Deborah O'Neill (NSW, Australian Labor Party, Shadow Assistant Minister for Innovation) Share this | Link to this | Hansard source

Just because of the hard marker in the Senate papers, I was making some remarks about Labor's reason for moving this partial disallowance motion, which relates particularly to our concerns about illegal logging and the devastation that it causes in the social and environmental contexts as well as the economic damage that it does. When my time this morning concluded, I was at a point where I was talking about Australian Labor Party values with regard to third-party certification as a means of helping demonstrate sustainability, and I was supporting its inclusion in Commonwealth procurement systems, particularly for products that are certified in Australia. But one of the concerns that we have with this particular construction from the government is that there are a number of examples of certified products that are proving to have been sourced from illegally logged forests in recent times. Having now been uncovered, this cannot be ignored, and that is why this partial disallowance is being put by Labor.

The requirements assess whether the information and evidence obtained by using the framework are accurate and reliable, and we are concerned that this should remain. We believe that we need the requirements to identify and assess, by using the framework and the gathered information, whether there is a risk that the product is made from or includes illegally logged timber. We also consider that the requirements should be used to consider any other information the importer knows, or ought reasonably know, that may indicate whether the product is made from or includes illegally logged timber. We also consider a written record should be kept of the process used to make the assessment.

These sorts of conditions are not unduly onerous. These are practical ways of preventing illegal logging and interrupting the trade in illegal logging. For the processing of domestically harvested logs, where there is a pretty strong understanding of local supply chains, we think that these provisions should remain.

These requirements are not worth removing when it entails a heightened risk of the penetration of illegally logged timber and timber products into the Australian market, which we know would undermine the Australian industry and Australian jobs. This is at the core of why Labor is making these partial disallowances today. Australian jobs matter to us. Making sure that we don't undermine the supply chain and that we support Australian industry is a critical business that we take very seriously in this place.

The matter of the make-up of the regulations is finally concluded, more than three years after Minister Frydenberg initiated the government review. It is slow, but Labor plans to focus on encouraging a greater emphasis on compliance with the law and regulations, and will explore options to enhance the department's capacity to ensure adherence to the law. I thank the chamber for its attention to these matters.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

I rise to speak on this disallowance motion moved by me and by Senators Brown and Hinch. The Greens do not see amending these regulations of the Illegal Logging Prohibition Amendment as justified, and we have concerns that they weaken the provisions that we have in place. We have those provisions in place for a very good reason: to tackle the major global issue of illegally logged timbers circulating in the marketplace. Australia must maintain high standards in order to play our part. It is not okay for us to squib on our responsibility to address the scourge of illegally logged wood products. The environmental costs, not to mention the social and the economic costs, are too high.

I want to start by setting the scene as to why this is important. The work that has been done in recent years by this government and the previous government has made it clear that illegal logging is still a huge issue in forests around the world. It is estimated that almost 10 per cent of the timber being imported into Australia may have come from wood sources and forests that have been illegally logged. This is huge. Almost one piece in 10 of every piece of timber being imported is likely to have been illegally logged—which almost certainly involved trashing forests that are critical for animals and birds, destroying forests that should be kept to soak up carbon, destroying forests that would otherwise be providing clean water, and, in many cases, destroying forests that are home to and provide the livelihoods for indigenous peoples around the world. Just in our region, illegal logging in Papua New Guinea, West Papua and Indonesia is still a very significant issue, destroying the lives of people and forests and the animals that live in these forests.

There was a 2013 report of logging in PNG by the non-government organisation Global Witness, which looked at logging occurring in their special agricultural and business leases, which they found was the source for around one in every 10 tropical logs entering the Chinese market. Global Witness concluded that most logging in these special agricultural business leases had violated laws designed to protect land rights for indigenous people. According to the report, time after time villagers denied that they had given permission for their land to be included in the leases.

There is not only the impact of illegal logging on communities around the world but there is another reason right here at home why we need to tackle overseas illegal logging: that is because timber and paper from this illegal logging undercuts our own wood products industry at home. We shouldn't be in a situation where timber and paper that is coming from well-managed Australian plantations has to compete with artificially cheap forest and livelihood-destroying illegally logged timber. But here we have this government wanting to water down the regulations that have been established to ensure the best chance of reducing illegally logged timber coming into the country.

