Chapter 6
Looking forward – Committee conclusions
Sovereignty and risk management
6.1
The committee's primary concern is that the draft bill should avoid the
creation of additional bureaucracy around the legality verification
requirements where there are already processes in place, both domestically and
in countries of source, that can provide the information required and surety by
way of due diligence.
6.2
In terms of the domestic context, whilst the committee received
assurances from DAFF officials that the intention of the bill is to ensure that
current systems are adapted, it stands by its recommendations to simplify the
framework for legality verification and due diligence to that of a mandatory
declaration underscored by due diligence in the form of validation
documentation.
6.3
The committee takes the view that whilst the legislation must be
effective in restricting the importation and processing of illegally logged
timber, it must also ensure that mechanisms used to address illegal imports do
not pose an additional bureaucracy or impose any unnecessary impediments on
domestic industry. The committee acknowledges the position of the Australian
Forest Products Association as expressed by Mr Mick Stephens in this regard:
The mechanism used to address illegal imports should be risk
based and flexible with respect to the treatment of imported products and any
requirements for domestic producers under World Trade Organisation rules.[1]
6.4
The committee recognises that in addition to state and territory
regulation, approximately 90 per cent of timber produced in Australia is
accredited under internationally-recognised voluntary third party certification
schemes which include standards and chain of custody legal verification.[2]
Similarly, evidence to the inquiry suggests that most timber-importing
companies and timber-product importing companies have their own in-house
systems in place with many such companies importing timber that is third party
certified.[3]
Compatibility with the Australian Standard is essential as Miss Kayt Watts of
Australian Forestry Standard Ltd explained:
With the current certification against the standards, there
is a recognition of certified timber and noncontroversial timber currently in
place, and the noncontroversial does have a declaration that comes in of the
source of supply of the timber so it can be certified.[4]
6.5
Notwithstanding these facts, the committee is equally aware of the
variability across companies in terms of the processes, mechanisms and
standards used to ensure that their timber supply is legal. The committee notes
the need to ensure that clear and appropriate systems are in place across the
domestic industry as well as in relation to importation, which are backed up by
evidence of due diligence. In terms of importation, the committee heard
considerable evidence in support of the view that timber that has been the
subject of a certification process such as SVLK in Indonesia and SGS TLTV in
Papua New Guinea should be considered as acceptable systems for certification
in terms of Australia's requirements under the draft bill. Whilst the
international benchmarks are new and evolving, the committee recognises the
importance of alignment with the EU and US and other appropriate legislation in
terms of recognising particular certification schemes and strongly encourages
DAFF to pursue this approach.
Regulations
6.6
The committee appreciates that many of the concerns raised by stakeholders
relate to uncertainty about the regulations and what may be prescribed in them.
The committee understands the importance of regulatory certainty, particularly
for industry. However, assurances were given by DAFF that in taking a co-regulatory
approach, it has sought to engage industry and other involved stakeholders in
the development of the legislation and will continue to do so in developing the
regulations. Furthermore, the committee recognises that prescription of some elements
in subordinate legislation will enable greater flexibility and room for
continual improvement to the legislative framework. This is particularly
important given that:
[T]his is a complex policy area and international benchmarks
are either difficult to establish or are new in their implementation and there
is little established practice.[5]
Harmonisation
6.7
The committee recognises the importance of avoiding a situation in which
there are multiple compliance regimes which will, amongst other things, drive
product substitution by competing materials. A situation whereby internationally
active companies are required to meet multiple requirements, all placing a
burden on business in terms of complexity and costs, is both counterproductive
and unstainable.
6.8
Most submitters suggested that harmonisation with the US Lacey Act and
EU legislation to the fullest extent possible would be most beneficial.[6]
Indeed, it was one of the key messages emanating from the evidence before the
committee. Ms Caroline Hoisington also held that the legislation should 'use
similar systems where possible to facilitate commercial dealings
internationally'.[7]
She continued:
It makes sense for Australia to work alongside the EU and the
USA and to implement a system that will be as robust as theirs - but to achieve
that, this proposed legislation will have to be strengthened. As much trade is
international, it will simplify work for Australian industry if similar, or at
least compatible, certification systems are used.[8]
6.9
The committee notes DAFF's intentions to continue discussion with the EU
and US and that a number of bilateral agreements have been signed or are progressing
towards signature. The committee appreciates that Australia is moving towards
alignment with both the EU and US and that such alignment will provide greater
opportunities to engage and potentially share approaches to implementing
aspects of the legislation.[9]
6.10
The committee recognises the benefits in harmonisation with the EU and
US legislation wherever appropriate and is satisfied that DAFF takes a similar
view. The committee strongly encourages DAFF to continue monitoring
developments in relation to both the EU and US legislation and to pursue talks
with both jurisdictions in order to ensure that harmonisation is realised to
the fullest extent possible in relation to the both the recommended mandatory
declaration and due diligence framework.
