SHIPPING service operators have criticised the Tasmanian Economic Regulator’s review of Bass Island Line’s pricing policies and King Island shipping service as “raising more questions than it answered”.
Eastern Line Shipping owner Warren Dick and Mark O’Brien, a qualified accountant with shipping clients on King Island for more than 20 years, uncovered what they called “potential discrepancies within the current shipping operations”.
Both agreed that while revealing certain hidden elements, the report primarily raised more questions than it answered, particularly regarding financial discrepancies and operational inefficiencies.
They called for government intervention and policy changes to address the identified issues and ensure a sustainable and efficient shipping service for King Island.
Mr Dick questioned the adequacy of the assessment process and expressed dissatisfaction with what he said seemed like a “lack of knowledge and the need for a more comprehensive evaluation of service providers”.
“The report is loosely put together,” he said. “There are quite a few points in there that could have been better.
“The one issue that stuck out for me was [the Minister’s] comment when the report was released that the Bass Island Line is the only dedicated shipping service to King Island, with 123 sailings.
“It annoyed me because, for the same time that year, Eastern Line Shipping had done 165 sailings.
“So quite a few more than Bass Island Line,” he said.
“Eastern Line Shipping sat down with the Regulator.
“We were the only organisation or shipping service to open our books and give confidential information.
“So, they know what are cost motivators and what drove our costs for the shippers on King Island,” Mr O’Brien points out.
He drew attention to “significant financial discrepancies and the magnitude of taxpayer-funded losses exceeding $22m”.
“Notably, the omission of certain costs in the report indicates a substantial underreporting of expenses related to the Bass Island Line’s operations,” he said.
These discrepancies suggested a larger loss than initially accounted for, raising concerns about the accuracy and transparency of financial representations.
“Their findings talk about the full attribution of costs of Bass Island Line, it does not include all of its overheads and administration costs – which are worn by TasPorts. They gave the example only for the 2022 financial year.
“They decided that when BIL is reporting in the TasPorts annual report, the costs that BIL are incurring are far greater than what’s being reported.
“So, in the 2022 year, they reported costs of just over $10m. But that excluded $1.577 million of costs that didn’t get attributed to BIL.
“So BIL is running at a far more substantial loss than what’s reported in these annual returns.
“That goes back to the 2015 – 16 reports.
“The State Government went on the record and said it wanted an open unregulated market; a commercially sustainable long-term service; a reliable, cost-effective service that supports growth on King Island, and here we find, when they do their numbers, the Regulator found and reported that they [BIL] have hidden about 13 per cent of the costs of running the service in 2022, and I suspect it is the same for the other years.
“I’m sure the Auditor General Department has got a copy of this report, and they certainly will be having a little bit of a think about this,” he said.
One of the report recommendations is that BIL should conduct a review to determine the suitability of the ship John Duigan to continue to provide freight services to King Island.
Looking to the future following the Regulator’s report, Mr Dick said: “The John Duigan was always seen as temporary, it has had operational problems.
“You’d have to question the suitability of that vessel in the operating environment.
“The biggest inefficiency, as an operator, is that we need a 24-hour safe harbour port.
“We can run vessels more efficiently. It means more trips and better use of vessels.
“Vessels won’t go to Grassy and then be turned away. That needs to be fixed and this would have an impact on freight costs for the shippers and a better freight service,” Mr Dick said.
Neither feel that the prescribed inquiry was a waste of time as it highlighted hidden figures and what’s missing in the report.
“Unless the government changes the use of the vessel policy, there will be no changes, and if BIL was a commercial business it would be run very differently.”
In the meantime, Murchison independent MLC Ruth Forest has asked some questions of the Minister for Transport, in regards to the report.