• Contested forests and uncontested wood
David Obendorf
The Scales are loaded: approximately 570,000 hectares of High Conservation Value Forest for permanent reservation in one pan; 265,000 cubic meters of peeler logs and 155,000 cubic metres of sawlog annually in the other. ENGO negotiator, Dr Pullinger is offering ‘uncontested wood’ via durability provisions to industry in exchange for the half a million hectares of contested forests.
As early as 2002 the Tasmanian Greens proposed their Forest Transition Strategy; a transition to stop logging in old growth/mature native forests. Successive majority Labor Governments under Premiers Jim Bacon, Paul Lennon and David Bartlett could not utter the word ‘transition’ in the same sentence as forestry.
Labor’s vision for a forestry industry included a large-scale kraft pulp mill, several rotary veneer plants, several export woodchip ports and pulpwood plantations… and Forestry Tasmania as the public forest manager.
Encouraging the Malaysian forestry corporation Ta Ann to come to Tasmania was on the agenda as early as 2002.
Paul Lennon [31 October 2002]: ‘… we are trying to get a rotary-peel veneer operation established in the southern forests.’
By 2006 Ta Ann was here and operating.
Bryan Green [4 July 2006]: ‘In recent times the Government has made decisions that have allowed companies like Ta Annto come to the State. They will be employing more Tasmanians in the Huon Valley… those mills are coming to Tasmania to take advantage of plantation or regrowth resource highlights that we have a well-managed forest system in the State. There is a $60 million investment in the two plants, in the south [Southwood] and the north-west [Smithton] of the State.’
In 2006 and 2007 Ta Ann signed long-term wood supply contract for access to up to 265,000 cubic meters of high quality peeler logs each year; in 2010 these contracts were extended out to 2027.
Whether any plantations timber that forest minister, Bryan Green talked about were used as peeler logs by Ta Ann is unclear.
Forestry Tasmania deceived itsLabor Ministers and the Commonwealth’s National Forest Inventory officials in ABARES about the projected transition of plantation in Tasmania for high quality sawlogs and peeler logs when their own data as is cited in the latest ABARES report (May2012) shows that the hardwood plantations in Tasmania are 83% focussed on one end usage – chip for a pulp mill that has yet to be built in Tasmania.
Forestry Tasmania’s projected sources of high quality sawlogs from 2006 to 2097; pink is plantations
Table from ABARES May 2012 Report of Australia’s Plantation Log Supply 2010-2054
In August 2012 the scales are now unevenly weighted in favour of continued native forest logging in these HCV forests for no other reason than Forestry Tasmania cannot deliver on its existing wood supply contracts out to 2027 and surrender 570,000 hectares of state forest.
• Crikey: Tasmania’s forestry sector akin to ‘work for the dole’
Andrew Macintosh of ANU and Richard Denniss of The Australia Institute write:
Late last week, the details of an interim agreement between the forestry industry and green groups on the future of Tasmania’s native forests was released, showing the distance between the two parties has narrowed considerably. Both sides now support the creation of additional reserves and a permanent native forest timber production area, and want governments to help the industry through a process of reform.
So close are the parties to a lasting truce that, upon seeing the agreement, the Deputy Premier of Tasmania, Bryan Green, declared Tasmania’s forest wars over.
Throughout the Tasmanian forest agreement process, the media and others have painted the picture of a polarised debate: greenies on one side fighting for the environment, industry on the other side fighting for economic growth and jobs. But there is another side to the tale; those asking why the native forest sector is treated differently to other industries and not subject to the market principles that apply in most other areas.
In the 1990s, the Council of Australian Governments established the National Competition Policy reform process as a way of weaning out inefficient government practices and promoting improved resource allocation outcomes. The process was remarkably successful, helping to improve productivity, increase choice and reduce prices. Somehow these reforms largely eluded the forest sector, which is still run by outmoded state forest agencies.
These agencies pay no rent for the land on which the forests are located, pay no charge for the trees that are cut down, don’t pay for the environmental harm they cause, receive direct monetary subsidies from the federal and state governments, and yet most still manage to lose money.
