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Monday, 11 November 1985
Page: 1935

Senator WATSON(9.41) —I wish to canvass two issues afforded by the debate tonight on the Appropriation Bill (No. 1). I refer to the structural weakness in the Australian economy and the future of the forest-based industries of Tasmania. The 1985-86 Budget is a document that said little and did little about the fundamental weaknesses in the Australian economy. Therefore, it is no small surprise that in so many areas the Budget has proved to be off course. It is scandalous that the Australian Labor Party has failed to address the fundamental and serious economic problems confronting our great Australian nation at present.

At the moment the Government appears to be adopting a wait and pray attitude, hoping perhaps that things will turn out for the better eventually. One would be a super optimist to expect that the Budget estimates which are often based on inaccurate predictions and a lack of understanding of the realities of the international market place would have any reliability or accuracy. I think it is interesting to ponder the reaction of the Reserve Bank of Australia shortly after the release of the Budget. It is true that unemployment has fallen and that a number of new jobs have been created. Congratulations are in order on that score. However, part of a government's Budget strategy is to create new jobs. Why is this Government now determined to throw thousands of people out of work in the hospitality and the car manufacturing industries through the introduction of a new and short-sighted anti-fringe benefits tax legislation?

Again so much of the success of the Budget depends on an improvement in all sectors of our industry. However, it is this very area which will be expected to bear the brunt of the Government's new tax package which has an anti-business bias. It is quite obvious why the Government left taxation out of the Budget. Of course the earlier document was meant to lull the people and the media into a false sense of security. The Budget promised cuts in the deficit. It promised pegged wages, reduced unemployment and incentives for rationalisation and growth. What was not said at the time was that the proposed new tax package would virtually nullify any gains that could have been expected from the Budget promises.

The Government's announced intention to push for full wage indexation in the recent national wage case went the way of so many of its good intentions-sweetheart deals with the Australian Council of Trade Unions and a 3.8 per cent wage rise across the board last week. All of these will further undermine international confidence in our ability to manage the economy-not to administer it but to manage it. There is a big difference. If Mr Keating had kept to his Budget time pledge of full discounting without qualification, the business community and the financial markets would have been a lot more reassured. Instead, the dollar fell to a record low and so, I think, has the Government. In response to this latest instance of government mismanagement the business community-it is still shocked by the ferocity of the anti-business bias in this tax package-is being forced yet again to sustain increases in wage and production costs and also increases in taxation.

The tax measures recently announced are supposed to be revenue neutral but it will not be long before the Government will be looking for a new source of revenue to counter the loss of previous oil receipts-about $7 billion. Just around the corner next year we will see a new tax package designed to raise real revenue. On top of what has just been announced, that will hurt. The business strategy was built around an expansion of our economy, particularly an increase in productivity, exports and business confidence. Therefore, it seems ludicrous that the Government should set about attacking the business community, the lifeblood of economic expansion, and quashing any incentive to invest, expand, create new opportunites and reward achievement and excellence, through new anti-business tax proposals.

Contrary to good Labor Party philosophy, the proposed capital gains tax will stop new entrants into the farming community. It will lock in existing investment because farmers cannot afford to move out. The Labor Party will perpetuate a landed class, contrary to its socialistic ideals, and will make it very much more difficult for new entrants. The Leader of the Government in the Senate (Senator Button) should not laugh; this is serious. It affects his Government's socialist proposals. The rationalisation policy for the motor vehicle industry, which could have revitalised a struggling sector of our manufacturing industry, will now be virtually destroyed by ill-advised tax measures. This is but one example of the Labor Party's determination to give with one hand and take away with the other.

The Government has now lost its nerve on tax reform and spending restraint. One has only to look at the altered expectations of cuts in the area of veterans' affairs to realise that so many of the promises of significant cuts in spending were dependent on legislation that was, or will be, eventually watered down. For example, the Government was unable to hurry the Veterans' Entitlements Bill through the Senate. As a result, the huge savings anticipated in the Budget did not and will not eventuate. Only last week, the Government softened its stand on cuts in the area of child care. Up in smoke went another cost saving. I am not saying that these changes were not necessary, only that when the Government was making cuts from Budget estimates, it was making paper dolls instead of effective and responsible economic determinations.

