John Watson (Tasmania, Liberal Party) Share this | Hansard source

We are debating cognately two bills, 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.The second of the two bills implements certain transitional measures. Effectively it enables the privatisation of the Forest and Wood Products Research and Development Corporation. We are establishing a new non-profit company, limited by guarantee under the Corporations Act 2001, and this corporation will receive payments that can be spent on activities such as marketing, promotion, research and other developmental activities. The bill establishes a new company that will replace the current Commonwealth statutory authority: the Forest Wood Products Research and Development Corporation. The effect of this is to transfer control from government to industry participants. The changes to agricultural extension services over the last 10 years reflect a worldwide trend towards privatisation so as to keep up with developments in markets both domestically and internationally.

This reorientation of the role of government in this area is matched by efforts towards deregulation in other areas better suited to private provision and the discipline of the market. The forestry industry clearly needs to be able to reorganise and strategically integrate its marketing and communication efforts to increase the consumption of timber products and to manage more effectively misinformation about sustainability and forest management, risks and harvesting practices. The industry particularly needs to convey, both at home and abroad, its very green credentials and to build the community’s confidence that it does have the expertise to manage our timber resource in a most sustainable way.

We have already seen what happens when this industry and the state forests and reservations are unable to manage and protect assets. I will refer briefly to the Victorian bushfires that burned for 47 days on a front as wide as 200 kilometres. The fires destroyed the Australian annual sawlog. It was a massive loss that should not have occurred. The forest industry are therefore heavily reliant on new research and development, and they need to know much more about managing fire risk. In addition to this, more promotion activities are needed to maintain competitiveness in a global market and to generate jobs in regional Australia. Currently the Forest and Wood Products Research and Development Corporation delivers research and development for the forest industries, and it is funded though statutory levies and charges and matching funding from the Commonwealth government. The Australian forest industry has identified a strong need for generic marketing and promotion of Australian forest products and forest management, which the corporation cannot undertake due to the legislative restrictions of the Primary Industries and Energy Research and Development Act 1989.

The Australian government gave policy approval to the proposal to establish a new industry services body and on 9 October last year it put forward legislation to implement the required changes. The policy proposal was agreed to by the Primary Industries Ministerial Council two years ago. The new company will replace the current statutory body. The idea is to provide enhanced capability that will communicate a positive image of the forest industry and the sustainability of timber as a resource.

Under the new arrangements, expenditure on research and development will not be reduced below the corporation’s current expenditure. Additional funding for marketing and promotion will be collected through changes to the levies and charges regime. A funding contract between the Australian government and the new company will set certain obligations and accountability requirements for the industry services body, including provisions relating to the use of levies and contractual payments, matching research and development funding and the transfer of assets and liabilities from the old corporation to the new company.

The main bill provides the minister with the ability to enter into a funding contract with a company to enable it to it to receive from the consolidated revenue fund and administer levies, charges and state forest grower contractual payments collected by the Commonwealth for industry promotion, research and development. The minister can then declare the company to be the industry services body for this purpose. Levies collected will be matched by appropriation from the consolidated revenue fund and then paid to the industry services body. There are also miscellaneous provisions in relation to ministerial directions to the industry services body in the event of an emergency, delegation of ministerial powers, compensation for acquisition of property and for the making of regulations.

The second bill, the Forestry Marketing and Research and Development Services (Transitional and Consequential Provisions) Bill 2007, deals with the transitional arrangements required to enable the smooth transition of responsibilities from the old statutory corporation to the new industry services body as well as consequential amendments to a number of other acts. These transitional arrangements include provision for the transfer of assets, liabilities and employees—together with all their rights and entitlements—from the corporation to the new industry services body. The value of the net assets is something in the order of $6.4 million.

Even though the industry is served by a number of organisations at national and state levels, performing marketing and promotions activities, this new industry owned company will enable the establishment of a new and more efficient approach for industry-wide issues. This is consistent with the approach taken in the reform of other rural industry statutory corporations for service provision. I refer particularly to changes that have occurred in other areas including the meat, pork, livestock export, egg, dairy, wool and horticulture industries that have been very positive for producers and for the industry as a whole.

The forestry industry in the main supports this proposal, and the foundation of this support is built on the knowledge that this change will ultimately translate into improved industry profitability, leading to expanded output, growth and jobs. As a Tasmanian senator, I heartily support the prospect of facilitating economic growth and increasing the potential of Tasmania’s forest industry. Overall, in 2004-05, Australian forest products had a turnover of $18 billion, which was one per cent of the GDP, and employed 95,360 people. For Tasmania, the importance of forest product industries cannot be underestimated.

In July 2006, the ABS released statistics on the manufacturing industry in Tasmania for the 2003-04 year. With sales of some $1.2 billion, the wood and paper products division is one of nine industry subdivisions and was ranked second highest in terms of both employment and wages and salaries. The ABS noted in its commentary that, in terms of its share of industry value added, wood and paper manufacturing is the major manufacturing industry in Tasmania, contributing something like 26 per cent of the total income.

The relative importance of wood and paper product manufacturing in Tasmania is very apparent when compared to the national contribution of the industry, which is seven per cent. So it is a very important industry for Tasmania. The IVA, or industry value adding, per person employed in wood and paper products in Tasmania rated highest of the nine ABS industry subdivisions at $142,000 per person employed. For this reason, the establishment of Forest and Wood Products Australia is very welcome, and it is my hope that it supports the forest industry in Tasmania to expand to its full capacity and for the whole of Tasmania to enjoy the benefits so derived.