The change appears to be motivated by an overall ideology from this government to reduce red tape. It was back in 2014 that the environment minister, Mr Frydenberg, in his then role as Parliamentary Secretary to the Prime Minister, kicked off this push to deregulate our framework to address illegally logged products. Of course, we have seen many spheres where this government has hacked away at sensible, robust regulatory frameworks in the guise of cutting red tape. But in doing so in this instance, we risk becoming a global dumping ground for illegally logged timbers, weakening the overall global framework. Driven by this agenda, the government kicked off a regulatory impact statement process to review the regulations, aiming at finding ways to reduce unnecessary costs from the framework. That was then put in place to ensure due diligence was exercised by importers of timber products. This regulatory impact statement process examined six options to try and carve out savings and then recommended two of them.

The statement came out in October last year and it proposed to streamline the processes for businesses, subject to the regulations, but undertaking the regulatory amendments we are discussing today. What is being proposed via this regulation change is to allow importers and domestic processors to use third-party timber specification frameworks to assess the risk associated with a regulated timber product, specifically the FSC and PEFC certifications, the Forest Stewardship Council and the Program for the Endorsement of Forest Certification. This change will create a new deemed-to-comply arrangement for products that are certified under FSC or PEFC. Any products imported that have either of those figures will automatically be deemed to be okay to be imported and not linked to illegal logging activities, and, in doing so, will remove the due diligence requirement which is in place in order to make sure that there is a robust examination of the supply chains for imported timber products.

As Greens, we don't support this is a good change because it is not justified when compared to its impact on the global and domestic timber trade. In taking this position, the Greens recognise the important role that certification schemes play in the timber and wood products markets and that as the most robust and credible certification, FSC certification in particular is a really important scheme that signals to importers and consumers that the product they are buying comes from well-managed sources.

Globally, FSC sets the bar very high for ecologically and socially responsible forest management. It is worth noting for reference that there is no logging of native forests on public land in Australia that meets the FSC certification standards. FSC recognises that logging that is putting birds and animals, like Leadbeater's possums and swift parrots in Australia, at risk of extinction because it doesn't meet their standards. I am going to talk more about this when we come to general business later this afternoon.

PEFC, on the other hand, is an industry-led certification scheme that's got much weaker standards, and it's been criticised for being a tick-box exercise that excludes social and environmental experts from its processes. There are a lot of complexities when it comes to talking about forest certification standards, but primarily I do want to make this distinction between FSC and PEFC. I also want to note that both standards, to different degrees, have come under scrutiny over time. For this reason, we need to maintain a safety net of a due diligence process for any importers sourcing timber products certified under these schemes.

The government gives two justifications for weakening the regulations. The first is the cost imposition on Australian timber importers. The second is that being certified under either FSC or PEFC effectively means all of the due diligence has already been done, so requiring extra work to be done is just doubling up. I'll deal with each of these justifications separately; firstly, the cost imposition on Australian timber importers. The government claims that this change would save the industry $4.2 million annually, but that is a tiny proportion of the overall value of the industry. The government's own regulatory impact statement tells us that we have an $8 billion timber import industry in Australia and, as I've already noted, a risk of up to nine per cent of the timber imported being illegally logged. Yet the government's own regulatory impact statement notes that keeping the status quo of continuing to require due diligence had an average compliance cost per importer of around $1,500 a year, and that it took about 23 hours each year to undertake that due diligence for each importer. So, to meet the current due diligence requirements, we're talking about a cost, as a percentage of the total value of regulated imports, of 0.0037 per cent, based on 2015 import values. And the regulatory impact statement tells us that these figures are potentially overstating the costs. The impact statement says:

… these estimates may overstate the overall cost of compliance for importers. In practice, a sizable number of product lines, once their initial due diligence process has been completed and they have been determined to be low risk, are likely to require only minimal intervention by an importer.

This is the government's own regulatory impact statement. So, in the context of this industry, we cannot see that this very, very small cost burden, when spread across all the businesses in the industry, is significant enough to warrant the risks of removing a safety net that guards against illegal products entering our market.

The government's second justification is essentially that the due diligence has been done with FSC- and PEFC-certified wood products, so it's just doubling up. Firstly, it's worth noting that this would be a novel approach from Australia in a global environment where other countries are facing the same issues. It was highlighted in several submissions to the regulatory impact statement process that neither the European Union nor the United States formally recognises third-party certification systems as a means of ensuring timber legality, although notably both do allow them to be used as part of a system of due diligence or due care. So, if we loosen our requirements in comparison to those markets, we're going to risk becoming a dumping ground for illegally logged timbers.

