Minority report
Timber plantations are
environmentally friendly, sustainable production systems for farming wood - a
renewable, recyclable and biodegradable resource (2020 Vision - commitment to
sustainability)
Australia's plantation industry
and the 2020 Vision cannot achieve their goal of sustainability unless they
face up to two key issues - the plantation wood glut and the disgraceful state
of Tasmania's forest management
system.
1. Plantation wood glut
Australia's supply of plantation
wood will increase by 33% from 18 to 24 million m3 per annum in
2005. The extra 6 million m3
is hardwood (eucalypt) pulpwood. Australia does not have the
capacity to process this quantity of plantation wood. It is competing directly with (subsidised)
native forest woodchips, 6 million m3 of which continue to be
exported annually, mostly from Tasmania. If native forest woodchipping continues,
prices for plantation hardwoods are likely to fall, reflecting the supply glut
not just in Australia but around the Pacific Rim.
Within three to five years, large areas of Australia's eucalypt plantations
will mature. The wood volumes projected
to come on stream are likely to generate a hardwood woodchip glut, if native
forest resources remain in the supply equation.[413]
The international market for plantation wood
products is extremely competitive, and forecast to become even more
competitive. Pacific Rim timber prices are
expected to fall in response to increasing plantation production, and continued
profitability depends on increasing productivity.[414]
The
expansion of hardwood plantations is mostly driven by special tax concessions,
justified by the government as supporting the 2020 Vision. These concessions enable investors to claim a
tax deduction in any one year for plantations to be established in the next
year. As Alan Kohler points out, 'the
companies are selling trees, but their customers are buying some thing else - a
tax deduction'. With no new planting,
hardwood pulplog supplies, currently 2 million m3 per annum, will
stabilise at around 10 million m3 per annum by 2010. With forecast new planting, they will
increase to 14 million m3 by 2010 and 18 million m3 by
2020.
These
phenomenal quantities of wood will undermine the international competitiveness
of Australia's plantation industry
rather than underpin regional wealth creation as envisaged by the 2020
Vision. Removing the explicit target of
trebling the extent of plantations is not sufficient to solve the problem; the tax deductions and subsidies for native
forest logging have to be addressed.
Recommendation
1
Abolish
special tax deductions for plantation establishment by managed funds (12 month
prepayment rule).
Note. The deductions cease on 30
June 2006. They should preferably be abolished before
the 2005-06 planting year but at minimum should not be extended or renewed.
2. Subsidised native forest wood
Native
forest wood remains in the supply equation because it is subsidised.
According to Evan Rolley, the managing director
of Forestry Tasmania, the average price for chip logs from public native
forests is $11 to $12 per tonne. I do
not think this committee will find any mainland plantation grower that can
compete at such low stumpages.[415]
Ms Naomi Edwards gave evidence that the
price premium for plantation wood over native forest wood is being 'very much
squeezed...so the substitution and competition effect between native and
plantation wood is becoming more raw and exposed'. She recommends in relation to the issue of
native wood subsidy that -
...the committee consider whether the
actions of government in selling the wood stumpage at 11 to 12 bucks is really
hurting an industry which is promising growers $32 to $50 a tonne for the same
product.[416]
Recommendation 2
Ensure that private
sector investment in hardwood plantations is not commercially undermined by
state government subsidies on chiplogs from native forests.
3. Tasmania's forest clearance for plantations
Tasmania planted more new
plantations in 2003 than any other state, and already has 22 percent of Australia's hardwood
plantations. The high rate of planting
is partly explained by the ability to subsidise plantation establishment
through clearing native forests, on both public and private land.
The
Forest Practices Board calculates that about 80 000 hectares of native forest
on public and private land were cleared for plantations in the six years to
2003. This 'forest mining' advantages
Tasmanian plantation growers -
Senator
HEFFERNAN -Would it be fair to say that Gunns are subsidising their plantation operation from forest mining?
Ms Clark -That is a very good
point and I would like to widen it out to Australia. Whilst in Tasmania you can establish
plantations through large clearing of native forests and earn the cash flow on
that business and then replant and enjoy that configuration, other eucalypt plantation growers in Australia do not enjoy that
benefit.
Recommendation
3
That the
Commonwealth act to bring Tasmania into line with other jurisdictions by prohibiting
broad-scale clearing of native vegetation for plantation establishment.
4. Tasmania's corrupt forest management system
There
is an almost complete absence of regulation of plantation establishment in Tasmania. Former Forest Practices Board auditor Mr Bill
Manning[417]
and numerous others gave evidence of a weak and unenforceable Code of Forest
Practices, a fraudulent audit system set to mislead the Tasmanian parliament,
inability for local communities to have a say over plantation establishment or
clearing of native vegetation, chemical pollution from aerial spraying, use of
1080 poison to kill native wildlife and serious and costly impacts of
plantations on water quality and supply.
There
is a widespread community backlash against the spread of plantations and the
failure of Tasmania's forest management
system.
Recommendation
4
That the
Commonwealth Ministers for Agriculture, Fisheries and Forestry and Environment
and Heritage commission an independent review of Tasmania's forest management
system, with the power to subpoena witnesses and evidence; it should be completed within 12 months.
Senator Bob Brown
Australian Greens