Victoria’s native forest industry – the numbers just don’t stack-up

Victoria’s ‘forest industry’ is a multi-billion dollar industry that is currently thriving and looking to expand. Yet, some politicians and commentators seem to delight in declaring that thousands of jobs will be lost, that entire towns will shut down, that this is an attack on rural life, it will gut the rural community and Orbost and Hayfield will be ‘wiped out’. All because of the Victorian Government’s recent announcement of new areas of protected forest and a native forest logging phase-out by 2030.

To help understand the Victorian forest industry and the role of native forest logging, SOSF member Brendan Nugent (brendannugent@hotmail.com) has collated the below information. References are listed at the end.

Employment

The native forest logging sector is a small part of the Victorian forestry industry.

There are only 500 FTE jobs directly employed in the native forest logging industry (Deloitte, 2017) and will be assisted with a $120 Million transition package, compared with 20,000 in the Victorian forestry industry (VAFI, 2017). This is just 1 in 40 Victorian forestry jobs.

Around 1,500 people are employed in processing manufacturing that use some proportion of wood from native forests (Deloitte, 2017). Over 850 of these 1,500 jobs are at the Australian Paper mill in Maryvale which already sources a majority of its wood from Victorian plantations and supports over 5,500 jobs across Victoria (Australian Paper Sustainability Report, 2018).

In North East Victoria the forestry industry is already based in plantations and is large employer in the region with many hundreds of people employed in the planting, management, harvesting and haulage of plantation wood. Major local businesses who rely on plantations include Alpine MDF, Alpine truss, Visy and D&R Henderson who alone directly employ 400 hundred people with the sawn timber, MDF products and laminated particleboard produced at their Benalla plant from plantations (D&R Henderson, 2019).

Hardwood sector booming in plantations, decreasing in native forests

The Australian hardwood plantation log harvest has more than doubled over the past five years to 11.3 Million m3 in 2017–18 (ABARES, 2018).

In 2017‒18 Victoria continued to have the largest total area of commercial plantations of Australia’s states and territories (420,600 ha), which includes 196,300 ha of hardwood plantations and 223,400 ha of softwood plantations (ABARES, 2019).

There is currently over 3 Million tonnes of hardwood plantation woodchips being exported out of the Port of Portland alone (Spec.com.au, 2017), which is twice the total fibre requirements of Australian Paper’s Maryvale paper plant (Australian Paper Sustainability Report, 2018).

In 2009, the state-wide estimated sustainable harvest levels of sawlogs from native forests was 500,000 m3 per year (VEAC, 2017). This has now reduced to 230,000 m3 of sawlogs per year in 2020/21 according to the most recent Resource Outlook from VicForests (VicForests, 2017).

This decline of over 50% is predominantly due to bushfire affecting large areas of forests in native forests and previous overharvesting. VicForests currently still do not factor in the possibility of future fires into their Resource Outlook and security of supply for its customers.

Bushfires are much harder to control in native forests where access is severely limited in mountainous areas, with this topography greatly increasing the speed at which bushfire spread. In contrast, plantations have much greater access for bushfire prevention and suppression and are typically located on relatively flat land that is generally surrounded by cleared paddocks.

What the native forestry industry is saying

According to a recent ABC News report (ABC, 2019):

“Mick McKinnell made a lot of money chopping down trees, but the former Healesville logger saw the writing on the wall two years ago and swung the axe. ‘There is no economic forest left out there that can have a financial benefit, so we just walked. The reality is that I would love the timber industry to continue, but if the wood’s not there it’s just not there — it’s a finite resource and if the commercial volumes aren’t there anymore there’s nothing we can do about it’. (In the same article): ‘They should have been planting extra trees 15 years ago’ one frustrated mill owner said.”

Local Benalla sawmillers Ryan & McNulty, who process wood sourced from native forest, are part of the G6 Sawmillers who called for a transition to plantations in 2018 (G6 Sawmillers, 2018). Their media release states:

  • “The G6’s plan is to remove Victoria’s reliance on native forests by transitioning to plantation supply by 2040
  • “To do this we need a willing and committed government that fully supports a sound forest policy that ‘bridges the gap’ between where we are today and where we need to be
  • “We need urgent action to make Victoria the ‘Plantation State’ of Australia”

Funding to support affected workers and the industry transition to plantations

The Premier announced a $120 Million transition package to support affected workers. Additional funding the industry has received from the State in the past two years includes:

  • $110 Million for plantation establishment
  • $60 Million package for the Heyfield timber mill for the State government to become a major shareholder and to restructure equipment for plantation log processing. This separate assistance from taxpayers equates to $240,000 per job at this one mill alone.
  • $11 Million to VicForests for areas designated for Leadbeater’s possum
  • $18 Million for pre-logging surveys
  • $18 Million for the Regional Forest Agreement Modernisation Program

A 2016 economic analysis by PricewaterhouseCoopers (PwC, 2016) showed:

It takes over $5 Million in capital investment for one full-time job equivalent in native forestry in Victoria, which is around 10 times what is required compared to plantation forestry

Capital investment employment impacts are extremely low in native forestry with just 0.2 fulltime equivalent jobs in direct employment and 0.63 FTE in flow on employment per $1 million invested, compared to 1.74 FTE in direct employment and 7.29 FTE in flow on employment for the forestry sector

Profitability of native forestry in Victoria is 31% lower than the Australian forestry sector.