Legality or sustainability
6.11
The committee acknowledges that one of the debates underlying the
evidence in relation to the draft bill is that of the objective of the
legislation. A number of submitters hold the view that the objective of the
legislation is to provide a legality verification framework under which a
prohibition on the importation and processing of illegally logged timber rests.
In contrast, other submitters maintain that the objective of the legislation should
be that of sustainable forest management.
6.12
The committee recognises that the provision of a legality verification
framework is the core intention of the bill. International benchmarks are new
and difficult to establish and key legislation including that of the EU
regulation and US Lacey Act are in the early stages. Given these facts, the
committee is firmly of the view that the draft bill should remain focused on
the verification of legality and that the definitions and other aspects of the
framework that are to be prescribed in the regulations reflect this objective.
6.13
The committee is concerned that sustainable forest management, which is
a far broader concept with its own value system around forest management, is a
different debate. Recognising that the bill entails requirements on industry
which are new and will have a financial impact as well as the greater levels of
complexity involved in sustainable forest management, the committee
acknowledges that there are many risks in taking a sustainable forest
management approach at this stage.[10]
The committee notes in this regard, the observations of Mr Robert Tate, PNG
Forest Industries Association that sustainability requires first legality of
production, adequate chain of custody controls, a form of checking and validity
of the resource base and social aspects and then certification.[11]
Indeed, it should be recognised that the regulatory environment is new and
evolving and establishing more stringent requirements which are also more
costly poses considerable risks.
6.14
In light of its position regarding the objective of the bill, the
committee takes the view that there would be no value added in including an
object clause in the draft bill. The committee considers the statement in Section
4 that the act 'prohibits the importation of regulated timber products that contain
illegally logged timber' an adequate explanation of its purpose.
Collaboration with industry and other stakeholders
6.15
DAFF highlighted that it has established a stakeholder working group to
provide input into the development of the regulations and that the working
group membership comprises representatives of the broad range of stakeholders.[12]
It also notes that the department will consult with businesses and industry
organisations that have developed processes to assess and mitigate the risk of
sourcing illegally harvested timber products.[13]
6.16
The committee acknowledges the consultation process that DAFF has
undertaken and the considerable amount of work that has been commissioned in
relation to Australia's timber imports, domestic legislation and regulations
for legal timber production, risk assessment, legality verification and codes
of conduct.[14]
It appreciates that DAFF has liaised with a working group of industry
stakeholders over the past three years whilst developing the policy.[15]
6.17
A number of involved stakeholders raised concerns with the committee
that the exposure draft of the bill was tabled prior to public consultation on
it. Mr John Talbot from DAFF defended its approach on the basis that it was
better to 'provide an exposure draft to a much wider range of clients and to
refer it to the committee so that a great deal of input could be put in before
it got absolutely too far down the track'.[16]
6.18
The committee appreciates the position of the department and trusts that
despite some misgivings of involved stakeholders with this approach, such
concerns do not impact on the consultation process between the department, industry
and relevant stakeholders or the spirit in which such consultation will take
place in the future.
Review of the provisions
6.19
A number of submitters acknowledged clarification in the explanatory
memorandum that a review of the due diligence requirement will take place after
five years.[17]
Many suggested that the bill include a provision for a review of the
legislation in its entirety within five years.[18]
Greenpeace suggested that such a review should on the effectiveness of the
legislation in 'reducing the import of illegal timber and timber products,
identifying research needs and assessing costs of the programme'.[19]
The joint WADIC submission recommended that periodic reviews take place to
assess whether the law has been effective and cost-efficient in meeting its
objective.[20]ANEDO
recommended that an initial review of the legislation take place within two
years of its enactment followed by reviews every two to five years. It noted in
this regard:
Such a review could consider, for example, statistics on
offences, monitoring and non-compliance; international developments and best
practice; whether requirements initially made in regulations should be
incorporated into primary legislation; along with an evaluation of the Bill's
overall effectiveness.[21]
6.20
The committee supports suggestions for a review of the legislation five
years from enactment, particularly in light of the rapid international
developments in terms of legislation to address illegal logging and trends
towards international third-party certification.
Recommendation 4
6.21
The committee recommends that the Department of Agriculture, Fisheries
and Forestry conduct a review of the bill's provisions five years after
enactment.
6.22
The committee recommends that consideration be given in the five-year
review to further periodic reviews.
Senator Glenn Sterle
Chair
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