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Tuesday, 15 October 1996
Page: 4178

Senator MURPHY(5.05 p.m.) —I should declare my interest in this debate for the information of other honourable senators. I am currently the state president of the forest division of the CFMEU in Tasmania. I guess I would be able to lay claim to representing one of the most important stakeholders in this debate: the workers in the industry. From that point of view, it is clear where I am coming from. I am totally committed to a prosperous industry and to the workers of the industry. I guess my record will attest to that. I will approach this debate from a significantly different approach and objective to that of Senator Brown. I will be supporting the disallowance motion, but I will do so on the basis of arguing a completely different approach.

As I have said, I am committed to ensuring the industry achieves its full potential, to seeing our current trade deficit—which has been spoken about in this place—in wood and paper products significantly reduced or maybe even turned into a net trade surplus. Quite frankly, I believe we can achieve that.

If we do achieve that, we will create hundreds, if not thousands, of jobs for Australians, which will in turn generate significant wealth and benefits for this country. Unfortunately, I regret to say that the debate relating to forestry issues has always had political overtones. Little or no commonsense and logic have ever been applied to decisions that have been taken, especially as they relate to export woodchips.

I can say that these regulations do nothing to alleviate that problem. These regulations are, in some respect, no different from those which previously applied. They are iniquitous and they weaken the previous criteria for downstream processing in this country. A key objective of any regulations or other regulatory measures ought to be to improve things, to bring about a better industry—one that maximises the utilisation of a very valuable resource and enhances the employment and wealth generating opportunities for the people of this country.

Of course, it should go without saying that regulations should and must take account of environmental requirements. These proposed regulations achieve none of these things. All the government has done is increase the ceiling—or, in fact, not have a ceiling—and substantially weaken the downstream processing aspects of the previous regulations. It has broadened the interpretations, particularly as they relate to degraded forests and other environmental aspects, such that they are almost meaningless.

I just want to take some time to remind the Senate of what is happening in the industry and what has happened to date. If you look at the history of my home state of Tasmania, on which I can probably speak with more authority than any other state, you will find that we had an industry that developed primarily as a sawmilling industry. Sawmills were supplied with sawlogs that were taken out of forests essentially on a selective logging program. They were set up to cut very high quality timber.

What happened in the mid- to late 1970s was that they realised that because they did not have the technology and the equipment to access some of the then remaining areas of high quality forests, they had to reduce significantly the volume of sawlog, particularly the category 1 sawlog, that was being supplied to the industry. They cut it by some 50 per cent. We then saw the introduction of woodchip licences, which were, at that time, designed to utilise what were residues from sawmilling operations, both in the form of head logs and the squaring of round timber.

That was a long time ago. We had two categories of sawlog in Tasmania—category 1 and category 2. We had veneer logs that were provided to the veneer industry. With the advent of woodchip licences and the export of woodchips, we have seen a dramatic increase over the years in the volume of timber taken from the forests of Tasmania. We have seen a decrease in the volume of sawlogs in category 1 and category 2 that are supplied to the industry. I think what has happened in my state is that the industry, particularly the Forestry Commission of Tasmania, has got itself caught in a situation where, because its revenue is generated from the sale of forest products, it is in a volume driven, revenue driven cycle.

If you also look at the old industry—if I can describe it in that way—it never had the technology or the expertise to cut some timber species. There was a legitimate argument for exporting some of those species of trees that they could not cut or dry and process satisfactorily. The other realisation that hit some of the Tasmanian Forestry Commission people in the face—the people responsible for the management of the state's forests—was that they were taking out the best trees, they had degraded forests left, to some degree, and they really had no plantation or regeneration program of any real worth being put in place. So they decided that they would have to embark upon a silvicultural regime that led to clear-felling. In some areas, that has an application. I would argue that it has not been best applied, in many cases, in Tasmania. But all of those things added to the burden.

If we just take one giant step forward to now, the reality is that not much has changed. We are still cutting down high volumes; we still have only two categories of sawlog in Tasmania—although some would argue that we have three; we now have a category 8, which is supposedly top end grade pulp logs. The other thing that has happened is that we now have the technology and the expertise to mill and process many of the species and types and qualities of logs that we once could not utilise simply because the technology and the expertise were not available. But it is now available.

