Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Rural and Regional Affairs and Transport Legislation Committee
Illegal Logging Prohibition Bill 2011

WATTS, Miss Kayt, Chief Executive Officer, Australian Forestry Standard Limited


CHAIR: Welcome. Australian Forestry Standard Limited has lodged submission No. 6. Would you like to make any amendments or additions to that submission?

Miss Watts : No, thank you.

CHAIR: Would you like to make a brief opening statement.

Miss Watts : I would like to present to the committee a brief background that is relevant, I believe, to the Illegal Logging Prohibition Bill. In relation to the development of management processes and their implementation, the Australian Forestry Standard was first initiated and developed by a steering committee in 1999. The steering committee was a partnership of the Commonwealth, state and territory governments, the National Association of Forest Industries, the Plantation Timber Association of Australia, Australian Forest Growers and the Australian Council of Trade Unions. The objective was to produce internationally aligned Australian standards for forest management and wood production and the traceability of wood and wood products down the supply chain.

In the first five years the Commonwealth owned the intellectual property for these standards. In 2003 the steering committee became a registered not-for-profit, member based public company called the Australian Forestry Standard Limited. The partnership representatives became the inaugural members and directors.

In 2004 the organisation was accredited by the Standards Accreditation Board of Standards Australia. The intellectual property was then signed over to the organisation by the Commonwealth government. The developed standards were recognised as Australian standards, bearing the identification of AS4708 for sustainable forest management and AS4707 for wood and wood products chain of custody. Under the business model of Standards Australia, AFSL is one of six standards development organisations that hold this accreditation. Standards Australia is recognised by the Australian government as the peak non-government standards body in Australia. That would, I believe, include their accredited standards development organisations.

Australians are made safer by standards: traffic lights, footpaths, power points, seat belts and child restraints, air quality and smoke and fire alarms are all underpinned by Australian Standards. Standards give businesses and consumers confidence that the goods and services they are developing or using are safe and reliable and will do the job they were intended for. Standards help consumers make everyday choices between one product and another. They protect Australian tradesmen, builders, electricians, plumbers and their customers. Government public health, safety and environment policies are often measured against Australian standards yardsticks. The premise of the AFSL submission is to highlight the efficiencies and cost effectiveness of integrating the procedure and processes for the development, implementation and management of the legislation requirements into the already rigorous and credible Australian standards for forest management.

The Commonwealth government has invested a great deal of resources—10 years and money—on the development of the Australian standards for forest management and wood and wood products chain of custody. Duplication of this investment can be highly reduced and leveraging of this investment provides an avenue to build on existing industry initiatives. These Australian standards are currently in their five-year mandatory revision period. This provides the government with an opportunity to integrate the requirements of the bill into the criteria of the Australian standards, utilising the accredited framework that retains the quality inherent in the rigorous, transparent and internationally aligned development process.

As a standards development organisation accredited by Standards Australia, our process must comply with International Organisation for Standardisation, ISO, development guidelines and the International Accreditation Forum, IAF, certification guidelines. These third-party independent audit processing systems are internationally recognised and utilised by the majority of Australian businesses.

The revision of Australian standards and the further development of the legality criteria will provide Australia with a rigorous and credible internationally recognised standard for the traceability of riverwood products. The further development of the legality criteria can also provide a two-stage approach to businesses to achieve full sustainability certification. Stage one could provide the compliance to governments and legality criteria; stage two could provide compliance for the remaining criteria.

The revision of the Australian standards will also be addressing the dual badging of Australian standards as Australian and New Zealand standards. This has been the tradition with the majority of the 1,800 Australian standards already in place. The Australian standards are already recognised and endorsed by the world's largest forest certification scheme, the Program for the Endorsement of Forest Certification, and can be provided for mutual recognition by other internationally recognised forestry schemes such as the Forest Stewardship Council.

Senator COLBECK: So when it comes back to the design of this legislation, and we are effectively creating another process that sits alongside all the other processes, what you are saying to us is that existing processes can be utilised effectively to achieve what we are looking to achieve without creating an additional bureaucracy?

