Program 1.3: Forestry industry

​​Program objective

The objective of this program is to foster and enable a productive, profitable, internationally competitive and sustainable Australian forest and forest products industry.

Review of performance

This review addresses the deliverables identified in the 2011–12 Portfolio​ Budget Statements. Table 4 summarises the extent to which we have met key performance indicators.

Sustainable forest management

Regional forest agreements

The 20-year regional forest agreements (RFAs) between the Australian Government and four states: New South Wales (three); Victoria (five); Western Australia (one); and Tasmania (one) set out objectives for the ecologically sustainable management of Australia's forests. These 10 RFAs aim to provide for a profitable and competitive industry, a comprehensive, adequate and representative reserve system and ecologically sustainable forest management.

RFAs are subject to five-yearly independent reviews. In 2010, the Australian and Tasmanian governments' joint response to the second five-year review of the Tasmanian RFA was tabled in parliament. It included a commitment to conduct an audit and evaluation of the Tasmanian Community Forest Agreement Industry Development Program. The report of the audit and evaluation was published on our website in November 2011. The department has commenced an internal review to respond to its findings. We have also commenced work with the Tasmanian Government on the third five-year review of the Tasmanian RFA.

We continued to work with the Western Australian Government on reviewing the first and second five-yearly periods of the South-West Forests Region RFA. We also worked with the Victorian and New South Wales governments to finalise joint responses to the recommendations arising from RFA reviews.

RFAs have a 15-year review point, which allows for consideration of extending the duration of the RFA. The first two RFAs signed—for Tasmania and East Gippsland in Victoria—reach their 15-year review point in 2012. In 2012–13, the department will work with these governments to develop a process for renewing RFAs.

Tasmanian Forests Intergovernmental Agreement

In October 2010, industry, union and environmental organisations signed the Tasmanian forests statement of principles to lead to an agreement to 'resolve the conflict over forests in Tasmania, protect native forests, and develop a strong sustainable timber industry'.

In July 2011, the Prime Minister and the Premier of Tasmania signed a Heads of Agreement on Tasmanian Forests, followed by the announcement of a $277 million Tasmanian Forests Intergovernmental Agreement. This agreement is aimed at:

  • supporting displaced workers and their families and contractors affected by the current downturn in industry activity and the commercial decision of Gunns Limited to exit native forest harvest and processing activities
  • protecting forests of high conservation value and ensuring a sustainable wood supply for industry
  • identifying and funding regional development and economic diversification projects in Tasmania.

The department was part of the Australian Government Taskforce responsible for implementing this agreement. We will continue to provide policy advice in 2012–13 to ensure that the agreement delivers enduring outcomes. Formal conservation of areas is dependent on the Tasmanian parliament passing legislation that includes the revision of sustainable yields from the remaining production estate and its incorporation into the Tasmanian RFA.

Assisting voluntary exits

The Tasmanian Forests Intergovernmental Agreement included a provision that the Commonwealth would provide and manage the allocation of $45 million for a Contractors Voluntary Exit Grants Program. The viability of many harvest, haulage and silvicultural contracting businesses was a significant downturn in activity in the industry, a high Australian dollar and the decision of Gunns Limited to exit native forest operations . The program aimed to reduce public native forest harvest, haulage and silviculture contracting capacity and, by doing so, support restructuring to a smaller operating environment.

Applications for the program opened in late October 2011 and grants were offered in February 2012. The program assisted 58 businesses to exit the sector, with support totalling $42.6 million. The Australian National Audit Office commenced a performance audit of the program during 2011–12. Its report is expected to be tabled in 2012–13.

Working with the forest industry

Forest and Wood Products Council

The Forest and Wood Prod​ucts Council is a statutory body that provides a high level forum for consultation and for sharing advice and information between the minister, the parliamentary secretary and stakeholders in the industry. It also facilitat​​es cooperation between different sectors of the industry. The council must meet at least twice each calendar year.

The council met in August 2011, December 2011 and February 2012 to receive updates on the progress of the government's election commitments and to discuss forest and forestry policy matters. We assisted the council to undertake a strategic planning process by providing funding to engage a consultant to analyse the pressing issues facing the industry and identify possible actions. This work will continue into 2012–13.

Forest and Wood Products Australia

Forest and Wood Products Australia (FWPA) is an industry services body that invests in and encourages the adoption of research and development, manages the generic promotion of forest and wood products and coordinates the sector's approach to timber standards and building codes.

