Superyacht Chartering

Briefing Note Summary

• The Special Recreational Vessels Act 2019 (SRV), passed into law in December 2019, allows foreign-owned superyachts to charter in Australia via temporary licences which are issued under the Coastal Trading Act.

• The change in policy unlocked 6261 jobs and $790 million in revenue to the Australian economy in 2021, despite the advent of COVID-19 and associated travel restrictions dramatically curtailing the potential growth.

• An independent Economic Impact Study commissioned by the Queensland Government showed an overall injection of $3.01 billion to the Australian economy and 22,646 FTE in 2021, an increase of $1.045 billion and 8,146 FTE since 2016. The introduction of the SRV Act has contributed an estimated 76% of this growth in jobs and economic value.

• A sunset clause attached to the Act will see the temporary licensing option expire on 30 June 2023.

• Allowing foreign flagged superyachts to charter in Australia beyond 2023 requires a revision of The Coastal Trading (Revitalising Australian Shipping) Act 2012 or an extension or removal of the sunset clause included in the current Special Recreational Vessel laws.

The Issue

Continuing to allow foreign superyachts to charter in Australia without the need to be “imported” is worth an estimated 14,346 jobs and $1.846 billion in revenue to the Australian economy by 2025.

In December 2019 the Special Recreational Vessels Act was enacted by Federal Parliament, allowing foreign owned superyachts to charter in Australia under temporary licencing arrangements. However, the Act contained a sunset clause that was scheduled to expire on 30 June 2021 – as proposed by then-Shadow Minister for Infrastructure, Transport, Cities and Regional Development the Hon Catherine King MP – requiring a permanent solution to be included in the planned revision of the Coastal Trading (Revitalising Australian Shipping) Act 2012. Due to the impacts of the pandemic and then subsequent change of government, this work has not been conducted. However, an extension to the sunset clause from 2021 to 2023 was passed by the Parliament in 2021 due to the lack of progress on the Coastal Trading Act revisions.

Background

There are 7247 registered superyachts worldwide, the majority based in the Mediterranean and Caribbean. About half of this fleet are charter vessels. Australia attracts less than 1% of these vessels with between 60-70 foreign flagged vessels visiting annually. The inability for foreign flagged superyachts to charter in Australia (until 2020) had been the single biggest inhibitor to growth in the Australian superyacht industry. In neighbouring countries such as Fiji, changes in legislation to allow foreign flagged superyacht charters has seen a 40% increase in vessel visitation and an increase in average stay from 21 days to 136 days. New Zealand enjoyed an increase of 54% in superyacht visitation in 20142015 with new legislation permitting a vessel to stay up to two years and to conduct charters.

In December 2019 the Federal Government introduced a Special Recreational Vessels Bill which was enacted by the Parliament to allow superyacht owners to apply for a temporary licence, enabling superyachts to engage in coastal trading in Australia over a 12-month period. The extended sunset clause in the Act will expire on 30 June 2023 when it was originally anticipated broad reform of the Coastal Trading Act would have been achieved. However, this timeline has not been met.

Economic modelling of the Australian superyacht industry shows the $3 billion industry had grown by an additional 76% in 2021 due to this new legislation – despite the impacts of COVID-19.

Indeed, Covid and consequent border closures had a significant impact on superyacht activity during this period which prevented a more complete assessment of the broader impact of the superyacht chartering rules without such limitations, justifying a further extension.

Economic forecasts anticipate further growth to $4.346 billion and 33,185 FTE by 2025 if the legislation remains in place. Critically, a failure to act would see an estimated decline by almost half to $2.5 billion and 18,839 FTE by 2025 if the SRV Act is removed.

In Tropical North Queensland (TNQ), in 2021 the industry injected an estimated $392.6 million into the regional economy and supported 3467 full-time equivalent jobs. This represented 10.5% of the 33,186 jobs supported by the superyacht industry Australia-wide. The flow-on effects into tourism, hospitality, vessel sustainment and maintenance clearly bring wider economic benefit to the region

Next Steps

It is strongly recommended that the Special Recreational Vessels Act sunset clause be removed, or alternatively be extended for a minimum of five years, in order to permit foreign flagged superyachts to charter in Australia beyond June 2023. The Act is a successful piece of legislation that will continue to drive significant economic benefit to regional Australia, and particularly Cairns. COVID-19 has meant the true economic benefit of this Bill has yet to be realised. There is no necessity for government investment to secure an additional $1.846 billion in GDP per annum by 2025 and to provide surety to the sector.

The urgency of a solution is demonstrated by interest from international companies such as Burgess (the world’s largest superyacht charter company) which has recently established an office in Sydney to support the growing number of international events that will attract superyachts to the Indo-Pacific region.

Our Recommendation

• To provide certainty to the superyacht sector beyond June 2023, the Federal Government removes or extends for a further five years the sunset clause in the Special Recreational Vessels Act to allow foreign flagged superyachts to charter in Australia.