What we see is the continuation of sending to woodchip mills logs that should actually be utilised in a way that I think will both prolong and enhance the value of Tasmania's forests—and this can also have equal application particularly in the states of Victoria and New South Wales—and this country's forests. We will achieve far greater benefits from the point of view of both employment and wealth generated if we make some changes to what is currently the pathetic way in which the timber of this country is being utilised.

If we look at how these regulations might go towards achieving that, I want to first go to the most recent regulations which were disallowed—the ones that operated when we were in government—and look at the requirements that were placed on applicants for woodchip licences. One particular aspect of the former regulations related to the applicant's commitment to value adding and processing activities in Australia, both now and in the future. That was designed to ensure that we started to focus, albeit in a very small way, on greater downstream processing in this country. I have listened to many members and senators say, `We want a pulp and paper mill in Australia. We want TPPC to build one, and we want this and we want that', and that government policy ought to reflect the opportunities and the stability to achieve that. I agree with that. But we do not see it in these regulations.

I turn to the problems this country has with the commitment of major exporters to downstream processing. I can give some examples of what the major players have done in the past to get themselves into a position where they can comply with the requirements of obtaining an export licence. There is the case of North Broken Hill and the games that I believe they play in making announcements about their commitment to downstream processing. They have done this year in, year out. Yet we have seen no real change, no real commitment to downstream processing in this country.

Some few years back North Broken Hill took a decision that they were a resource supplier. I do not have any contention with that. If that is their position, that is fine. But I do not believe that it ought to be acceptable in the public interest that this Senate and this parliament accept that we allow companies which clearly flout the rules of the day to get away with it. We have a responsibility to the community as a whole to ensure that, if we have resources, benefits are maximised from them.

By way of example I want to refer to a couple of press releases which were put out in late 1995 prior to the issuing of the 1996 licences. North Ltd issued one on 27 September 1995 headed `The pre-feasibility for MDF plant at Triabunna'. It states:

North Forest Products today announced a pre-feasibility study for a medium density fibre board plant at Triabunna, the first such plant in southern Tasmania.

Of course it paints a very rosy picture. I do not know how you have a pre-feasibility study into a feasibility study, but I am quite sure North have done nothing about this. This was just grandstanding. What they did not tell us was that with regard to MDF plants you need a reasonable supply of water. Triabunna always has a real problem with water, even for the town water supply. I do not know where North intended to get the water from, but I do know this: they never intended and never will intend to build an MDF plant. It is a charade that should be brought to an end. A further press release of 22 September 1995 is headed: `North opens Tamar flitch mill'. It states:

North Forest Products today announced the operation of a flitch mill at its Tamar export woodchip mill at Longreach north of Launceston. The flitch mill will be managed by North, be operated by employees at the Tamar mill and use equipment currently on site.

Of course it will. It did open. It used to be open before and it opened again, but it closed three months later. It does not operate today. The blokes who were working it are not working it today. There are no flitches being cut and nothing is being achieved with regard to any commitment to downstream processing. Again, it was a charade.

The other major company involved in exports of woodchips from this country is Boral. We read, `Boral may set up flitch mill'; `Boral eyeing north-west sites'; `Boral's announcement on Thursday that it had agreed with Forestry Tasmania to feasibility studies'. They are not going to have a pre-feasibility study, just a direct feasibility study. We read that they are `examining a $100 million hardboard factory, a $10 million recovery sawmill at Longreach and a $10 million veneer plant. But I do not think there has been any feasibility study with regard to those things either. They again just represent some grandstanding with regard to the former criteria. Those criteria did require the applicant to give some demonstration of commitment to value adding and processing in Australia, both now and in the future. The minister's statement on hardwood export policy says:

Export licence conditions have been included to give priority (in decreasing order) to woodchips sourced from sawmill residues, reject logs, logging residues, silvicultural thinnings and silvicultural residues (these terms are defined in Attachment D). About 2 million tonnes of woodchips sourced from sawmill residues will be exported in 1996 . . .

That figure of two million tonnes represented about 40 per cent of the total volume that was proposed to be exported from Australia in 1996. That being the case, the statement goes on to say:

The Government is committed to ensuring that the proportion of exports not derived from genuine value-adding activities is decreased over time. The ultimate goal is to maximise domestic processing.

The Government will continue to favour value-adding proposals when assessing woodchip licence applications. . .

