Chapter 1Introduction and background
Referral and conduct of the inquiry
1.1On 16 May 2024, the Senate referred the provisions of the Illegal Logging Prohibition Amendment (Strengthening Measures to Prevent Illegal Timber Trade) Bill 2024 (the bill) to the Rural and Regional Affairs and Transport Legislation Committee (the committee), for inquiry and report by 20 June 2024.
1.2The committee called for submissions by advertising the inquiry on its website and writing to relevant stakeholders to invite them to make a submission by 31 May 2024.
1.3In total, 37 submissions were received and published on the committees website. A list of all submissions can be found at Appendix 1. The committee did not conduct any public hearings for the inquiry.
1.4The committee thanks everyone who contributed to the inquiry.
Structure of the report
1.5This report comprises two chapters. This first chapter provides an introduction and background information, outlines the key elements of the bill, and looks at their consideration by other parliamentary committees. Chapter 2 examines the key issues raised by submitters and sets out the committee view and recommendation.
Background
1.6Illegal logging in Australia is defined as 'the harvesting of timber in contravention of the laws of the country where the timber is harvested', which includes logging of protected species and areas, logging with fake or illegal permits, and logging using illegal harvest methods.
1.7Illegal logging is widely considered to be the largest environmental crime globally, costing $240 billion per year. The negative impacts are significant, causing environmental, social, and economic damage through forest degradation and deforestation, links to organised crime, corruption, and civil wars. It is estimated that trade of illegally logged timber reduces the price of legal timber by seven to 16 per cent.
1.8According to the Department of Agriculture, Fisheries and Forestry (the Department), the consequences of illegal logging and their level of impact vary between Australia and international regions. While the environmental, social, and economic impacts to government and communities in Australia are considered low, impacts to consumers and local timber producers are considered high. This is explained by illegally logged products being misrepresented to consumers in terms of their origin, sustainability and type, and by being cheaper than legally logged products on the market.
1.9It is estimated that up to 10 per cent, or approximately $900 million worth of timber imports in Australia could originate from high-risk sources every year. Domestically, there have also been cases of high-value timber being illegally logged.
1.10Australia first introduced illegal logging laws in 2012 with the Illegal Logging Prohibition Act 2012 (the Act) and theIllegal Logging Prohibition Regulation 2012 (the Regulation). These laws restrict the importation and processing of illegally logged timber, whether harvested in Australia or internationally. These laws directly apply to domestic processers and importers and requires them to establish a structured due diligence framework to manage the risks of importing or processing illegally logged timber.
1.11The Regulation was due to sunset on 1 April 2023. As such, the Department undertook a review to consider whether the Regulation was still fit-for-purpose prior to sunsetting, and ways to strengthen the Act and the Regulation. The recommendations of an earlier statutory review of the Act, completed in 2019, were used as the basis of the reforms considered in the Sunsetting Review.
1.12The review highlighted the following issues with implementing and enforcing the current laws:
it is challenging to verify whether imported or processed timber was legally harvested, and if claims about regulated timber products are valid due to the due diligence arrangements and powers of compliance officers;
while the Act provides for forfeiture powers, it is difficult to enact these powers as the goods are likely to have been sold by the time an audit is conducted. The Act also provides for a range of monitoring, investigation, and enforcement powers but does not adequately provide for at-border sampling or detainment powers;
legislation does not provide for emerging testing technologies that can identify the species and harvest location of timber. Internationally, this has been implemented under powers to sample and seize products at-border;
Australia’s laws do not enable gathering of most key information about regulated timber products unless that information is gathered through a warrant;
Australia’s laws do not include several best practice elements that have been implemented internationally. Not implementing new measures may jeopardise Australia’s reputation and market access benefits; and
the regulated community has over 20 000 entities, yet there are limited regulatory resources to cover targeted audits. Increasing the resourcing would still not provide adequate coverage. Internationally, some due diligence processes have been streamlined to increase its efficiency and effectiveness.
1.13In a second reading speech, the Minister for Regional Development, Local Government and Territories, the Hon Kristy McBain MP, stated that this bill seeks to implement improvements identified in the statutory and sunsetting reviews.
