Additional Comments from the Australian Greens

1.1The Australian Greens thank everyone who made a public submission and/or gave evidence to this inquiry.

1.2As stated on the Department of Infrastructure, Transport, Regional Development, Communications and the Arts’ (the DITRDCA) webpage for the Tasmanian Freight Equalisation Scheme (the TFES), the:

TFES provides financial assistance for cost incurred by shippers of eligible non-bulk goods moved by sea across the Bass Strait. The amount of assistance is based on the difference between the freight costs of moving the goods by sea and the notional freight costs of moving them by road over an equivalent distance. The objective of TFES is to provide Tasmanian industries with equal opportunities to compete in other markets, recognising that, unlike their mainland counterparts, Tasmanian shippers do not have the option of transporting goods interstate by road orrail.

1.3The need for this inquiry was reiterated in much of the evidence provided to the Committee, including by Fruit Growers Tasmania which submitted:

This cost disadvantage [to Tasmanian businesses] is real and has increased dramatically in recent times. Higher costs result from inherent lower efficiency of sea freight over shorter distances, and costs from meeting requirements for intermodal transfer, and intermodal handling. Unlike other states, there is no alternative mode of transport for freight, in particular rail. Unfortunately, the scheme is no longer fit forpurpose…[1]

1.4This experience was reflected in much of the evidence presented to the Committee, which reflected on the growing and structural inequity of the TFES and its inability to maintain equivalence between road freight costs that would be borne by mainland businesses freighting goods by road, and Tasmanian businesses required to freight by sea across the Bass Strait. As submitted by Norske Skog, under current TFESsettings:

… there will likely always be a trend towards this ‘Rate Equivalence Shift’ accruing over time, because ‘Bass Strait Sea Freight Costs’ will increase at a slightly higher rate than ‘Road Freight Equivalent Costs’, resulting in increasing levels of ‘under-compensation’ for all Scheme participants over time. While this trend might only lead to small changes year/year, the effects will compound over time resulting in significant disadvantagetoparticipants.

1.5The Australian Greens agree with Fruit Growers Tasmania that:

… this enquiry is an opportunity to address the errors in the scheme and bring it into line with current freight cost arrangements. We believe this is also an opportunity to simplify the scheme to remove some of the administrative complexity.

1.6As such, the Australian Greens support the recommendations made by the Committee.

1.7The Australian Greens recommend that the Senate supports all the recommendations made in the Committee’s report.

1.8While the Australian Greens support the Committee’s recommendation for “comprehensive review of the Tasmanian Freight Equalisation Scheme”, we also believe there is need for the threshold levels and payment cap to be reviewed regularly to ensure alignment with changes in sea and roadfreightcosts.

1.9The Australian Greens recommend that there be a statutory review of the threshold levels and payment cap under the Tasmanian Freight Equalisation Scheme to be conducted every three years to ensure consideration of, and alignment with, changes in sea and road freight costs.

1.10The Australian Greens recognise the importance - and equity - of the TFES to Tasmania’s economy, including its many small and agricultural businesses.

1.11The only exception to the Australia Greens’ support for the recommendations of this report is in regard to how wood products and wood chips or particles are considered under the TFES, in particular the eligibility of sawlogs and other products sourced from Tasmania’s native forests.

1.12A public hearing for this inquiry in Hobart on 13 November 2024 included witnesses representing three environmental non-government organisations (ENGOs): The Wilderness Society (TWS), the Bob Brown Foundation (the BBF), and Environmental Justice Australia (EJA).

1.13As submitted in an opening statement tabled by the EJA:

EJA’s concerns in relation to the Tasmanian Freight Equalisation Scheme … are limited to its application to the timber industry and subsidisation of native forest wood to the extent it is shipped from Tasmanian forests tomainlandAustralia.

1.14This is a concern shared by the AustralianGreens.

1.15The EJA further submitted that:

The Australian Government has committed to halting and reversing deforestation, forest degradation and biodiversity loss in Australia by 2030. We consider that this review is an opportunity for the Federal government to ensure that the Scheme aligns with the government’s broader commitments, policies and international obligations, including its no new extinctions policy, and discontinue its subsidisation of the native forest logging industry.

1.16These broader commitments, policies, and obligations include the Convention on the Conservation of Migratory Species of Wild Animals 1979; the Montreal Process for the Conservation and Sustainable Management of Temperate and Boreal Forests 1994; and Australia's renewed commitment at the 2021 United Nations Climate Change Conference (COP26) to halt and reverse forest loss by 2030, and to prevent further extinctions as part of the Glasgow Leaders’ Declaration on Forests and Land Use.

