Coalition Senators' dissenting report

Flaws in this Bill

1.1The Illegal Logging Prohibition Amendment (Strengthening Measures to Prevent Illegal Timber Trade) Bill 2024 (the Bill) is well-intentioned legislation. However, it is unfortunately accompanied by a number of flaws in its design and proposed execution.

1.2More specifically, and as has been made clear in many of the 37 written submissions to this inquiry, passage of the Bill in its present form would be likely to create a number of counterproductive and adverse impacts—especially for Australian timber importing businesses.

1.3Indeed, the Coalition would like to take this opportunity to thank all of those people and organisations who took the time to compose submissions to this inquiry. They have shed vital light on the many problems and difficulties, and damaging ramifications, that will likely arise if the Bill is passed.

1.4Outside of the inquiry itself, Coalition Members and Senators and their staff have also separately heard a number of concerns from industry stakeholders who say that domestic timber producers and landholders should also be exempted from the repercussions of the proposed changes. Those concerns are given even more weight by the reality that the states and territories already have various regimes and acts in place to punish illegal activity.

1.5On each of these grounds, we are therefore adopting a different approach to the one recommended in the Chair’s report.

1.6We do not think it is the best approach to immediately endorse parliamentary passage of the Bill. Nor do we think it is wise to rely on verbal commitments from the Australian Government (the Government) that they will ultimately address all of the mounting problems with the Bill at some time in the future as part of the as-yet-unseen new Rules for the regime.

1.7It strikes us as a more sensible approach to delay passage of the Bill until the new Rules are also released publicly.

1.8Alternatively, if the Government is insistent that parliamentary passage should occur speedily, then it is our view that this approach needs to be underpinned by their agreement to a series of amendments to the Bill.

1.9We are also partial to the suggestions raised by Simon Dorries, in his submission on behalf of Responsible Wood, that speak to the need for the provision of better education, and up-to-date-knowledge, about any legislative changes and how they might be met (or not met).[1]

1.10Amendments to the Bill should centre on the three key sets of concerns that repeatedly resonate in the stakeholder submissions to this inquiry, namely:

the unworkability of, and substantial costs associated with, the new requirements for mass fibre testing;

the requirement for importers to directly verify and validate the legitimacy of a far higher number of their timber purchases, even for repeat imports of exactly the same products from exactly the same exporter; and

the dangers associated with the creation of a new, strict liability criminal offence and the accompanying proposal to 'name and shame' individuals and organisations who are prosecuted in accordance with the new provisions of the Illegal Logging Prohibition Act 2012 (the Act).

1.11In short, there is a widespread belief among many stakeholders that the changes in the Bill will render genuine compliance near impossible.

1.12They are especially exercised by the notion that importers are now being obliged to comply with significantly more onerous due diligence requirements. This includes needing to considerably expand their provision of proof of traceability to the harvest source, and to verify information prior to every import rather than only once annually for identical repeat imports. More generally, they also assert that the Government has failed to appropriately balance risk minimisation and the reduction of red tape.

1.13There is also a recurring theme in many of the submissions that there has been a creeping cultural shift over recent months within the Department of Agriculture, Fisheries and Forestry (DAFF) in their oversight and implementation of this area of law and policy. Apparently (and largely secretively), DAFF officials have already been pre-emptively embarking on more punitive enforcement actions even ahead of the parliamentary consideration of the Bill.

1.14If that is true, then it is unacceptable and such an approach needs to be halted, with immediate effect.

1.15Similarly, it is clear, from the written submissions, that there needs to be further consultation between the Government and various key industry players (especially in the timber importing and wholesaling sectors) about the changes in the Bill.

1.16On a related front, it is also worth noting that the recent actions of the Victorian and Western Australian Labor governments to ban native forestry in their jurisdictions have inevitably increased the risk of illegally logged timber entering the Australian market.

1.17This is because the demand for timber both domestically and internationally, especially for housing, is continuing to increase. Accordingly, further decreases and shortages in the availability of traditional forms of local supply necessarily accelerate the sourcing of even more wood from overseas.