Water losses from logging native forests

Water yield from Ash forests decreases when logging converts older forests to young age classes due to an increase in transpiration and rainfall interception (Vertessy et al., 2001). Or stated another way; logging converts older forests to younger, thirstier forests.

High rainfall forests occupy the water catchments relied upon by Melbourne and the Goulburn- Broken river system. It has long been known that water yield from Ash forests found in these areas reduces by 50% after 30 years and takes 150 years on average to return to maximum levels of water yield (Kuczera, 1987).

Goulburn-Broken catchment

The logging in the headwaters of the Goulburn-Broken catchment which feeds Victoria’s food bowl, sustains rural communities and is critical for Murray-Darling basin inflows, has also been extremely intense. There are no recent published figures to quantify the water lost in the Goulburn-Broken water catchment, but an analysis in 2009 found an additional water yield of 3,807 gigalitres would be delivered into the Goulburn-Broken catchment over the next 100 years if logging ceased in 2009 (ACF, 2009). Logging has continued for another decade and will continue for another decade to come, resulting in significantly more water to be lost from one of the country’s most important agricultural and horticultural regions.

North East Victoria comprises only 2% of the area in the Murray-Darling Basin but contributes 38% of the annual water flows of the entire Murray-Darling Basin (NECMA, 2019).

Under current climate change trajectories rainfall in the Ovens-Murray area is predicted to decrease by 25%, with temperature increases further reducing water yield from catchments through greater evaporation and transpiration rates (DELWP, 2019). We must manage our water catchments for water, not timber that can be grown in previously cleared areas.

VicForests do not pay a cent for the water lost as a result of their logging. The high rainfall, forested water catchments of Victoria are critical for providing water for rivers that agriculture and rural and regional communities depend on for their survival.

Melbourne

The logging in Melbourne’s largest water catchment (Thompson) has led to water losses equivalent to the annual water use of 250,000 people each year, and if logging continued this would result in water losses equivalent to the annual water use of 600,000 people by 2060 (ANU, 2019).

Native forestry not only competes with other industries it also contributes far less to the Victorian economy. In the Central Highlands the relative economic contribution to GDP (Industry Value Added value) of the agriculture ($312m), water supply ($310m) and tourism ($260m) industries were each more than twenty times higher than the contribution of the native forestry industry ($12m)(Keith et al., 2017).

Similarly, the revenue from these industries in the central highlands in 2013-14 was also much greater for agricultural production ($659 M), water supply ($911) and tourism ($485) compared to native forestry ($62 M)(Keith et al., 2017).

Threatened species

A Strathbogie Forest Greater Glider - threatened by fire and logging.
A Strathbogie Forest Greater Glider – threatened by fire and logging.

In the last two decades Greater Glider populations have had documented declines of 50% in East Gippsland and over 80% in the Central Highlands (Greater Glider Action Statement, 2019). Despite this, logging has continued in confirmed Greater Glider habitat for years and will only change with the recently released Action Statement.

Some new areas of the Central Highlands have been set aside for the Leadbeater’s Possum which is in the most threatened category we have; Critically Endangered. VicForests have been paid for the timber in these areas without having to expend any money to log them. This year alone they were paid $11 M for this which allowed the company to make a $2 M profit for the entire year.

Between 2000 to 2015 the number of threatened species in the Central Highlands increased from 28 to 38, including 5 more species entering the most threatened Critically Endangered category (Keith et al., 2017).

Carbon

Old growth Mountain Ash forests are the most carbon dense ecosystems on Earth, storing over 2,800 tonnes of carbon per ha in some areas (Keith et al., 2009).

The forests being logged today will never regain the same amount of carbon that was present before logging, even if it is not burnt by bushfire while regrowing. Climate change is expected to reduce total carbon in regrown Mountain Ash forests by at least 15% in the Central Highlands (VEAC, 2017) and reductions are likely to be even greater when the cumulative impacts of climate change of forest growth are considered.

Two-thirds (66%) of wood from montane ash forests (Mt Ash, Alpine Ash) in the Central Highlands is made into products with average life spans of less than 3 years (such as paper), while only 4% ends up as sawn timber products with life spans of over 30 years (Keith, 2014).

Forest Stewardship Council

VicForests have tried in the past to achieve FSC certification and have failed. They are currently trying again but they are unlikely to succeed due to logging large areas of an IUCN Critically Endangered ecosystem and illegally logging thousands of ha outside of the Allocation Order which defines where VicForests are legally allowed to harvest.

