The ACTU is backing three maritime unions seeking to block companies from sacking local workers and replacing them with cheap foreign labour while working in Australian waters.
The unions have begun an Industrial Relations Commission challenge to the dismissal of an Australian crew on the once locally registered CSL Pacific.
The ship's Canadian-based owner, CSL, has removed the Australian flag from the vessel, registered it in the Bahamas and hired Ukrainian crews who earn about half the monthly rate of Australian sailors.
The Federal Government has intervened to support CSL.
The legal move follows a huge increase in the use of foreign ships and crews plying Australian waters since permit controls were relaxed under the Navigation Act. Since the government was elected in 1996, permits issued to foreign ships for work in local waters have increased by about 350 per cent. Only about 45 big Australian-flagged and crewed commercial vessels remain.
The increased use of foreign labour has also outraged the Australian Shipping Owners Association, which believes the government is actively undermining local industry.
ASOA executive director Lachlan Payne said there would be "a lynching mob" in the Australian transport sector if the government allowed foreign truck drivers to operate on local roads, but Transport Minister John Anderson "seems to think local waters are something different".
Mr Payne said foreign ships were exempt from a number of local laws. He said double standards were evident when Immigration Minister Philip Ruddock removed several Indian stonemasons from Australia last year after it was discovered they were working on Indian wage rates near Sydney to build a temple.
"Mr Anderson ought to know better," Mr Payne said. "We compete internationally, that's fine. But anyone who works in Australia should be the subject of Australian industrial law. To do otherwise is anti-competitive."
Mr Anderson's office yesterday referred media to Workplace Minister Tony Abbott, whose spokeswoman said it was an issue "beyond the jurisdiction" of the Industrial Relations Commission.
ACTU president Sharan Burrow said the future of Australia's shipping industry and local jobs were being threatened because the government preferred foreign vessels with low-wage crews.
"By issuing more and more permits to these vessels, John Anderson is knowingly authorising the export of Australian jobs," she said. "The foreign fleet is killing the local shipping industry. They just destroy jobs and don't pay Australian taxes. Ships doing the right thing and operating with Australian crews under the Australian flag simply can't compete."
Unions have recently won a Federal Court injunction against CSL preventing it replacing Australian crew on the CSL Yarra, which was sabotaged last month when leaking water caused a cargo of cement to solidify. Police found no evidence to implicate the crew in the incident.
Maritime Union of Australia spokeswoman Zoe Reynolds said the government sent local ships overseas to return with guestworkers employed under third-world conditions, circumventing labour, tax, migration and customs laws.