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Wednesday, 9 March 1966

Mr FAIRBAIRN (Farrer) (Minister for National Development) . - by leave - On 24th February I announced the Government's decision ito offer the States about $20 million in long-term loans over the next five years to help lift the planting rate in Government softwood plantations. Since forestry is a subject which will be new to many members I am making the following statement for the members' information, to give them the background to the decision and the terms of the Commonwealth offer.

Forestry is a State matter and will always remain so, but now in the second half of this century we are realising that in forestry there is a national interest just as there is a State interest. Perhaps the greatest national interest from the point of view of the Federal Government is the effect that the timber industry has on our balance of payments. We have seen in the past year a tremendous demand for funds for the purchase of timber from overseas. In fact, I do not think there are many people in Australia who realise that we are spending over $200 million per annum on the importation of timber and forest products into Australia and this will rise substantially in the future.

Before I talk about the future, let me give the House the background of the present position in Australia. The area of productive native forests in use in Australia is approximately 30 million acres. Most of this area is hardwood forests, mainly eucalypts. There is less than half a million acres of native softwood forests. In addition there are about 700,000 acres of softwood plantations of which about 500,000 acres are governmentally owned and 200,000 acres are privately owned. About two thirds of the plantation area is pinus radiata.

The demand in Australia for timber and forest products is running at the equivalent of something like 500 million cubic feet of wood per annum of which about two thirds is produced locally and one third imported. This represents a factory door value approaching $600 million of which imports represent over $200 million. It is estimated that consumption will rise to 670 million cubic feet by 1975 and to over 1,100 million cubic feet by the year 2000. If forestry programmes are continued only at the current rate the annual yield of logs in Australia in 1975 would be less than 500 million cubic feet and would be of the order of 700 million cubic feet by the year 2000. On this basis it is estimated that the cost of imports required to maintain the supply of timber and other forest products, based on present costs, would be $280 million annually by 1975 and of the order of $600 million annually by the year 2000, the actual cost depending upon the rate of growth of population. However, it is most unlikely that future imports will be obtained at present day costs, lt is also by no means certain that overseas supplies will be available to fill our future requirements. Recent studies forecast increasing deficiencies between supply and demand for timber in the Asia-Pacific region and in Europe. A similar position will probably apply in Africa and it is likely that the United States of America will require virtually the whole of the exportable surplus from Canada by the end of this century.

New Zealand exports considerable quantities of timber and is the -main supplier of plantation softwoods to Australia. The Government recently concluded a free trade agreement with New Zealand which guarantees ultimate duty free trade between both countries for a wide range of products, including forest products. At present we obtain approximately 10 per cent, of our requirements in New Zealand and while we can look to increased supplies from New Zealand the estimated export availability from there in the year 2000 will still represent only 10 per cent, of the expected forest products market in Australia. Thus we cannot rely on ready availability of overseas supplies in the future and it is almost certain that the cost of imported supplies will increase substantially. I think all honorable members will agree that the Government would be remiss if it continued to count on overseas supplies to make up a deficiency as large as that at present forecast. This is the position facing Australia and it was basically because of this that the Commonwealth Government set up the Australian Forestry Council in consultation with the States. The Forestry Council is a national advisory body on forestry matters and a particular function is to look at ways of developing Australian forests to meet our requirements of timber and forest products both for our own use and for export. 1 had the great honour of chairing the first meeting in August 1964 which occurred shortly after I became Minister for National Development.

The Australian Forestry Council comprises the six State Ministers for Forestry, the Minister for Territories and the Minister for National Development. Under it is a standing committee consisting of the Director-General of the Forestry and Timber Bureau, the head of each of the State forestry services, and the chief of the Division of Forest Products, Commonwealth Scientific and Industrial Research Organization. The first task which the Council undertook was an urgent examination of Australia's present and future requirements and the potential for meeting these requirements from our own resources. As a result of this examination the Council reached the view that although the long term forecast was for a substantial deficiency in timber and other forest products this could be made good economically from timber produced in Australia. To meet the deficiency the Council estimated that Australia would require a softwood resource of about three million acres of plantations by the year 2000. It was estimated that such a resource together with improved production from the native forests would be likely to make Australia reasonably self sufficient as to total requirements for wood for the Australian population expected at that time.

