John Cameron
The Andrews Government’s forestry spin
At the budget presentation the Andrews Government announced $200 million for Victorian workers and their families to transition away from native timber logging by 1 January 2024, rather than 2030 as per the 2019 Forestry Plan.
Dan Andrews said “it was to give workers certainty … we’re stepping up to give these workers and their communities, businesses and partners along the supply chain the certainty they deserve”.
The government has led people to believe that we can transition out of native forests into plantations and has led the public to believe that this is feasible and a good outcome for all. The government spin can hardly be further from the truth and what was certain in 2030 is no longer.
The forest reality
The Andrews Government decision to close native forest harvesting will be devastating for those in rural communities and deliver lower ecologically sustainable development for all Victorians and Australians and the decision will aid adverse geopolitical outcomes.
The decision will lead to inflated timber and house prices, greater use of less ecologically sustainable building materials and the use of more imported forest products from countries with poor social, environmental and human rights records.
It will inevitably include Australia importing more wood products manufactured using Russian timber (conflict timber) and Russian energy which is becoming a key component of Asian manufacturing. There is a shortage of timber in democratic countries with good social, environmental and human rights records.
Annually in Victoria about 1.0 million cubic metres has been sourced from the harvesting of about 3,000 hectares per year within 160,000 hectares of VicForests ‘operable area’, that is the only area available for timber production. The annual harvest area is only 0.04% of 7.5 million hectares of Victorian public native forest of which a huge 7.3 million hectares or 97% of the forest is reserved for other use such as conservation and never harvested.
The Andrews Governments’ Forestry Plan was heralded as the solution to phasing out native forest supply but has effectively delivered little more than ‘announcements’.
The recent loss of plantation area rather than expansion of net planted area is an indictment on the Andrews Governments 2019 Forestry Plan. It should be a lightbulb moment for a government hoodwinking communities that it can replace 1.0 million cubic metres of native forest timber by converting 14,000 hectares of farmland to plantations in Gippsland. The 14,000 hectares will only produce about 250,000 cubic metres per year and only in about 25-30 years’ time and will not even replace the 50,000 hectares of plantation area lost over the last few years, let alone the 1.0 million cubic metres per annum of native timber no longer available.
The Andrews Government Forestry Plan is far too little and too damn late
Replacing the loss of 1.0 million cubic metres per year traditionally sourced from native forest requires about 50,000 hectares of new plantation and the plantation logs produced will not be a perfect substitute, nor be available now, we will have to wait for 25-30 years.
The timing of the decision to exit native forest harvesting could not be worse. Over the last few years the plantation estate has shrunk by 50,000 hectares (Figure 1) leading to log supply constraints for existing plantation-based sawmills. This decline in plantation area has been particularly severe in the Central Gippsland NPI[1] region close to Opal’s Maryvale mill and Ash’s hardwood sawmill at Heyfield.
Figure 1: Victorian plantation area is declining[2]
Prior to last year’s election, the Andrews Government promised 14,000 hectares of new planting. If these 14,000 hectares is successfully implemented (it may not be), it will only replace 14% of the 100,000 hectares of plantation required to a) replace the cessation of native timber harvesting and b) replace the recent shrinkage of the existing Victorian plantation estate. Further, this new planting will not produce a sawlog until about 2045-50. What do existing workers, sawmills and timber communities do between 2024 and 2045-50?
The Andrews Government’s planned 14,000 ha of new plantation is underfunded
The government have announced a $120 million investment in collaboration with Hancock Victorian Plantations (HVP). The 14,000 net hectares of new plantation area requires about 17,500 gross hectares of farmland (including firebreaks etc.) and is unlikely to be achieved given that it is underfunded. The $120 million fund equates to $6,900 per gross hectare. This amount per hectare is insufficient to cover land purchase cost let alone plantation establishment and maintenance costs over 25-30 years.
The Andrews government has misled on the jobs to be created with the new planting
There were smoke and mirrors in the Andrews government’s September 2022 announcement. The statement that the establishment of the 14,000 hectares would “‘underpin’ 2,000 new and existing jobs” is misleading. The impact of planting 14,000 hectares on new jobs will be tiny until harvesting and processing of the logs commences in say 2045-50, after which much of the current workforce would have retired. The lion’s share of jobs in the forest industry sector are in the harvesting, haulage and processing of the logs into finished goods, not in the establishment and maintenance of the plantations.
The Andrews Government forestry plan for transition from native timber ignores many impediments
There are also numerous impediments to plantation development. Impediments to new planting include the high cost of the most suitable farmland, and the unsuitability of much of the inexpensive farmland because it is too steep, too far from mills or remnant native trees limit utilizable plantation area.
