New federal boost for Bass Strait freight scheme

Tasmanian businesses are set to receive a further federal government funding boost under the scheme designed to offset the increased cost of doing business across the Bass Strait.

By Matt Dennien – The Examiner 23rd August 2018

The federal government has announced an expansion of the Tasmanian Freight Equalisation Scheme, worth $147.3 million in 2017-18, to ensure geography is "not a barrier" to the state's prosperity.

Under proposed changes, pending a review due by the end of the year, new funding would be available for goods brought into the state through an Australian port when there is no Australian-made equivalent.

Further assistance for high-density goods transported to and from the mainland could also be introduced. 

From October, payment processing times will be reduced from 35 to 30 days. A 2016 expansion to cover goods sent overseas through mainland ports will be locked in immediately - worth an estimated $34.7 million last financial year. The expansion will also include an annual review process, beginning in January 2020, which will consider stakeholder feedback and ensure the scheme is working as intended.

Bass Liberal MHR Bridget Archer said it was important Tasmanian importers and exporters had opportunities equal to their mainland counterparts.
"[The extension] will a have tangible, significant impact on increasing the competitiveness for a number of sectors in northern Tasmania, including agriculture," Ms Archer said.
With the high cost of sea freight, and more than 99 per cent of goods coming in and out of Tasmania by sea, the federal government subsidises this cost across the Bass Strait via the TFES.

The subsidy is based on the price difference between sea and road freight over an equivalent distance.

The 2016 expansion formed a central element of the federal government response to a scathing 2014 Productivity Commission report on the state's shipping and freight industry.
More than $2 billion had been outlaid on the scheme since implementation, which had fallen "well short" of improving the lagging competitiveness of Tasmania's economy, the report found.

Assistant Minister to the Deputy Prime Minister Andrew Gee noted the advocacy of Tasmanian Liberal Party MPs and Senator Jacqui Lambie in bringing about the new changes.
"The government is committed to supporting Tasmanian businesses and is making these changes to ensure they remain competitive and prosperous now and in the future," he said.