Panel Co-ordinator
Planning Panels Victoria
Department of Sustainability and Environment
PO Box 500
EAST MELBOURNE  8002  VIC 

Dear Madam/Sir


INTRODUCTION

Port Phillip Bay is the jewel in the crown of Victoria’s natural assets.

I wish to make clear my complete opposition to this proposal.  My attendance at most of the Hearing days and the Bay excursion held from September-December 2004 into the EES for Port Phillip Bay Channel Deepening has further informed and re-inforced my position that this project should not proceed. 

Some of the issues which have emerged since then and which I would like to comment on are:

• Third Party contribution and involvement
• Veracity and release of information provided by the PoMC
• Limitations of the present EES process
• Modelling versus reality.
• Drewry Report
• S-EES
• Services under the Yarra.

Third Party Contributions

This submission revisits a number of concerns that I raised in my submission to the Panel Hearings into the EES on this subject in 2004.  My reading of the S-EES appears not to have resolved those concerns.

Who amongst us can afford to participate in and witness the Panel Hearing process to its final conclusion other than those receiving guaranteed funding?  NOT MANY.

Volunteering third parties are operating at a distinct disadvantage to the generously taxpayer funded proponent – everyone in this room is funding the case presented by the proponent.  Those of us presenting opposition to the proposal are also then required to fund (as much as they can) their own appearance, expert witnesses, legal representation etc.  Little wonder that third party appearances often appear less glossy and professional than those presented by the proponent – and little wonder that the audience is not full of interested third parties.

BUT: If not for the third party involvement in the EES, in particular Dr Simon Roberts, we would not have learned the truth about many critical issues affecting the health of all species – including humans – who rely on the Bay.  Dr Roberts has cast severe doubt on the increased Nitrogen load calculations and modelling of seagrass recruitment rates – he has challenged numerous assumptions made by the PoMC about the natural systems of the Bay.  Dr Roberts has also exposed the truth about the toxicity of sediments in the Yarra, and the inadequacy of the PoMC’s highly paid consultants in properly identifying and categorising them.  The people of Victoria have a debt to Dr Roberts.

Also to Captain Frank Hart who was the catalyst for a proper explanation about access for deeper draft vessels through The Rip.  The information provided by the proponent proved to be confusing to the Panel and third parties for the duration of the Hearing.  We know because of Captain Hart’s diligence, that deeper draft vessels will not have unimpeded access, and that in spite of all the promotional rhetoric of the PoMC that this project would solve all the problems of the Port, the truth is that Melbourne Port will not offer unlimited access for the very ships for which this project was supposedly purpose designed.  Captain Hart has also brought increased risk and safety issues to the forefront.

In spite of being extremely critical of Captain Hart’s evidence, the PoMC did not present their own expert witness – either their Harbour Master or the Sea Pilots – to challenge Captain Hart’s evidence, and instead merely relied on attempts to discredit him.  It begs the question as to why the PoMC did not present its own expert witness in this area.

Apart from the Panel, these two people, one appearing as an unfunded Expert witness, provided the only mechanism by which we are now better informed about the project and its liabilities.  Their commitment was of a much higher order than that provided by any other paid expert appearing for the PoMC.

Veracity and release of PoMC information

Community pressure also ensured that the project was properly referred to the Commonwealth.  Correspondence made available during the Panel Hearing process between Environment Australia (EA) and the VCA reveals that had the VCA/PoMC and Victorian government been left to their own devices, they would have avoided the project being subjected to an EES and then to it being declared a ‘controlled action’ by the Federal government, under the EPBC Act 1999.  It is of note that under subsection 74(2) of the EPBC Act the State Minister for Planning was informed of the referral on 19 February 2002, and was invited to provide comments on whether the action is a controlled action.  EA received no reply to their invitation.

At the very least this silence from the Minister for Planning diminishes the credibility of the Victorian government’s purported position in relation to the environmental significance of this project, as espoused under their numerous Sustainability policies.

The correspondence between VCA and EA only appeared in response to the apparent deception attempted by the PoMC to use Mr Brett Lane’s (draft) EPBC report to lull the Panel into an acceptance that all relevant issues to be addressed as part of the EPBC Act requirements were met by Mr Lane’s EPBC report – and the draft report was only made available on the day of his scheduled appearance as an Expert Witness.  The Panel was not deceived.