We continued to work with FWPA to ensure its compliance with its 2007–2012 statutory funding agreement, progress a new funding agreement for 2012–2017 and provide effective support for the forest and wood products industry. FWPA met its statutory obligations in 2011–12.

National Indigenous Forestry Strategy

This strategy aims to encourage greater participation by Indigenous communities in the forestry and wood products industry to provide long-term benefits for both. We continued to support the strategy through a national coordinator, whose role is to facilitate partnerships between Indigenous groups, forestry companies, training organisations and state forestry agencies. Highlights in 2011–12 included:

  • the provision of training services to the Batemans Bay Local Aboriginal Land Council in New South Wales
  • the discussion of land use options with groups in southern Western Australia
  • consultations with the Cape York Land Council in Queensland.

The department also funded a pilot project to develop a mapping scenario tool for land tenure, to assist Indigenous land managers in their decision making for land and forest use.

Research

ABARES continued to provide analysis and reporting on the productivity, sustainability, competitiveness and profitability of Australian forest industries. Published studies included reports on the impact of climate change on forest industries, including assessments of the social and economic implications for six key regions across Australia. ABARES also published the National wood processing survey 2010–11—jointly funded by ABARES and FWPA—representing an update of the 2007 national sawmill survey undertaken by the former Australian Bureau of Agricultural and Resource Economics.

ABARES published Australian plantation statistics 2011 and Australia's plantation log supply 2010–2054, based on information prepared by the National Plantation Inventory. ABARES continues to work with state and territory agencies on Australia's state of the forests report 2013. This will be the fourth five-yearly report issued in accordance with the 1992 National Forest Policy Statement.

Case study

Climate change may affect log supply

A declining logging supply, reduced investment and reductions in the value of production and employment are the likely effects of climate change on forests and forestry in Australia, according to a recent study by ABARES. ABARES modelled two climate change scenarios to study the potential effects of climate change on a number of species across six regions by 2030 and 2050.

The results—outlined in the 2011 publication Potential effects of climate change on forests and forestry in Australia and six associated regional reports—show a generally negative trend for a number of species. For example, blue gum (Eucalyptus globulus) and radiata pine (Pinus radiata) are projected to become less productive under warmer and drier conditions, particularly in the Green Triangle region of south-eastern South Australia and south-western Victoria. However, other species could become more productive, for example Caribbean pine (Pinus caribaea) in north-eastern New South Wales–south-eastern Queensland.

Growth rates of Australia's forests generally decrease under projected climate change; while some species showed minor increases in modelled growth rates, the majority showed decline. Coniferous (softwood) plantations are expected to be more affected than broadleaved (hardwood) plantations. In general, log availability from plantations is projected to change more due to climate change than is log availability from native forests. The interval between harvests in native forests exceeds the timeframe assessed in this study, so there may be more substantial effects beyond 2050.

The report projects that, in addition to lower productivity, climate change will lead to much greater uncertainty, with many regions now used for forest production moving toward climates less conducive to forest industries. This means that regional communities dependent on these industries are likely to face increased vulnerability to changes in employment. The projections do not take into account any adaptation and some adaptive measures to help offset these potential impacts are presented in the ABARES publications.

Summary reports were publicly released in August 2011 and technical reports in January 2012. The national summary report is available on the ABARES website.

A maritime pine plantation in Western Australia.
A maritime pine plantation in Western Australia
Photo: DAFF.

Action on illegal logging

Illegal logging remains a global problem with significant social, economic and environmental impacts. In 2010, the Australian Government committed to combat illegal logging and associated trade by introducing legislation to restrict the import and sale in Australia of illegally logged timber.

Australia's Illegal Logging Prohibition Bill 2011 closely aligns with the views of other countries in the Asia–Pacific region which is reflected in the 2011 Asia–Pacific Economic Cooperation (APEC) Leader's Declaration, made in Honolulu:

'economies would work to implement appropriate measures to prohibit trade in illegally harvested forest products and undertake additional activities in APEC to combat illegal logging and associated trade.'

In March 2011, an exposure draft of the legislation was the subject of a public inquiry by the Senate Standing Committee on Rural and Regional Affairs and Transport. The draft legislation was amended to reflect the recommendations from the Senate inquiry.

The Illegal Logging Prohibition Bill 2011 was introduced into parliament in November 2011. The Bill applies both to imported wood products and to raw logs harvested and processed in Australia.