Forestry Tasmania, which is at the centre of the negotiations in Tasmania, is a case in point. Its financial performance can be summarised with four facts:
• In the last six years it has received $100 million in subsidies from the federal government
• In the last four years it has lost an average of $100 million per year
• It has an unfunded superannuation liability of well over $100 million
• The Tasmanian government has recently promised to prop it up with an additional $100 million subsidy.
By any measure, this entity is not economically viable. Yet the tap of government subsidies continues to run in order to keep Forestry Tasmania and Tasmania’s native forest sector alive.
Typically, these subsidies are justified on the basis of jobs. Roughly 2000 people are employed in growing, managing, harvesting and processing native forest logs in Tasmania and, with the Tasmanian economy in the doldrums, taxpayers are effectively being asked to look upon the handouts as the equivalent of a work for the dole program.
There is nothing wrong with welfare for the needy but the amounts given to the native forest sector are exorbitant. For every worker in the sector, Forestry Tasmania loses around $50,000 a year. And, conservatively, handouts from the federal government alone in the last four years amount to roughly $50,000 per worker. Very few other industries or workers receive this sort of treatment.
The simplest explanation for the mollycoddling of the native forest sector is electoral maths. Under the Australian constitution, Tasmania is guaranteed five seats in the House of Representatives and 12 in the Senate, which gives Tasmanians a disproportionate influence on the outcome of elections. And Tasmanians have been gravely misled about the contribution that the native forest sector makes to the state economy.
In a recent poll conducted by The Australia Institute, Tasmanians were asked to estimate what proportion of the Tasmanian workforce they thought was employed in forestry and logging (growing and harvesting forests) and in the forestry and forest products industry more generally (growing, harvesting, transporting and processing forest products). The average estimates were 19% and 24% respectively. In reality, forestry and logging accounts for roughly 0.5% of employment in Tasmania (around 1000 people), while employment across the entire forestry and forest products industry adds up to a mere 2% of the state total (around 4,500 people out of almost 240,000).
The same distortions were evident in responses to questioning about the contribution of the forestry and forest products industry to economic activity (gross state product). The average estimate was 28%; the reality is around 3%.
These results relate to the entire forest sector: native forest and plantation. Native forests only account for about half of total employment and output in the industry, making it little more than a footnote in the state economic accounts.
Yet the perception is that Tasmania relies on native forestry for its existence, and that without it, the state would collapse. The public has been fooled into believing this by the industry, which relies on public support to back the subsidies it needs to stay afloat.
With the native forest sector haemorrhaging money at record rates due to the high Australian dollar, increased competition and diminished demand, it is time for the federal and state governments to cut the cord on subsidies and allow market forces to restructure the industry. Such cuts will cause temporary unemployment and the government has a role to play in helping those who are adversely affected. But surely the forest industry should now be treated on the same basis as all others?
*Andrew Macintosh is an associate professor at the ANU’s Australian Centre for Environmental Law and Richard Denniss is the executive director of The Australia Institute
An angry David Llewellyn – ‘we’ve been through it all before’
Do not go gently into that good night… Rage, rage against the dying of the light – Dylan Thomas
[Transcript: 16 August 2012 ABC 936 – Statewide Mornings]
Leon Compton: David Llewellyn has come in to talk about Willow Court this morning,… without any intention to ambush you – we will! [chuckles]. David Llewellyn good morning, former forestry minister and so you’ve been listening to the language that’s been going on this morning [ on the Interim Forestry Agreement]. Do you think this is a pathway to a durable process?
David Llewellyn: No, I don’t ahhm… I think it’s a tragedy for Tasmania. Thousands of people out of work ahh… and ahhh… really ahh… hundreds and hundreds of millions of dollars into the future lost, from a revenue point of view, into Tasmania. And, for no good reason, ahhm… I believe. And I, ahh… I just ahh… I’m very, very angry about the process – people sitting on their hands really for the last three years and ahh… and not getting out there and obtaining additional supply ahh… contracts when they are available. And, ahh… there’s, there is… is a pathway, I believe, through the process but we came to talk about Willow Court ahh… ahhh… you’ve got me on an angry soapbox on the forest industry.
