Government Overview of Policies, Issues and Opportunities for Australias Forest Industries

1
Government Overview of Policies, Issues and
Opportunities for Australias Forest Industries
Andrew Wilson On behalf of Tony
Bartlett General Manager, Forest Industries
Branch
2
Key Current Forest Policies

• 1992 - National Forest Policy Statement
• 1998 - 2020 Vision Plantation Strategy
• 2005 - Tasmanian Community Forest
  Agreement
• 2005 - National Indigenous Forestry
  Strategy

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National Forest Policy - 1992
The National Forest Policy Statement (NFPS) sets
broad goals for the ecologically sustainable
management of Australia's forests.

• Maintain permanent native forest estate for
  conservation and other values
• Internationally competitive and expansion of
  value added industries
• Integrated decision making and management
• Sustainable management of private forests
• Expand employment opportunities
• Expand plantations
• Water supply and catchment management
• Enhanced research and development

4
Plantations for Australia The 2020 Vision

• Target of 3 million ha of plantation by the year
  2020
• Since 1997 plantation estate has increased by 60
  with establishment rates averaging 74,000
  hectares per year
• Private investment in hardwood plantations is the
  main driver
• Most hardwood plantations are grown for pulpwood
• Limited expansion of softwood or long rotation
  hardwood plantations under current MIS regimes
• Plantations not yet providing the full diversity
  of products available from native forests

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Plantations
1 of forest area 1.74 million hectares

• Plantation species
• 57 - softwood species
• (75 Pinus radiata)
• 43 - hardwood species
• ( 61 Eucalyptus globulus)
• Area of Plantation ownership
• Government owned 640,000 ha
• Privately owned 998,000 ha
• Jointly owned 97,000 ha

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Expansion of Plantations
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Native Forests Available for Wood Supply

• Native forest area 162.7 million ha
• Land tenure of native forests Crown land
  121.6 million ha - conservation reserves 21.4
  million ha - multiple use forests 11.4
  million ha Private land 38.9 million ha
• About 13 million hectares used for timber
  production
• Of the 13 million hectares, less than 1 are
  harvested annually for wood products

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Forest Trends 1992 - 2007
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Changes to Forestry MIS Taxation Arrangements

• Effective from 1 July 2007 investors in Forestry
  MIS will
• Be eligible for immediate upfront deductibility
  of all expenditure provided that at least 70 of
  expenditure is directly related to developing
  forestry.
• Direct forestry expenditure include activities
  such as planting, tending, harvesting and annual
  costs of land in the 70.

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Contribution of the forest industry to the
economy

• Total annual production of roundwood 27 million
  m3- Native Forests 8.7 million m3-
  Eucalypt Plantations 3.8 million m3
• - Softwood Plantations 14.4 million m3
• (67 production from plantations)
• 1.7 billion mill door log value
• 18 billion industry turnover
• 82,900 people employed
• Wages and Salaries 2.9 billion
• More than A6.5 billion in investment from mid
  1990s

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Forecast Potential Pulpwood Supply from Hardwood
Plantations(assuming annual expansion of 50,000
ha)

• Current 4 million m3/year
• 2010 12 million m3/year
• 2015 16 million m3/year
• 2020 20 million m3/year

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Resource Issues

• Expansion of plantation estate to 3 million ha
• long and short rotation plantations
• Maintaining investor capital for expansion
  replanting
• Economic Rates of Return with declining prices
• Water regimes drought/bushfire
• Possible biosecurity threats
• Access to public native forest resources
• Availability of high value native timbers
• Forest Fire Management
• Integration of forestry, water, NRM, and climate
  policy eg. Commercial Environmental Forestry
  Program

13
Processing Industries

• Support for Major Investments in Value Adding
  Processing eg. Gunns Pulp Mill, Lignor
• Skills and Investment in Contracting Businesses
• Expansion and maintenance of international
  markets not all products will be sold in
  Australia
• Threats to long rotation structural timber
  markets from short rotation eucalypts and
  engineered wood products
• Investment in Research and Development across the
  value chain

14
Export Markets for Australian Forest Products

• 2.1 billion worth of forest product exports in
  04/05
• Exports of round wood and wood panels declining
• Exports of sawn timber and paper increasing
• Exports of wood chips small increase ( 8 value)
• Government views
• Developing a policy on combating illegal
  logging
• Recognise the need to develop export markets for
  plantation fibre
• Concerned about threats to markets for native
  forest products
• Appreciates that plantation woodchips may out
  compete native forests

15
Forest Product Markets in China and India

• By 2010 China will need to import 125 million m3
  of wood per year
• By 2010 Australia will harvest 36 million m3 of
  wood per year with possibly 10 million m3 for
  export
• Wood markets in India are emerging rapidly but
  Australia needs to better understand this market
  and position itself to become a significant
  supplier

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Opportunities

• Innovation- flooring products- young eucalypt
  sawing- reconstituted wood products
• Carbon- sinks, wood products
• Indigenous Forestry- partnerships, land,
  employment

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Emerging Issues

• Maintaining International Competitiveness- costs
  declining real prices
• Legal and Sustainable Production forest
  certification, procurement policies
• Water- NWI water entitlements
• Climate Change- sinks threats to production
• Skills and Education- workforce and graduates

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Future Directions

• Implementation of new plantation taxation
  arrangements
• Updating of National Forest Policy
• Increased effort on market development and
  promotion of Australian forest industries
• Enhanced Research and Development/Marketing
  capacity with formation of Forest Wood Products
  Australia
• and
• Strong and viable future for Australian forest
  industries ongoing investments