That was a situation where we took a very small step. When we were in government I was always critical of our approach in dealing with woodchip licences. But we did take a very small step towards beginning to get companies to value add and downstream process in this country. I wish to give an example of how I think the industry in Tasmania—I have said this before—is either corrupt or so pathetically managed that it is incomprehensible.

In 1992, a person named Al Corbet came to see me. He is a Queenslander who has a company called Asia Pacific Resources. He had a proposal to set up three flitch mills in Tasmania. They would have utilised about half a million tonnes of logs that were then being chipped. He went to the Forestry Commission with that proposal and also to the Tasmanian Development Authority. The Forestry Commission said to him that they were somewhat sceptical about his view regarding the potential recovery. I add that all of those flitches were to be exported. It was a totally export oriented proposal. None of them would have been sold on the domestic market.

The Forestry Commission said a few things. It was sceptical about his claim regarding what could be recovered. He conducted some trials to prove that. He also received a letter from the Forestry Commission. This is why I say it is critically important that, at a federal level, where we have a capacity to determine how the industry will be driven in terms of value adding and downstream processing, and we only have it through the Export Control Act, we at least do something about it. This is a really good example.

The Forestry Commission said to Mr Corbet, `Fine, we'll sell you the logs. If, at the end of the day, you can prove that what you say is right, we'll sell you the logs. But what you have to do is go to see North Broken Hill and you have to seek an arrangement with them that will allow you to sell the residue from the processing of those logs.' Of course, when you are processing low grade logs, you always get a higher percentage of residue.

In that letter the Forestry Commission also said that his negotiations with North Broken Hill must not interfere in any way with the current arrangements that existed between Forestry Tasmania—what was then the Forestry Commission—and the particular company; indeed, it must not reduce the quality of that company's exports, that is, its chips.

You have to question: what are we really on about? What is Forestry Tasmania on about? As Senator Hill or Senator Parer said yesterday, the states have the responsibility for the way in which forests are managed and harvested. That is true, but if we see things that are wrong or if we see that there are not practices in place and there are not efforts being made at a state level to guarantee that this country maximises its opportunities from its forest based industries, we ought to do something about it. As I said, we do have the capacity under the Export Control Act to do that.

But it did not stop there in terms of this person. He owns a sawmill on the north-west coast of Tasmania called Precise Timbers. That is what it used to be called. He completely rebuilt it. He sought to purchase logs from Forestry and also from North to supply that mill. Twenty-five people could have been employed. His access to the mill was across crown land. The minister of the day sold the land to another sawmill owner next door who took out an injunction to stop access to this mill.

Forestry Tasmania said, `Well, you are not a complying mill now because you have no access.' Of course, who owned the sawmill that acquired the land? It was a former management employee of North Broken Hill. You have to wonder, if there is not collusion somewhere there, why it is that somebody who says `I want to employ 25 people, I want to run a sawmill, I've got a sale for the timber' cannot get the sawmill up and running.

It does not stop there, either. He proposed to build a sawmill at Bridgewater. All the plant and equipment is sitting at Bridgewater waiting to go together. Unfortunately, the land that he purchased happened to be land on which it was proposed, although nobody knew it, to construct part of the national highway. Websters, a rural based company in Tasmania, did not know that. When they found out, that prolonged the period of time involved. He had an agreement with Forestry that he would meet certain time commitments. Forestry then opted out and said, `You didn't meet the commitments, therefore we don't want you.'

I read the other day in the paper that the Country Sawmillers Association seem to have come to some agreement with North Broken Hill, I have to say under threat. A couple of people from Country Sawmillers said, `North has really got the arm twisted up the back here. They don't want us to put in an application for a woodchip licence. If we do, we're likely to suffer the consequences.' The consequences that they would suffer are simply these: the price for their residue from sawmilling operations would be reduced or refused, because under the current rules in Tasmania, that is what North Broken Hill can do. Again, that is unacceptable. You cannot allow those practices to continue. We have an obligation to ensure that in issuing export woodchip licences we do not allow that to continue. Those are just a few examples.

I propose to seek leave to table photographs of logs that have continually been going to woodchip mills. In this case these logs are going to Boral's woodchip mill. I am quite happy to provide them to Senator Parer so that he can look at them. I will then seek leave to have those photographs tabled. I can remember seeing on the front page of the Australian newspaper last year 10 or 12 people who lost their jobs at the Coolah Tops sawmill in New South Wales. They were sitting on a pile of logs, the last logs that they had to cut. When you see those logs and think about those people who lost their jobs, you have to wonder what we are really doing in this industry.

