Blast for freight scheme

TWO Tasmanian Liberal senators have accused the federal government of stalling its review into the Tasmanian Freight Equalisation Scheme (TFES), saying it has left the state’s farmers, manufacturers and exporters high and dry.

The comprehensive Independent Review of the Tasmanian Transport Schemes (which encompasses the TFES) was due for delivery to the government in the first half of 2026.

While it's yet to officially release the document to the public, it was received by the deadline set under the terms of reference and Assistant Minister for Regional Development Senator Anthony Chisholm said “we are now carefully considering the recommendations to ensure these schemes serve the best interests of Tasmanian communities, while giving certainty to Tasmanian industry”.

Senators Richard Colbeck and Chris Gatenby said Labor “must stop delaying action on the scheme and ensure the final outcome genuinely levels the playing field when it comes to moving freight around the country”.

They believe that Tasmanian businesses should not face higher costs than interstate competitors simply because Bass Strait sits between them and their markets.

“The purpose of the TFES is to equalise the freight disadvantage faced by Tasmanian businesses,” Senator Colbeck said.

“Bass Strait is our highway to the mainland and businesses should not be penalised because that highway happens to be made of water.”

Restructuring the subsidy schemes, which cost more than $213 million in the 2025–26 financial year, is being eagerly awaited as fuel and freight costs continue to escalate.

The review is evaluating both the TFES and the Bass Strait Passenger Vehicle Equalisation Scheme (BSPVES) to make sure they are modern and fit for purpose.

Senator Chisholm said that the federal government is supporting Tasmanian businesses and communities by boosting the TFES payment by 25 per cent for two years, and by undertaking the review.

“We committed to our review before the election to ensure TFES and BSPVES are fit-for-purpose and deliver for Tasmanians into the future,” he said.

“That’s more than the Coalition ever did during a decade of power, where TFES rates were left to stagnate and didn’t keep pace with price increases.

“The independent reviewers have worked closely with businesses and industry across Tasmania throughout a comprehensive review process.”

Senators Colbeck and Gatenby said years of rising freight costs and inflation had eroded the effectiveness of the scheme, with evidence to the Senate inquiry showing that support had failed to keep pace with the real cost disadvantage facing Tasmanian businesses.

Senator Gatenby said the review must result in meaningful reform rather than another missed opportunity.

“Industry has been clear about what needs to happen. Support rates must better reflect the real cost of moving goods to and from Tasmania, including higher assistance for northbound and southbound freight movements and better recognition of intermodal costs,” Senator Gatenby said.

“It must also properly consider support for exporters who ship goods through mainland ports to international markets, and ensure businesses on King Island and Flinders Island are not left behind. Those disadvantages are real and they are growing.”

The senators said reform should also address the “class slippage” identified during the Senate inquiry,

where inflation and rising freight rates have steadily reduced the value of assistance available under the scheme.

“The evidence presented to the inquiry was compelling,” Senator Colbeck said.

“There has been a sharp surge in underpayment in recent years.

“The scheme needs to keep pace with actual freight costs, market conditions and the competitive realities facing Tasmanian businesses. If it does not, the gap between Tasmania and the mainland simply continues to widen.

“Labor might claim they have increased the rate paid by 25 per cent so there is nothing to worry about, but Labor’s increase does nothing about intermodal costs, the payment for which needs to be at least doubled from the current $100 to $200, and then indexed annually as was proposed by the Coalition last year.”

The Senators said the review should also establish a framework for more regular assessments of the scheme in future, preventing support from once again falling behind actual freight costs.

“We also support consideration of the Bass Strait Passenger Vehicle Equalisation Scheme alongside the freight scheme because both are critical to overcoming Tasmania’s island disadvantage,” Senator Gatenby said.

“Ultimately, this review should return the TFES to its original purpose: ensuring Tasmanian businesses can compete on fair and equal terms with mainland competitors.”