet the same standards and be licensed in the same way as those providing that service today. The honourable member for Drummoyne implied towards the end of his remarks that charges would balloon after the three-year capped period. The bill provides that charges cannot rise beyond a certain level. Even after the third year the Minister will have regulatory control and will allow increases only if they are fair and reasonable in the circumstances. So all regulatory controls will not be removed.

I shall refer to a couple of aspects of the bill which I think need clarifying. They were not really clarified in the Minister's second reading speech. The honourable member for Drummoyne raised the question of privatisation of other ports in New South Wales, such as Newcastle. This is enabling legislation. It will allow ports in New South Wales to be privatised but it does not say that they must be privatised. I would not mind betting that in future quite a few ports in New South Wales, having seen the benefits of privatisation, will take advantage of what this legislation has to offer. Another point I wanted to raise relates to safety. It has been suggested that should the successful operator employ pilots other than those currently employed by the Maritime Services Board there would be no guarantee that the safety of ships would not be compromised. The Pilotage Act provides that pilots must be licensed, and should the new operator seek to employ persons who are not licensed, or pilots from other ports who are not endorsed for work in Sydney and Botany Bay, those employees will need to be appropriately trained before they can act as pilots. In other words, they will need the same qualifications as those pilots who bring ships into Sydney and Botany Bay at present; that is, they will have to be licensed by the director-general. I am advised that a number of pilots who are now employed by the Maritime Services Board are likely to be employed by the new operator, whomever that may be.

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The bill states that a pilot will act only in an advisory capacity and that the master will be fully responsible for the safety of the ship. A number of people have asked me why the master should incur a penalty of $10,000 for disobeying a pilot safety order and taking a ship to sea. The answer is that although a pilot is an adviser to the master, he is nevertheless a professional seafarer and is therefore required to make a reasoned judgment on the seaworthiness of a vessel on behalf of the port authority. If a pilot boards a vessel to take it out of port but he has reason to believe the vessel is unsafe, he will refuse to take the vessel out and will advise the master and the port authority of his reasons. In those circumstances a master who then proceeds to leave a port without a pilot, thereby risking blocking the entrance to the port or endangering the life of his crew, commits an offence under the Act. I commend the Minister for increasing the penalty for this offence from $400 - which is a farce - to $10,000 which is a more appropriate penalty.

I conclude my remarks by stating the obvious. We are not doing something new here. It has been done in many ports throughout the world, including in Australia, very successfully. In Australia independent operators have worked at Western Port, Port Phillip, Dampier, Gove and Brisbane, and a private operator has conducted the pilotage service in Torres Strait since the 1800s. This is not a new concept. There will be no diminution in the quality of service provided. There will be no diminution in the safety of vessels if they are brought in by a pilotage service that is not necessarily owned by the Government. Under proposed section 34B, if the pilots who now perform that service wish to tender for the work, they will be free to do so and the Government will be bound by its tendering procedures to view that application in an appropriate light.

Mr THOMPSON (Rockdale) [5.3]: The honourable member for Ballina, in his opening remarks, said that the Opposition is captivated by an antiprivatisation dogma. Clearly, that is not the case. If there is any dogma in this debate, it comes from the Government, which has a mindless and cold-blooded commitment to privatisation - privatisation at any cost. It will go to any lengths to push its dogmatic beliefs on to the people of New South Wales. Though this bill deals generally with port pilotage facilities, my prime interest in it arises from the fact that its provisions are to be implemented in Sydney Harbour and Port Botany. Port Botany is a major facility in Botany Bay which is bordered on its western rim by my electorate of Rockdale. Thus I and my constituents have a natural interest in any decision of this Government that is likely to affect the bay or activities in the bay. The bill will enable the Maritime Services Board and port authorities to privatise port pilotage services. The bill continues the trend of this Government to separate regulation from operation and to divest the operation of pilotage services to private enterprise, transferring its regulation from the Maritime Services Board to the Department of Transport. The Minister in his second reading speech stated:
      The object of this bill is to enable the Maritime Services Board to privatise the State's port pilotage services. This has been achieved by amending the Pilotage Act 1971 to provide for a port pilotage service to be provided by the Maritime Services Board, a subsidiary Maritime Services Board Port Authority, or an independent operator.

I quote further from the second reading speech:
      The principal purpose of the bill is to shed a loss-making element of government business and to enable private enterprise to tender for this previously government-operated service to shipping. It seeks to do this by permitting the MSB to enter into contracts with private companies for the provision of pilotage services at different pilotage ports under contract.


