Superyacht chartering

SUPER YACHT CHARTERING

COUNCIL: CAIRNS STATE ELECTORATE: CAIRNS FEDERAL ELECTORATE: LEICHHARDT

THE ISSUE

Allowing foreign superyachts to charter in Australia without the need to be “imported” is worth an estimated 11,800 jobs and $1.64 billion in revenue to the Australian economy1 . To unlock this market and attract increased visitation to Australia, 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 contains a sunset clause that expires on 30 June 2021. A permanent solution is planned, which requires a revision of The Coastal Trading (Revitalising Australian Shipping) Act 2012, however due to the pandemic this work has been postponed.

BACKGROUND

There are 5,796 registered Superyachts worldwide, the majority based in the Mediterranean and Caribbean. Australia attracts less than 1.1% of these vessels with between 60-70 foreign flagged vessels visiting annually. The inability for foreign flagged superyachts to charter in Australia until 2020 has 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 shown a 40% increase in vessel visitation and an increase of average stay from 21 days to 136 days. New Zealand enjoyed an increase of 54% in superyacht visitation in 2014- 2015 with new legislation permitting a vessel to stay up to 2 years and conduct charters1 .

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 sunset clause in the Act will expire on 30 June 2021 when it was anticipated broad reform of the Coastal Trading Act would have been achieved. However, the impacts of COVID-19 have meant this timeline has not been met.

Before the new laws were passed, economic modelling of the Australian superyacht industry suggested the $1.965 billion industry would grow by approximately 13% over the five years from 2016 to 20211. However, with appropriate policy settings the superyacht sector’s annual contribution to the Australian economy could grow by as much as 70%, delivering $1.64 billion more in GDP and 11,800 more Australian jobs based on pre COVID-19 economic modelling.

In Tropical North Queensland (TNQ), prior to COVID-19 the industry injected $324.1 million into the regional economy and supported 2664 full-time equivalent jobs. This represented 18% of the 14,500 jobs supported by the superyacht industry Australia-wide. Despite COVID-19, the Special Recreational Vessels Act has still been successful. Since it came into place 12 months ago, three vessels conducting four charters have created an economic benefit of $8.54million with GST receipts for government of $621 000.

BRIEFING NOTE SUMMARY

• The Special Recreational

Vessels Act 2019 allows foreign owned superyachts to charter in

Australia via temporary licences which are issued under the Coastal

Trading Act. • The change in policy was expected to unlock an estimated 11,800 jobs and $1.64 billion in revenue to the

Australian economy by 2021, but the advent of

COVID-19 and associated travel restrictions has dramatically curtailed growth. • A sunset clause attached to the Act will see the temporary licensing option expire on 30 June 2021. • Allowing foreign flagged superyachts to charter in Australia beyond 2021 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.

NEXT STEPS

It is strongly recommended that the Special Recreational Vessels Act sunset clause be removed, or alternatively, be extended for a minimum of two years, in order to permit foreign flagged superyachts to charter in Australia beyond June 2021. The Act is a successful piece of legislation that will 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 in order to secure an additional $1.64 billion in GDP per annum1 and provide surety to the sector. The urgency of a solution is demonstrated by interest from international companies such as Burgess (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 IndoPacific region. • That in 2021-2022, consultations with industry on options for reform of the Coastal Trading (Revitalising Australian Shipping) Act 2012 continue to be pursued by the Department of

Infrastructure, Transport, Regional Development and Communications. • That to provide surety to the sector and allow foreign flagged superyachts to charter in

Australia, to remove or extend the sunset clause in the Special Recreational Vessels Act, to ensure certainty to the industry beyond June 2021.

1 AEC (2016), Economic Impact of the Superyacht Sector on the Australian Economy. 2 Superyacht Intelligence 2017, Fleet Data, viewed 3 Jan 2017, http://ww.superyachtintelligence.com/fleetnews/