18 October 2011

The Rena as a public-policy case study

Although some have tried, it would be illogical to 'blame' the grounding of the Rena on the deregulation of New Zealand's coastal shipping back in the 1990s. After all, we will never know if such a disaster might have happened anyway under the old system. And let's not forget the pre-deregulation Wahine tragedy!

But, the fact is that the good ship Rena (and her foreign crew) would not have been plying our waters were it not for deregulation.

The Rena hit the Astrolabe reef at 2.18 am, 5 October. The owner and manager of the ship is the Greek firm Costamare. Costamare is also the parent company of Daina Shipping which was responsible for contracting the salvage firm, Svitzer Salvage whose global head office is in Copenhagen. The salvage contract is a standard Lloyd's contract, and hence is governed by English law.

Costamare has third-party cover with the Swedish Club, a non-profit mutual insurer, obviously based in Sweden. This cover includes pollution liabilities, and the insurer has promised to pay out 'in full' but they mentioned no exact sum at this time.

The vessel is chartered by the Mediterranean Shipping Company, based in Geneva, Switzerland. MSC is a significant customer of Costamare, leasing numerous vessels. MSC say: "MSC Group confirms that it is neither the owner of the involved vessel nor responsible for its management or the crew on board." As of today, in spite of denying legal liability, they have offered $1 million to help with the clean-up.

Although owned by a Greek firm, the ship is registered in Monrovia, Liberia. This is a common practice that is widely regarded as a way of evading the high labour, health and safety and environmental standards of developed countries. In return for the fee paid to the Liberian government, the ship-owner gets to evade European law. See the report by Al Jazeera.

Liberia is hardly noted for an absence of corruption, and one wonders what happens to those fees. And it also seems unlikely that any law-suit to hold them accountable will get anyone very far.

This globalized, non-transparent, cost-cutting approach is furthered by the ship's operator hiring a Filipino crew.

But Costamare's website boasts about high standards regarding employment, safety and environmental protection. They have issued an unreserved apology so far, but it remains to be seen what liabilities they will incur, or what assistance they will front up with, other than the standard insurance excess.

Having outlined those facts, let's bring the matter back to Wellington. Maritime NZ was created in 2005, and was previously known as the Maritime Safety Authority. The latter was created by a deregulation-led reorganization in 1993. It was split off from the Ministry of Transport as a Crown entity, giving it a greater degree of operational independence from the Minister.

The deregulation of coastal shipping of the 1990s was justified by the then Minister of Transport, Jenny Shipley, in the House in 1997, on the grounds of reduced cargo-fees and expanded services. (See Hansard). Such cost-cutting was achieved at the expense of New Zealand operators and crews, according to Harry Duynhoven, then MP for New Plymouth.

The good ship Rena, her oil, and her cargo are now our problem. This event arises from a context created by public-policy decisions made some time ago, and the prosecution of the Captain and navigator will not answer all the questions. The complexities that lie ahead in determining who pays for the clean-up will be huge, thanks to the globalization of the industry. I doubt that the companies concerned will compensate us for all of the costs and consequences, and the NZ taxpayer will probably end up footing much of the bill - not to mention the huge voluntary contributions of people out there on the beaches.


At 9:12 PM, Blogger anaya said...

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