Consultation process
1.14On 6 July 2021, the Department published a consultation paper to seek feedback on several potential reforms to the Act and the Regulation. Stakeholders included timber importers and processors, customs brokers, industry bodies, state and territory governments, foreign governments, and other interested parties.
1.15In its Sunsetting Review Regulation Impact Statement, the Department claimed that stakeholders broadly supported the reforms and where there were reservations about the implementation, these could be addressed through 'attentive legislative design'.
Purpose of the bill
1.16The bill seeks to amend the Illegal Logging Prohibition Act 2012 (the Act), 'to modernise and strengthen' laws to protect the Australian market from illegally harvested timber products for a 'sustainable timber trade into the future'.
1.17Senator the Hon Murray Watt, Minister for Agriculture, Fisheries and Forestry, stated that the bill includes measures for '[g]reater investment in timber testing technology, increased enforcement, expanded monitoring and investigation powers, as well as naming and shaming those who break the rules'.
1.18The bill proposes to:
substitute the existing fault-based offences with a graduated and flexible enforcement framework consisting of fault-based offences, strict liability offences, and civil penalty provisions, introduce civil penalties for providing false or misleading information;
ensure the Act and Rules apply to partnerships, trusts, and unincorporated bodies and associations;
extend monitoring and investigation powers to take, test, and analyse regulated timber products and enable powers for inspectors to determine the species and origin of products that are subject to biosecurity or customs control;
enable entrusted persons to authorise use and disclosure of relevant information, allow the Department Secretary to require information or audits regarding compliance with the due diligence requirements and allow publication of breaches of the Act on the Department website; and
require importers and processors to provide notice of regulated timber products brought into Australia, and the processing of raw logs within Australia.
1.19The bill’s Explanatory Memorandum (EM) states that the bill would also allow for remaking the Regulation with disallowable rules to enable flexible updating of key guidance information. Additionally, the bill seeks to provide protection for auditors, inspectors, Australian Public Service employees, the Minister, and the Secretary from civil proceedings for exercising powers or functions in alignment with the Act or the Rules.
1.20According to the Department, the proposed Rules are currently still in development.
Consideration by other parliamentary committees
1.21When examining a bill, the committee considers any relevant comments published by the Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) and the Parliamentary Joint Committee on Human Rights (Human Rights Committee).
Scrutiny Committee consideration
1.22In its Scrutiny Digest 6 of 2024, the Scrutiny Committee raised a number of minor concerns relating to the lack of justification and reasoning of key decisions, such as the lack of derivative use immunity and the retention of negligence as a fault element, among others. As such, the Scrutiny Committee requested the Minister provide advice on these issues, along with an amended EM addressing these gaps in explanation.
1.23The Scrutiny Committee highlighted concerns that the bill seeks to provide that an offence 'does not apply in any circumstances prescribed by the rules' and that 'a defendant bears an evidential burden' in relation to the offences. It explained that the evidential burden of proof should only be included where it is 'peculiarly within the knowledge of the defendant [and] it would be significantly more difficult and costly for the prosecution to disprove than for the defendant to establish the matter', and in that case it should be explained in the EM.
1.24Additionally, the Scrutiny Committee explained that, as the exceptions are to be specified in Rules, 'it is not possible to comment' on whether the matters 'would be peculiarly within the knowledge of the defendant', and the exception to an offence in delegated legislation 'is a significant matter' which may impact personal rights and liberties. It therefore suggested the exceptions should instead be placed in the primary legislation to allow for appropriate parliamentary scrutiny.
1.25The Minister's advice was sought as to why it is proposed to use offence specific defences that reverse the evidential burden of proof and why it is appropriate to include exceptions prescribed by the Rules.
1.26The Scrutiny Committee drew to the attention of senators, and left to the Senate, the 'appropriateness of leaving the definition of a regulated timber product to rules', as is proposed within the bill.
1.27The Minister has provided a response to these requests, however, at the time of writing this response has not yet publicly available.
Human Rights Committee consideration
1.28The Human Rights Committee had no comment on the bill. However, the statement of compatibility with human rights contained in the EM concluded that the bill is compatible with the 'human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011'.