The federal government could scrap laws designed to protect local ship operators from competition from foreign vessels, under planned changes to the coastal shipping laws.
Acting Prime Minister Warren Truss said the nation's shipping industry was treading water, due to restrictive red tape.
The infrastructure minister released an options paper, which he says aligns with his own thoughts.
It argues the current regulatory settings hurt growth in the broader Australian economy due to increased shipping costs and by restricting access to timely and flexible services.
Under coastal trading laws introduced by the former Labor government in 2012, foreign vessels operating in Australia are subject to domestic workplace, immigration, taxation and other laws.
Cruise liners have to obtain a special temporary licence to sail around Australia.
While this was done to protect local ship operators, the paper said it also reduced competition and productivity.
"Regulation dulls the incentive for firms to improve productivity, cease unsuccessful investments early and diversify into other ventures," the paper said.
Australian shipping volumes are expected to double by 2030.
Mr Truss said a framework was needed to manage this growth.
"Too often we hear that it is cheaper to freight goods from overseas than ship them from one Australian port to another," he said in a statement on Tuesday.
"Meanwhile, we have reached a situation where the number of Australian-registered ships has halved over the last decade."
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