Thursday, 8 February 2018
Regulations and Determinations
Illegal Logging Prohibition Amendment (Due Diligence Improvements) Regulations 2017; Disallowance
At the request of Senators Brown, Hinch and Rice, I move:
That items 1, 3 to 8, 11 to 13, 16 to 19, 21 to 25, 28 to 30, and 33 to 36 of Schedule 1 of the Illegal Logging Prohibition Amendment (Due Diligence Improvements) Regulation 2017, made under the Illegal Logging Prohibition Act 2012, be disallowed [F2017L01338].
I wish to put on the record that Labor is moving this disallowance motion because illegal logging causes devastating social, environmental and economic damage in source countries and all around the world. I think it is a matter of concern for Australians that this is the case. Illegal logging also very unfairly undercuts jobs in the Australian forestry and forest products industry. This very much matters to Labor, but it matters to regional Australia in particular, which is why this disallowance motion is so important. It also matters where strong governance means that forestry activities occur consistent with stringent procedures. Australia imports a significant amount of logged material—roughly $8.1 billion worth of timber products per year come into this country. According to estimates from the Department of Agriculture and Water Resources, up to $800 million comes from sources with some risk of being illegally logged. This is an issue that I think Australians who care about the social, environmental and economic damage that such a volume of movement of illegally logged materials could cause want proper action on.
Just to go back over some of the history, a review of the illegal logging prohibition regulation was initiated quite some time ago by Minister Frydenberg, when he was in the role of Parliamentary Secretary to the Prime Minister. At that point in time he had specific responsibility for deregulation. In his 11 December 2014 article in the Australian Financial Review he stated that at that time he expected the regulation impact statement with regard to these regulations would be completed by March 2015. I'm sad to say we shouldn't necessarily be surprised that there was a delay in that timeline. It was not March 2015 but, in fact, as recently as 5 October 2017 that the Commonwealth finally announced its reform from the review and tabled its RIS. It's in that context that this disallowance—this partial disallowance, to be accurate—enters. The partial disallowance seeks to disallow items 1, 3 to 8, 11 to 13, 16 to 19, 21 to 25, 28 to 30 and 33 to 36 of schedule 1. It's in that context that this partial allowance deals with parts of the government's reforms with which Labor does not agree.
This disallowance will mean that importers and processors who are using timber legality frameworks vital to the sustainability of this industry—such as the Forest Stewardship Council and the Program for the Endorsement of Forestry Certification—as part of their due diligence systems to satisfy their obligations as required by the Illegal Logging Prohibition Act 2012 will still need to do some core essential work to ensure the productivity and value of the materials they're putting into the distribution chain. In order to maintain the integrity of the supply, they will still need to consider any other information the importer knows, or ought reasonably to know, that may indicate whether the product is made from or includes illegally logged timber. So this is about making sure that that protection that came in is maintained. Why is it so important to maintain the integrity that was embedded in the Illegal Logging Prohibition Act 2012? Maintaining it is an important check and balance in the system, and it's vital to maintain the integrity of the prohibition on illegally logged timber and timber products.
Timber legality frameworks can be used, in large part, by importers of regulated timber and timber products and processors of raw logs domestically in order to satisfy themselves and the department that they are sourcing legally harvested product, as explained by the Labor government in 2012, when the original regulations were tabled, and again in 2013, after a long period of consultation with the illegal logging working group. That process was quite extensive. I'm very pleased to say that it included representation from all of those who were interested in the sustainability of the sector, such as experts on the logging chain and the identification of the goods at all points of contact and movement. Representatives of the industry were engaged. Clearly, as a vital part of the chain of the delivery of logs and timber products into this country, the importers were also engaged. I'm pleased to say that, of course, the unions were engaged. The impact of this on Australian jobs is something I will say more about a little later on. The unions were involved in the illegal logging working group. Civil society groups were engaged and, indeed, foreign governments were engaged. This carefully constructed set of protocols was widely consulted on and delivered fulsomely to give us the best possible outcome we could have with regard to ensuring the integrity of timber and timber products coming into the country.
The statement that they made was:
The intention is that an importer may not use a timber legality framework to assure themselves of the legality of a product if there is information known to them that would otherwise call into question the legality of that product.
So it puts the responsibility on the delivery chain to check and make sure that they don't just abrogate their responsibility: 'It's not my fault; it's not my responsibility.' This is a requirement that, if they know anything, they are actually responsible for assuring themselves of the legality of the product.
There are a number of downsides to junking this principle by removing the additional information gathering elements that were required under Labor's regulation and endorsing, under the regulations, an automatic, deemed-to-comply arrangement for timber legality frameworks. As outlined in the regulation impact statement, there are significant concerns with the government's proposal. One of the major concerns in the RIS was that what the government is proposing could:
… lead to situations where a business will import or process a 'certified' product, despite information or circumstances suggesting that it is likely to contain timber that has been illegally harvested.
That, in my view, is certainly not something that Australians would think is of benefit to our economy, our environment, our social networks or our work capacity.
The RIS outlined the concern that this risk:
… is heightened by several factors, including the propensity for corruption in some high-risk nations—
nations from which the timber products would flow, and—
the possibility of fraudulent documents being provided—
That is, it would be just a tick-and-flick process entirely inadequate for properly checking the distribution chain. Another concern was:
… misleading claims being made; and the inherent complexity of such systems, which can be confusing or prone to misunderstanding.
The RIS further said:
It is also worthwhile noting that while both third-party certification systems (FSC and PEFC) have comprehensive systems that are backed up by third-party audit, they have not deliberately been designed to provide guarantees of legality. There have also been reports suggesting that these systems are vulnerable to deliberate fraud.
Given that level of concern, it's clear to me that the partial disallowance motion we're putting forward this morning should be supported in this place. The core problems that I've just outlined are not the only ones, though. There are additional shortcomings in the government's approach outlined in the RIS. They include such significant concerns as the fact that neither the European Union Timber Regulation nor the United States' Lacey Act formally recognise third-party certification systems, such as the FSC or the PEFC, as means of ensuring timber legality.
Another problem with the government's approach—in addition to not following the best practice approach evidenced by the actions of the European Union and the United States—is that this proposal, which we seek to disallow, moves away from the principle that importers and processers need to understand their supply chain. It shouldn't just be a question of getting a piece of paper, checking it off and saying: 'Yeah, it looks like it's fine. Let it go.' We actually believe that, to ensure the integrity of logging products that come into Australia, we should make sure that our importers and those who are involved in processing are absolutely aware of the supply chain from which they are gathering their raw or partially developed materials.
The RIS concluded that another risk, if the government's approach were adopted, would be potential fraudulent activity by certified parties. Yet another concern was that the government's approach might incentivise the misuse or abuse of certification systems. Surely the government don't really want to do that? With this disallowance motion we're helping them to help themselves to a much better outcome. It's not that hard; they should just agree with the Labor Party on this matter of certification.
To be clear, the Australian Labor Party does value third-party certification as a means to help demonstrate sustainability and it supports its inclusion in Commonwealth procurement systems, in particular with products that are certified in Australia. But, despite this, we note that in recent times a number of examples of certified products that have proved to be from illegally logged forests have been uncovered. So the requirement to assess whether the information and evidence obtained by using the framework is accurate and reliable, the requirement to identify and assess, by using the framework and the gathered information, where there is a risk that the product is made from or includes illegally logged timber—