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A pilotage service has operated in the ports of Sydney - that is, Port Jackson and Port Botany - since 1792. Pilotage services have been the cornerstone for the development of the nation as the role of the pilot is to guarantee safe navigation by commercial shipping within the ports. There has never been a private pilotage service in New South Wales. In Australia the majority of pilotage services are conducted by port authorities or State government departments. There are some exceptions, and they are based on historical circumstances. For example, the Port Phillip sea pilots have operated as a private company since the early days of the colony in Victoria. The pilotage service provides pilots to shipping in Melbourne, Geelong and Western Port. The Victorian port of Portland has a pilotage service operated by the Port of Portland Authority, which is a government authority. Though the pilotage services in Victoria are operated as private services, they are controlled strictly and regulated by the Marine Board of Victoria. Not only are pilots licensed but all activities, including the number of pilots, recruitment, ongoing training, fees and charges levied on shipowners and associated matters, are controlled directly by the Marine Board. Such circumstances are not contemplated in the legislation we are debating in this House. In fact, the bill advocates an arrangement that is advantageous to a private company.

The proposal in the Pilotage (Amendment) Bill is to hand over to a private company a natural monopoly. As I said before, the provision of pilotage services was the cornerstone to the development of trade and commerce within the ports of New South Wales. They have generated substantial turnover. At least in the Illawarra and in the Hunter pilotage services are profitable. The service in Sydney should be profitable also. This bill has been introduced as a result of ongoing industrial negotiations over the past two years primarily between the Merchant Service Guild and the Maritime Services Board concerning a revision of the award and the negotiation of a new award for pilots. Those industrial relations have been difficult and protracted. From time to time the board has threatened the pilots and the guild that should agreement not be reached on proposals put forward by the MSB the board will privatise the pilotage services.

It is significant that over the past several weeks detailed agreements and arrangements have been reached between the pilots, the Merchant Service Guild and the MSB Hunter Ports Authority and the MSB Illawarra Ports Authority. Indeed, an award went to the Industrial Relations Commission as a result of hearings before the commission on 23rd December last. The approach taken by the MSB Hunter Ports Authority and the MSB Illawarra Ports Authority has been to negotiate a revised industrial agreement with the pilots but also to incorporate the considerable skills and experience of marine pilots within the port operations management structure of those two ports. This is the basis of the new industrial arrangements contained in the award. The Merchant Service Guild has not been able to reach agreement with the Maritime Services Board Sydney Ports Authority. One must ask why. After nearly 12 months of negotiation throughout 1991, the terms of settlement to finalise the negotiation between the Merchant Service Guild and the Maritime Services Board Sydney Ports Authority were accepted in principle by the authority, the guild and the pilots in November and early December 1991 but when placed before the main Maritime Services Board meeting on 5th December, the terms of settlement were rejected. That was despite the fact that the terms of settlement were supported by senior management including the acting chief executive and the general manager of human resources.

The Pilotage (Amendment) Bill has been introduced in the context of the industrial negotiations that have been conducted during the last two years and the failure of those negotiations. At present the major issue between the Merchant Service Guild and the Maritime Services Board concerns the proposed reduction in the number of
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marine pilots in the Sydney ports. The parties do not agree on redundancy and the guild has commenced proceedings in the Australian Industrial Relations Commission. The guild is arguing for redundancy payments in excess of current New South Wales Government standards. In view of the situation in the real world in relation to redundancy, is it any wonder the guild is seeking to argue that point? The introduction of the proposed legislation at the present time is clearly an attempt by the Maritime Services Board to frustrate the proceedings in the Australian Industrial Relations Commission. It is trying to dud workers in the industry. Simply put, the Maritime Services Board is attempting to privatise the Sydney ports service and ultimately terminate the services of the present marine pilots prior to the conclusion of proceedings currently under way in the Federal commission.

Earlier today the Premier referred to certain places in eastern Europe, but governments of all political complexions - communist, socialist, liberal, conservative or whatever - are committed to widely defined privatisation programs which include the sale of selected public assets and the acceptance and encouragement of the private sector's role in the construction and operation of vital infrastructure projects. The guiding approach of the New South Wales Opposition to privatisation involves a twofold test. This test has been articulated in this House on several occasions during the last few months. That twofold test is, first, what is the social usefulness of public ownership case by case, instance by instance? Second, what is the retention value of the enterprise measured against its sale value? This approach is essentially a broad-based social and economic cost benefit analysis and is the opposite to the Greiner Government's narrow arid financial criteria. In the opinion of the Australian Labor Party, a similar broad analysis should also be employed to judge the merits of private sector involvement in the State's infrastructure. By any objective measure, this bill fails the test. It is strongly opposed by the membership of the unions involved, and for good reasons. It is opposed from an economic viewpoint and from the perspective of harbour safety and environmental protection. In his second reading speech the Minister said:
      One of the results of this process was identifying the pilotage services of Sydney and Botany Bay as such a loss-making element. Honourable members will realise that this has not been achieved overnight and a lot of hard work has gone into producing the outcome.