The Budget plan to cut the deficit has been thwarted by the way that the devaluation is widening and the balance of payments deficit is growing. Although gross national product rose by about $40 billion, three-quarters of it was effectively financed by debt. Over 50 per cent of our increasing indebtedness is overseas debt. Our exports must rise. They have risen as anticipated, but growth has been limited to only a small number of areas. Returns from primary production, which is the basis of our export industry, have been so depressed that the returns will make little impact on our growing foreign debt which has risen from $7 billion to over $50 billion in just five years. Imports were expected to fall as a result of the devaluation of the dollar but this has not really happened. Australians, in their race for expansion and growth, have in fact increased the level of imports-a factor which has obviously widened the trade deficit. Australia's failure to develop an export oriented industrial base in the past, and the continued failure of our struggling manufacturing industries to become more competitive at home and on international markets, has resulted in the poor standing of our economy in the eyes of the Western world. Australia is rapidly becoming structurally locked into dependence on imports of industrial manufactured products and on foreign capital rather than local capital for development funds.

The Budget assumption that our industries would rally in response to devaluation has so far been proved to be false. The upward spiral of devaluation-or the downward spiral of devaluation, whichever way one looks at it-followed by price increases, followed by wage increases, followed by inflation, followed by further devaluation, will surely reach its ultimate conclusion.

The shaky dollar is a direct result of unrealistic Budget strategy and economic mismanagement by the Government. While the Australian Labor Party today celebrates its great tenth anniversary, I wish to remind its members that the Australian economy now is in a similar position to that which it was in when the notable Dr Jim Cairns was Treasurer.

Australia is currently experiencing the highest real interest rates since the Depression in order to prop up the falling dollar. Just how long can we really expect Australian people, home owners and the business community, to survive these huge interest repayments? That remains to be seen. High interest rates are another nail in the coffin of business expansion and development. Australians have increased their borrowing from low interest sources in other countries. This is escalating our foreign debt problem at a time when we should be doing all in our power to try to reduce it.

The Government must be prepared to take action to reduce government spending, to throw out its anti-business tax package and to come up with a new proposal that will reward incentive, excellence and ambition and offer incentives to the business community not only to become more competitive in the local and international market-place but also to develop some new industries. The Government must be prepared to control the level of borrowing from overseas, to regulate the growth of imports and to restore confidence in our economy by very much sounder management.

The other issue that I wish to develop tonight is the future of the forest based industries, particularly the woodchip industry in Tasmania. Scarcely a week passes without at least some story in the media about the impact of wood chipping and its future in Tasmania. These stories have ranged from local councils which have reaffirmed the value of revenue and local employment generated by logging in their municipalities to the various industry and conservation groups pressing their respective cases on the future of Tasmanian forests. The Tasmanian Chamber of Industries and the Tasmanian Trades and Labour Council, both very powerful and representative bodies, have endorsed the importance of continued wood chip export operations in Tasmania beyond 1988. The Tasmanian Chamber of Industries' news editorial expressed the issues involved very succinctly as being that:

. . . in considering the granting of woodchip licences beyond 1988 the Federal Government is inevitably involving itself in the future of the entire forest based industry in Tasmania. Because this industry is so critical to our economic well being, it is not an issue in which the Federal Government can give something to both sides simply to protect its electoral standing with the conservationists.

The question of how much of Tasmania's forests should remain as wilderness is a decision for the State Government to make and one for all Tasmanians to make. There is a tremendous feeling amongst my constituents in Tasmania that they want Tasmania and Tasmanians to determine their future. The Commonwealth agreement for Tasmanian concessions is likely to be unacceptable. By a recent action, going back several months perhaps, in postponing the tour of Tasmanian forests by Federal Australian Labor Party colleagues, Bob Graham, MHA, a Labor member for Denison, revealed that the State Labor Party is fully aware of the depth of feeling in the electorate about this issue and the desire of the Tasmanian people to retain control of Tasmania's destiny.