1.17As submitted by EJA, Tasmania’s native forests are:

… critical habitat for iconic threatened wildlife, including the Swift Parrot and Tasmanian Devil, both of which are facing extinction if more is not done now to ensure their survival.

1.18As submitted by the BBF:

The [native] forests we are seeing transported over the Bass Strait were essential habitat for our endangered and threatened species, including the critically endangered Swift Parrot. Habitat trees and feed tree forests are being shipped to mainland Australia in huge quantities.

1.19This evidence is supported by data provided to the Committee by the DITRDCA. According to DITRDCA’s data on TFES claimants, millions of dollars are being paid every year by the Commonwealth through the TFES to subsidise the export of millions of tonnes of native forest sawlogs from Tasmania to Victoria every year.

1.20Having reviewed the claimant data provided by the DITRDCA, TWS noted in its evidence that according to the data:

Federal subsidies for transporting native forest products between Tasmania and Victoria have doubled from 2023, with the federal government supplying upwards of $10 million in subsidies to a declining native forest industry in 2024.

1.21The rapid and significant increase in TFES claims for the export of native forest sawlogs that is exposed by the claimant data provided by the DITRDCA is evidence that not only is the subsidisation of wood products as defined in schedule 1 of the Ministerial Directions for the Operation of the Tasmanian Freight Equalisation Scheme - and in particular the processed wood category (code 31000) - is not only unaligned with the Commonwealth’s broader commitments, policies and international obligations regarding forests and threatened species habitat, it is being shamelessly exploited by companies that log native forests to undermine and defy those commitments, and to extract further public subsidies to underpin an already mendicant industry.

1.22Evidence was provided that not only was subsidisation of the export of native forest sawlogs under the TFES inconsistent with the Commonwealth’s obligations regarding native forests, it was also inconsistent with the stated purpose of the TFES. As submitted byEJA:

The intended purpose of the Scheme in relation to Northbound goods was to level the playing field for Tasmanian producers and manufacturers and facilitate competition with mainland businesses by alleviating the freight cost disadvantage incurred by shippers of eligible non-bulk goods. For that reason, goods manufactured on the mainland or outside of Australia are not eligible for assistance, unless they have undergone a manufacturing process in Tasmania. Accordingly, the subsidisation of raw logs that are merely cut or trimmed down in Tasmania prior to Northbound travel is not consistent with the purpose of the Scheme, nor is it a beneficial use of Federal funds.

1.23According to evidence submitted by the DITRDCA and confirmed in evidence provided by the Tasmanian Minister for Business, Industry and Resources, the Hon Eric Abetz, one recipient of the TFES is Western Junction Sawmill. Western Junction Sawmill has been exporting native forest sawlogs to Victoria since it was purchased by Australian Sustainable Hardwood (ASH) in2021.

1.24Of particular relevance to this inquiry - and again confirmed in evidence by Mr Abetz - ASH is also an owner of Victoria's Heyfield Sawmill, which is Australia's largest hardwood sawmill. Previously the sole owner of the Heyfield Sawmill, in 2017 ASH sold a 49 per cent interest in the sawmill to the Andrews Labor Government for more than $61million.

1.25According to evidence provided by DITRDCA, Western Junction Sawmill made its first ten claims under the TFES in 2021, followed by 113 claims in 2022 and 202 claims in2023.

1.26As an indication of the volume of native forest sawlogs being exported from Tasmania to Victoria under the TFES, the BBF provided evidence that:

In 2023, Western Junction Sawmill received $5,426,427 from the TFES. This equates to approximately 8 B-double log trucks fully laden with our forests every workday for a year. That's 133,000 tons of unprocessed raw habitat leaving Tasmania from one company in one year.

1.27This evidence was supported by EJA, which submitted more broadly that:

In the 2022/23 financial year, ‘wood – processed’ was the second highest commodity class covered by the Scheme in terms of total volume and payments, equating to 17,242 twenty-foot equivalent units (TEUs) and $14.2millionrespectively.

1.28Evidence was also provided to the Committee that this was yet another government subsidy for an industry that would otherwise be unviable.

1.29Noting that Commonwealth subsidies for transporting native forest products between Tasmania and Victoria under the TFES had doubled this year from the previous year, TWS also provided evidence that native forest logging processors benefiting from the TFES may also have received Commonwealth and/or state government payments through either the Tasmanian Forest Agreement exit packages or Victorian Transition Funds.

