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Australian forestry and forest industries: a vision for the 1990s and beyond



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EMBARGOED UNTIL 2.00PM 9 AUGUST 1991

T he H on Alan G riffiths MP M in ister for R esources

A u stra lia n fo re stry and fo rest in d u strie s: a v isio n for th e 1990s and beyond

Forestry House CSIRO Division of Forestry Banks Street, Yarralumla

Friday, 9 August 1991

COMMONWEALTH

PA RLIA M EN TA RY LIBRARY . iv ii C A B

A u stra lia n fo re stry and fo re st in d u s trie s - a v isio n for th e 1990s and beyond

Introduction

Ladies and gentlemen .

Thank you for the opportunity to outline my vision for Australian forestry and the forest-based industries for the 1990s and beyond.

In many senses, as the Minister responsible for forests, I am working at the leading edge of the sustainable development debate.

For me, the 1990s represent a period of challenge where, if we manage the issues properly, we have the opportunity to have our houses and our forests too.

This is why an occasion such as this, bringing together some of Australia's leading forest scientists can be so helpful. As you know, it is my firm view that science must be a key arbiter in resolving resource access issues.

Before looking to the future of forestry and the forest industries, I believe it is important that we take stock of the past by, if you like, glancing into the rear-vision mirror. This is a useful exercise because if there is one thing certain in life, it is that the future is normally not the

same as the past.

A Quick Look at the Past

There can be no doubt that the forest products industry and profession face enormous pressure these days. Such objectives as access to resources and the need to add value to our raw material seem to clash with the community’s ever-changing sentiment about logging in native forests.

For my part, I am responsible for a resource that has great significance. Our forests form part of our emotional fabric; tapping images of our pioneer past and offering a comforting contrast to the pressures of our mainly urban existence.

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I can understand why the forest industry and its supporters get so frustrated that what they see as confusion and simplification that abound in discussion of forest issues.

I can also understand why conservationists feel similarly when if they assume attitudes and management practices of the past will guide the future.

Thankfully, during the 1960s, there began a world-wide awakening to the possible effects of continuing economic expansion on our shared natural environment. We owe a great debt of gratitude to the modern pioneers of this changed sentiment.

Within Australia, the post-War wood production strategy became the key focus of the country's emerging environmental movement, resulting in two decades of conflict about the use and management of public forested land for wood production.

In the past, this has been influenced by two main factors.

Firstly, the pressures on Government to respond to strong economic and development needs and secondly, social attitudes of the time to resource and environmental conservation.

Until the mid 1960s environmental perceptions were only weakly developed in Australia. As a result, Governments readily allocated public land to wood production to help service the nation's requirements to maintain rural industries and employment and, importantly, to provide housing for the exploding number of post-War Australians.

It was inevitable that some adjustment to the forest utilisation-forest preservation balance was needed.

The critical question became - how should that adjustment be made?

Until recently Governments in Australia have rarely led in policy formulation; rather they have responded to changing social perceptions and needs.

There have now been two decades of transition in which piece-meal reductions have been made in land allocated to wood production.

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The uncertainty created had an unsettling effect on forest planning, and on industrial and social stability - all the more so at a time of continuing dependence on wood supply from the native forests.

As with the danger of over-development, so there is a danger of environmental over-reaction, of moving beyond that point where adequate account is taken of the wider public interest.

Whilst the wood oriented post-war strategy has served this nation well, it has run its course. More innovative thinking is now required to take account of changing attitudes to the native forests.

Where we are today

As I said earlier, it is important to review the past before forming judgements about how best to proceed. The wisdom of hindsight is, of course, the most incisive of analytical tools.

In Australia today, we are at a crossroad in the forests debate.

The hard economic facts of this industry are compelling. In calendar 1990, Australia had an annual trade deficit of $1.7 billion in forest products representing almost 10% of our current account deficit. We export largely low value woodchips and import largely high value timber and paper products.

Our woodchips are exported for around $75 per tonne and we buy back finished paper at around $1,800 per tonne. Expressed another way, each day we import around $6 million dollars of value added timber and paper product but export around $1.5 million Of largely undifferentiated

woodchips.

Clearly, these economic circumstances are unacceptable, indeed as an Australian, I believe they are embarrassing.

From an employment perspective, the forestry and forest products sector provides jobs for around 250,000 Australians and support for their families.

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It is my contention that Australia has the best scientifically-based forest planning, management and research practices in the world. As the draft Resource Assessment Commission and the Ecologically Sustainable Development reports have found, controlled forest management has not caused the extinction of one plant or animal species.

Notwithstanding these facts, the practices do have shortcomings and I believe they must be improved over time. This will require of State Forest Services a committment to consider different ways of managing the native forest; particularly the so-called oldgrowth forests.