The people of Tasmania are very much aware of the impact of wood chipping on the Tasmanian scene, both environmentally and economically. They are fed up with these fly-in, fly-over tours of the so-called horror spots by some Federal politicians, who then return to Canberra and roundly condemn the role of forest-based industries in Tasmania. Both Senator Sanders and the Leader of the Australian Democrats (Senator Chipp) have made these tours amidst considerable media attention and have commented on the so-called failure of regeneration after clear felling. Forestry Commission officers have replied that they too are unable to see from the air the young seedlings and regrowth in new areas. They thus conduct ground surveys in order to assess the progress and success of their regeneration programs. I draw the Senate's attention to comments by the Leader of the Democrats in a recent speech to the Senate, condemning what he saw as a nefarious industry, when he said:

On a recent trip to Tasmania I saw scenes of incredible devastation as the woodchippers pursued their dreadful course.

From a Tasmanian perspective, I do not think this was a particularly balanced or even a thorough assessment of the environmental or economic impact of the wood chipping industry in Tasmania. A great deal of media attention has been focused on these exclamations of horror by politicians after touring clear-felling operations. I draw the Senate's attention to a very successful scheme which has been operating in southern Tasmania. Australian Newsprint Mills Ltd has opened up its operations and has been conducting warts and all tours in particular areas such as the Florentine Valley. For example, that company, in co-operation with two private tour operators, has for the first time shown people real forests and the impact of proper forest management practices.

It is all very well to state emotionally that each week a space equal to 200 Melbourne cricket grounds is devastated for wood chips. It seems an awe inspiring statisitic, but until such an area is visited by Mr and Mrs Average Australian, they find it difficult to visualise the magnitude and volume of Tasmania's forests. Areas of natural beauty have been left aside for preservation by the Forestry Commission and by the industry for years, long before conservation became an emotive issue. But a sad fact which must be remembered is that these areas have been locked up. They are vast tracts of Tasmanian forests that have been preserved as part of the natural cycle. I think we must remember that after a while a tree reaches maturity and then rot begins to set in; so a mature forest eventually disintegrates. While conservationists may be horrified by clear-felling, before the beginning of wood chipping a century of selective logging by saw-mills had left the forests in a sorry state. Any attempt to stop the removal of pulp wood for export from the National Estate areas would not automatically exclude the harvesting of sawlogs. Instead, it would mean the disruption of a regeneration program which is based on years of experience of clear-felling both for pulp wood and sawlogs, followed by a total reafforestation.

The beginning of the pulp wood industry in Tasmania provided an economic outlet for wood that could not be used for sawlogs and the waste material generated by saw-mill operations allowed the regeneration of forests which had been devastated by successive sawlogging operations since the earliest days of white settlement. The opportunity to utilise the pulpwood resources of Tasmania has made the regeneration of forests after logging not only practical but also of tremendous economic value to Tasmania.

The forest-based industries are now Tasmania's second largest employer, having created some 4,400 jobs, directly and indirectly, in the wood chip export industry. The forest-based industries earn a value added $250m for Tasmania-an income second only to our manufacturing industries and ahead of our agricultural earnings. The wood chip industry earns more than $100m a year in export earnings for Tasmania. The industry has the potential in the next 10 years to earn $1 billion in export income and will maintain the present employment level. Many of the jobs provided by these industries are of crucial importance in country areas which are hit by the rural recession.

The wood chip industry has estimated that over the next 10 years the total area harvested by the forest-based industries will represent only 4 per cent of the total area. These forests will be replaced in turn by regenerated stands of forests of even higher quality. A Legislative Council select committee report calculated that if the Federal Government decided to ban the taking of pulp wood from areas listed on the National Estate, the opportunity cost at present day values would be over $13m per annum. If the Government went a step further and placed a total embargo on logging operations in areas listed in the National Estate, the opportunity cost to Tasmania would be reckoned at about $21m. These costings clearly show the enormous wealth potential of the forests and the conservation movement seeks to lock up all these areas and reserves. At present I cannot envisage that the value of tourism in these locked up areas would ever compensate for the loss of a multi- million dollar earner for Tasmania.

