Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Hansard source

These two bills, which are being debated cognately, the Forestry Marketing and Research and Development Services Bill 2007 and the Forestry Marketing and Research and Development Services (Transitional and Consequential Provisions) Bill 2007, effectively replace the forestry research and development statutory authority, which was called the Forest and Wood Products Research and Development Corporation, with a new research and development plus marketing corporation. That new body is to be called Forest and Wood Products Australia, FWPA. In simple terms, the research and development corporation that relates to the forestry and forest products industry is, like all of the other R&D bodies, going through the process of responding to and adapting to the template laid down by the Uhrig review. The difference on this occasion is that this body is also embracing a marketing dimension. We welcome that. It has been long overdue, and we broadly support the bills.

We as a party have strongly supported the continuation of the forestry R&D that is to be carried out by the new entity and we have always had a longstanding commitment to value adding in this particular industry. I go back over the many years of my association with this industry not only during my time in parliament but also during my time, before I came into the parliament, as the President of the ACTU. As the Minister for Primary Industries and Energy, subsequently as the Minister for Employment, Education and Training and as a member of cabinet, I was involved in those days in some of the difficult issues confronting the forestry industry and its future. As a government, we set about the task of calling for security of that industry’s resource, taking the view that if you could secure its resource the next best thing was to have an industry development strategy that would effectively encourage value adding to that resource. In our view, there was not much point in securing the resource only to see it go out as woodchips. If, in fact, we were able to get agreement on resource security and environmental protection, so getting a balance, it would be necessary to have as much effort as possible put into the value-adding dimension so we could take better advantage of that element of the resource that was secured for the industry.

Way back in 1992, the national forestry policy statement that the then Labor government developed was agreed as the blueprint for the future of public and private forests. It reaffirmed the commitment of all state and federal governments to the management of our forests for all Australians. Of course, it was the Labor government that effectively established regional forest agreements. Regional forest agreements were the means by which the resource could be secured. What has been lacking since the change in government is not that we were not able to get bipartisan support on RFAs—of course we were and there was a lot of focus on this in the last federal election, as you, Mr Deputy Speaker Adams, would well know—but that this government will not give its support to the commitment of development and value adding for the forest products industry. So we are delighted that this ray of light has been shone on this industry and that recognition has been given, embodied in this important legislative change.

The Forest Wood and Products Research and Development Corporation has provided a national integrated research and development focus for the Australian forest and wood products industry. It is committed to research and development that promotes internationally competitive and environmentally sustainable practices. It enhances employment opportunities and contributes to Australia’s reputation as an innovative producer of high quality forest and wood products and we support the continuation of this role. In the 1980s, the Labor government saw the importance of building the research and development commitment of our rural industries by establishing a whole gamut of research and development corporations across those sectors. We support not only the continuation of that research and development effort but also the expansion of the forest R&D organisation to include marketing of Australia’s forestry and forest products industry.

Under this legislation, we will establish an industry-owned company and that organisation will have more flexibility to fund marketing and promotional activities. The bill will create a company limited by guarantee under the Corporations Act 2001 to assume the research and development functions currently carried out by the R&D corporation for the forest and wood products industry. It will also incorporate the new functions of marketing and promotion. Forest and Wood Products Australia, the emerging body, will continue to be funded through industry levies, as was the old R&D corporation, with the federal government matching levy components used for research and development. The major difference is the nature of the legislation controlling the new organisation. I understand that the forest industry is strongly in support of the establishment of a new entity to undertake these additional roles.

As the bill will establish a new entity with new responsibilities, it is appropriate that it be reviewed to ensure it is properly established and that the transition arrangements are appropriate. We believe it is essential that this new body is driven in relation to the industry structure by strong partnerships that recognise the relationship between state and federal governments and industry partners as well as the companies, the workforces and their unions. In our view, all stakeholders have to be involved in this newly developed structure. I hope that that is the basis upon which this bill proceeds. We will have the opportunity as a party in another place to ascertain that. The bill has been referred by the Senate Standing Committee for the Selection of Bills to the Senate Standing Committee on Rural and Regional Affairs and Transport for further review so that the Senate can give greater scrutiny to what is proposed.

