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Leadbeaters versus VicForests

In the next few weeks the Victorian State Government will make a decision that is likely to seal the fates of leadbeater’s possums and Victoria’s native forest timber industry. Source: The Herald Sun

The possum, a cute critter and since 1968 Victoria’s faunal emblem, is in a bad way. No one is sure how many of them managed to survive the Black Saturday bushfires, which, according to official estimates, burned 45% of the area kept for its protection and 34% of its potential habitat.

The State Government puts its numbers between 3750 and 11,250, which sounds dire, but is better than the earlier official estimate, which until its rediscovery in 1961 was zero.

Unfortunately for the possum, it shares its habitat with another endangered species, the native forest timber industry.

Again, relying on official estimates, VicForests, the government-owned entity which manages the logging of the state’s native forests, sources 70% of its annual ash timber supply from within the range of the leadbeater’s possum.

More importantly, some say this area is the most — indeed some would argue only — profitable part of VicForests’ logging activities. In other words, saving the possum is unlikely to be compatible with saving the native forest timber industry.

Like the possum, the native forestry numbers have been in steep decline too.

According to Australian Bureau of Agricultural and Resource Economics and Sciences data, in the decade to 2012 annual native sawlog production fell by 45% and pulp wood by 30%.

As for VicForests financial statements, the best that can be said for them is that they are not as bad as they used to be. According to its latest annual report, last year it took in $104.5 million from the sales of forest products, with other income taking its revenue to $106.3m.

Its expenses came to $105.3 million, meaning all up, its net profit was only $802,000, which is better than the $96,000 it lost the year before.

VicForests hasn’t paid a dividend to the Victorian Treasury since 2007. it has only paid a dividend twice since it was established in 2004.

Across its eight years of existence it has reported an after-tax profit of only $12.3 million. Over the same period it has received government grants of $24.7 million.

VicForests can borrow money at subsidised rates from the Treasury Corporation of Victoria, whereas its private competitors, who grow trees on plantations, cannot.
Cabinet will soon consider a report from an advisory group, which includes the Victorian Association of Forest Industries and representatives of VicForests, established to consider ways the possums could be saved “while maintaining a sustainable timber industry”.

The report has gone to Environment Minister Ryan Smith and Agriculture Minister Peter Walsh.

Government sources say that the two men take a different view of what should be done.

Smith is believed to support the creation of a Central Highlands National Park to save the possum, while Walsh is prepared to accept a small area be set aside to save the timber industry.

His line of argument with his colleagues is expected to be that this is a jobs issue, which in an election year should trump other considerations.

The Government claims the industry employs 2300 people, but it is unclear how many of those jobs depend entirely on native forestry, rather than a mixture of native and plantation timber.

The largest employer, with 900 jobs, is the Maryvale paper plant, which has indicated in the past it would be happy to shift to chips from plantations.

VicForests employs 114 people.

Treasurer Michael O’Brien is unlikely to be impressed with an industry whose subsidies are retarding the growth of the private enterprise plantation industry. The possum may yet triumph over the loggers.