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From the Desk of the Executive Director

Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

Why the government should overhaul Labor's illegal logging laws

Monday, February 09, 2015

Last year, I had a real go at the Federal Government over the impending red tape nightmare that was about to unfold with the new illegal logging laws.

In an environment where the government was, and is, doing a lot to seriously reduce red tape for both large and small businesses, the illegal logging laws were a stand-out, and quite threatening, backward step.

The laws were designed and passed by the Labor-Green government in 2011. The Abbott opposition promised to overturn the laws but, quite oddly, in government they reneged and said they would go ahead with the initial timetable of implementing the laws, which were expected to come into effect last November.  

The laws were and are a shocker. They mean that anyone importing timber or timber products has to guarantee that none of the sourced timber was illegally logged. This includes not just wood itself but furniture, wood veneers and even paper.

Importers are expected to know every logging law in every country from which their timber comes and guarantee that no laws were broken anywhere in the supply chain for the products. Failure of the Australian importer to comply involves criminal prosecution with reverse onus of proof and the possibility of prison.

The laws are an example of red tape laws designed by bureaucrats entirely out of touch with business reality and determined to act as big brother, Stalinist-style aggressors. What was galling, and is frequently the case with this sort of oppressive approach, is that the department in charge offered a website with ‘helpful’ data to assist with compliance. But the department would not guarantee the accuracy of the information on legal or illegal logging activity that appeared on that website. That is, one standard for the police, another for the policed.

The entire situation was looking pretty disastrous for the 17,000 businesses (15,000 of them small) that are subject to the laws. But a level of sanity seems to have ultimately prevailed.

In a joint statement issued by the Parliamentary Secretary responsible for the laws, Senator Richard Colbeck, Small Business Minister Bruce Billson and Josh Frydenberg, Parliamentary Secretary to the PM (and now Assistant Treasurer) on December 1 last year, the laws were effectively frozen pending review.

More than that, an article by Frydenberg published on December 11 makes it plain that the intent of the review is to find “options for reducing or removing any adverse impacts” and to “ensure that we don’t make criminals out of reputable small business operators…”.

An independent outside body has apparently been appointed to conduct a review but with discussions with interested parties only beginning at the end of January, they’ll need to move pretty fast to have the report ready for the March deadline.

What this law demonstrates is how red tape that damages business frequently comes about. An issue will heat up, in this case activists drumming up political support to stop illegal logging, itself a worthy objective. But this then locks in a view that the bad activity is the result of ‘greedy business people’ seeking to make money. It’s an anti-capitalist view of the world, or at least a modified version of that ideological bent.

The prescription for fixing the problem is to oppress businesses by making them comply with onerous obligations. The bureaucrats who then administer and police the obligations set themselves up (under the mask of parliamentary process) as an all powerful and unaccountable regime.

However, this process results in a poor analysis of the root causes of the problem and offers poor solutions for how it might be fixed.

For example, in this instance, the bulk of illegal logging is done by desperately poor people in Third World economies taking wood mostly for their own use. Yes, wood is also illegally logged by firms that push it into the international supply chain.

If Australia is to play a role in stopping or curtailing the international trade in illegally logged wood, you’d think that the first step would be a partnership between government and the businesses concerned.

Government has, or should have, the resources to track the laws in foreign countries and be able to report where illegal logging prosecutions have occurred. ‘Black banning’ of known trouble spots, should for example be feasible. If government can’t do this, how can they expect small business operators to perform this task?

One thing is for certain, making criminals out of legitimate business operators won’t stop illegal logging. 

[First published in Business Spectator, February 2015]

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