Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Link to 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.

John Murphy (Lowe, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

That’s a disgrace.

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

That is a disgrace, because what they effectively did was to drop by one-third the government’s contribution to this nation’s future. The parliamentary secretary at the table, the member for Flinders, looks aghast. It is pretty dramatic. That is why we have not been able to export as effectively as before. That is why we are not as productive as before. We have all these assertions as to how Work Choices and workplace arrangements have increased our productivity. Productivity has in fact gone down under this government’s watch. Why? Because they have stripped away our commitment to innovation, research and development.

When Labor was in office, average annual growth of real business investment in R&D rose to 11.4 per cent from 1986-87 to 1995-96. In the period 1995-96 to now, it has dropped from 11½ per cent to five per cent. It has more than halved. By effectively taking away concessions and support, the government have been responsible for more than halving business expenditure on research and development in this country, and they wonder why we are not more productive. They wonder why we are not more competitive. They are a government which have been prepared to ride their luck—the luck of the resources boom. But what happens when the resources boom runs out? Nothing will happen unless we encourage the innovative opportunities of this nation, and that will not happen by government vacating the field. It will not happen unless the government are prepared to recognise and respond to the market failure associated with research and development expenditure not just in our economy but in all developed economies of the world.

In talking specifically about this matter and the government patting itself on the back about its commitment to R&D for one sector, let us look at what it has done to R&D in the total economy. It has stripped it bare, and the nation pays a price for lost opportunity. Sustained productivity growth in our key export sectors has always been underpinned and will be underpinned by a strong commitment to research and development and innovation. But it will not happen on its own. It will not happen unless governments are prepared to commit resources and forge partnerships with industry.

Labor support this legislation. We support the extension not just to an R&D body but to a marketing body. We see great opportunities and a great future for our wood and forest products industry. At the recent Labor Party National Conference, Labor restated its commitment to value adding in the industry and, specifically, its commitment to a wood and paper industry innovation council. We believe that you have to build strong, productive and ongoing working relationships between all participants in the supply chain. Because of the relationship between the Commonwealth and the state governments, as well as the industry partners, the council will facilitate whole-of-government commitments, developing initiatives aimed at improving productivity, global competitiveness, increasing market access and securing the future of the sector and also a commitment to best practices in workplaces in the sector by working cooperatively together and a commitment to sustainable development of the sector. That is Labor’s commitment. We actually laid the basis for this with the regional forest agreement, as I said at the outset of this debate. But what we also have to develop is the cooperative approach within the industry.

I hope that this new structure will provide the basis for that cooperation. We will look with great interest at how, through the Senate processes, the commitments to what this new body does will play out. But there is no point in securing the resource base of this industry unless you value-add it, and you will not effectively value-add it unless you have the commitment to innovation, research, cooperation, productiveness and competitiveness within the industry. That will come by engaging and involving all the stakeholders. That is our commitment and we will honour it. We hope we have the opportunity to implement this in the not too distant future. This new body provides a very solid basis for doing that. We believe in this and we want the opportunity to implement it.

I urge the government to adopt and embrace the direction forward that we talk about and believe in, not just pay lip-service to it and pretend that they will do it only to see another broken promise if re-elected. We support the bill but urge cooperation of the workforce, all the stakeholders and, through this new body, encourage not just the shared commitment to research and development but the marketing strategy and the value-adding direction for the great industry of this country.

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

I am delighted to make a contribution to the debate on the Forestry Marketing and Research and Development Services Bill 2007 and cognate bill. I acknowledge the member for Hotham’s thoughtful remarks about his involvement with research and development. I also note the presence in the chamber of the member for Lowe, who is an expert on blue gums. I advised him on those matters on an earlier occasion. I also acknowledge the great depth of experience that you have in the forestry sector, Mr Deputy Speaker Adams. I also acknowledge the member for Hotham’s earlier experience in the foothills of the Otways, because it was there that he started to understand rural Australia. He understood all about the trees. At times he has taken it on board, and at other times he has been less than understanding about some of those matters.

He supports the inclusion in this bill of promotional activities. He talked about the national forestry statement 2002. I supported him on that statement, which then led to the regional forest agreement. The member for Hotham was very supportive of the regional forest agreement, but I draw to his attention that, in Victoria, Premier Bracks came down to the Otways—where the member for Hotham learnt something about trees—and, overnight, wiped out the RFA. I wonder what the member for Hotham would say about that. He will probably now leave the chamber because he would not be too happy about that. The RFA was a very good arrangement, whereby forestry industries could—

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

Who set it up?

