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Thursday, 1 March 2001
Page: 24747

Mr TUCKEY (Minister for Forestry and Conservation and Minister Assisting the Prime Minister) (9:47 AM) —I move:

That the bill be now read a second time.

The Primary Industries and Energy Research and Development Amendment Bill 2001 places the Forest and Wood Products Research and Development Corporation on a much more secure footing to provide a strong, national focus to forest R&D by increasing the Commonwealth contribution to the corporation from July 2001.

The Primary Industries and Energy Research and Development Act 1989inaugurated a major delivery system for rural research and development through a series of R&D corporations financed by industry levies and matching government contributions.

Many primary industry producers lack the size to individually undertake R&D activities necessary for the long-term development of their industries. Governments have recognised this situation and developed, with industry, a mechanism whereby levies and charges are imposed and administered by the Commonwealth at the request and on behalf of industry organisations. ThePrimary Industries and Energy Research and Development Act established, and now governs the operation of, this R&D delivery mechanism.

When the Forest and Wood Products Research and Development Corporation was established in 1994, thePrimary Industries and Energy Research and Development Act was amended to provide a specific funding arrangement for the forest sector of $1 from the Commonwealth for every $2 from industry. This was half the rate for all other R&D corporations to which a levy is attached under the act. I can only assume, Mr Acting Speaker, that the government of the day took that decision because it was dealing with trees. As you would well know—and have no doubt represented to your own constituents—the normal arrangement is $1 of Commonwealth money for every $1 contribution from industry.

This policy was based on the belief that dollar for dollar funding should be confined to the rural and primary production part of the industry. It was suggested that the Commonwealth should not match R&D expenditure in the processing and manufacturing part of the forest and wood products industry. The suggestion was that when one makes a levy payment on raw wool it traditionally gets spent on wool processing technology.

There is, however, no significant difference in industry structure between forests and any other food crop or fibre industry covered under the Primary Industries and Energy Research and Development Act arrangements.

The Forest and Wood Products Research and Development Corporation, like all other R&D corporations, funds research into production, processing and marketing links in the chain.

In common with other primary industries, timber processors and wood product manufacturers often tend to be small, competing enterprises that are difficult to organise and that find it difficult to fund and capture the benefits of R&D.

The arbitrary separation of the forest and wood products sector into rural-primary production and manufacturing components is inconsistent with modern approaches to resource industries. This government is actively encouraging rural industries to move towards a `whole-of-chain' approach to industry planning and development. Whole-of-chain planning encompasses sustainable resource use, production, processing, storage, transport, marketing and usage, plus promotes the linkages in the chain.

In the forest and wood product sector, I am working with industry on an action agenda to engender a more innovative and outward looking industry on a whole-of-chain basis. Artificial divides between primary production and manufacturing components of the sector are inconsistent with this action agenda.

In 1999-2000, Australia imported $3.8 billion mainly paper and high value products and exported $1.6 billion of forest and wood products—mainly woodchips and roundwood. Yet, with our extensive forest resources, Australia should be in a position of exporting a wider range of high value products to redress this imbalance.

R&D on forest and wood products is vital if Australia is to reverse the current trade imbalance in trade in these products. Forest R&D has the potential to create sustainable, long-term competitive advantage for the industry, particularly for higher value products. This bill is therefore a vital component of the forest and wood products action agenda.

Since 1997, the Commonwealth has supplemented the funding arrangement under the act to bring Commonwealth contributions to 49 per cent of the Forest and Wood Products Research and Development Corporation revenue. The main source of these additional funds, the Wood and Paper Industries Strategy, WAPIS, operated from 1996 to June 2000.

The conclusion of WAPIS coincides with a number of other developments that could jeopardise continuing investment in forest R&D. Following the conclusion of regional forest agreements, there has been a significant reduction in the state forest commercial estate. At the same time, there are an increasing number of small private growers establishing plantations and managing commercial stands of native timber.

A strong forest and wood products R&D corporation is required to prevent greater fragmentation in the forest and wood products industry and consequently reduced R&D investment, particularly for broader national, strategic and public good research.

The Primary Industries and Energy Research and Development Amendment Bill 2001 is a timely demonstration of Commonwealth support for strategic, innovative and high quality R&D in the forest and wood products sector. It closely follows the innovation action plan launched recently by the Prime Minister, and it demonstrates strong government support for the Forest and Wood Products R&D Corporation. This support is likely, in turn, to ensure continuing industry support.

The increased funding, which, of course, brings the contribution up to a dollar for a dollar, will underpin a range of commercially viable projects to create greater value for our native timber resources, while developing new opportunities for our expanding plantation base. The bill will ensure continuing investment in forest research and development, particularly for whole-of-chain, national and strategic research.

I would like to take the opportunity to inform the House that, in line with this additional funding, through the effluxion of time I have had the opportunity to appoint a new chairman to the FWPRDC, which is the corporation to administer these research funds, and I would like to record my thanks in this House to Mr Thorry Gunnersen for accepting that position. Mr Gunnersen, of course, is a senior executive of one of the very large forest industry family groups, which are a significant feature of the forest industry—how often, in the smallest or largest sawmill, we meet grandfather, father and son all operating in the same arrangement. Mr Gunnersen is well known and has held international chairmanships of forest industry bodies and therefore brings a huge experience to this particular job. He has commenced his duties and I am very happy that he has done so and that he is clearly taking a great interest in this responsibility.

I will make this point: around the world many traditional glues are used in forest products, and they have all been designed, basically, with Northern Hemisphere softwoods in mind. They are based on formaldehyde, which is not exactly a product that one likes to sleep next to when the bedhead is made of wood, yet most of those glues are not compatible with Australian hardwoods. There is a magnificent research opportunity because, not withstanding an exercise that occurred in this place yesterday, woodchip is the base material for panel board and is the best way to utilise a tree, particularly one that might not have grown square—in other words, one that has not grown straight enough to go in a sawmill. There are huge opportunities in such basic issues as the fundamentals of a new glue product. I am sure that the research group will be looking at that particular problem.

The bill simply but effectively removes an anomaly that has existed in R&D funding under the Primary Industries and Energy Research and Development Act 1989 since 1994. It does not affect the arrangements for all the other R&D corporations under the Primary Industries and Energy R&D Act. I present the explanatory memorandum to the bill and commend the bill to the House.

Debate (on motion by Mr Bevis) adjourned.