The risk of plantation fire losses has increased due to poorer fire prevention on crown land. The government has been fuel reducing only 1.2% of the forest each year against the recommended 5% by the Victorian Bushfire Royal Commission following the 2009 wildfire. The cost of fire insurance of plantations has become prohibitively expensive following increased plantation losses over the last 20 years.
Other impediments to plantation development include the high up-front cost and long lead time to returns, requiring a stable regulatory environment with low sovereign risk. Low sovereign risk has been trashed by a string of forestry decisions by the Andrews Government.
Another socioeconomic consideration of converting farmland to plantations is the adverse impact on scale economies in agriculture and food processing. Lack of sufficient scale has caused some closures.
Victoria’s plantation log production is in serious decline
Victoria’s log production is in serious decline (Figure 2) due to closure of native forest to harvesting and conversion of plantations back to farmland, aided by shorter lead time to returns and favourable prices for agricultural commodities. Declines in other states and haulage cost constraints limit interstate imports.
Figure 2: Victorian log production is in serious decline[3]
The socioeconomic impacts of reduced native forest supply are devastating for rural communities
The decline in native forest log supply over the last 20 years has resulted in a reduction in Victorian Gross Regional Product of $6.6 billion (cumulative over 20 years) and reduction in Victorian employment of about 5,560 jobs (Type 2 – Direct Employment + production induced + consumption induced) on a full time equivalent (FTE) basis. Over the next 20 years, the cessation of native forest supply under the Victorian ‘Forestry Plan’ is expected to contribute to a further loss of $5.6 billion in Gross Regional Product over 20 years and the loss of another 3,660 jobs.[4]
The recently announced $200 million to support workers in the transition is insufficient
The government’s $200 million transition package is insufficient and the CFMEU are not happy. The $200 million equates to only $55,000 per worker, assuming 3,660 workers are directly and indirectly effected. The $200 million will not cover the hundreds of millions invested in specialised harvesting and sawmilling equipment that will be substantially devalued or become worthless. Details of the support package are yet to be disclosed (probably because the policy has been delivered with no strategy).
Mills will not be able to transition to plantation logs because of the recent decline in plantation supply. They need increasing supply to deliver the scale economies required to justify investment in transitioning mills to plantation logs but face a cessation of native forest supply and a decline in plantation supply. Without urgent and sensible government action even more mill and forest jobs are at risk.
The Andrews Government’s decision is a big step backwards for sustainability
President of Forestry Australia, Dr Michelle Freeman said:
- “There are very few production systems on the globe that offer stronger sustainability credentials than well managed native forests. In fact, we know that well managed native forests can actually provide superior biodiversity, fire and climate outcomes,”
- “Simply excluding harvesting from native forests does not guarantee biological diversity, particularly from the broader threats of wildfires, invasive species, and climate change. Closing the native forest timber industry in Victoria will constrain the silvicultural and management options for State forests.”
Vic Forests has managed the 3,000 ha of coupes they harvest each year in accordance with high standards of forest stewardship. Forestry operations for wood production have not caused extinctions and pose the lowest threat to native flora and one of the lowest threats to fauna relative to other more serious threats, particular given the very small harvest coupe size and partial harvesting systems now employed. Risks to threatened native flora and fauna are much higher from grazing from introduced and native fauna, invasive species, and competition from introduced plants, predation from introduced animals, clearing for farming and mining, unsuitable fire (essentially wildfire) and illegal collection.[5]
The Department of Energy, Environment and Climate Action (DEECA, formerly DELWP) and Parks Victoria continue to inflict considerable ecological damage by ineffective mitigation of wildfire and invasive pests across 7.5 million hectares of crown native forest. The Government persists with an unsustainable fire policy ‘Safer Together’ that does not comply with the recommendations of the 2009 Bushfire Royal Commission [6] and has been relatively ineffective mitigating the impact of invasive pests as well as wildfire.
Our trade deficit in wood products is growing and will get worse with the need for more housing
The Andrews Government decision will lead to a significant increase in imports of sawntimber exacerbating a growing trade deficit in wood products. The Andrews Government decision is untimely, coinciding with an increasing timber trade deficit (Figure 3), ‘real’ increases in timber prices, escalating interest rates, stretched household budgets and scarce rental properties; all at a time when we need to build more houses.