The correspondence also reveals that the VCA deceived the Federal government in their referral advice by advising that the proposal was to ‘deepen the shipping channels in the order of 1.5 metres to 2.0 metres at Port Phillip Heads, in Port Phillip Bay and the Yarra River and its approaching channels ...’

We now know that the proposed deepening at The Heads is in the order of 3+ metres, and in addition to the Great Ship Channel, now clearly includes dredging of both the West and East channels.  Dredging of greater than 2.0 metres is also proposed in sections of the Yarra River.  This was not made clear to the public, and particularly interested third parties such as divers, at any time until it was addressed during this Panel Hearing.

What is also now clear is that had the VCA/PoMC pursued the 1.5 to 2.0 metre option, as they advised the Commonwealth was their intention, the relative SUKC for deeper draft vessels would have been reduced compared with what is currently available for vessels of 11.6 metres.  Hence VCA/PoMC would have been reducing the present safety margin of 2.4 metres to a future 1.5 to 2.0 metres SUKC – for a longer, wider, heavier, less manoeuvrable ship in a potentially faster current. 

It is clear that the VCA was always intending to cater for 14 metre draft vessels.  This could never have been achieved with only a 1.5 to 2.0 metre increase in channel depth – so why tell the Commonwealth that only 1.5 to 2.0 metres needed to be removed?  The PoMC’s actions can only be seen as another question mark over their credibility in the promotion of this proposal.
I request that the Panel highlight this important change to the proposal in your report to the Commonwealth.

Had EA known from the outset that the proposed dredging regime was more extensive than first revealed, its assessment and interest in the project may well have been of a different order – EA may even have chosen to carry out their own assessment rather than accredit this process.

And once an EES had been accepted as necessary, and it has been decided that it must be referred to the Commonwealth as a controlled action, we still have at the end of the process a FINAL EES which is full of inaccuracies, incomplete reports, claims that further studies need to be undertaken, and considerable new work being placed before the Panel whilst the Hearing is proceeding; eg: Dr Provis Annexure D.

It is quite clear that the EES was not final, it was incomplete and should not have been released, and I object.  The PoMC is well aware that there is considerable community concern about this proposal, which would be much greater if there was proper disclosure of information.  PoMC clearly released information at a time and place that suited their convenience, withholding information until the last possible moment on a number of occasions, to reduce proper scrutiny of their proposal.  No doubt there is still much that we still do not know about – but will never be revealed, due largely to the lack of resources available to third parties.

Significant amounts of public resource have been squandered by the PoMC on this poorly constructed and presented proposal.  Simon Molesworth QC stated after listening to Dr Cohen being cross examined by Dr Roberts, that Dr Cohen was going home with a very dark cloud over his head.  Likewise, I put it to the Panel that the PoMC also leaves this Hearing with a very dark cloud over its head. 

The PoMC has not let up in its obstruction of the proper flow of information to the Panel and the public throughout the entire EES process.  You have been given numerous examples of this from other presenters.  Their most insulting attempt however was their behaviour in trying to rule out  Cpt Frank Hart’s video presentation of a maritime history of the Rip area (and tribute to sea pilots) even before the Panel had seen it. 

What is it they are trying to cover up, and why?

Limitations of the present EES process

The PoMC is proposing significant and unquantifiable damage to Port Phillip Bay for the benefit of international ship owners. It is the intention of shippers and ship owners that this damage be paid for by the Victorian taxpayer.

Consequently, I request that the Panel in submitting their final report to the Minister note the following:

There is an inherent bias in the present EES process, and this bias has likely influenced the outcome of the Panel Hearing.  This should be considered by the Minister in making the decision on the Channel Deepening Project – the largest and most complex EES apparently ever undertaken in Victoria, and yet one in which the public had little ability to fully contribute.  In order to address the present structural bias, as a minimum the Environmental Effects Act 1978 needs to be amended to include the following:

1. The proponent should be required to fund all parties equally
2. EES processes should include the mandatory full assessment of the “do nothing” option.
3. That at least one feasible alternative to the proposal be fully investigated
4. Evidence from expert witnesses should not be considered partisan because s/he has been prepared to declare their personal opinion (informed by their professional opinion) in relation to the proposal

Modelling versus reality

This project is based on a faith in modelling. Much has been said about robustness of the modelling, and that the public should be assured that the models have correctly predicted outcomes for the Bay.

