Time for a fair-go on freight

Being an island state can be a blessing and a curse. Tasmanians are blessed with a relatively stable climate, good soils, reliable rainfall and a hard-earned reputation for high-quality agricultural produce. Add to that an irrigation system the envy of the nation, skilled farmers who are world-class practitioners and a population that is both proud and protective of our farms and farmers.

But then there is the curse of Bass Strait. It is the most expensive stretch of water in the world. Having two inefficient and expensive ports only 400-odd kilometres apart soon bursts the bubble of our efficient agricultural paradise.

Since the 1970s Tasmanian farmers shifting their produce to mainland markets have been supported by the Tasmanian Freight Equalisation Scheme, or TFES. The intent of the TFES, as recommended by the Nimmo Commission in 1976 was that “the cost of transporting goods between Tasmania and the mainland is approximately the same as moving goods by land across the same distance on the mainland.”

This has never been legislated, is often derided and scorned by mainland states and many politicians, mostly federal but some state, have tried to get rid of it. Those who use it and rely on it to make Bass Strait freight less costly understand that it is clearly no longer fit for purpose. While there have been many iterations and additions to the TFES in the intervening decades, it continues to be significantly sub-optimal for Tasmanian agricultural exporters. Federal Governments and their political participants are constantly lobbied to improve the scheme, however, to date no real and material improvement has been seen towards reducing the cost burden and impact for farmers. 

The Senate Select Committee that convened a series of hearings in 2024 led by independent Senator for Tasmania Tammy Tyrrell has in many ways crossed the Rubicon and we are now hopefully on the same trajectory as Julius Caesar was in 49BC when he also crossed the Rubicon – on the campaign to success.

But what does success look like? Well, we are glad you asked. It is self-evident that TFES needs to meet the contemporary needs of Tasmanian exporters. That means in simple terms to increase the amount that exporters receive to help get closer to the lower cost that other states pay to move freight on roads.

It should function from the business at the point of freight despatch to the point of freight delivery to the receiving business, where that freight journey involves transit across Bass Strait, irrespective of which state (or island in Bass Strait) that freight journey commences. The rate of payment should be such that the final cost to the business consigning the freight should be no more than if the same length journey was made on mainland Australia using conventional road-based transport. 

The rate paid should be equal across all freight types, irrespective of commodity. Payment should accommodate the cost of freight logistics surrounding port infrastructure, including trans-shipping, periodic short-term storage as part of the freight journey and other costs associated with the successful completion of the freight journey. Furthermore, payment should be streamlined into a fit-for-purpose online portal that pays on completion of the appropriate data entry.

TasFarmers, along with Fruit Growers Tasmania, seeks an immediate full review of TFES with the view to implementing all the findings of the Senate Select Committee. There needs to be short-term increase in the basic rates that are available through TFES, but these are short-term ‘fixes’ until a serious, legislated long-term solution to the inequity of freight movements across Bass Strait is implemented. 

Fruit Growers Tasmania have calculated the following increases and TasFarmers endorses these on the same basis. The intermodal component needs to be doubled from $100 to $200 per twenty foot equivalent container (TEU) which helps with the cost inefficiencies of container movements through the ports on both sides of Bass Strait. The current cap of $755 per TEU for northbound container movements needs to be lifted to $913 a container and the transhipped freight assistance should be raised from $700 per TEU to $800 per TEU.

These are of course interim measures to keep Tasmanian producers in the industry.

The long-term game, which should be the position of all political representatives and candidates as we head to the 2025 Federal Election, is to fully review TFES, recognise the inequity, realign to the first principles of the scheme, legislate the scheme including indexation and increase funding accordingly. Tasmanian farmers expect no less and expect all political parties and candidates to show their strong support for Tasmanian agriculture and a fairer Tasmanian Freight Equalisation Scheme. As Caeser said upon crossing the Rubicon, “let the die be cast”.