Figure 3: Australian global trade deficit in wood products has reached A$3.8 billion[7]
Cessation of native timber supply will drive up the price of timber used in housing
The reduction in plantation and native forest sawlog supply (most marked in Victoria), has resulted in a shortage in sawntimber that is driving up sawntimber prices (Figure 4). With the current housing shortage and increased migration, we can expect further ‘real’ price increases in sawntimber that will add tens of thousands of dollars to the cost of building new homes for Victorians. The pain will be felt by families in metro Melbourne as well as in the bush. The price of structural timber increased by 35% and other timber, board and joinery by 20% over the last year.
Figure 4: Australian Price Index for timber used in housing (2011-12 = 100)
Asia is a key supplier of our imported timber and Asian imports of timber aid Russia
Based on recent global events, geopolitical considerations are particularly relevant. Actions that reduce supply of Australian timber at this time (where supply is already in decline), are increasing demand for imported timber and timber products, including from countries with appalling records on the environment and social justice. Russian native forests represent the global ‘swing’ volume. China sources timber from Russia (conflict wood) and China now accounts for $2.2 billion (Figure 5) of Australia’s $3.8 billion trade deficit in wood products.
Figure 5: Australia’s trade deficit in wood products with China has reached A$2.2 billion
Following Putin’s invasion of Ukraine on 24/2/22, China immediately increased imports of coal, oil and gas from Russia from US$4.3 billion in February 2022 to about US$9.0 billion per month over July–August 2022, at substantially discounted prices such that the increase in tonnage was roughly threefold.
China and Russia are in the final stages of building pipelines that can send gas from Siberia to Shanghai. The 8,000 km pipeline with 3,000-km in Russia and 5,111-km in China transmits natural gas from Siberia to nine provincial-level regions in China[8]. Russia is to supply China 98 billion cubic metres of gas and 100 million metric tonnes of LNG to China by 2030, roughly a six-fold increase[9].
A portion of the imported forest products from China are likely to include products manufactured from Russian logs using power derived from Russian coal, oil and gas – not a good outcome for the global environment nor human rights.
Timber from native forests will be replaced with less ecologically sustainable building materials
Timber harvested from native forests is one of our most sustainable building materials. The regeneration of native forests is less equipment intensive than plantations, delivering a lower carbon footprint. Also the harvested timber archives the carbon during in-use for 100+ years, regenerated forests sequester more carbon than reserved senescing old-growth forests and those regenerated from seed deliver greater genetic adaptation to climate or other impacts. Forests with the full complement of seral stages from young seedlings through to old-growth deliver greater diversity of habitat.
We will be forced to use less environmentally friendly building materials such as concrete, steel and aluminium (Table 1), with a greater component imported from countries with lower social, environmental and human rights credentials.
Table 1: Greenhouse friendly attributes of Sawntimber as a building materials[10]
Much of our alternate building materials such as steel, aluminium and wood-based panels are sourced from China and manufactured using power derived mostly from fossil fuels including increasing supply of fossil fuels from Russia. China’s use of fossil fuels increased threefold over the last 20 years.
Whether by accident or design, Victorian forest policy and green activism are unsustainable and undesirable, delivering increased use of less sustainable building materials, strengthening undemocratic countries that have poor environmental, social and human rights records and aiding an unlawful invasion of Ukraine by undermining the free world’s blockade of Russian trade.
There is a case to continue to manage the small 160,000 hectares of VicForests ‘operable area’ for multiple use, including for wood production and manage the remaining 7.3 million hectares primarily for conservation (but not the entire 7.5 million hectares for conservation from January 2024).
About the Author: John Cameron (Dip Hort. Burnley, MBA Monash, and tertiary units in economics, mathematics and statistics) is a forestry and business consultant previously holding positions in General Management, Corporate Development and Research in forestry and forest products. Former roles include Chairman of Private Forestry Gippsland, Chairman Southern Tree Breeding Association, Chairman Australian Research Group on Forest Genetics, Board Member CRC for Forestry Hobart & CRC for Pulp and Paper Science Monash.
[1] National Plantation Inventory (NPI) regions.
[2] Derived from ABARES 2023.
[3] Derived from ABARES data (2022).
[4] Cameron, J N (1920). Ecologically sustainable management of Victorian native forests. LC EPC Inquiry into Ecosystem Decline in Victoria, Submission 471.
[5] Australia’s State of the Forests Report 2018.
[6] Cameron, J N (2020) Victorian megafires and government policy and practise. Submission NND.600.00145.01 to Royal Commission into National Natural Disaster Arrangements.
[7] Derived from ABARES 2023.
[8] Report from the Xinhua News Agency on 17 Sept 2022.
[9] spglobal.com
[10] Adapted from RAC Report & I. Ferguson, B. Lafontaine, P. Vinden, L. Bren, R. Hateley, and B. Hermesec, B. (1996). Environmental Properties of Timber. FWPRDC Report PN005.95