The consequences of the models proving to be fallible are however catastrophic, both in relation to the entrance to Port Phillip Bay, and the ecosystem based modelling. The EES identified over 180 threats, 129 of them extreme or high. These are the threats we know about – Expert witnesses have told us however that we don’t know what we don’t know. The unknown unknowns are unquantifiable.

It is timely to reflect on the outcome of the recent Geelong Channel Improvement project dredging campaign, as reported in ‘A report to the EPA from the Environment Review committee for the Geelong Dredging Channel Improvement Program’.

In the Geelong dredging project, the proponents, their consultants, the EPA and the Assessment Panel all failed to identify crucial potential problems, including sediment fluidisation and containment and the required size for the spoil ground. Environment groups who raised concerns about such issues reported that they were not taken seriously during the consultation process by the Port of Geelong Authority, their consultants or the Panel.

The predictions of environment groups, NOT those of the consultants and modellers were the unfortunate eventual outcome.

Some of the most relevant issues from the report are:

List of issues:

Page 2: During the operational phase of the project a number of major dredging impacts occurred that were not predicted in the EES, including the adoption of blasting to remove rock offshore from Clifton Springs
Page 10: Sediment fluidisation
Page 12: Grounding of the Dredge the Volvox Delta
Page 13: Weaknesses
Page 16: Enforcement.

During this present Panel Hearing, Expert Witness Dr. Greg Jenkins confirmed that from his many years of working with models and in the field, he is reluctant to rely on models to predict the natural world. It is memorable that Dr. Jenkins stated under cross examination that he never believed in the accuracy of the plume model presented in the Final EES, as prepared by Dr. Provis.

Independent Peer Reviewer Dr. Kerry Black also stated that there was too much reliance on modelling in this EES. He stated there is a huge body of work on Port Phillip Bay which could better be relied upon. Dr. Black also said of the EES, that we are working in a vacuum with the paucity of information presented in it in several areas, such as the movement of sand in and around The Heads.

Dr. Black stressed that The Sands is a most sensitive and reactive area, stating “Based on what I see there will undoubtedly be a change to The Sands region”.

Independent Peer Reviewer, Dr. Keogh also expresses grave doubts about the statistical modelling relied upon by the PoMC, particularly for seagrasses, and PoMC’s Nitrogen load calculations. He stresses that there is considerable uncertainty as a result of the science employed. The staunch criticisms he then has for setting of thresholds and monitoring – across most disciplines leaves little doubt that about the desirability of the project.
 
In short, we have been asked to entrust our Bay to the same modellers and consultants who have been proven wrong time and time again. Decision makers have listened almost exclusively to consultants and modellers, and as a result have wrought great and detrimental change already to our environment. It’s time to listen to those who know and accept the realities of the natural world.

THE PROJECT

For every action there will be an equal and opposite reaction. There will be no exemption for PP Bay. I believe that in total, that reaction will be judged to be negative.

Throughout the community consultation phase, the PoMC has provided varying advice on the total amount of spoil to be generated from the project - the figure has varied from 40 million to 60 million cubic metres. The Great Ship Channel and West Channel are proposed to be dredged to 17 metres CD (over dredging not included) from the original natural depth through the Rip of 10 metres CD. 

The application of the Precautionary Principle is most applicable at this site.

For the 100 years that this deepening has been occurring incrementally, so has erosion of our coastline. Worldwide evidence also confirms that sea levels will rise due to the Greenhouse effect. CSIRO advise that sea levels in Port Phillip Bay could rise as much as 130 mm in the next 30 years, with a variety of serious, adverse impacts.

The PoMC advises that sea level will only rise by approximately an average 8-10mm on the spring tide. This prediction is based on a model. A model which seems to have been accepted without much examination, whilst quite rightly other models relied upon within this process have been closely scrutinised and found to be wanting.

I do not accept that the consequences from sea level rise effects as predicted by the PoMC will be as “imperceptible” as Dr. Provis advises.
 

Any proposal which would artificially increase water levels in the Bay, above that predicted by world leaders in the science of climate change, can only be seen as totally irresponsible.

The only responsible course of action is to seek ways to reduce the effects of sea level rise – not exacerbate it.