According to the 1991 annual report of the Maritime Services Board of New South Wales, the combined revenue for pilotage services in the three main ports - that is the Sydney ports of Port Jackson and Port Botany, Newcastle and Port Kembla - was $12,424,000. That was an increase of $757,000 from the 1990 figure of $11,667,000. Pilotage charges have not increased since 1986 despite increasing costs and the rise in consumer price index and inflation figures. The costs of pilotage in New South Wales are the cheapest in Australia for main ports. [Extension of time agreed to.]

For this reason alone there is no reason why the pilotage service in the ports of Sydney and Botany Bay should be losing money. The assertion by the Minister of a loss on pilotage services in the Sydney ports is a mechanism to allow the Greiner Government to advocate privatisation. If the decision whether to privatise was based solely on commercial criteria, there would be no case at all for the privatisation of this natural monopoly and essential service to shipping, trade and commerce. In its 1989-90 budget the Maritime Services Board Sydney Ports Authority allocated $1,159,000 for overheads and against the revenue of the pilotage service. With revenue in 1989-90 for the Sydney ports pilotage service of about $6 million the overheads, which were not defined, represented about 19.32 per cent of the total revenue. The authority now claims that the service is making a loss and needs to be privatised. Put simply, the pilotage service is
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being loaded up with excess financial baggage. There is a rort or, at the very best, creative accounting going on and this is being used to justify a political position on privatisation.

In the submission to the Maritime Services Board from M. Fox, the Managing Director of the Maritime Services Board Sydney Ports Authority, dated 27th August, 1991, which advocates the privatisation of the Sydney port pilotage service, attachment No. 5 was entitled "Pilotage - MSB Sydney Ports Authority - Consolidated Income, Expenditure and Appropriation for Month ended 30 June 1991". In that document the following figures are stated: first, income from pilotage, $6,674,000; second, expenditure, $6,378,000; third, deficit for extraordinary items, $716,000; fourth, the expenditure included internal expenses of $848,000 exclusive of wages, fuel, administration and related costs; fifth, Sydney Ports Authority overheads, $1,012,000. The last two figures to which I have referred totalled $1,860,000. Again a rort or creative accounting by the Maritime Services Board Sydney Ports Authority has turned a profit on current income and expenditure into a loss, thus justifying an ideological position on privatisation.

It is interesting to note that the provisions of this bill will apply only to Sydney Harbour and Port Botany. The Hunter and Illawarra ports authorities seem to be happy with existing arrangements, which were arrived at after negotiations leading to structural efficiency agreements with the unions involved. Surely that is the way it ought to be. That is the commonsense way to achieve workplace reform and efficient outcomes. During the past 12 months the three trade unions which cover all employees of the Maritime Services Board Sydney Ports Authority pilotage service have been involved in industrial negotiations with the authority under the structural efficiency principle with the aim of substantially improving the efficiency of the pilotage service. The following issues are under negotiation: first, the closure of South Head signal station, in negotiation with the Seamens Union, with established savings of $220,000; second, a reduction in the number of pilots in the Sydney ports from 21 to 18, in negotiation with the Merchant Service Guild, with estimated savings of $300,000; third, change in transport arrangements, again in negotiation with the Merchant Service Guild, with estimated savings of $300,000; and fourth, changes in pilot tender arrangements involving the elimination of nine positions in pilot tenders and amenities at Watson Bay, again in negotiation with the Seamens Union, with estimated savings of $500,000. Total estimated savings in the order of $1,720,000 are possible due to structural efficiency agreements with maritime unions.

Inevitably, we must reach the conclusion that, by adding the estimated savings resulting from structural efficiency agreements with the maritime unions and the published loss for the year ending 30th June, 1991, the pilotage service would make a considerable profit; and this is not taking into account the extraordinary items totalling $1,159,000. In this instance the Government's case for privatisation is poorly argued, with no attempt being made to justify figures used which allegedly show a loss to the Maritime Services Board. There is no economic or equity rationale for this legislation; it is based purely on ideology. The Government should examine all opportunities to cut overheads and improve revenue before rushing to privatise and before disposing of valuable public assets. To do this the Government needs the co-operation of the unions and their work force. Instead of confrontation members of the Government should sit down, like the people in the Hunter and the Illawarra, and genuinely and honestly negotiate appropriate structural efficiency agreements.

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The passage of this bill effectively will lead to a private monopoly running the pilotage services in Sydney Harbour and Port Botany. This legislation is not genuine, economic reform; it is a sham. The clinical, bottom-line approach of the Greiner Government is far too narrow to guarantee satisfactory protection for present and future consumers, taxpayers, workers and the environment. Only the Labor Party is committed to the maintenance of a strong, dynamic and efficient public sector capable of providing the high quality and responsive community service essential to the development of the economy and the community of New South Wales. The pilotage service should not be privatised. Maritime Services Board management should be told to negotiate honestly and in good faith with its employees, through their unions, for structural reform instead of creating a private monopoly to run the piloting services in Sydney Harbour and Port Botany.

Debate adjourned on motion by Mr Hartcher.