1.18Even prior to the Victorian and Western Australian bans, there were already widespread prohibitions on the level of native forestry harvesting that occurs across Australia. More specifically, there are around 132 million hectares of native forest area in Australia and only 0.06 per cent of this area (or the equivalent of six trees out of every 10 000) is harvested annually.

1.19This comparatively very low level of harvesting means that Australia already now imports more than $5.5 billion of wood products annually.

1.20A 2022 Forest & Wood Products Australia study even found that, without significant changes to the status quo, Australia’s reliance on imported timber will likely further surge—and potentially even double—by 2050. That study was also written before the Victorian Government decided, in May 2023, to bring forward its native forestry ban by six years—from 2030 to 2024.

1.21As matters currently stand, the changes being pursued by the Government in the Bill will drive outcomes that are the opposite of those recommended as part of the Sunsetting Review. As Innovative Timber Ideas noted in its submission, the approach 'is impractical and ignores the recommendations from the Sunsetting Review, which suggested reducing unnecessary regulations and focusing efforts where they are truly needed'.

The Coalition’s position on illegal logging practices

1.22The Coalition is very strongly opposed to any further proliferation and growth of illegal logging practices around the world. It is our view that this stance leads to better environmental outcomes globally and to a level playing field for Australian grown and harvested timber.

1.23Emphatically, we believe that these practices need to be actively and effectively countered—and that a strong legislative and regulatory regime, and strong practical actions, are required in Australia if illegal forestry activity is to be effectively addressed.

1.24In large part, this is because illegal logging leads to a host of damaging economic, social, and environmental consequences—most obviously in the form of increased deforestation and the destruction of forest ecosystems. Historically, such activity has also been linked to various forms of organised crime, and the use of slave labour.

1.25By definition, it also significantly distorts the free and fair operation of timber markets.

1.26In keeping with those philosophies, much of the formative and preparatory work for this Bill was actually undertaken during the years when the Coalition was in government.

1.27In acknowledgment of the fast-moving developments in other parts of the world, we recognised the need to consider and pursue changes to Australia’s legislation and regulations. In particular, we wanted to identify (and guard against) any further unaddressed threats to the viability and profitability of the Australian timber market.

1.28Accordingly, we decided in late 2021 to instigate a review process of the operation of the Illegal Logging Prohibition Regulation 2012—well ahead of its scheduled sunsetting in 2023. This followed two earlier reviews in our years in government. The first of these was conducted by KPMG for the Abbott Government in 2015 to examine the impact of the Illegal Logging Prohibition Regulation, specifically on small business. The second was a statutory review of the Act that was undertaken in 2018 by the then Department of Agriculture and Water Resources.

1.29We were also pleased that the Labor Party followed our lead during the 2022 election campaign and endorsed our policy of committing $4.4 million to 'strengthen Australia’s fight against illegal logging and stop illegal timber imports from undercutting Australian producers'.

1.30Unfortunately, in relation to this Bill, the Labor Party have translated a series of good ideas and sensible intentions into a number of legislative problems that need to be corrected.

Summary

1.31In short, the Coalition is not, in any way, opposed to further actions (including to changes to the Illegal Logging Prohibition Act 2012) that are aimed at reducing instances of illegal logging around the world.

1.32Indeed, we recognise that—since the time of the creation of that Act in 2012—a variety of potential improvements to those laws have become apparent. In particular, a range of enhanced timber identification technologies have emerged that have increasingly assisted legislators and regulators around the world to devise and enforce more powerful compliance measures.

1.33Accordingly, there are many possible pathways to formally and sensibly strengthen and modernise Australia’s pursuit of those people and organisations involved in illegal logging.

1.34However, the approach reflected in this Bill is too heavy-handed and it represents overreach.

1.35The Coalition recommends that the passage of the Bill be deferred until after the finalisation of the accompanying new Rules.

Senator the Hon Matthew Canavan

Deputy Chair

Nationals Senator for Queensland

Senator Gerard Rennick

Member

Liberal National Party Senator for Queensland

Senator the Hon Jonathon Duniam

Participating Member

Liberal Senator for Tasmania

Footnotes

[1]Responsible Wood, Submission 1, pp. 2–3.