The minister referred the Bill and Explanatory Memorandum to the Senate Rural and Regional Affairs and Transport Legislation Committee. This second public inquiry sought submissions from domestic and international stakeholders. The committee reported in February 2012, recommending the passage of the Bill.

In March 2012, the House of Representatives Selection of Bills Committee referred the Bill to the Joint Standing Committee on Foreign Affairs, Defence and Trade. We made a joint submission with the Department of Foreign Affairs and Trade and appeared before the Joint Standing Committee. The committee reported on 28 June 2012, also recommending the passage of the Bill.

In 2011–12, we also commenced developing the regulations that will form the subordinate legislation. This process is supported by a range of analyses commissioned by the department. We continue to consult key stakeholders throughout the formulation of the regulations, building on previous engagement activities over a number of years, including more than 60 meetings with key trading partners.

Regional and international cooperation

Asia–Pacific Forestry Skills and Capacity Building Program

This program commenced in 2007 to assist countries in the Asia–Pacific region to increase their forest management expertise and improve carbon sequestration performance of their forests.

In 2011–12, we continued negotiating with the governments of Indonesia and Papua New Guinea to enable $12.1 million in projects to get under way as part of Phase II of the program. The projects support sustainable forest management and help reduce emissions from deforestation and forest degradation.

Case study

Government and business take a stand against illegal logging

In a bid to help stamp out the trade in illegally logged timber, the department joined forces with the forest industry, importers and Australia's trading partners to develop legislation that will help combat the problem internationally.

Illegal logging contributes to global deforestation and climate change. Forestry products made from illegally harvested timber provide an unfair trading advantage because they tend to be cheaper to produce.

Australia is the third economy in the world, following the United States and European Union, to develop laws to deal with this problem. In November 2011, the Illegal Logging Prohibition Bill 2011 was introduced into parliament and development of the accompanying regulations is underway and will continue in 2012–13.

Timber producing countries, such as Indonesia, Malaysia and China, are making significant efforts to develop and implement legality verification schemes. These schemes will contribute to a reduction in illegal logging and demonstrate the legality of timber products from those countries to their trading partners.

Key considerations for the department have been ensuring that the legislation and regulations facilitate trade in legal timber products and minimise the compliance costs imposed on business. Consultation with the many stakeholders, including state and international trading partners involved in the industry, has been an essential and integral part of the development of the Bill and its regulations.

National and international stakeholders were kept informed and consulted via a range of mechanisms, such as presentations at a combined domestic and international industry-based working group; public seminars across Australia; briefing of trading partners and government forestry representatives; and speeches delivered at international forestry meetings, including the United Nations and the Asia–Pacific Economic Cooperation members.

The Bill has also been regularly discussed in formal bilateral meetings with China, Malaysia, Indonesia, Papua New Guinea and the Republic of Korea and informally with many other trading partners and non-government organisations. It has been the subject of three government inquiries, each receiving domestic and international public submissions.

As the regulations are developed, DAFF will hold further industry and government workshops in Indonesia, Malaysia, Papua New Guinea and New Zealand to garner further information that will help make Australia a world leader in promoting trade in legally harvested timber.

The sawn ends of a stack of logs.
Sawn logs—untagged and unmarked
Photo: DAFF.

Two projects commenced in Papua New Guinea. The projects in Indonesia did not proceed, due to challenges in establishing an administrative framework to ensure that projects were consistent with Indonesian regulations while also meeting Australian aid objectives.

The department is currently examining alternative ways of providing capacity building in the Asia–Pacific region to focus on the Australian Government's priorities of sustainable forest management and promoting legal trade in timber products. The new program would seek to use different delivery structures and mechanisms to ensure both timely and effective delivery of capacity building in forestry, in support of efforts of APEC countries and recognising the recent developments with Australia's Illegal Logging Prohibition Bill.

Australia's international engagement on forestry

We took part in numerous multilateral forums to promote sustainable forest management and combat illegal logging. We provided sponsorship of $180 000 through the Australian Agency for International Development (AusAID) to three International Tropical Timber Organization (ITTO) projects. The department also facilitated AusAID funding of $198 000 to ITTO's Thematic Programme on Forest Law Enforcement, Governance and Trade.

We continued to represent Australia in the Montreal Process Working Group on Criteria and Indicators for the Conservation and Sustainable Management of Temperate and Boreal Forests. The Montreal Process enables the 12 member countries—which represent about 60 per cent of the world's forests—to use a consistent framework of criteria and indicators to report on sustainable forest management. The framework is implemented nationally through 'Australia's state of the forests report', due in 2013.

