TIMBER industry veteran Peter Crowe says it’s time for the talking to stop and action to start when it comes to increasing softwood plantations around Tumut and Tumbarumba.
The chair of the influential Softwoods Working Group, Mr Crowe, and the Group’s CEO, Diana Gibbs, addressed an Upper House inquiry examining the sustainability of the timber industry in Tumut last week.
They are calling for between 30,000 and 60,000 hectares of pine trees to be planted in the area. The need to expand the plantation estate has been talked about for decades, with no meaningful progress to date.
Cleared agricultural land would be the target, but not necessarily prime grazing country, with a view to opportunistically buying land as it became available, perhaps over a decade-long period.
Farmers have been questioning the viability of pine plantations amid record land sales and booming commodity prices, but the Softwoods Working Group has come up with a proposal which it says adds up.
Mr Crowe said the state government had an essential role to play and has a successful track record – evidenced by the world-class industry of this area.
“I think we should bear in mind that the Government’s involvement in plantation establishment across New South Wales – in particular in the South West Slopes – has been a very, very successful, if not the most successful, regional development project in New South Wales,” Mr Crowe said.
“Where else have you got a billion bucks worth of pulp and paper investment just over the hill (Visy)? Each sawmill (Hyne, AKD), by the time you get them fully set up and running— half a billion.
“We are not talking about low-paid jobs; we’re talking about high-paid jobs. We are not talking about low-level technology; we are talking about cutting-edge technology.
“For example, if you buy a piece of wood and it has come from Hyne sawmill, the first person that touched the wood would be the bloke who opens the pack down at Bunnings.”
Private enterprise was unlikely to invest in buying land and establishing plantations, because the seven per cent rate of return generally required by private investors can’t be achieved by forestry under average conditions.
The upfront cost of buying land, together with roads and tree establishment, combined with the fact that 78 per cent of the revenue isn’t generated until harvest, some 30 years after investment, meant there were major barriers to enticing the private sector to buy-in.
The Softwoods Working Group has proposed the government purchase land, then plantations be established either by public companies, or private operations leasing the land from the government.
In 2020, the Softwoods Working Group estimated that the cost of purchasing 30,000 hectares of land would be $320 million over 10 years and that the capital outlay could be recouped by lease fees paid by the grower over the first 30 years.
The land would remain in government ownership and become an appreciating asset on the government balance sheet, under the SWG plan.
“The beauty of this is that capital barrier, which is so hard for the private growers to overcome when they have to buy the land up front – if the Government takes that off their lists, the Government gets paid an annual Tease fee, which ends up costing the grower more but is spread over 30 years,” Ms Gibbs told last week’s enquiry.
“What the Government then ends up with is an item on their balance sheet which is continually appreciating, plus 30 years of, say, a 4 per cent or 4.5 per cent lease fee, which is agistment rates.
“Thirty times 4.5 is more than 100. They (the government) get all that cash back and they have this appreciating asset on their balance sheet. We would have thought it was win-win.
“If you then add the carbon market onto that for the private grower, they can meet the hurdle rates that become competitive with superannuation funds of around 7 per cent, which they cannot make if they have to buy the land up-front themselves.”
Mr Crowe reiterated that, despite the devastating 2019-20 fires, the timber industry is “still the biggest socio-economic game in town”.
“It is bigger than agriculture and bigger than tourism by several orders of magnitude,” he said. “Our processing mills are globally competitive and modern and rank amongst the largest of their kind in the Southern Hemisphere.
“The industry is highly integrated. That means just about every gram of fibre that is grown is used in some way, either as a commercial product, a fossil fuel replacement or for environmental protection in the forest.
“Our urgent need to maintain this successful and sustainable driver of our regional economy is to have more trees in the ground – at least 30,000 hectares net in addition to the existing estate, and preferably more.
“This expansion will not threaten agricultural production, but it would involve the right trees in the right place at the right scale.”