The reason that the US and the EU don't accept these certification schemes is that these certification schemes are not fail-safe. There have been two recently publicised examples of the failure of these schemes. One was illegal logging in Romania. Despite the products being sourced by an Austrian company with FSC chain-of-custody certificates, FSC took a long time to revoke the certificates and rectify the situation, despite being presented with the evidence of illegal logging. There is also a current example in Peru, where one of Peru's largest exporters was blocked from US exports under their prohibition despite having two valid FSC certificates. A month later, the US government banned all imports from this company because they found massive amounts of illegal timber in their shipment. So if we had changed our regulations now, that company would be free to send all of that timber to Australia instead under the new deemed-to-comply provision. That's two examples of where the FSC certification has failed.

The FSC is extremely robust compared to the PEFC. Many PEFC schemes have much lower standards and hardly any independent controls. I certainly don't think that, overall, PEFC certification is worth the paper that the certificates are printed on. The Australian version of PEFC is the Australian Forestry Standard, which certifies as legal and attempts to greenwash clear-fell logging in Australia, which has been challenged time and time again in the courts and been found to not be legal. You only need to look at the court successes of Environment East Gippsland over illegal rainforest logging and logging which is destroying the habitats of threatened species and the lack of proper surveys in previously unlogged forests—such as in the Kuark forests of East Gippsland—to see that PEFC certification, even based on the Australian version of it here, cannot reliably be used for due diligence.

The other thing to bear in mind with certification and whether it's good enough for due diligence is that where you've got strong certification, such as FSC certification, it actually makes the required due diligence much easier. Where there is a robust certification scheme with robust chains of custody, then it is actually easy to check the certificates. It will streamline and considerably reduce the cost of undertaking due diligence. If a company is importing FSC-certified timber, the cost of that due diligence, I'm sure, will be far, far less than what was estimated in the regulation impact statement.

As such, I expect that maintaining due diligence, even on certified products, will in fact encourage the use and the import of FSC-certified timber as opposed to PEFC-certified timber and, indeed, uncertified timber. That is a good thing. If supporting and reinforcing the Forest Stewardship Council brand then flows on to increasing the use of Australian FSC-certified timber, which is almost all sustainable plantation-sourced timber in Australia, then that will be an absolutely welcome bonus of maintaining these regulations as they stand.

I want to conclude by emphasising that our role in these global supply chains is crucial. Illegal logging is a global problem, and Australia must do its bit to uphold a robust framework to address it. The Greens cannot see any good reason to allow these regulation changes to be implemented. For this reason, we have co-sponsored this disallowance motion, and we are seeking the Senate's support for the maintenance of a sensible and robust approach to keep illegally logged timber out of the Australian market.

Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

Before I make some comments about why the government believes that the regulation amendments that we are seeking to put before this place are sensible and balanced, can I just make a few comments about some of the comments that have been made about this disallowance motion by those who have spoken before me. It comes as no great surprise that it is of great concern to me that Senator Rice would actually suggest that the federal government's position of having a desire to reduce red tape for Australian businesses is somehow a bad thing. I would have thought it was eminently sensible for us to be constantly looking at ways and means by which we can reduce the financial and cost burden on Australian businesses if there is demonstrated fact that the cost of the regulation far outweighs the benefits of anything that it's trying to achieve.

It's also interesting that Senator Rice makes many comments about the Greens not being satisfied—that she's not satisfied. I absolutely assure this chamber that the very extensive review that assessed the need for and impact of the regulations that were brought in in conjunction with the illegal logging legislation that was brought in by this government at the start of our term was undertaken by a number of independent assessors. It was a very robust process. It sought to speak to people across the entire supply chain: importers, domestic operators and unions. So to suggest that somehow what the Greens say or what Senator Rice thinks is a more robust way to assess the efficacy of a particular regulation—I'm sorry, I'm going to have to say that I would rather take the word of and outcomes that have been delivered to us by an independent, transparent, robust and scientifically based process than what she may think.

I'd also draw to the attention of this place to the fact that it is incumbent on every government, no matter of what persuasion, and everybody in this place to understand that nothing is ever going to be perfect. What we're entrusted to do is make sure that we strike a balance so that we are not, as in the old saying, smashing a walnut with a sledgehammer. If, as legislators, we believe that the burden of the regulation far outweighs any benefit that the regulation puts into place, then it's incumbent on us to assess that and make a decision that you cannot possibly regulate the Australian economy out of existence just because you want to deliver an absolutely perfect environment, where absolutely nothing ever has any risk. You cannot triage by legislation all risk out of existence in Australia.

First of all, I congratulate the Australian forestry industry for their response to the introduction of illegal-logging regulations. They have worked extremely hard to make sure they've got their businesses and their importing businesses up to speed so that they can address the very serious issue of illegally logged timber, seeing that Australia is doing everything that's reasonably possible to make sure that we're not a country where illegally logged timber is imported.

