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Thursday, 16 August 2012
Page: 8891

Ms JULIE BISHOP (CurtinDeputy Leader of the Opposition) (11:20): I rise to speak on the Illegal Logging Prohibition Bill 2011 and note that the coalition has circulated an amendment to this bill which, in effect, is to delay the start-up of the proposed legislation and the penalties and regulations under it until such time as adequate consultation with industry and with our trading partners has occurred.

I regret to say that a hallmark of this government has been the spectacular inadequacy of its consultation processes with relevant parties before it acts, and then it acts to our country's detriment. The live cattle export ban is a signature example of this government's failure to consult, and then to act to our country's detriment.

During the last parliamentary sittings the Trade Subcommittee of the Joint Standing Committee on Foreign Affairs, Defence and Trade delivered a report on this bill. A principal recommendation of the majority report, recommendation 3, states:

The Committee recommends that the Illegal Logging Prohibition Bill 2011 be passed.

I was a member of that committee and I was led to believe that there would be a caveat adding, 'subject to the penalties under the act and the regulations having effect from 1 January 2013'.

This was in order to give recognition to the idea that the legislation be aligned with the regulations. However, this caveat did not make it into the report as delivered to the parliament. The coalition members of the subcommittee recommended that the bill not be passed until the draft subordinate legislation had been finalised and had been the subject of further, extensive, community and international consultation. There was evidence to the committee of a lack of consultation, and that was recognised in part by the committee in recommendation 1, which said:

The Committee recommends that the Government continues to consult closely with the Governments of Canada, Indonesia, Malaysia, New Zealand and Papua New Guinea and other relevant stakeholders on implementation of the bill and the development of subordinate legislation.

This was just a diplomatic way for the Labor members of the committee to reflect the evidence that the government had not consulted properly, let alone closely. The second recommendation was:

The Committee recommends that the Government facilitate Malaysia and Papua New Guinea’s representation on the Illegal Logging Working Group convened by the Department of Agriculture, Fisheries and Forestry.

This was again a polite way to acknowledge the concerns of those countries that had been left out of the consultation process.

Considering all this, it was our view that the bill should not be brought on for second reading debate until the first parliamentary session of calendar year 2014 at the earliest. Given the evidence as to how long it would take—it was estimated that it would take between 18 and 24 months—to properly carry out the necessary consultations and draft the regulations, the coalition now seeks that the amendment as circulated, which has an implementation date of July 2015, be adopted. Obviously we cannot expect this to be agreed to, and that is why we are raising our concerns today. We have raised our concerns with the minister and with the government on numerous occasions, so they have been discussed extensively with the government.

The coalition took to the last election a promise that we would support satisfactory legislation to prohibit illegal logging. However, given the shortcomings and failings of the bill, we are seeking this amendment. If there is the opportunity to bring into effect the legislation and the regulations, the end result will be a better bill based on extensive stakeholder consultation and the necessary alignment of the legislation and regulations. The coalition has major reservations about the policy process that has been conducted and about the government's failure to consult adequately—or, in some instances, at all—with those most affected by the legislation. The critical reason that we insist on our amendment is that it will delay the coming into effect of the legislation until the regulations associated with the bill have been drafted and released for consultation at home and abroad. We are of the view that the legislation, while supportable in principle, demonstrates further the chaotic policy processes that typify this government—in particular, the Minister for Agriculture, Fisheries and Forestry, who is sponsoring the bill. It is no coincidence that this minister, who failed so spectacularly to consult adequately and follow due process during the live cattle export fiasco with Indonesia, is the same minister who has his fingerprints all over this bill.

To explain the problems with the government's policy process, I turn to the purpose of the bill. The coalition supports the purpose of the bill, which is to stop the importation to Australia of illegally logged wood from other countries; the problems have to do with how this is to be done and the lack of adequate consultation. According to the government, the bill provides for:

• a prohibition on illegally logged and timber and wood products (with an additional prohibition on the processing of illegally processed raw logs)


• a requirement for industry to carry out due diligence to mitigate the risk of importing illegal logged timber into Australia.

That is all well and good. However, there are major questions about the compatibility of this legislation with World Trade Organization rules. This in turn raises questions about adequate consultation with our foreign neighbours such as Indonesia, with whom Senator Ludwig, the minister for agriculture, has already done his utmost to destroy a relationship that successive governments have dedicated decades of work and effort to establish. I am surprised to find that the Minister for Trade and Competitiveness, who is always quick out of the blocks to condemn even the merest sniff of contravention of WTO rules, has not uttered a peep about this legislation.

This legislation also went before an inquiry of the Senate Rural and Regional Affairs and Transport Legislation Committee. The Indonesian government's submission to that inquiry was quite alarming. The Indonesian minister of trade personally wrote to the committee on 25 January this year, prefacing his remarks by stating that the government of Indonesia:

… fully supports the bill's overall objective to reduce the harmful environmental, social and economic impacts of illegal logging as well as to impose penalties on those who import illegal logged timber into Australia.

However, the minister then stated critically that the Indonesian government 'regrets that our cooperation has not been sought to date on the best means to address the aims set out.' The Indonesian government is right to be concerned by the cavalier attitude of the Labor government to our bilateral relationship with Indonesia. I well recall the Oceanic Viking debacle, which fatally undermined the cooperative relationship that the Howard government had established with the Indonesian government. As the Indonesian foreign ministry's director of diplomatic security, Dr Sujatmiko, said in a press in statement in late 2009:

This will be the last time we are helping Australia deal with its foreign refugee influx problem.