Miss Watts : I believe they can be.

Senator COLBECK: The government seems to have some concerns about transparency of the process. How do you address that?

Miss Watts : The Australian standards criteria include developing Australian standards compliant with ISO standards development. The transparency is part of that framework of the standards development guidelines. Australian Forestry Standard gets surveillance audited every six months and fully audited and accredited every three years. Under those design guidelines, we have to show evidence of full transparency and we have to show evidence of public consultation and engagement with all relevant stakeholders.

Senator COLBECK: I am trying to work through a process whereby you would utilise these systems to verify the legality of timber within somebody's existing systems. What is the regularity requirement of audit for systems and the potential for checking those particular matters as part of the general management of accreditation?

Miss Watts : Certified organisations must have a minimum 12-months surveillance audit and they need to be recertified every three years under Australian standards.

Senator COLBECK: So part of that process could be a verification check of the legality of the source of their timbers. What process would you go through to ascertain that?

Miss Watts : With the current certification against the standards, there is a recognition of certified timber and noncontroversial timber currently in place, and the noncontroversial does have a declaration that comes in of the source of supply of the timber so it can be certified.

Senator COLBECK: So you are talking about timber that might come from New Zealand? How would you describe something that is classified as noncontroversial?

Miss Watts : I may have to get back to you on that, but it is within standard—

Senator COLBECK: We have very stringent forestry management practices here in Australia. The New Zealand submission talks about theirs being the same. I think we have acknowledged that there is a certain range of places that are subject to higher risk, if you like. I am looking to see how you can reasonably and without applying too much additional cost within existing systems apply similar practices. I am sure if you talk to the Australian industry or the New Zealand industry the cost of complying with their management and harvest regimes would probably be regarded as much higher than in some of the higher risk countries, because of a range of issues such as governance. So they would be averse to having additional costs applied at this local level and would rather see it go back down so that perhaps there is a more comparable cost regime applied to those. How would you acknowledge and accept within a system that there is a relatively low cost with a high regime of oversight versus the opposite?

Miss Watts : With the revision of the current standard based on the PEFC standard that was released in November 2010, the legality criterion has been developed further and within that it has the social and labour requirements. So the cost is already coming into the certification schemes on a domestic level. I do not believe there is another additional cost by incorporating the legislation as we will already be meeting those international benchmarks.

Senator COLBECK: So the market has actually started to move in that direction anyway, which is effectively what you are saying, and so what we are looking to do is to put in a framework to acknowledge and verify what is actually happening in those countries of origin.

Miss Watts : Correct.

Senator COLBECK: In relation to coverage, and I think we are talking about the higher risk products being highly manufactured furniture, panel and those sorts of things, what sort of coverage do the current certification systems have of those sorts of products?

Miss Watts : Certification starts at the source out of the forest. As a product gets transformed at each stage by those organisations that transform it and that are certified, the product comes on to being a certified product, as you know, in the traceability. If you had a furniture manufacturer that made a lounge chair that had some wood framing in it, that manufacturer, if they were certified, would be able to supply or make the declaration and show that it was certified timber that was used within it. At this stage that certification has not gone into that manufacturing market to that degree, but definitely with windows, doors and every other visibly timber product—and also paper based products—the certification comes all the way through to the printer. So the printer is certified.

Senator COLBECK: What about penetrations into some of those higher risk countries like Papua New Guinea, Malaysia and Indonesia? We have heard about country based processes that have been put into place to actually provide verification. What about the interaction between the country based processes and the private label ones, if you like, being the private certification systems such as PEFC and FSC?

Miss Watts : Definitely the international growth is happening with countries. Under the PEFC standard it is an umbrella organisation and, in fact, the revised forest management standard that was released in November 2010 is a metastandard. It is not a standard that any organisation can supply or any organisation can be certified against. It is about national governing bodies and national standards being certified against and recognised against it. MTCC is one of these in the umbrella, as is AFS. At the moment China is developing an international standard to meet and to be endorsed by the PEFC metastandard. With countries such as Indonesia, I know that PEFC is in conversations and discussions to help enhance and build the capacity. I know that they are looking at that SBLK and how it can be recognised. So under the international schemes they are definitely helping countries to comply and then to somehow bring them into the certification scheme.