This project is being proposed because only a very few ship builders in the world are choosing to build ships with deeper drafts, currently already in excess of 14 metres.  Unless an international standard is set for draft limitations, every port in the world will eventually have to be modified time and time again.  This would set in train a cascade of environmental damage, costing billions of dollars.

The Australian government must take the initiative (triggered hopefully by the folly of this project) and set the standard for Australian ports at their current depths – in the case of Melbourne that is to cater for ships with a draft of 11.6 metres at all tides. Otherwise, most ports in Australia will be faced with a recurring round of channel deepening. If government is not prepared to do that, an alternative of rationalising port usage to existing deep water ports, namely Sydney, Darwin, Brisbane and Fremantle (Kwinana) is a sensible option.

Melbourne will not be able to compete in future for unimpeded access for all deeper draft vessels. We have heard expert evidence about the manoeuvrability of deep draft vessels into/out of berth at the PoM, and through The Rip, and opinion from informed submitters such as shipping consultant Mr. Richard Clarke that access and turning of ships up to 330 metres length in the narrow river port of Melbourne will pose significant difficulties – and no doubt additional costs for shippers and taxpayers.

The PoMC is still unable to clarify whether or not they can provide the access required for deeper draft ships at The Heads. However, we still have the spectre of Royal Boskalis International – the same company who were involved in the ill fated Geraldton dredging campaign proposing to drive an as yet untested piece of equipment resembling a heavily armoured ancient Roman chariot through our precious underwater reefs, destroying them forever.

Although properly, we have legislation that disallows us to even cast a line in our Marine National Parks, Royal Boskalis apparently can be trusted to ram their Roman chariot hard up against our Marine National Park, cutting into rock of similar characteristics to that encountered at Geraldton, and to manage the resultant dredge plume that will undoubtedly engulf the adjacent Marine National Park.

Something does not feel right

It was notable that Dr. Provis knew about the Geraldton dredging fiasco, and although happy to say that it was “a big mess”, wished to assure the Panel that he was almost certain that Boskalis was not involved.
  
SUSTAINABILITY

Groundwater and Aquifers

There is ample evidence that water is our most precious resource – certainly not the junk brought in on container vessels.

Not a lot has been said during this Panel Hearing about the aquifer system – although we have received some minimalist assurances from PoMC experts not to worry, and that there shouldn’t be any threats to the aquifers. My reading of the relevant section of the EES technical appendices left much unanswered, or obscured by commercial demands for privilege over the information about the very water on which we depend.

Mr John Carter, submitter on Monday 29th November 2004 spoke of his concerns about threats to groundwater, particularly the ‘gin clear’ water from his well in Portsea. When I spoke with him later about the Moray St. Gravel aquifer, which could heave as a result of having its cover reduced in thickness by the dredging process – Mr. Carter said he was unaware of that issue, in spite of having tried to read the EES extensively. He expressed his deep concern for any damage to any aquifer system.

(Notably: Mr. Carter’s experience is analogous to the experience of Prof. Sherwood, who in spite of having read the EES quite thoroughly, had not been successful in locating all of the sediment chemistry technical information. This left Prof. Sherwood unable to comment with authority on an important element of the proposal, and one in which he was particularly qualified and concerned. Two further examples of the disassembled nature of the EES documentation)

What we see above ground is only one half of the hydrological system. Above ground are the streams and rivers, and below ground the invisible underground aquifers. What we see on the ground is only a part of the great cycle of water, and whilst the value of natural creeklines and their spring fed sources is slowly being realised by some of us, many are unaware that the underground water system is the stabilising feature of the water cycle on earth. Groundwater acts as a great flywheel, feeding all life in between rain events. Please reflect on this amazing water cycle as you consider this proposal, and weigh up its infinite value against the purported value to be had from possible “trickle down” savings passed on from international shippers. 

Are bigger ships the answer?

Much has been written about the expected cost savings to be realised from moving to bigger ships. This may not always be the case however, and it is worth considering recent evidence that being bigger does not always provide the expected benefits in the long run.

The oil tanker, ‘Sea Giant’ the second biggest ship ever built is currently being scrapped on a beach in Pakistan, amidst much environmental controversy, along with important issues of worker safety.