Independent report on regulation

The Independent Review of Timber Harvesting Regulation, commissioned by the State government in 2018 found: “The policies and procedures that guide investigations through to possible enforcement actions are limited and are inadequately implemented”, “The current organisational structure is opaque, disjointed and ineffective in discharging the regulatory function” and that “DELWP is neither an effective or respected regulator”.

References

ABARES (Australian Bureau of Agricultural and Resource Economics and Sciences), 2018, Statistics September and December Quarters 2018, https://www.agriculture.gov.au/sites/default/files/sitecollectiondocuments/abares/publications/afwps- overview-sep-dec-2018-v1.0.0.pdf

ABARES (Australian Bureau of Agricultural and Resource Economics and Sciences), 2019, Australian Plantation Statistics 2019 Update, https://www.agriculture.gov.au/sites/default/files/sitecollectiondocuments/abares/publications/AustPlantatio nStats_2019_v.1.0.0.pdf

ABC, 2019 (9 November), The Victorian Government’s killing off one of the state’s oldest industries — but was it close to death anyway? https://www.abc.net.au/news/2019-11-09/why-the-victorian-government-is-taking- an-axe-to-timber-industry/11687952

ACF (Australian Conservation Foundation), 2009, http://forestsandclimate.org.au/cms/wp- content/uploads/woodchipping-our-water-acf-report.pdf

ANU (Australian National University), 2019, https://www.anu.edu.au/news/all-news/250000-melbourne- residents-losing-water-due-to-logging

Australian Paper Sustainability Report, 2018, https://www.australianpaper.com.au/ap-sustainability-report- 2018/mobile/index.html

D & R Henderson, 2019, https://drhenderson.com.au/about-us/
Deloitte Access Economics, 2017, The economic impact of VicForests on the Victorian community,

http://www.vicforests.com.au/static/uploads/files/report-vf-2017-deloitte-report-final-wfxocecnfegf.pdf

DELWP (Department of Environment, Land, Water and Planning), 2019,

https://www.climatechange.vic.gov.au/__data/assets/pdf_file/0034/429883/Ovens-Murray-Climate- Projections-2019.pdf

G6 Sawmillers Media Release, 2018, Victorian sawmillers announce bold plan to secure the future of besieged timber industry, http://journalists.medianet.com.au/DisplayAttachment.aspx?j=903179&s=2&k=9461201

Greater Glider Action Statement, 2019, DELWP,

https://www.environment.vic.gov.au/__data/assets/pdf_file/0019/440371/267-Greater-Glider-2019-Action- Statement.pdf

Keith et al., 2009, Re-evaluation of forest biomass carbon stocks and lessons from the world’s most carbon- dense forests, Proceedings of the National Academy of Sciences of the United States of America, https://doi.org/10.1073/pnas.0901970106

Keith et al., 2014, Managing temperate forests for carbon storage: impacts of logging versus forest protection on carbon stocks, Ecosphere, https://doi.org/10.1890/ES14-00051.1

Keith et al., 2017, Experimental Ecosystem Accounts for the Central Highlands of Victoria, Fenner School of Environment and Society, Australian National University, http://www.nespthreatenedspecies.edu.au/Ecosystem%20Summary%20Report_V3b_low.pdf

Kuczera, G., 1987, Prediction of water yield reductions following a bushfire in ash-mixed species eucalypt forest, Journal of Hydrology, 94(3-4):215-36

NECMA (North East Catchment Management Authority), 2019, https://www.necma.vic.gov.au/About-Us/Our- region/Facts-figures

PwC (PricewaterhouseCoopers), 2016, Rethinking Victoria’s approach to forestry

Spec.com.au, 2017, Port of Portland’s woodchip bonanza, https://www.spec.com.au/2017/07/port-portlands- woodchip-bonanza/

The Independent Review of Timber Harvesting Regulation, 2018, Panel Report to the Secretary of DELWP,

https://www.forestsandreserves.vic.gov.au/__data/assets/pdf_file/0021/414165/Independent-Review-of- Timber-Harvesting-Regulation-Report.pdf

VAFI (Victorian Association of Forest Industries), 2017, Industry Review, http://www.vafi.org.au/wp- content/uploads/2018/05/171023-VAFI035-Industry-Review-2017-v8.pdf

VEAC (Victorian Environmental Assessment Council) Fibre and Wood Supply, 2017, Assessment report,

http://veac.vic.gov.au/investigation/fibre-and-wood-supply-assessment/reports

Vertessy, R. A., Watson, F. G. R. & O’Sullivan, S. K., 2001, Factors determining relations between stand age and catchment water balance in mountain ash forests, Forest Ecology and Management, 143(1–3):13-26

VicForests Resource Outlook 2016-17, 2017, http://www.vicforests.com.au/static/uploads/files/vicforests- resource-outlook-2016-17-wfasdtpknkdp.pdf

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