Consequently, the first recommendation of the Forestry Council was that the rate of establishment of softwood plantations should be stepped up from the present 40,000 acres per annum to 75.001) acres per annum for the next 35 years. The Council estimated that if this rate of planting were achieved the lag in production would be substantially overcome by the turn of the century. This is not to mean that we will no longer have to import. It is very difficult to estimate so far ahead. There are so many factors which can influence consumption and production. There will be deficiencies in particular types of timber and we will always need to import special purpose timbers which cannot be grown in Australia. However, with a softwood resource of three million acres of plantation, production would more nearly balance consumption and we would not face an import bill nearly as large as $600 million.

If we are to avoid dependence on substantial imports in the future it will also be necessary to concentrate our attention on increased production of timber and forest products from our native forests. This can be achieved by better management of the natural hardwood resources that we have and this is another avenue to which the Forestry Council has been turning its attention. However, our. most urgent need is to increase substantially our plantings of softwood timbers. There has been spectacular success achieved in Australia with the planting of pine species from overseas. This is particularly so in the case of pinus radiata plantations which have already been established in Australia. Average growth rates several times as great as those obtained in the traditional softwood exporting countries in the northern hemisphere have been achieved. In addition to the large balance of payments savings which would result from an increased planting programme there would also be substantial benefits in the contribution the programme would make to decentralisation. Forestry and forest industries by their very nature attract population to rural areas, and the establishment of new or larger saw mills and processing factories in country areas will provide increased employment opportunities and consequent benefits to business in country towns. Australia is fortunate in having more than sufficient suitable land to carry out the proposed programme. Following its investigations the Forestry Council estimated that an area of more than four million acres could be made available for planting softwoods without encroaching on the better areas of the hardwood forests.

Having reached a view that a planting programme of 75,000 acres per annum was necessary, the Australian Forestry Council turned its attention to the financing of such a programme. The Council estimated that private forest owners will contribute on the average at least 10,000 acres a year to the programme. This left 65,000 acres a year to be planted by the government forest services. At present the governments are planting at the rate of about 30,000 acres a year so 'that the programme envisages an increase by them of about 35,000 acres a year or more than doubling their present rate of plantings.

The State Ministers on the Council indicated that their respective Governments were already allocating a substantial proportion of State funds to forestry. While supporting the programme as such they pointed out that they would have great difficulty in allocating additional funds to accelerate their planting programme and requested me as Chairman to approach the Commonwealth Government for additional funds for the expanded programme. As I have already announced, the Government has responded most generously to this request by the States. Forestry is a revenue earning activity, and our investigations have revealed that production of softwood in plantations can be a profitable operation in the long term. The emphasis is on the long term, since even with the fast growth rates achieved with pinus radiata in Australia it is 35 years before any substantial income is received and it can be over 40 years before all the trees are finally felled. The Government has consistently taken the view that Commonwealth assistance to revenue earning projects should be in the form of loans. However, in recognition of the long term nature of forestry and the long period between planting and income earning production, the Commonwealth has offered long term loans free of interest' and repayment of principal in the first ten years.

The initial programme proposed by the States covers the next five years and it is estimated that the cost of the additional plantings over that five years will be about $20 million. The planting programme, of course, covers 35 years so that towards the end of the five years we need to have another look at the programme and consider the question of further support for future plantings. With the assistance of these loans T would expect the planting rate in the Government owned plantations to accelerate rapidly and we should be approaching the target rate of 65,000 acres of plantings a year by the end of the initial five year period. I feel that this is a most important step in the development of Australia's natural resources. Many of us will probably not be here to see the effects of the plantings, but future generations will, I am sure, look back and thank us for the foresight which led to the acceptance of the Forestry Council programme.

I present the following paper -

Softwood Planting in Australia - Ministerial Statement, 9th March 1966- and move -

That the House take note of the paper.

Debate (on motion by Mr. Luchetti) adjourned.

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