Along with many other super-sized tankers, the ‘Sea Giant’ carrying 500,000 tonnes of crude oil was built during the 1970’s in response to claims that it was more efficient to transport oil in larger ships. It has since been found to be uneconomic. It was too big for most ports around the world, and had to anchor at sea, with its cargo decanted onto smaller vessels. The shipping industry no longer builds oil tankers of this size, because it is uneconomic to do so, and has returned to a vessel size which can be readily accommodated around the world. 

We are presently being told about the high demand for bigger container vessels; that bigger container ships will be more economical and that we must deepen at present 30 ports around the world to accommodate the forecast draft for the near future. Whether these 30 ports will all be modified to accommodate the current generation of 14 to 14.5 metre draft container vessels is a moot point. Certainly it is a moot point whether those 30 or more ports will respond again to further demands for deepening when even deeper draft vessels are released onto the seas.

We are already hearing about a few ‘hub ports’ being developed to accommodate larger container ships, with the same decanting philosophy of moving containers onto smaller ships for medium and smaller markets. This will prove to be just as uneconomic as the decanting of the Sea Giant – both involve double handling of the cargo, which obviously increases handling costs.

It seems pretty likely that the container ship industry will follow the same trajectory as oil tankers, and at some point in the very near future economies of scale to be had from bigger container vessels will be exhausted.

Fortunately, in the 1970’s common sense prevailed, and we did not race into channel deepening around the world to accommodate the passing whim of the oil industry.

I therefore urge the Panel to not permit the destruction of the beautiful reefs at the entrance to our Bay, and threaten the ecosystem of our Bay and Yarra River merely to accommodate another passing fad in the shipping industry, this time the container trade.

Is shipping sustainable – or has it had a free ride?

We have been told by the shipping industry that we will receive significant benefits to our community if we allow this project to proceed. The facts show that we have not received any benefits from international shippers that we could not have provided just as well under our own steam.

So let us now pull back the curtain on the international shipping combine and their treatment of the people of Australia over the last century.

World War 1: 1916 -  Australian Prime Minister W.M. Hughes was in London. The Australian Government was having trouble with the overseas Shipping Combine, who were squeezing the government for increased freight rates. The cards were stacked against Australia with preference being given to the Argentine and other countries, who were prepared to pay high freights for shorter hauls. Australian produce was rotting on the wharfs waiting for ships that never arrived.

PM Hughes decided to do something about it. He employed an agent who obtained an option on 30 ships, the deal was soon settled and the Commonwealth Shipping Line – owned by the people of Australia – came into being. Once they realised who the buyer was, the Combine prevented Hughes obtaining any more than the 30 ships.

There was little doubt that Hughes operated as the Chief Executive Officer of CSL, instructing the CSL to undercut the fares and freights of the Shipping Combine, which CSL were able to do with great success – confirming that the Shipping Combine had indeed been milking the people of Australia.

By 1921, partly because of wartime buoyancy, the CSL had amassed profits of no less than ₤ 7,341,819.  Those profits had written off the entire capital costs and still showed a balance of ₤2 million in hand, in spite of rate cutting.

This antipodean success story annoyed the Chairman of the Shipping Conference, and P&O Chairman Lord Inchcape greatly, as it had been expected that once the war was over that Hughes should sell the ships and hand the trade back to the Conference.

In an address to his shareholders in London in 1921, Lord Inchcape said:

“Mr. Hughes would be infinitely better advised if he left the business to those in commerce and allowed the people to work out their own salvation. I hope Mr. Hughes will be satisfied with the profit he has made out of the ships and will dispose of them.”

Mr. Hughes, a former umbrella mender was too smart to accept the advice of a Peer of the Realm. He knew when he was on to a good thing. And so in retaliation for not carrying out their bidding, the shipping industry looked around for a willing voice in the Federal Parliament in Melbourne. It was that of Stanley Melbourne Bruce, newly elected member for Flinders. Bruce declared himself to be against State enterprise in shipping – a declaration which guaranteed him the support of the Shipping Combine in Australian politics.

With their powerful support, Hughes was soon despatched and his war efforts to save the British Empire from almost certain demise were soon forgotten.

S.M. Bruce, resplendent in bowler hat and spats became the next Prime Minister of Australia - with his main policy platform being to get rid of the CSL. It had to be a slow process however as he was in coalition with the Country Party. The agrarian based CP were the main beneficiaries of CSL’s low cost freight rates so paradoxically Bruce’s set task was at odds with the wishes of his coalition partners.  Australian exporters were vigorously opposed to the destruction of CSL for some time, and it was not until 1927 that Bruce was able to complete his task.