Senator COLBECK: So effectively, what can occur is that as long as those in-country processes that are being developed in, say, Malaysia have a recognised chain of custody and, obviously, a cost which goes with that—that is having an impact in the market at the moment—and are developed in accordance with the processes that are designed under the meta-standard through PEFC, they can actually be recognised as part of that process and then could form part of a declaration-at-border type process for importation into the country and give some comfort to those who are purchasers and users of the product here in Australia that it has been sourced legally?

Miss Watts : That is correct.

Senator MILNE: In your submission you make a point:

Section 6(a) of the Bill must be amended so the prohibition covers any trade and not just importation.

I would like to follow that up, and also the requirement for importers to disclose information at the point of importation, which is part of the common platform to which you have signed on.

Could we go first, perhaps, to the disclosure of information at the point of importation? It is not in the bill as it currently stands. Would you support the proposition that we have, as the Lacey Act does, that requirement for declaration upfront? Also, would you like to expand on the prohibition covering any trade, not just importation?

Miss Watts : I will take the second one first—any trade—because that complies with the certification schemes, which we do not differentiate between or certify importers or manufacturers. In fact, we are across the whole market of wood and wood products. Our stand on that would be that using the certification scheme would cover every trade in the industry.

On the other one—the specifying of products as they come in: the current standard does not ask for specification of the species, but as part of the revision process an Australian standard must go through a public consultation process. If that were a requirement of the stakeholders it would then be brought into the standard.

Senator MILNE: But you have signed on to a common platform which says that must be in the bill, so you would support that going into the bill?

Miss Watts : Correct.

Senator O'BRIEN: In terms of certification standards in different countries: do you accept that in some cases there are financial benefits where a particular standard is recognised and, in a way, imposed on an industry in a particular region, that may not have been there before?

Miss Watts : Sorry, can you repeat that?

Senator O'BRIEN: Do you accept that where a particular certification standard is deemed to be acceptable that that will create a financial benefit for whoever is the beneficiary of that standard—whoever works in it and whichever group manages that standard? That will do for starters.

Miss Watts : As a standards development organisation we receive no money whatsoever for certification. It is a totally independent third party process. Yes, auditors no doubt benefit from standards being brought into countries where they provide service for a fee to do the audits. The other value, I would believe, is the increased acceptance on the product, which then goes back to the supplier.

Senator O'BRIEN: If a particular standard is deemed acceptable, will that not give that particular standard an advantage in imposing itself in areas where it does not now exist?

Miss Watts : The introduction of procurement policies and legislation that may refer to standards definitely puts those standards in a position of demand.

Senator O'BRIEN: And what thought has your organisation given to how this legislation might be applied in a prosecution successfully pursued in relation to timber which is said by the importer to be legally obtained and said by the prosecution to be illegally obtained?

Miss Watts : The certification system for the Australian standards and under the IAF have penalty processes in place for breaches against certification. At this stage I cannot fully advise you what they are, but I can give you—

Senator O'BRIEN: Are they being used? Have penalties been imposed?

Miss Watts : Through the complaints and grievances process, which is internationally recognised, on an international level there has been a complaint and grievance in Indonesia regarding practices under a certified organisation there. The escalation and appeals have gone up to the IAF level, where certification bodies and auditors were also investigated. The findings have not been fully released yet.

Senator O'BRIEN: Is that the only incidence of an alleged breach of that standard being pursued?

Miss Watts : It is the only one I am aware of.

Senator O'BRIEN: Could you take that on notice and let us know if there are others? Could you provide us with more detail, if you are able to, about the circumstances of that alleged breach and the proceedings that have taken place?

Miss Watts : Yes.

CHAIR: If there are no further questions, I thank Miss Watts.