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Wednesday, 23 November 2011
Page: 13569

Dr MIKE KELLY (Eden-MonaroParliamentary Secretary for Agriculture, Fisheries and Forestry) (11:45): I move:

That this bill be now read a second time.


The Illegal Logging Prohibition Bill (the bill) responds to a significant issue affecting forest communities around the world.

The environmental and social costs of illegal logging worldwide have been estimated at approximately US$60 billion per annum.

Illegal harvest of timber contributes to environmental degradation through bad practices by illegal loggers. It hampers social development by depriving local governments and communities of the benefits derived from the use of their resource.

Illegally harvested timber also undermines well regulated and sustainable industries, including the Australian industry, by undercutting legally harvested timber products.

This bill will make it a criminal offence to import regulated timber products or process raw logs without undertaking due diligence.

How this bill was developed

The bill is the product of extensive consultation.

A commitment to prohibit the importation of illegally harvested timber was first presented to the community during the 2007 and 2010 election campaigns. Following the 2007 election, the Labor government commissioned substantial research to inform policy development including a regulation impact statement; a risk assessment framework; a framework for differentiating legality verification and chain of custody; a generic code of conduct for importers; an economic analysis of the impact of illegal logging; and reports on the small business impacts and social costs of illegal logging.

In December 2010, the government announced the framework to implement the policy.

On 23 March 2011 the Minister for Agriculture, Fisheries and Forestry tabled an exposure draft, referring it to the Senate Rural Affairs and Transport Legislation Committee for public inquiry.

The committee released a report on its findings on 23 June 2011, which included seven recommendations. In particular, the committee recommended the government reconsider the role of the timber industry certifiers and the inclusion of a requirement for a mandatory and explicit declaration at the border.

The government has considered the report, and the dissenting report, and the views of stakeholders about the committee recommendations in preparing the bill now before the parliament.

The government has received representations from the domestic timber industry, state governments, timber and timber product importers, the Australian Conservation Foundation, Greenpeace, the Uniting Church of Australia, the Construction, Forestry, Mining and Energy Union, domestic retailers and exporters of timber products to Australia.

The government welcomes the strong community interest in this issue.

How the bill works

The bill focuses exclusively on measures that will restrict the importation and sale of illegally logged timber in Australia. The government recognises these measures are an essential first step towards a longer-term goal of Australia sourcing timber products from sustainably managed forests, wherever they are in the world.

The bill will regulate timber products at two key points of entry onto the Australian timber market—at the border, for imported timber products, and at timber processing plants where domestically sourced raw logs are processed for the first time. It will restrict the importation and sale of illegally logged timber in Australia in three main ways.

First, the bill prohibits the importation of all timber products that contain illegally logged timber and the processing of domestically grown raw logs that have been illegally harvested. The prohibition enters into force on the day after royal assent of this bill. A maximum penalty of five years imprisonment or 500 penalty units, equivalent to $55,000 for an individual and $275,000 for a corporation or body corporate, or both, applies under this offence. Importers and processors suspected of importing or processing illegally logged timber products will be investigated under the powers of monitoring, investigation and enforcement under part 4 of the bill and will be prosecuted if they intentionally, knowingly or recklessly import or process illegally logged timber products.

Our own research and the work of the European Union indicate that the best way to minimise trade in illegally harvested product is to implement a due diligence framework. Importers and processors will be required to undertake a process of due diligence on those products to mitigate the risk that the timber has been illegally logged. The level of culpability for these products is negligence which differs from the standard subjective fault elements of intention, knowledge or recklessness. Negligence is an objective fault element which looks to the standard of care that a reasonable person would exercise in the circumstances. Importers of regulated timber products can only be negligent if the prosecution can satisfy the requirements for negligence set out in the Criminal Code 1995.

Second, the bill will require importers of regulated timber products and processors of raw logs to undertake due diligence to mitigate the risk of products containing illegally logged timber.

Timber products, for which due diligence will be required, will be prescribed by regulations that will be developed in consultation with key stakeholders. The government will use a number of inputs when finalising timber products to be prescribed by regulations including an economic assessment of the range of product types, value and volume of timber annually imported into Australia.

Importers of regulated timber products and processors of domestically grown raw logs will be required to undertake due diligence to mitigate the risk of importing or processing illegally logged timber. The details of the due diligence process will be prescribed by regulations and will be based on a risk management approach. Criminal offences will apply to importers and processors who do not comply with the due diligence requirements of the bill. There is a maximum penalty of 300 penalty units, equivalent to a fine of $33,000 for an individual and $165,000 for a corporation or body corporate. Administrative sanctions and civil penalties for minor breaches of the legislation will be included in subordinate legislative instruments such as administrative sanctions for noncompliance with certain due diligence requirements.

Requirements for due diligence will be enacted after two years have elapsed following the commencement of the bill to give industry sufficient time to establish and implement their due diligence systems and processes.