Of note is the speech of former PM Hughes in a 1927 parliamentary debate on the Bill to dispose of the CSL:

“From the day that the Commonwealth Line was purchased the Conference Lines have not spared any effort to destroy it...

It is natural and inevitable that when those possessing such power have the opportunity to levy toll, that toll will be levied...

....There is only one thing between us and the gentleman who stands at the toll gate, and that is the CSL”

declared Hughes.

How his stand contrasted with that of Prime Minister Bruce who at a dinner in London in 1928 given for services rendered to Lord Inchcape said:

“I do not know if you are giving Australia the best services. I am told you are not. We may be at your mercy, but I hope to heaven you will exercise your power mercifully.”

What a cringing speech from the leader of the Australian people.

What has changed? Today we are STILL at the mercy of the international Shipping Combine. And international shippers have not moved one inch – they do not want competition, they want collusion and price fixing and the thing they fear most is any revival of state enterprise in shipping.

The successor to the CSL was an arrangement for “Conference” carriage of overseas cargo, which was formalised by the 1930 Amendment to the Australian Industries Preservation Act. The amendment provided that agreements made between ship owners and shippers and approved by both, would not be regarded as an offence under the Act – and lives on as an exemption under Part X of the Trade Practices Act 1965. The general community saw it at the time as a “sell out” in the interests of an overseas monopoly.

What the 1930 Amendment really provided for was price fixing and collusion amongst the shipping industry

As the Panel has heard from Mr. Meyrick under cross-examination recently, ship owners are still exempt from prosecution for collusion and price fixing under the Trade Practices Act.

Lord Inchcape has cast a long shadow, and we are still at the mercy of the likes of Lord Inchcape – How long can we continue?

During W.W. II, and once again as a Labour Government initiative, a large fleet of general cargo vessels was constructed for carrying our own cargo – The Australian National Line ANL. However, with the election of the Menzies governemnt in 1949, ideology was again to take over at the expense of commonsense and reason. Unable to dispose of the ANL post-war for a reasonable return, the Menzies government instead entered into another agreement with the overseas shipping combine which ensured that for the next 20 years that the ANL would be hobbled from further expansion into overseas and coastal trade. This was achieved by ensuring that:

1. The Commonwealth owned ANL would not operate more than 325,000 tons in coastal and territorial waters.
2. The ANL would not undertake bookings or handling of its own cargoes, instead being required to use the services of the signatory companies in any port where that company provided those services

This pervasive ideology prevented a rational, sustainable approach to the entire question of providing efficient and effective domestic and overseas shipping services for Australian businesses – and still does.

Since the sale of the CSL in the late 1920’s Australia has depended almost wholly on overseas shipping cartels for the transport of our imports and exports. Those cartels, for the most part consisting of privately owned shipping lines organised into conferences, charge freight rates agreed amongst themselves, and provide a shipping schedule agreed amongst themselves – not with us  - their clients.

In 1956 a Parliamentary Committee of Inquiry into the Stevedoring industry examined the methods by which freight rates were fixed. In their report the members said:
“We find it difficult to avoid the conclusion that the ultimate determining factor in the setting of freight rates is what the traffic will bear”.

With the recent disposal of the ANL by government we are once again wholly reliant on private ship operators to provide essential services between Australia and the rest of the world. This coincides with the recent skyrocketing of freight rates – along with the recent legal case which had to direct these overseas ship owners to pay Australian rates of pay in Australian waters.
 
And yet we continue to be reminded by the likes of Mr. Lachlan Payne, then Chief Executive Officer of the Australian Shipowners Association in an article in The Age dated 17th January 2002 ‘Port in Deep trouble’ that his members expected that the costs of channel deepening works should be borne by the government because of the huge benefits to the community that would occur from keeping the trade in Melbourne.

Mr. Payne’s assertions are however in stark contrast to what one learns from careful reading of Meyrick’s reports and the very recent advice of Mr. Matthew John Lee. Mr. Lee, a Peer Reviewer for the Economics studies within the EES under cross-examination stated that “flow on” benefits to consumers from savings to shippers would be “immeasurably minor”
The raison d’etre for this project is to reduce the costs of transporting goods, and flow on savings have been promised to end consumers. Permanent horrendous damage to the Bay, as proposed by the shipping industry, will not achieve this aim.