I wish to highlight the role of a very important group which is often overlooked by conservationists and the public and yet which plays a very crucial role in the management or our forest resources. I refer to these professional foresters of Australia. As public servants who are responsible to State governments, they are not encouraged to adopt a public profile or to speak out on contentious issues. These foresters are truly professional in their conduct and training and are acutely sensitive to the need for balance between the ideals of development and preservation. All too often their role is overlooked by the media when they produce their reports opposing the forces of industry and conservation.

A little publicised event last year demonstrated the vulnerability of these public servants to extreme criticism by some conservationists who are often biased and inaccurate and risk discrediting the entire forestry profession. Last year the chief of the Victorian Forest Commission was sacked by the Minister responsible because he failed to tolerate extreme conserva- tionists and was too blinkered in his approach. The Minister is understood to be convinced that conservationists deserve a stronger hearing in forests policy making matters.

Having mentioned the dangers of narrow and inaccurate reporting to the reputation of professional foresters, I draw attention to the pragmatic and realistic claims of the Forest Action Network-FAN-which is a coalition body representing a number of conservation groups. It has produced a forest industry study which ideally it would like to see adopted as official policy. This organisation recognises the importance of forest based industries to the Tasmanian economy and it would like to see an expansion of employment opportunities and a greater downstream of production within Tasmania. In its concern for economic viability and employment benefits for the wood chipping industry, this organisation shares the development aims of the industry generally to assist in the preservation of both natural beauty and of our forestry industry.

I conclude with a remark about Mr Cohen. The recommendations that have been made by the Minister for Arts, Heritage and Environment must be totally rejected to avoid an unwarranted, uneconomic and disastrous intrusion by the Commonwealth into Tasmania's management of its land resources. The Minister for Primary Industry, Mr Kerin, must temper Cohen's environmental recommendations with a proper regard for economic employment and trade considerations. However, the Primary Industry Minister's Press release of 29 October did not augur well for balanced decision making, as he described Cohen's recommendations as timely, moderate and well directed.

Although Tasmania is not opposed to receiving advice from the Commonwealth, particularly its agencies on forestry matters, the Commonwealth has no constitutional prerogative to instruct any State on its land use management. No State would tolerate such interference by the Commonwealth in its constitutional responsib- ilities. Furthermore, Environment Minister Cohen's recommendation, if implemented, would see an ongoing Commonwealth intrusion into the future operations of the industry. The people of Tasmania will reject this intrusion by the Commonwealth, as will their Government and industry.

The effects of Commonwealth involvement in the industry, in line with Minister Cohen's recommendation, would be completely catastrophic. For example, 25 per cent of Tasmania's forest resources would be closed off by Canberra. It is not the wish of Tasmanians. It is important that we continue to have these areas of forest, which have been used for almost a century, as production areas. At least 3,000 Tasmanians could lose their jobs if the recommendations were put into full effect. The Commonwealth is now seeking to control the use of about two million hectares of land, or almost 30 per cent of Tasmania's land area. Newsprint production by Australian newsprint mills would be reduced by 50 per cent if those recommendations were not altered. It would substantially reduce the output of many of the hardwood sawmills. It would shut both of the State's veneer mills. It would jeopardise the future of the pulp project in northern Tasmania and would also undermine international confidence in our ability to deliver, because of the severe penalties that are imposed for infringement, which could result in termination of licence.

The problems go beyond the Minister's control. While he has found that there is no overriding environmental reason for not granting licences for the export of wood chips from Tasmania, his recommendations concerning areas listed for the National Estate were governed by the constraints imposed on any Federal Minister by the Australian Heritage Commission Act to take action against anything which infringes upon the National Estate. I believe Minister Cohen's recommendations must be totally rejected. I appeal to Mr Kerin to act in a sensible way to enable wood chipping operations to take place under a proper management program.