Attachment A: Hardwood Woodchip Export Policy
The Government has developed a comprehensive forest policy that seeks to progress the dual objectives of developing a world standard conservation reserve system and an internationally competitive, ecologically sustainable wood and paper industry. In this context the Government has put in place a policy on hardwood woodchip exports that seeks to:
- encourage increased domestic value-adding processing of lower grade wood currently being exported as woodchips; and
- ensure the ecological sustainability of management regimes applied in forests from where woodchips are sourced.
The policy involves the following components:
1 The imposition of a woodchip export ceiling of 5.251 million tonnes.
This compares with the 9 million tonnes of applications for 1996 and 6.025 million tonnes of approvals for 1995. The national ceiling will apply except where a Regional Forest Agreement between the Commonwealth and a State has been signed. Each Agreement will specify ecologically sustainable wood yields for that region.
2 Reduction of woodchip exports by 20 per cent a year unless significant progress occurs towards a Regional Forest Agreement.
The purpose of these cuts is to ensure assessments of forests are progressed at a satisfactory rate. First stage licences (for 80% of the ceiling volume in 1996) are issued to provide security to industry and a very strong incentive for States to participate in the Regional Forest Agreement process. The Government is committed to phasing out all woodchip exports by the year 2000 from native forests in regions where Regional Forest Agreements have not been finalised.
3 A commitment to encouraging value adding processing including:
Resources will be made available through the Wood and Paper Industry Strategy and the Structural Adjustment Package to regions where licences have been reduced for the purpose of identifying and facilitating investment and job creation proposals.
Export licence conditions have been included that give priority (in decreasing order) to woodchips sourced from sawmill residues, reject logs, logging residues, silvicultural thinnings and silvicultural residues (these terms are defined in Attachment D). About 2 million tonnes of woodchips sourced from sawmill residues will be exported in 1996 under this regime. It is estimated that this will increase the proportion of woodchips sourced from sawmill residue from under 30 per cent in 1995 to almost 40 per cent in 1996.
The Government is committed to ensuring that the proportion of exports not derived from genuine value-adding activities is decreased over time. The ultimate goal is to maximise domestic processing.
The Government will continue to favour value-adding proposals when assessing woodchip licence applications (as demonstrated by this year's licence decisions). It is also the Government's intention to negotiate, with licence holders, investment strategies and agreements with clear commitments and time-lines.
All export licences include domestic preference clauses that require exporters to give priority to domestic processors that seek to purchase woodchips at an export parity price. Exporters can also be required to undertake a study of the feasibility of processing wood in Australia.
To progress the objective of phasing out exports of unprocessed wood in favour of domestic value-adding processing by 2000, the new Industry Council will, as an objective and as part of its Terms of Reference, examine the issue. The Council will be given the resources to appoint a consultant to advise the Government on the most effective way to use export licences to help achieve the objective.
4. An ongoing commitment to reform in line with the National Competition Policy.
The Government will work with States through the Regional Forest Agreement process and through Commonwealth/State Ministerial Councils to increase competition in the forest sector and remove market distortions. Important issues to be pursued are:
- separation of native forest and plantation functions of State agencies;
- pricing policies, subsidies, debt retirement and cost recovery objectives;
- consistency in regulations for private and public forests;
- transparency of reporting mechanisms.
Progress in pursuing these reforms will form part of the "significant progress" assessment for determining the level of future year's woodchip export licences.
5. Protection of the conservation values of Australia's forests.
This year's licences contain conditions ensuring woodchips will not be drawn from:
- areas identified as Deferred or Interim (Tasmania) forest areas;
- rainforest; and
- land which is being harvested for the purposes of agricultural land clearance.
The Government will also not permit any woodchip-driven operations in areas of old-growth forest. This issue will be jointly progressed by the States and the Commonwealth as part of the Regional Forest Agreement process with criteria being required before 1997 export licences are determined.
6. The management of production forests will be ecologically sustainable.
As part of the Regional Forest Agreement process, the Commonwealth and the States will comprehensively review Codes of Practice and forest management techniques to ensure that:
- the need to attain particular woodchip volumes for export is not influencing forest management practices or determining silvicultural systems choice;
- silvicultural systems (including clear-felling and cable logging) and harvesting rates for both sawlogs and pulp logs are ecologically sustainable.
7. The Government is committed to establishing Australia and the Australian industry as a genuine world leader in sustainable forest management.
Australia will host a UN/FAO conference in May 1996 to progress international action on certification and labelling of sustainably produced timber products.