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

We agreed with it, but it was your Labor government that disbanded it both in New South Wales and Victoria. So whilst you give lip-service to the national forestry statement 2002—a regional forest agreement—it was your state governments which did not do the right thing. It is my understanding that the Tasmanian government has stuck with the spirit of the RFA, much more so than the other states.

I have long had an interest in these forestry matters and I commend the thrust of this bill in terms of research and development. I have always advocated a sustainable forestry industry and have been around these arguments for the last 15 years or so. Obviously time is short for me to conclude my remarks tonight, but I would like to mention Mr Michael O’Connor, who is well known to me as a representative of the CFMEU. That may come as a surprise to those opposite. Michael O’Connor has conducted negotiations on behalf of his workforce to keep the forest workers in the forest. He has fought a number of battles on behalf of the workers. He fought a battle, I recall, in Tasmania before the last election. Michael O’Connor does have a deep understanding of the matters referred to in the bill and I think he should be participating in research and development because he can make a valuable contribution. I say that in all sincerity, because he does have an understanding of some of the key elements of tree growing, harvesting and new species. I think the member for Hotham would agree with that. I note that Mr Michael O’Connor has been elevated to the federal executive. He has had arguments with some other members of the frontbench about forestry matters. So I put that on the record and would be happy to support that particular proposal.

Like the member for Hotham, I am pleased to support 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. These are technical bills, as members would be aware. These pieces of legislation provide for the establishment of a new body to coordinate the marketing, research and development, and the provision of services for the forestry industry. The fact that we are debating these bills today demonstrates the Howard government’s support for the sustainable forestry industry sector, and in particular the government’s strong support for those hardworking forestry and timber industry workers and their families. They make a living in the Australian bush in one of the most sustainable resource industries. Again I put on the record my strong support for those workers. They are good people. They work hard in very dangerous areas. They have worked, in my view, cooperatively with the loggers in trying to sustain the industry over time, contrary to some of the perceptions and arguments put forward by some of our city cousins.

The new forestry industry services body will replace the Forest and Wood Products Research and Development Corporation, which has served the industry well. The FWPRDC has administered the levy paid by forest companies to undertake research and development to improve the long-term sustainability and competitiveness of the sector. There have been major improvements in the genetics of tree species that have supported the improvements in productivity and efficiency. I am aware of that, as the member for Lowe would be because he knows about blue gums. The genetics of those blue gums have improved over the last 10 years. That has been a result of some of this concentrated research. It is claimed that the improved genetics of some of these species has increased yields by up to 15 per cent. This demonstrates the importance of industry research and development. The Forest and Wood Products Research and Development Corporation was restricted in how it could expend the levy funds raised with the emphasis being on research and development. The industry has worked with the government on the reforms that will encourage increased industry contribution to the new forestry services body to undertake a wider range of activities that the sector believes should be undertaken on its behalf. I think the member for Hotham alluded to that and supported more ongoing promotion. I am pleased that he has added his support to this.

The new body established by the Forestry Marketing and Research and Development Services Bill 2007 will continue to undertake and deliver industry-wide research and development. Government funding for R&D will be maintained at the current levels as a minimum. Under these reforms it will potentially increase because the levy base will be broadened to include a new forest grower managed investments levy. So the forest growers—and I have had a few things to say about managed investment schemes—will be making a contribution to commercial forestry. I have had some reservations, as the member for Lowe and others would know, about managed investment schemes. I will have more to say about that in this House at a later time. The Commonwealth will also match funding raised from the existing import charge imposed on logs and certain classes of primary processed forest products imported into Australia where that import charge is spent on eligible research and development. Contract payments from state and territory governments to the new forestry industry services body will also be able to receive matching funding from the Commonwealth for eligible research and development. I think that is a commendable set of arrangements. The Commonwealth will match dollar for dollar the state contribution.

An important role of the new body which has not been able to be provided by the current Forest and Wood Products Research and Development Corporation is that the body will be able to use levy funds to promote the sustainable nature of the timber industry and promote the environmental values of wood products. The member for Hotham, the member for Batman, the member for Lowe and I would agree on that approach. We want to argue the case for the timber industry. Mr Deputy Speaker Adams, I am sure you would agree with us as well. It does provide environmental values and it is a sustainable product, contrary to some of the green environmental debates that we have seen over recent years—probably in the heartland of the electorate of the member for Lowe where they have some misguided views on the timber industry. Some of the more sensible members on both sides of the parliament have been trying to enlighten them. It is a sustainable industry and it is here to stay provided we can provide some research, provide some sensible guidelines and do not reject the regional forest agreements as some state governments have done. In view of the time, I seek leave to continue my remarks when the debate is resumed.

Leave granted; debate adjourned.