As the foregoing has amply proven, the only mechanism for reducing the cost of moving goods, and hence costs to consumers is the removal of collusion, and the re-introduction of state enterprise in this essential service. We have seen that the Trade Practices Act from 1930 to today has been totally ineffectual in bringing the costs of transport down for consumers – in fact it has only pushed the price up - by preventing competition.

Drewry Report

1.  The Drewry Report has been released to Peter Fitzgerald, economist, after an FOI request in 2005.  This means that this report was not available to the EES Panel Hearing which has held in 2004.  In other words this is another example of PoMC withholding vital information from the Panel and the public, which again may have skewed the outcome of the Panel Hearing Report. in 2005.  This is a relevant and compelling report to this proposal and should have been readily available to the Panel and public.  A summary of the 93-page report follows:

• The history is interesting; the report is dated November 2001 and the Government announced In Principle support in December 2001.
• Its a fabulous, rigorous, non-biased encyclopaedic report that actually lists every container ship on a regular route to Melbourne.
• It examines their size, routes, cost, the whole box and dice.

2     Observations about the Drewry Report

a.    The economic gains as stated by Dewry are not sufficient to economically justify an investment of $600 m (now estimated to be $763m in 2007)

b.    By over-scaling the project the modest benefits no longer exceed the likely costs.

• Drewry estimated that 75 per cent of the benefits are gained by deepening the channels by 0.5 metres (Table 6). 
• The full project proposal is a 2.4 metre deepening at a cost above $600m (already 50 per cent more than that tabled during the 2004 Panel Enquiries).
• The cost premium imposed by present draught restrictions are estimated by Drewry at US$1.9m in 2000, US$6.5m in 2005, US$9.8m in 2010 and US$30.8m in 2030.

c.    The price of the channel deepening project (a $20 levy), (now $30 levy) is a far greater threat to low-cost shipping into Melbourne than present draught restrictions.

d.    PoMC have tabled a proposal to add a $20 levy (now $30) on every international container, and then to put CPI escalations every year thereafter.

• Shippers looking for the value-for-money from the proposed $20 levy per container will find little comfort from the Drewry report that says in 2005 the benefits from channel deepening would amount to less than $6 per container.
• The cost of the levy to shippers – based on today’s volumes – will be $32m pa (plus CPI) yet the ‘gains’ by 2010 still less than half that at $13 million pa according to Drewry (US$9.8million).
• The $20 levy (plus CPI) and the estimate of international containers at 1.6m TEU pa is contained in the evidence to Parliamentary Committee by Stephen Bradford from 27 July 2005.
• It is unclear whether the $20 levy is an estimate based on the $400m project cost used by Meyrick, the “well over $500 million” estimate quoted by Bradford to the Parliamentary Committee or the other estimates such as the $640M (now $763 million) as quoted on the release of the S-EES.
• According to Drewry it would be well after 2015 before the benefits exceed the yearly costs, and it’s by no means clear that the benefits to shipping operators will necessarily be passed on to shippers.

e.    The comparison with the Meyrick Report (2004) is stunning.

• Meyrick (2004) estimate the gains by 2030 at $334m whereas Drewry (2001) estimate them at US$30m by 2030.
• The effective ‘blow-out’ is 850%.
• The massive difference between Drewry’s $30m and Meyrick’s $334m, is that one is objective, rigorous and encyclopaedic in its approach, and the other one is based on modelling with some brave assumptions.
• A tale of two consultants, one with an eye for detail and an understanding of every ship and every shipping lines schedule and the other is one who can build an econometric model with lots of assumptions and lots of zeroes.
• Meyrick assumes that 85 per cent of the ships will be between 4000-6500 TEU by 2030, whereas Drewry says that the structure for Europe-routed ships, for example (already using 4100 TEU Panamax ships) is unlikely to change at all between 2005-2030 (see Table 2.47).

f.    So there will be massive new costs in terms of the $20 levy but at best speculative estimates of the benefits; with substantial uncertainty on quantum, timing and the precise beneficiaries.  Not to mention substantial environmental costs and risks.