The review of the outcomes of this process and comparison against the Uhrig templates is important—as has been done with all amendments being made to the R&D corporations post-Uhrig—to ensure that the governance arrangements are satisfactory. The strong point that we make on this occasion is that we have to ensure that the strong partnerships which have been an important part of this industry are reflected in the new structure—the government better than anyone would understand the importance of that. The review requested by the Senate is appropriate to consider the terms of the statutory funding agreement between the new corporation and the Commonwealth. The Senate process will also enable the appropriate review and consultations to be undertaken by the committee. Labor will participate constructively in that review process. Given my long association and involvement in this industry, I, along with others, will be taking a keen interest in the outcome of those committee findings and ensuring that the framework will be right during the setting up of this new entity.

It is important to remind ourselves that in the last election the Prime Minister made a commitment to various parties involved in the industry, particularly in relation to Tasmania. We hope that the direction of the legislation, which reflects that commitment, is followed. All stakeholders have to be engaged in the future direction of this industry. On this side of the House we firmly believe that the most effective way forward is a partnership between the government and the industry partners—to get people to work as a team; to commit to value-adding activities; to be a more productive and efficient workforce engaging with the rest of the world; to export to the rest of the world; to replace imports from the rest of the world; and to use the opportunity through sensible and strategic industry development to ensure that our contribution and exports are enhanced in this vital industry to the future of this country and in particular to the state of Tasmania.

Having said that, I think it is also important to remind the House that we probably would not even be debating this bill in terms of the transition of the company were it not for the foresight that previous Labor governments had in reforming rural research and development. The research and development corporations—this one, which is moving into transition, being one of them—have provided a unique and successful partnership between government and industry in the past. In 2004-05, total spending by the Commonwealth and industry on research and development corporations was $511 million and over $230 million of that came from industry.

It is important to remind the House that it was Labor, under the stewardship of the then Minister for Primary Industries and Energy, John Kerin, who, in the mid-1980s, saw the need to reform rural research and development. It was the Hawke government and John Kerin in particular who recognised the need to narrow the gap between research and product development and saw the need to improve our export performance and productivity by marrying scientific research with the needs of industry to enable best practice and innovation in product development. That was the broad template that was laid out there. That is the specific template that we hope will be translated effectively to this particular industry. It has been significant in greatly improving the competitiveness and profitability of Australia’s agricultural, fish and forestry industries and in supporting the sustainability of primary production and our natural resource base.

In essence, the Hawke government recognised that there was a market failure in private sector research because many types of firms and individuals were unable to derive sufficient benefit to make their investment worth while. It was that government’s recognition of that problem, and its preparedness to make the commitment through the matching funds in relation to 14 rural research and development corporations, that laid the basis for those R&D bodies to more effectively create an environment for value-adding to our natural resource base. Of course, this government has maintained that commitment to matching funds, but it was the drive and initiative that came from a Labor government that set them up—and I take the opportunity as part of this debate to remind the House of that.

I also remind the government that our commitment to research and development went even further. Not only were we committed to research and development bodies and the matching funding but also we established the Cooperative Research Centre program, which, as the then Minister for Science and Technology, I had responsibility for implementing. Again, that is an initiative that this government has embraced.

Those 50-plus research CRCs have also been doing great work in marrying the basic research to the commercial opportunities. In terms of the R&D effort, that really did set us up to become a much more productive and innovative nation. That came about in the rural industries not only through our commitment to research and development through the CRC programs but also through our commitment to introducing a 150 per cent R&D tax concession. That was a recognition of market failure. It recognised that the returns on research were not immediate, that they happened over the longer term, and that what we had to recognise the upfront costs to businesses associated with that.

We also recognised that many of the companies getting into R&D did not turn a profit. There is not much point giving a tax deduction to a company which does not pay tax. That is why we introduced the research and development syndication for start-up companies. We also invested heavily in R&D and made expenditures through public sector R&D.

Why do I mention all this? Because one would have thought it would be a view shared by both sides of the parliament that we should retain our commitment to innovation and research and development. Indeed, before the 1996 election, the Howard opposition promised to retain 150 per cent tax deductibility. It also promised to retain syndicated research and development, only for us to find that, when it came to office, it scrapped them effectively in its first budget. Those must have been ‘non-core promises’.

What has been the impact in terms of this nation’s innovative direction? I will tell you, because I think it is pretty revealing. Labor had that suite of programs that I have just outlined—not one in particular but a whole range of programs which recognised different ways of encouraging research and development and innovation for our future to encourage more effective and innovative ways of getting products and services into not only this market but also overseas. With that suite of initiatives we saw government investment as a proportion of GDP rise to 0.24 per cent in 1995-96. With the stripping away of those initiatives the government’s investment as a proportion of R&D fell from 0.24 per cent of GDP to 0.18 per cent.

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