Leon Compton: David Llewellyn on forestry, what do you think about the process … of say: ‘we don’t want this to be a political negotiation, they [processes] have failed before when they’ve been tried, we want to put others in the room, to get them [processes] to work’?
David Llewellyn: Yeah, look, we’re ahh…. My efforts as ahh… Minister for Forests both back in the ahh… early 1990s and ahh… also ahh… in the last ahh… government prior to 2010 were all about trying to establish and we did, during that whole period – a bipartisan approach to forest operations [with the Liberals]. Now that’s gone out the window, unfortunately and ahh… we found ourselves in this situation at the moment. Part of it is due to the fact that we have a minority government and ahh… Green members in the Cabinet frankly… ahh… looking over the shoulder of people who are trying to make decisions; that haven’t made decisions for the last three years.
Leon Compton: David Llewellyn is our guest this morning. Look I’ll just ask you a couple more questions (David Llewellyn chuckles) on forestry and then we will… then we will move on. So David this process at the moment, you just don’t see the value or the potential outcomes worth the price of the negotiations?
David Llewellyn: Well, we’ve been through it all before. I was in fact the Minister in the Accord Government [Labor-Green Accord period – 1989-1992] where we agreed to disagree on forest issues [with the Greens] and that came unstuck in the … in the finish. A large area of Tasmania was lock… was put away for ahhh… as reserve… some of it, very appropriately. Ahhm… but, at the end of the day,ahh… groups, you know, then just got on another bandwagon and it started all over again.
Leon Compton: What do you do about protest in international markets that seem to be effective? And the cyclical issues – the high Australian dollar and so on.
David Llewellyn: Yeah well, they are a problem, but they are a temporary problem. And there’s going to be a huge demand for timber into the future. The only… the unfortunate part about it is, we won’t have an industry to participate in it. I mean… I, I, I looked at the question of the… of ahh… this half a million hectares that we’re talking about – really – from a reserve point of view. Ahhm… and I had ahh… I asked Forestry Tasmania to go through the process to trying to certify it for… under the FSC ahh… banner. Forest Stewardship Council banner,ahhm… I talked to the auditor, the international auditor that was associated with it [certification] and he assured me, that he believed almost 80% of ahh… that area would actually be certified FSC. [Chuckles] Where’s that now? I mean it, it seems that none of it going ahhm… certainly from the environment point of view, treated in that way.
• The Global Forest Industry This Quarter
Excerpts from the 2Q 2012 issue of the Wood Resource Quarterly (www.woodprices.com)
The Global Conifer Sawlog Price Index (GSPI) declined in the 2Q/12 for the fourth consecutive quarter to $82.90/m3, down 3.4% from previous quarter.
The Softwood Wood Fiber Price Index (SFPI) fell by 4.1% from the 1Q/12 to $100.54/odmt, which was a continuation of a declining trend that started in the 3Q/11.
The Hardwood Wood Fiber Price Index (HFPI) was down 4.4% from 1Q/12 to US$104.88 and down for the third consecutive quarter since the all-time high in the 3Q/11.
Softwood market pulp (NBSK) prices in the 2Q/12 have fallen dramatically from a year ago. The price also fell for hardwood pulp (BHKP) but not as steeply as for NBSK.
In May, lumber consumption in the US was 13% higher than in the same month last year.
Pine lumber prices in the US South have gone up almost 35 % this year, while spruce-pine-fir (SPF) prices in Canada have increased by about 30 %.
China’s importation of softwood lumber increased in the 2Q/12.
Sawmills in Finland and Sweden increased exports year-over-year by almost 10% the first five months of 2012.
In the 2Q/12, woody biomass prices were down between 2-10% in the key biomass-consuming region of the US as compared to the 1Q/12.
North American shipments of pellets to Europe continue to steadily increase, reaching a new high in the 1Q/12.
The full article can be found in the downloadable PDF file…..