The coalition government, by its very actions, has demonstrated that it is absolutely committed to combatting illegal harvesting of timber. But we recognise that the importance of preventing illegally logged timber being imported into Australia has to be balanced by making sure that the regulatory burden we place on importers is at a relevant and an appropriate level so that we combat the illegal logging but don't destroy our businesses in the process.

I'd also draw to the chamber's attention that when Senator O'Neill was making her contribution to this particular disallowance motion, she made a comment about $800 million of timber that's being imported into Australia and that there was some risk of it being logged illegally. Again, Senator Rice drew attention to the estimate that up to nine per cent of timber that's logged internationally has some risk of having been sourced illegally. I'd like to point out to the chamber that just because something is averaged across the whole of the world doesn't necessarily mean that Australia has to accept its proportion of that particular issue. In many instances, Australia is a world leader in how we go about things, whether it be in our forestry sector, our fisheries sector, our water management sector or our agricultural sector. We have some of the most robust regulations in place to ensure that we hit well above the average in making sure that we are very compliant in many of the things that we do. So to pluck a sum out of the air and say that because the world has up to nine per cent illegally logged timber—it's in our report and I admit it's in our report—is not a direct correlation to saying that nine per cent of wood that's imported into Australia being illegally logged.

I think this probably highlights very clearly one of the most insidious things that are seeping into our country at the moment, and that is that you can twist and distort facts. You can twist and distort the science, and in many instances you can actually tell untruths to try to argue your point. And we see time and time and time again from the Greens where the inconvenient truth is completely disregarded because it makes a much better argument for us to come in here and twist the facts so it looks like a much worse situation than really exists on the ground.

All we serve to do by this false information, this misrepresentation of the facts, is to damage our industries—our industries that are recognised, if you look at peer group review of the science, as some of the best and most effective, efficient and sustainable in the world in just about everything we do in Australia. And yet we seem to think that it's okay to come in here and spread misinformation to the rest of the world so they actually think that Australian industries are not the fantastic industries they are. I can assure you I will, day in, day out, never fail to stand up in this place and defend the amazing environmental credentials of all of our agricultural industries and sectors, because they are the best in the world. They deserve to be supported and they deserve to be protected against the misinformation that's often thrown our way by those that sit opposite.

But I move on to the actual disallowance. I'm disappointed that those opposite are choosing to move to disallow this. I would question particularly the Labor Party and their support of this disallowance. Does their hypocrisy know no bounds? I can assure you that I've been working on this particular issue with industry, with importers in the Australian domestic timber industry, for a number of years. In fact, it was one of the first chores and tasks that I undertook when I was appointed to this particular position. The Labor Party had been out amongst industry up until the last week of 2017, spruiking their support for these particular amendments and changes to the regulations. And then, lo and behold, somehow over the Christmas period we found that someone, whether it's the CFMEU or whoever, had somehow got into their heads, and now they don't support these regulations.

I generally thought, from the comments that I had been hearing and receiving as I had been travelling around the country, talking to our timber industry and consulting on this particular issue, that those opposite actually also understood that, if you go through the rigorous process of getting yourself certified by an independent certification standard, particularly FSC in the case of the Greens—FSC is auspiced by the World Wildlife Fund, about whose credentials they seem quite happy to crow at every other instance, particularly when there's money at the other end of it. They then come into this place and say that it's not good enough anymore.

I don't know what went on, but all I can say is that this just seems to me to smack once again of the 'no' politics we see from those opposite. All we're doing is, in effect, stopping the release of nearly $5 million back to industry that's been independently assessed as being an unnecessary regulatory burden on the Australian forest-products-importing industry. So it is with great disappointment that I find that the Labor Party, the Greens and Senator Hinch have chosen not to recognise that there is very, very little risk of any further imported timber into this country having been illegally sourced after the addition of a deem-to-comply condition on the two internationally recognised standards, FSC and PEFC. The benefits of this arrangement would be simply to reduce an unnecessary cost on industry and, in the process of doing so, make very little difference to the outcome.

So it is with great regret that it appears to me as if these particular very small changes to regulation that we have before us will not pass this place. All I can say is: shame on those opposite for the hypocrisy that they have shown in not supporting these amendments.

Scott Ryan (President) Share this | Link to this | Hansard source

The question is that business of the Senate notice of motion No. 2, the disallowance motion standing in the names of Senators Brown, Hinch and Rice, be agreed to.