Small business impacts review

​​​​​​​​​​Independent review of the impact of the illegal logging regulations on small business

On 25 February 2016, the Australian Government ​released the final report of the ‘Independent review of the impact of the illegal logging regulations on small business’ and its associated response.

The Australian Government announced the review in December 2014.  The review was conducted by an independent consultant, KPMG. The review assessed whether the existing due diligence requirements strike an appropriate balance between the cost of compliance for small businesses and reducing the risk of illegally logged timber entering the Australian market.  A copy of the review’s Terms of Reference can be found on the illegal logging website.

The review found that:

  • nearly 60 per cent of businesses affected by the Regulation are likely to fall within the government’s definition of a small business, with these businesses responsible for importing around 20 per cent of regulated timber products by value
  • there is some preliminary evidence to suggest the Regulation may be helping to reduce the risk of illegally logged products entering Australia, but due to the early stage of the Regulation’s implementation much of the compliance work by Australian businesses is still ongoing
  • while there is limited evidence to suggest that business size is a key determinant of risk, it is likely that Australian small businesses contribute at least their share of illegally logged product to the domestic market
  • the Regulation’s current requirements are likely to encompass all sources of illegally logged timber entering Australia. However, they do not account for the varying capacity of individual businesses, particularly small businesses, to absorb the associated compliance burden
  • there is an opportunity to amend the Regulation to strike a better balance between the cost of compliance to small business and the risk of illegal timber entering the Australian market
  • the Australian Government should progress a package of regulatory and non-regulatory reforms to minimise the cost of compliance to small businesses.

The government response notes the government’s in-principle support for the review’s five recommendations and commits the government to progressing a package of regulatory and non-regulatory reforms. This will include the consideration of regulatory reforms through a Regulation Impact Statement (RIS) process. The RIS will be progressed by the Government in the first half of 2016 and will include a process of public consultation.

Recognising that it will take some time to progress these initiatives, the Government has also agreed to extend its initial ‘soft-start’ compliance period until any associated amendments have commenced. During this soft-start period, the Government will not issue penalties to a business if their due diligence practices are found to be non-compliant with the Regulation. Further information on the Government’s compliance arrangements can be found on the​ Compliance page.