Senator STOTT DESPOJA (8:21 PM) —Before question time today, I was talking about the significant oversight in this legislation and the RFA process in relation to the plantation industry. In fact, the Democrats believe that this legislation, or the process, unfairly discriminates against the plantation industry. I was talking about the double-speak, if you like, to which the Australian community was being subjected with this process—the stated goal of the process being to develop internationally competitive forest based industries. Of course, the explanatory memorandum of the legislation says that it is intended to implement a national forest policy statement which has, as its stated goal, a transition from native forest exploitation to plantation harvesting.

However, the only option considered in the RFAs is the disposal of the native forest resource, ignoring the fact that fully 75 per cent of Australia's sawn timber, wood panel and paper needs comes from plantations and recycling. The reality of the process is to perpetuate for as long as possible the most uneconomical and unproductive sector of the industry and to frustrate for as long as possible the promised move to plantations. At best this is illogical; at worst, an indefensible position for a responsible Senate or parliament to enshrine.

The process of subsidy deserves examination in greater detail. In every single piece of information on the pricing of native forest logs and public plantation logs, the native forest logs of similar grade are always priced less—often much less—than plantation logs, even though the two parts of the industry compete in the same final market. Since one suspects that the accountants have done a better job of incorporating costs and returns into the price of the public plantation log, the clear implication is that the public resource of the native forest log is virtually being given away. That is a direct subsidy to the native forest industry and, in about 60 per cent of cases, a direct subsidy to the lowest productivity use of the log. It is also a direct subsidy to the woodchipping company and presumably, if the woodchipper takes only a normal rate of profit, a direct subsidy to the—usually—foreign consumer of chipboard, cardboard and paper.

Australian governments have been prone to get very testy with other governments slipping subsidies to their primary product exporters, but the point here is that it is Australia's plantation industry and Australian employment opportunities that suffer as a result. There is an argument that the desirable change should be helped in order to make sure pricing policy is consistent with industry policy direction.

Another subsidy is the hundreds of millions of dollars in compensation to the states for the RFA outcome, which, in some cases, defies logic. For example, Tasmania is slated to receive $70 million in compensation directly related to RFAs even though the area available for native forest logging has significantly increased. Tasmania will also reap additional funds from the Natural Heritage Trust Fund. Another example is at Eden, where the RFA that the New South Wales government is presently negotiating will pay $6 million to build a new sawmill. The company, which is the beneficiary, will close two existing mills in Bombala and Cooma and put only $2 million of its own money into the new mill. The plantation sector does not enjoy this sort of largesse, but is in the same market.

The taxpayer also faces an opportunity cost in putting good money after bad, propping up an industry sector which is in decline in any case. Every dollar to prop up the native forest industry is undermining the more competitive plantation sector. Another less economically tangible opportunity cost is the monopolisation of bureaucratic and legislative time and resources by the least productive sector. The response from some other senators to this evidence of discrimination was the suggestion that yet another committee examine the plantation sector. The Democrats did not support this. If the RFA Bill is passed, the dubious privileges of the native forest sector will have been locked in and all the Senate will have to offer the plantation industry will be an empty gesture or perhaps an intellectual exercise. It could only be of assistance if there was a possibility or some commitment or indication that the RFAs could be changed as a result.

I have not concentrated on the significant environmental and job problems in this legislation. My Democrat colleagues will comment in depth on these matters. We have always said that it is important that this bill not proceed until the issue of the discrimination against the plantation industry and the significant economic and employment issues be taken into account, and until this legislation or process meets the stated goal of the national forest policy statement, that is, to be in transition out of the native forest sector and into plantations.

It is clear that the plantation industry is significantly disadvantaged by the regional forest agreement process and that it will become more so in the near future. The RFA Bill is fundamentally flawed and cannot come anywhere near meeting its stated objectives of fostering internationally competitive forest based industries and assisting in the move to a plantation based industry. We believe that to perpetuate such an untruth is inappropriate for the Senate, and for that reason the Democrats have outlined their objections.