We were recently asked by the Nature Conservation Council of NSW (NCC) to examine the financial and budgetary drivers behind the Victorian Government’s decision to accelerate the closure of its public native forest logging (NFL) business – and how comparable these drivers are in New South Wales and Tasmania.
While the native forest logging businesses in NSW (Forestry Corporation of NSW - FCNSW) and Tasmania (Sustainable Timber Tasmania - STT) have not reached the same level of operational crisis and loss of keystone customers as Victoria, they share the fact that they have been a financial drag on taxpayers over a very long period. FCNSW’s hardwood division has a long history of poor financial returns and lost $30 million in the last two years. STT has also incurred operating cash losses over long periods.
Our previous analysis “Comparing the value of alternative uses of native forests in Southern NSW” also shows that this unprofitable business also comes at a significant opportunity cost to the community. This is in terms of the loss of alternative higher valued uses of the standing forest, and the loss of environmental services.
The poor financial position and budgetary burden posed by the publicly-owned NFL business is intensifying. Factors include the reducing log supply, increasing costs of production, and the increasing competition from alternative wood products that have dramatically reduced demand, including for structural timber from native forests.
It is time to stem the cost to the community posed by the industry and to plan for an orderly exit from NFL.
Additionally, the facts show that this would not materially disrupt downstream markets or increase illegally logged supply.
Wood production by the NFL industry has already fallen by 60% since the early 2000s, so it is possible to see what the likely impacts will be. The data suggests the markets for sawn wood products have substantially switched to softwood timber and wood-based panels. The decline in Australian native woodchip supply has largely been filled with plantation woodchips, particularly from Vietnam.
View the full report commissioned by Nature Conservation Council of New South Wales below.