This document is so compelling that the Government should have accepted it in 2001 without any further investigation of the channel deepening proposal and $114 million of taxpayers money spent to date and significant damage to the Bay from the Trial Dredge in 2005.
 
The irrational demands of industry

Those industry sectors demanding that the project proceed have not provided accurate data in support of their assertions.

A number of startling admissions and/or oblivion to the detail of the proposal before us were evident in the presentations from various industry groups as they passed before the Panel, including Shipping Australia, Australian Industry Group, and the Victorian Freight and Logistics Council (VFLC) – in spite of each organisation arriving in numbers, each bringing representatives with individual areas of expertise. Shipping Australia and VFLC were oblivious of the earlier written advice provided to them by the Panel that entrance to the Port would be restricted to effectively 50% of the time. These organisations were unable to provide advice as to how this might affect their operations.

In spite of the PoMC’s January 2004 public submission to the Essential Services Commission that port charges should increase via a levy on shippers, all groups seem dedicated to the position that somebody other than themselves would be paying for the project.  Could they really have been unaware of this proposal, or, as the main clients of the PoMC, not have been consulted by the PoMC?  

I note the VFLC in their presentation to the EES Panel assert a Key argument in support of shipping is Co2 emissions for land transport vs. Sea.  VFLC quote:

Sea freight is generally considered the least emission intensive freight mode, followed by rail and then road, with air the most emission intensive.  Shifting freight back along this hierarchy should reduce emissions   (National Greenhouse Office)

This assertion may not necessarily hold true.  The organisation Global Tradewatch advises:

• About 95% of the world’s traded goods are moved by maritime transport, which in turn cause about 5% of the globe’s sulphur oxides and 14% of the world’s Nitrogen Oxide emissions – equal to the N emissions from all the cars, trucks and other vehicles in the US. Environmental dangers from airborne sulphur and nitrogen oxides are serious. Sulphur particles cause acid rain whilst N compounds – as well as being greenhouse gasses can form ground level ozone.
• International transport to and from Australia generates a massive 10.2 million tonnes of Co2 emissions each year, making a significant contribution to global warming.  Australia’s Greenhouse emissions from international transport grew 63% between 1990 and 2000, faster than any other sector.  Outrageously, these emissions are NOT included in official greenhouse emissions calculations.
• It is of note that an article in Sunday Age, March 4, 2007 under the heading ‘Ships, not planes, new warming risk.  The article goes on to state:

An International Maritime Organisation (IMO) study of greenhouse gas emissions has estimated that emissions from the global fleet will increase dramatically in the next 20 years as globalisation leads to increased demand for bigger, faster ships.  If no action is taken, the IMO predicts that by 2020, emissions from ships will increase up to 72 per cent.  Last week the Independent Tyndall Centre for Climate Change which has launched a 2-year study into shipping emissions, said the problem needed to be dealt with urgently.  ‘The proportion of emissions from international shipping continues to receive scant regard within government.’
     Said researcher Alice Bowes.

Shipping has been missed off the climate change agenda.

So reliance on National Greenhouse Office data to promote the ‘green’ credentials of the shipping sector may be very misleading.

On Friday 26th November 2004 Ms Rose Elphink of the VFLC asserted that savings of $10 per TEU per day can be very significant for importers (Page 5 of VFLC overheads comparing a 3500 and a 5500 TEU vessel). However, in an article in The Age dated Saturday 6th December 2003, ‘Trouble brewing at the bottom of the Bay’, Ms. Elphink is quoted as saying that the efficiencies of a fully laden ship could mean savings of $30 to $40 for each container of goods. The figures appear to move around.

The EES does not support either claim made by Ms. Elphink, with Meyrick/Price Waterhouse Coopers confidently reporting only $1.39 per day per TEU as the expected savings between a 3501 and a 5501 TEU vessel.

Ms Elphink asserted that consumers would benefit even if a small portion of her $10 per TEU savings were passed on. The “pass on” looks less attractive once a small portion of $1.39 is on offer, shared between the wholesaler, retailer and the customer. 

In this infinite universe in which we live, surely it is time for us to acknowledge that we are not its masters. We cannot continue to blithely follow our whims for new development ideas, or the demands of a few, merely because we think it would be a great thing to do, or a great way to make money. We are all on the one ship – all thirty million species on this earth, and it is not going to well at present all because of one species – us!

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