Plan to cut freight schemes

REDUCING the freight equalisation scheme, privatising port assets, including international- bound freight in north-bound shipments and scrapping the wheat subsidy are among changes to Tasmania's freight network proposed in a Productivity Commission report released today.

The draft report is the result of an investigation into Tasmania's freight equalisation schemes, which began in late December.

It said the scheme "significantly overcompensates claimants for their notional cost disadvantage", and should be reviewed every two years based on Bureau of Infrastructure, Transport and Regional Economics parameter reviews.

According to a report released by the bureau last year, that would have cut TFES payments in 2011-12 by $90 million, almost half of the $200 million actually paid.

Tasmanian exporters received $93 million from the TFES in 2011-12. The Bass Strait Passenger Vehicle Equalisation Scheme paid out $35 million.

The draft report also said the scheme encouraged exporters to alter their business models to fit, and suggested changes such as expanding the Tasmania to Melbourne leg of the scheme to include all eligible freight, including freight then intended to be shipped internationally, and removing all compensation for freight shipped from Melbourne to Tasmania.

The report said the passenger vehicle subsidy provided only "diluted support" to Tasmanian tourism, other than subsidising the Spirit of Tasmania, and the government should look at whether tourism could be more effectively supported through other means.

"Support for TT-Line is not a stated objective of the scheme," it said.

It requested the government state its objectives in operating a shipping business, and questioned whether operating TT-Line was the most cost-effective option.

It also recommended:

•- The government examine ways to rationalise or privatise TasPorts and TasRail.

•- Introducing a flat rate subsidy per container.

•- Public reporting of TFES payments.

•- Reviewing the effect of cabotage costs as part of the promised Coastal Shipping Review.

Economic Development Minister David O'Byrne said the report foreshadowed plans to "cut the guts" out of the subsidy schemes, despite the report itself saying maintaining the schemes was the Australian Government's aim.

"The draft report recommends a major decrease in the rate of assistance, potentially ripping $40million out of the pockets of Tasmanian exporters," Mr O'Byrne said.

"It also recommends that funding for the BSPVES could be redirected completely, announcing the death knell of this critical support for the tourism industry and Tasmanian sea travellers.

"Despite Liberal promises before the election it would appear that they are looking to do exactly what they said they wouldn't - rip money out of Tasmania."

The commission will release its final report on March 7.

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