Australia's bilateral technical cooperation relationship with China was strengthened by a new memorandum of understanding (MoU) on collaboration between ABARES and the Chinese Forestry Economics and Development Research Center. The MoU covers areas of shared research interest in sustainable forest management and land resources assessment.

Australia also held bilateral discussions with the Republic of Korea, Malaysia, Papua New Guinea and Indonesia on forestry matters. Issues discussed included maintaining international efforts to support trade in legal forest products, promoting sustainable forest management and capacity building activities.

Key performance indicators

Table 4 Program 1.3: Forestry industry—key performance indicators
Key performance indicator2011–12 targetAchievement
2011–122010–112009–10

Meet with peak industry bodies through the Forest and Wood Products Council (FWPC)

2 meetings

Met

Met

Met

Performance: The FWPC met three times in 2011–12: in August and December 2011; and in February 2012.

Grantees comply with funding requirements

100%

Not met

Met

Met

Performance: In 2011–12, there were 58 grantees under the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program. As at 30 June 2012, 40 had been fully paid. The department was working with the remaining grantees towards making final payments, which were expected to be finalised in early 2012–13. All of the projects under the Forest Industries Climate Change Research Fund program have now been finalised, with the exception of one project, which is carrying out some extension activities in late 2012.

Engage RFA states on intent and performance of agreements

All states have been engaged in continued activity with regard to RFA reviews

Met

Met

Met

Performance: Joint government responses are being finalised to the recommendations for the first five-year review of the New South Wales RFAs and the five-year and 10-year reviews of the Victorian RFAs.
The public consultation document for the five-year and 10-year reviews of the Western Australian RFA is in the final stage of development. In Tasmania, discussions on the third five-year RFA review have been initiated.

Process in place to combat illegally logged timber entering the Australian market

Commencement of primary legislation

Not met

Performance: In 2009–10 and 2010–11, the department met the targets for earlier phases of work to restrict the importation and sale of illegally logged timber. In 2011–12, primary legislation was introduced into parliament. Debate of the legislation is anticipated later in 2012. The department is on track to introduce subordinate legislation in 2012–13. This is a new indicator.

Renewal processes for Regional Forestry Agreements in place

Renewal process will be discussed with states as part of the third five-yearly RFA reviews

Not met

Performance: The renewal process was not discussed with the states, as the third five-yearly RFA reviews are yet to be formally initiated by governments. This is a new indicator.

Timely delivery of the Asia-Pacific forestry skills initiative

Grant milestones met

Partially met

Could not be assessed

Partially met

Performance: Grant deeds are being entered into for two projects in Papua New Guinea. These projects are underway, with a schedule of milestones to meet through 2012–13. The Indonesian projects did not proceed, due to difficulties in establishing the appropriate administrative framework within the required timeframe.

All levy funds paid to Forest and Wood Products Australia in accordance with Statutory Funding Agreement

100%

Met

Met

Met

Performance: DAFF has regularly met this target. In 2011–12, all payments were made on time and in accordance with the agreement.

Minister/parliamentary secretary and executive satisfied with the quality and timeliness of policy advice and support

High level of satisfaction achieved

Met

Performance: DAFF has provided extensive policy advice and support to the minister and parliamentary secretary. This advice has been received with a high level of satisfaction. This is a new indicator.

Outlook for 2012–13

We will continue to review RFAs, including working with the Victorian and New South Wales governments in developing joint responses to the recommendations arising from RFA reviews completed in those states. The department will also be working with relevant states towards renewal of their agreements.

We will continue to provide policy advice in the processes established by the Tasmanian Forests Intergovernmental Agreement. The department will be monitoring activities and compliance for the Contractors Voluntary Exit Grants Program and the Tasmanian Forest Contractors Exit Assistance Program.

We will work with the Forest and Wood Products Council to progress a strategic plan for the industry and progress government consideration of the House of Representatives Inquiry into the future of the Australian forestry industry.

The department will assist the government to implement its commitment to combat illegal logging. This will include supporting the passage of the Illegal Logging Prohibition Bill 2011 and tabling the regulations that will provide the operational framework.

The department will work with AusAID to develop and commence delivery of a program that complements the government's illegal logging policy, with a focus on combating illegal logging through improving capacity to build and implement verification systems to assess timber legality.

Through international and bilateral forums, DAFF will advocate for Australia's interests in forest policy. Our focus will continue to be legal trade in forest products and promoting sustainable forest management.

Last reviewed: 4 November 2019
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