John Cameron
The Andrew’s Government’s Victorian Forestry Plan launched in 2019, calls for the transition from native forest timber by 2030 and from that date the log shortfall is supposed to be sourced from plantations. This exit in 2030 provides insufficient time to establish replacement plantations that typically take 30 years to mature. Since the announcement in 2019 little has been achieved apart from the odd ‘announcement’.
The 2030 exit also unfortunately coincides with the proposed closure of Yallourn Power Station in 2028 (with the loss of 1,000 direct jobs) and eminent closure of other Latrobe Valley power stations (all up about 10,000 direct plus indirect jobs at risk). Over the last decade employment in Latrobe LGA has declined by about 4,500 jobs following the closure of Hazelwood and Morwell power facilities plus Morwell Hardwood and Softwood sawmills.
The ‘Forestry Plan’ lacks rigorous strategic analysis of the adverse socioeconomic impacts on rural
Communities caused by exiting native forest log supply. The Plan also ignores the triple impact of the native forest exit coinciding with closure of the coal fired power industry and diminishing scale economies in agriculture caused by the Forestry Plan’s call for the new plantations to be on farmland.
The challenges include very limited availability of suitable land, high land cost, poor plantation log quality for products typically made from native forest logs, unsuitability of plantation sawlogs for existing mills and the large scale required for returns on investment in new mill technology for plantation logs. Replacing native forest timber with new plantations on farmland threatens to push up farmland prices, crowd out farmers and will lead to diminishing scale economies in agricultural production and food processing.
Farmland in Gippsland is scarce and much of it prohibitively expensive for plantations. Most of Victoria’s 7.5 million hectares of native forest is in Gippsland, leaving only 1.2 million hectares of cleared farmland. Of the cleared land only a small fraction is suitable for plantations after taking into account land cost; and other drivers of plantation economics including soil, rainfall, topography, wood quality, distance to mills and presence of world scale mills within economic haul.
World scale mills are not delivered by government spin (nor fairies) but by investors who invest in mill upgrades leveraged off the back of mill expansions supported by increasing log supply and supportive government policy. However, the Andrews Government’s Forestry Plan will deliver decreasing log supply.
Exiting native forest harvesting requires an investment of $1.0 to $1.5 billion dollars in land and plantation costs, to establish 50,000 hectares of plantation, to replace the current 1.0 million cubic metres per year currently harvested from native forest in 2022. The required investment assumes sufficient favourable sites but ignores the cost of reconfigured or new mills to handle the different log quality.
Under the Forestry Plan the government is proposing an investment of only $280 million on land and plantation costs, to establish only 14,000 hectares of plantation, to produce about 280,000 cubic metres per year from 2053. The $280 million is based on a ‘dollar for dollar’ investment by the Victorian Government and Hancock Victorian Plantations ‘sometime’ over the next 30 years.
The Victorian Forestry Plan fails to acknowledge the current decline in plantation supply and the considerable and possibly insurmountable challenges to establishing new plantations. Between 2008-09 and 2020-21 plantation area in the Central Gippsland National Plantation Inventory (NPI) Region declined by about 12,000 ha or 12%, with most of the reduction in Eucalypt plantation.
The ‘Forestry Plan’ is essentially just a plan to replace the shrinkage of the Gippsland plantation estate over the last 12 years, and replace it with pine, rather than Eucalypt which accounts for most of the decline in supply. Also the government has yet to outline a sustainable strategy for dealing with the supply shortfall over the years 2025 to 2053, until the new plantations mature in 30 years.
Over the last 21 years misallocation by policy and exacerbated by negligent wildfire loss, has resulted in the loss of $6.6 billion Gross Regional Product over the last 21 years and 5,560 jobs. The ‘Forestry Plan’ is likely to contribute to a further loss of $5.6 billion in Gross Regional Product over the next twenty years and the loss of another 3,660 jobs.
The ‘Forest Plan’ will lead to underdevelopment for disenfranchised rural communities and timber towns, already severely impacted by years of reducing native log supply. The exit by 2030 is poorly timed coinciding with the projected closure of Latrobe Valley power stations.
We are witnessing a classic example of the ‘economics of underdevelopment’ being played out, albeit in this case at the direct hand of government, rather than the invisible hand of market forces. Rural communities and timber towns are being stripped of economic output and employment opportunities. This is causing adverse impacts on community services.
This adverse impact is a result of the abandonment of the application of sustainable ‘multiple use’ to the remaining 6% of forest currently available for timber production. This 6% equates to only 0.004% or 3,000 ha of the forest logged each year, across spatially dispersed small coupes and delivers genetic recombination and the range of ecological age classes for sustainable forests.
In Europe, 80% of their native forests are available for sustainable wood production under ‘multiple use’.
The government claims for the ‘Forestry Plan’ the abatement of 1.71 million tonnes of carbon dioxide-equivalent each year. By contrast the 450,000 m3 pa of native sawlogs currently supplied and converted into sawntimber will archive (sequester) ca. 183 million t pa of carbon dioxide-equivalent each year.
To deliver sustainable building materials and a strong forest industry in Gippsland, the Andrews Governments Forestry Plan should complement rather than replace the 1.0 million cubic metres currently sustainably harvested from native forests. Native forest logs and their resultant building materials are more ecologically sustainable than plantation grown logs and far more ecologically sustainable than other building materials.
John Cameron (Dip Hort. Burnley, MBA Monash & 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.
