Unlocking the Secrets of Productivity: A Monumental Challenge for Australia's Future
By Hugh Christie on
20 January 2023
Whilst we are seeing positive changes with international freight capacity returning to levels pre-COVID-19, productivity issues at major Australian container ports identified in the latest Productivity Commission report cost the Australian economy an estimated $605 million annually.
These inefficiencies directly impact Australian farmers and if not addressed soon, will be a compounding cost for all primary producers, as well as exporters more broadly.
The report by the Commission highlights several key pain points in the supply chain, which are microcosm examples of the significant economic problems our local exporters face given our reliance on the Port of Melbourne for exports from Tasmania to mainland Australia and beyond.
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The commission has identified a lack of competition in some parts of the supply chain and foresees disruptions in productivity due to the potential of protracted industrial relations disputes.
For transport operators, the lack of competition is born out by the fact that they are not being given a choice about which terminals they use to pick up or drop off containers from. They are told where they must go and forced to pay the price set by the terminal operator.
This has allowed terminal operators to increase charges and abuse their market power.
These costs will then often be reflected directly in prices paid to farmers for their produce as the supply chain builds these risks into prices. Another key findings of the report also was that current workplace arrangements lower productivity due to complex enterprise agreements and the power of unions in stevedoring operations in major ports. Whilst this is a recurring issue in ports, this is also an example of the potential issues that can be seen across industries supporting the agricultural sector.
This is particularly relevant when considering changes to the Fair Work Act, including the potential for multiple enterprise bargaining, which potentially rather than improving efficiencies raise risks of entire sections of the supply chain being impacted. This is potentially in direct conflict with the recommendations by the Commission for changes to the Fair Work Act to reduce the impact of prolonged enterprise bargaining and agreements that impose inflexible workplace agreements.
These issues are also further complicated through increasing urban encroachment pressures on these major ports in Melbourne, Sydney and Brisbane, making the operator environment and future increases in capacity increasingly difficult.
Whilst these factors may be whole of supply chain and exporters across sectors, which the TFGA will continue to support the National Farmers Federation push for reform of containerised freight management, it does provide a cautionary tale to potential impacts on productivity more broadly.
Issues such as benefit of competition for services to farmers, industrial relations and urban encroachment impact both on the broader agricultural supply chain and primary producers provide obvious targets for improvement, it is important to focus on how we drive improved productivity across all areas of business. This includes seemingly innocuous changes such as red-tape impacts due to changes to how conditional registration of farm vehicles are managed, which has recently gone from a local process at Service Tasmania to a potential two week process involving sending documentation to Hobart for assessment (but don’t worry, you can still get your snow mobile registered locally).
Working to improve productivity and efficiency of process for our members will continue to be a focus of TFGA during the year, as these changes which can seem small or logical to those implementing the process, they can have significant impacts on the agricultural businesses that support Tasmania’s prosperity.
