The Gillard Labor Government has announced the most comprehensive package of reforms to the Australian shipping industry ever undertaken including a zero tax rate for Australian ship operators.

These historic reforms are designed to make the Australian shipping industry more internationally competitive and allow Australian shipping companies to compete on international routes, according to Infrastructure Minister Anthony Albanese.

"We are determined to remove the disincentives that have made it uneconomic to operate Australian ships in a global environment. We are determined to create an environment that will encourage and sustain growth and productivity in our shipping industry," Albanese said in his speech top the Maritime Industry in Sydney.

The reform package's key elements includes tax reforms to remove barriers to investment in Australian shipping, establishment of an Australian International Shipping Register to put Australian companies on a level footing with their international competitors and establishment of a Maritime Workforce Development Forum to progress key maritime skills and training priorities.

The reforms also include a tax break for companies employing Australian seafarers on international voyages.

Companies will also be given a financial incentive to replace ships earlier, with the depreciation rate reduced from 20 years to ten years to encourage renewal of the fleet.

The government statement cited an international study which found that the cost of operating a 20 year old ship compared to a five year old ship is 40 percent higher.

"The industry has been in decline for decades and if we don’t act now, in five years time, Australia won’t have a shipping industry. In 1995 there were 55 Australian operated ships - now there are only 22," Albanese said.

"The Australian shipping industry has been operating at a substantial disadvantage compared to international operators who have access to beneficial tax, regulatory and employment arrangements," he said.

He said the reforms will improve productivity and ensure the safety and security of Australia's marine environment for future generations.

Maritime Union of Australia National Secretary Paddy Crumlin welcomed the shipping reform because "it recognizes the importance of Australia as the fourth largest shipping nation by volume and the numbers are increasing with the mineral resources boom."

“We have long been one of the world’s largest shipping nations but we lost critical momentum in this vital industry...The new policy restores fairness and transparency to the way shipping participates in the domestic freight market, while greatly increasing the potential for greenfield opportunities for Australian businesses to participate in international shipping," Crumlin said in a separate statement.

“If implemented properly, shipping reform will be good for the domestic economy - providing surety of investment, regular scheduling, efficient and effective utilization of ships, and developing the critical shortage in maritime skills that Australia as a trading and shipping nation so desperately needs," he added.