1.30Regarding Victorian Transition Funds, and more broadly the Victorian Government’s decision to end its Regional Forest Agreements in 2023, EJA submitted that:

… the supply of Tasmanian native forest wood to Victorian mills is undermining the transition to a sustainable plantation-based industry in Victoria. It is not appropriate for Federal funds to subsidise the continued supply of wood from native forest logging to Victoria after the Victorian State government’s decision to end native forest logging from 1January2024.

1.31The Australian Greens recommend that the eligibility criteria for goods under the Tasmanian Freight Equalisation Scheme be amended by the Australian Government to expressly exclude all wood products sourced fromnativeforests.

1.32The Australian Greens recommend that the Australian Government insert a definition of ‘processed wood’ to apply to plantation wood that will continue to fall within the scope of the Tasmanian Freight Equalisation Scheme, in line with the definition in the Illegal Logging Prohibition Act2012.

1.33The public hearing for this inquiry in Hobart also heard evidence from the Tasmanian Government, including from the Hon Eric Abetz, Minister for Business, Industry and Resources. During that hearing, the following exchange occurred between the Committee and Mr Abetz:

Senator McKIM: Do you have concerns that the freight equalisation scheme is sending a market signal to folks who are buying Tasmanian logs from your government business, Forestry Tasmania, to assist them in subsidising transport across Bass Strait so that those logs that you are selling them end up milled in Victorian sawmills? …

Mr Abetz: I caveated that before, and I will check up further and get back on notice to the committee. But I understand a fair amount of the logs that are going across Bass Strait at the moment are in fact from the private sector.

Senator McKIM: On what basis do you make that claim?

Mr Abetz: I will come back to the committee. I admit I may not be fully informed, but I will come back to the committee in relation to that detail. …

Senator McKIM: So your evidence to the committee is that not a single whole log that's been exported across Bass Strait and attracts a TFES subsidy is being sold by Forestry Tasmania. Is that your evidence?

Mr Abetz: Chair, I came to this committee to talk TFES, not who owns what piece of timber. But, as I indicated earlier, my hunch was that the vast majority of the timber going across was from private sources. I've now been provided with a note suggesting it is totally from that source. But I will come back to the committee to ensure that we nail this downabsolutely.

1.34Although Mr Abetz responded to numerous written questions put to him on notice, at the time of writing these additional comments, Mr Abetz had failed to respond to this particular question on notice, despite follow-up fromtheCommittee.

1.35As part of his evidence, Mr Abetz also referred to:

… all sawn logs from Tasmania's publicly managed [native] forests supplied to Tasmanian based sawmills for on-islandprocessing.

1.36In response to this claim, Mr Abetz was provided with written questions on notice seeking assurance that all native forest sawlogs provided to Tasmanian-based sawmills were in fact processed on-island, asking what due diligence/auditing was conducted by the Tasmanian Government to ensure sawlogs provided for contracted on-island processing are processed on-island. Without directly answering the questions, Mr Abetz merely responded that:

Sustainable Timber Tasmania’s existing contracts for sawlogs require that supply is made at the nominated Delivery Site. The Delivery Site for each existing contract is a location wholly within Tasmania. All Delivery Sites are at mill locations where customers have timber processingfacilities.

1.37This response leaves open the possibility that, as submitted in evidence by the ENGOs and contrary to the stated purpose of the TFES, native forest sawlogs are being exported from Tasmania for processing in Victorian sawmills.

1.38The Australian Greens recommends that the Australian Government provides accurate, transparent, disaggregated and publicly available data on all wood products and wood chips or particles - as defined in schedule 1 of the Ministerial Directions for the Operation of the Tasmanian Freight Equalisation Scheme - being transported under the Tasmanian Freight Equalisation Scheme, on a quarterly basis.

1.39As a concluding remark, I refer to a statement provided to the Committee through The Wilderness Society by Uncle Jimmy Everett - puralia meenamatta, who is a respected activist, writer and Tasmanian Aboriginal Elder:

First Nations’ law is in Country and we are obligated to defend our law because we are Country and Country is us. The profit-driven, and huge taxpayer costs to maintain the forest industry, and the costs in terms of destroying natural ecosystems and the life therein, is a serious issue at this time of climate change, and it has to stop immediately. As Aboriginal people, we have a saying, ‘we are Country and Country is us.’ We are obligated to protect these forests.

Footnotes

[1]Evidence provided to the committee throughout the inquiry, in the form of submissions, Hansard transcripts, responses to questions on notice and other additional material is published on the committee’s website (accessed19December 2024).