As you can see from the examples that I have provided—and they are but a few—the proposed regulations do nothing to rectify these problems. I know the government will say that it is rubbish, but let us have a look at what is proposed. As I said before, under the pre-existing regulations at least two million tonnes, or around that, of wood for woodchips were sourced from sawmill residues. The proposed ceiling has been lifted by one million tonnes. But in reality, as I said earlier, there is no ceiling, simply because of the degraded forest licences and trial shipment licences. This is exacerbated by the very loose definitions that are proposed, especially in the area of wood sourcing.

Let us go to the proposed regulations in terms of the definitions and look at what residue woodchips are. They mean `control of woodchips derived from sawmill residues or silvicultural thinnings'. It says `or silvicultural thinnings'. It does not say one thing. It does not say `sawmill residues'. There is no definition in here of what sawmill residues actually are. They could be anything. At least under the old regulations that you disallowed there was a specific definition for sawmill residues—very specific.

Page 4 says that `silvicultural thinnings' means `waste material resulting from thinning of regrowth forest for the purpose of improving the production potential of the forest'. That can mean anything. Let us go to the issue of `regrowth-old growth'. I asked the minister's office to explain to me what was their interpretation of `old growth-regrowth'. They said, `It's in the national forest policy statement.' I had a look and said, `What about the age difference?' They said, `It has nothing to do with age.'

Let me tell you, Senator Parer, that in Tasmania regrowth forest is considered to be anything less than 150 years old. Then you take that and you think, `Hang on. Haven't we been running an argument about an 80-year rotation for the production of sawlogs?' None of this gels. None of it fits; none of it stacks up. We have an obligation in this place to do something about it.

Again, in terms of the process, silvicultural residues and sawmill residues are not defined. `Degraded forest' is basically being left up to the minister of the day to say, `Tom, Dick, Harry or Sue have the expertise to determine what a degraded forest is.'

Senator Calvert —Natalie.

Senator MURPHY —Maybe Natalie, too. The minister will say, `They have the expertise to determine what a degraded forest is and we'll accept that.' That is just not acceptable. We have to have comprehensive guide lines and criteria so that they can be appropriately interpreted.

We also have to understand that the world has a shortage of timber and we have a responsibility to maximise the use of it. More and more consumers are going to demand that. We know that there is a change in the view of consumers around the world. Therefore, we have an even greater obligation.

No-one in the debate thus far—particularly the two ministers responsible, Senator Hill and Senator Parer—has made any comment or provided any reasons as to why the definitions have been weakened and what benefits will be had from weakening the definitions. It certainly will not lead to increased downstream processing in this country.

Moreover, even if we in the interests of the industry voted for these regulations in good faith, there are other issues that demonstrate that the government is not genuine about real industry development, about having an industry that will focus on import replacement and the creation of jobs and wealth for Australians and Australia. I will give you one example of why I make that statement, and that is the removal of funding for unions and others to participate in an appropriate forum such as the Industry Council and in a way that would allow a genuine and open approach to industry development. If for no other reason, these regulations do not address any of the real issues confronting Australia's forest industry.

But of course it does not stop there. When we look at the issue of equity, when we grant woodchip licences—and I want to very quickly deal with this because—

Senator Parer —You are running out of time.

Senator MURPHY —I know, Senator Parer; I am running out of time. Maybe I will have to finish it on the adjournment. When you have a ceiling in place, you cannot in any way grant licences equitably. You cannot. I know from the past, when we were in government, that you cannot have nine million tonnes worth of applications and have a ceiling of either five million or six million tonnes and do it fairly. It does not work and it ultimately ends up that the big players at the top end of town get the benefits and the others do not. You cannot do it and you will not achieve downstream processing in that way.

I put to the government: you ought to withdraw these regulations and amend them such that you give a proper focus to downstream processing in this country and that you ensure that there is greater equity for all of the participants in the industry. If you do not, then you will have achieved nothing other than what was achieved in the past. I have been critical of that. I hope the government will do that and I urge senators to vote against these regulations. I seek leave to table the photographs. (Time expired)

Leave granted.