Due diligence will involve a three-step process: (i) identifying and gathering information to enable the risk of procuring illegally logged timber to be assessed; (ii) assessing and identifying the risk of timber being illegally logged based on this information; and (iii) mitigating this risk depending on the level identified where it has not been identified as negligible. The specific measures and procedures underpinning the three steps will be prescribed by regulations to be developed in consultation with stakeholders.

To help meet their due diligence obligations and minimise compliance costs, importers and processors may utilise laws, rules or processes including those in force in a state, a territory or another country. Individual country initiatives and national schemes including national timber legality verification and forest certification schemes that can demonstrate that timber products have been harvested in compliance with the applicable laws of the country of harvest may be used, where applicable, as part of an importer's due diligence process.

To enable the government to enforce compliance with the due diligence requirements, importers are required to complete a statement of compliance with the due diligence requirements of the bill before they complete a customs import declaration at the border. The information to be provided on the statement of compliance and customs import declaration will be prescribed by regulations.

The customs import declaration will include a community protection question asking importers of regulated timber products whether they have undertaken due diligence in compliance with this bill. This will be linked to importers' statements of compliance to provide a legally binding basis for enforcement of compliance with the legislation. The government will monitor the importation of regulated timber products at the border for compliance with the customs declaration, whilst government compliance and investigation officers will carry out border and post-border checks, as required, using the monitoring, investigation and enforcement powers of the bill.

Processors are required to complete a statement of compliance with the due diligence requirements of the bill. As Commonwealth, state and territory laws relating to the legality of timber harvesting in Australia are comprehensive and robust, the Commonwealth government will seek to align the due diligence requirements of the bill with the pre-harvesting approvals processes of relevant state and territory governments to reduce compliance and administrative costs. The content and form of the statement will be prescribed by regulations.

Third, the bill establishes a comprehensive monitoring, investigation and enforcement regime to ensure compliance with all elements of the bill including the prohibition and due diligence requirements. Imported timber products may be seized by the Commonwealth without a warrant under provisions in the Customs Act 1901, whilst goods deemed to be involved in an offence under the act, consistent with provisions provided in the Customs Act 1901 and the Crimes Act 1913, may be forfeited to the Commonwealth.

The bill also provides requirements for importers and processors to provide statements and declarations of compliance, undertake audits and remedial action, provide reports and other information to the minister and publish information for compliance and enforcement purposes.

The results of audits will provide a basis for continuous improvement of importers and processors due diligence systems and processes where deficiencies are identified, and for enforcement purposes by the Commonwealth where breaches are detected. To ensure there are satisfactory levels of transparency of compliance with the due diligence requirements of the bill, importers and processors are required to make an annual statement of compliance. The nature and detail of these statements will be prescribed by regulations to be developed in consultation with key stakeholders. This information may be used by the Commonwealth to publicly report on the performance and level of compliance of importers and processors, consistent with privacy and commercial-in-confidence considerations. The coverage and detail of public reporting requirements will be developed in consultation with key stakeholders.

The bill provides for the government to undertake a review of the first five years of the operation of the act. This review is to be commenced no later than 12 months after the five-year period is complete. This provision should ensure ongoing improvement in relation to the operational aspects and effectiveness of the legislative framework.

International alignment

The bill aligns Australia's efforts to combat illegal logging with international initiatives including legislation already implemented in the United States and developments in the European Union.

It is therefore sensible that this bill should work towards alignment with international regimes.

In establishing the regulations, the government will continue to develop requirements that, to the greatest extent possible, align with the measures being introduced as part of the US Lacey Act Amendments 2008 and the EU Regulation 2010 in order to minimise compliance costs for exporters. This will have the effect of engendering greater cooperation amongst timber importing markets like Australia, Europe and the US and help to facilitate higher compliance amongst exporting countries.

For example, the government anticipates that certification systems (either third party or government) recognised by EU or the US frameworks will be capable of meeting Australia's requirements.

The bill will also strengthen Australia's leadership position in the Asia-Pacific region on forestry issues and facilitate continued bilateral and multilateral cooperation with developing countries to promote legal and sustainable forest management.


The bill allows the government to work with key stakeholders to stamp out illegal logging and trade in illegally logged timber products.

An illegal logging working group comprising industry sectors and non-government organisations is already established to assist the government in this process and help minimise the compliance and administrative costs for both industry and government whilst driving, of course, behavioural change in the global timber trade. The government will continue to work closely with its illegal logging working group and state and territory governments to develop the subordinate legislative instruments required.

The government appreciates the work of the Senate Standing Committee on Rural Affairs and Transport for its contribution to the development of the bill. The government also acknowledges the input of industry, both importers and domestic producers, and other members of the community for their input into the process thus far.

The Illegal Logging Prohibition Bill 2011 delivers on the government's policy to restrict the importation and sale of illegally logged timber in Australia. It will remove unfair competition posed by illegally logged timber for Australia's domestic timber producers and suppliers and establish an even economic playing field for the purchase and sale of legally logged timber products and provide assurance to consumers that products they purchase have been sourced in compliance with government legislation. I commend the bill to the House.

Debate adjourned.