So the Labor government was put on notice.

The Indonesian trade minister in his submission to the trade subcommittee criticises the Australian government for not listing which timber products the bill applies to. This is an obviously important omission, and it indicates why the coalition is seeking a deferral of the starting date of the legislation. Offences are contained in the legislation, yet the basis of the offence—including which timber products the bill applies to; and these offences carry penalties—is all to be left to the regulations. So the evidence that came before the trade subcommittee was deeply concerning; parties could be prosecuted under the legislation, but the details of the offences would not be available until regulations were drafted.

It was admitted in evidence to the committee that prosecutions could occur, but people would not know the basis of those prosecutions—of the offences. The Australian Financial Review, reporting on 6 March 2012, referred to the chaotic approach and the impact this was having on our relationships with our neighbours. It said:

Australia’s relationship with Indonesia is under new strain, with Jakarta frustrated by the federal government’s “dysfunction” and neglect of its relationship with its near neighbour.

And that:

Indonesia’s Trade Minister, Gita Wirjawan, has blasted the Gillard government's lack of consultation over an illegal logging bill which he says threatens the future of Indonesia’s $5 billion export forestry industry. He is threatening to lodge a complaint with the World Trade Organisation if it proceeds.

The Indonesian minister maintained that they have a low cost alternative to the heavy regulation proposed in the Labor govern­ment's bill. He maintained the Indonesian timber legality and assurance system provides adequate protections. If the Australian government were to consult over this proposed course of action, there would be an opportunity to massively reduce the red tape and regulation.

The Indonesians are not alone in their observations. In their submission to the Senate inquiry of 20 December 2011, the Canadian government noted their concerns:

The implementation of the bill and subordinate legislation may impose unnecessary burdens on trade in forest products from countries with effective legislation supervision and discourage imports of timber products into Australia.

And that:

As a result of the imposition of greater burdens on imported timber products the implementation of the bill could favour processing of timber products in Australia to the detriment of Australian consumers.

The New Zealand government also made a submission to the Senate inquiry, stating that:

The implementation of the bill has the potential to have a significant negative impact on New Zealand's forestry industry, an industry almost entirely based on privately owned plantation forests that are established specifically to be harvested.

Further, well-known authority on WTO matters and former ambassador to the General Agreement on Tariffs and Trade Alan Oxley made a submission to the Senate inquiry, stating that the bill:

Fails to meet Australia's obligation under I.1 of the General Agreement on Tariffs and Trade 1994 not to create advantage for the like products from some parties to the Agreement and not others and is not covered by other provisions in the Agreement.

He went on in his submission of 10 January 2012:

It breaches Australia's obligations under Article XI.1 of the General Agreement on Tariffs and Trade 1994 not to use restrictions of any kind other than duties, taxes or other charges on the importation of any product and cannot be justified under other provisions of the Agreement.

He went on to say:

It fails to meet Australia's obligations under Article 7(1) of the ASEAN-Australia-New Zealand Free Trade Agreement which mirrors the terms of GATT 1994 XI.1.

Mr Oxley regards the bill as containing:

… particularly onerous and costly obligations on Australian producers to demonstrate product in Australia is legally produced.

And Mr Oxley notes that this is a critical issue for our trade not only with Indonesia and New Zealand but also with Canada. And, according to his submission, 'timber products are imported from Canada, members of the EU, Indonesia, Malaysia, New Zealand, Papua New Guinea, the Solomon Islands and Vietnam'. So Australia does not simply face potential action under the WTO from Indonesia and Canada but from a whole range of other countries.

There are a number of other legal opinions that have discussed the possible international trade implications of this legislation. Associate Professor Andrew Mitchell and Glyn Ayres of the Melbourne University Law School have recorded a number of reservations about the bill in their opinion of 10 January 2012. Another legal opinion has been supplied by well-respected Melbourne barrister Gavin Griffith QC and his colleague Benjamin Jellis, dated 22 December 2011. They state:

The scheme and content of the Bill is so deeply flawed in its conceptual approach, based as it is upon the use of Australian courts to enforce the laws of foreign trading partners, that it should be abandoned.

Finally, there is another joint legal opinion from Associate Professor Tim Stephens and Professor Ben Saul at the University of Sydney. It has to be said that these two academics are more relaxed with the general provisions of the bill. However, they note the bill has problems in international law:

Australia may need to demonstrate that it negotiated in good faith with affected countries to secure its conservation objectives before resorting to unilateral restrictive measures.

The Australian timber industry are rightfully concerned about the red tape burden of this legislation. In the 12 March 2012 edition of Timber and Forestry E News, it states that:

Thousands of containers of wood products shipped for consumers and landing on wharves around Australia every month are likely to be impounded under regulations in the Illegal Logging Bill.

The bottom line is that there are many flaws to the legislation put forward by the government. Our dissenting report to the trade sub-committee said that:

The Government has also indicated that the regulations will come into force two years after the Bill receives Royal Assent and also indicated that the regulations will be tabled in the Parliament within six months of Royal Assent to give exporters and importers time to establish due diligence. However, the Government also made it clear that parties could be open to prosecution during this two year stand-off. This lag between the Bill and the regulations is of genuine concern.

And the government:

…should not introduce the legislation until the enabling subordinate legislation is finalised, released for public comment and a satisfactory consultation period has taken place on both the legislation and the regulations.

For that reason the coalition has been reluctant to support the bill in these circumstances. We have done so because of our strong support for the principle— (Time expired)