Thinking globally, and from an environmental perspective, to forego the ecologically sustainable use of our native forests has the perverse effect of increasing demands for imports from countries which adopt lower forest management standards. If we close down our forest industries we will do

so at the expense of exacerbating global environmental problems.

In my period as Minister for Resources, I have found the community is becoming increasingly evaluative of the issues which impinge on the environment.

Concerning the forest environment in particular there is an

acknowledgement in the community that:

• they are concerned about regrowth, wildlife and flora;

• they acknowledge a component of our forests are preserved;

• they know the industry actively engages in the replanting and restoration of the areas they harvest; '

• and most importantly they believe that the industry is indispensible.

Yet for all of that, there is still a perception that Australian native forests are disappearing, particularly on private property.

There is one thing the community overwhelmingly agrees on - that there is a need for more factual, scientifically-based information about the forest industry. When it comes to the forest environment, the community is in information seeking mode.

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The wav ahead

This leads me to the focus of my address - the task ahead of us - and the opportunities to realise the full benefits that Australia's forests offer our community.

Value adding manufacture

From my perspective, value adding is an integral part of the

Government's economic strategy. The rationale for this is simple - if a greater proportion of our raw materials can be processed in Australia, our economy can become more diversified and less vulnerable to

fluctuations in world prices for our agricultural and mineral commodities.

Greater value adding is imperative to our longer term economic welfare. We have made some progress but we need to do much more to overcome our current account problems. Put simply, we need to turn more

woodchips into paper, more base metals into elaborately transformed metal products; more wool into suits; more wheat into pasta and more scientific research into productive development.

The Government recognises that the right policy framework is a fundamental precondition to investment of the large capital sums required for the future growth and prosperity of the forest industries. We are seeking to create a positive climate based on the following parameters:

• a reliable, transparent and predictable framework for decision making in relation to the allocation of the forest resources to wood and non-wood uses;

• partnerships between all interested parties and acceptance by each of the others' legitimate interests and concerns;

• increased research and development;

• improved technical expertise;

• appropriate arrangements for protecting the environment and values such as biodiversity.

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• efficient harvesting, manufacture, storage, handling and transport, and

• appropriate taxation and resource pricing policies.

National Forest Policy

As one would expect, the forest debate has seen many alternative forest use scenarios developed by the various interest groups. The Resource Assessment Commission has examined several of these, ranging from unrestricted logging of native forests at one extreme, to the immediate cessation of all such logging at the other.

The contrast between these scenarios is stark. Yet there is at least one common theme. That is, one way or another, the logging of old growth forests outside of existing reserves will eventually be phased out in favour of supply from regrowth forests and plantations.

As custodians of the public forest resource, State and Commonwealth Governments have a shared responsibility. That is, to ensure that our forests are managed in accordance with a sustainable yield strategy and in a way which optimises the return to the community from their use.

As I have said earlier, it is no secret that forest issues have been dealt with by governments in an ad hoc way. This is typified by the long list of inquiries which both the Commonwealth and State Governments have set in train to examine various aspects of forest resource use.

Against this background, I am committed to the development of a national forest policy aimed at:

• maximising the long term community benefits from all forest values;

• protecting forest ecological and cultural values;

• providing stability in resource access;

• facilitating, the highest value adding processing of forest products;

• removing impediments to plantation development as a basis for long term industry development and expansion;

• achieving ecologically sustainable forest management; and

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• encouraging increased research and development iri the forests sector.

The key word in this is "national", because what I have in mind will provide a national framework for forest use.

The policy will involve consultation with the major players in the forest use debate, including the States, industry, unions, and conservation groups. I intend to have the policy in place by the end of 1992.

I am confident that the establishment of such a policy framework will help facilitate the resolution of forest use issues. It will do so in a transparent and predictable way and without the level of discord that has

characterised past forest use debates.

The forest policy will be broad ranging and will bring together those initiatives and studies which are already in train. For example:

• the findings of the Resource Assessment Commission, the National Plantations Advisory Committee, and the Ecologically Sustainable Development Working Group on Forest Use; ,

• the resource security process;

• the Inter-governmental Agreement on the Environment arising from the Prime Minister's "New Federalism" initiative; and

• other planning and consultative processes such as the Tasmanian Forests and Forest Industry Strategy and the South East Forests and East Gippsland processes.

Resource security process

Let me now turn to the issue of resource security for the forest industry.

The resource security policy represents a new approach by the Commonwealth and State Governments and is a major reform by any measure.

Put simply, the resource security policy is about achieving three key objectives:

• ensuring the forest environment is adequately protected

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• facilitating world-scale value adding investments

• creating more and better jobs for Australians who earn an honest living from this industry.

Naturally, I am pleased to report that the policy was supported at the Australian Labor Party's Centenary Conference in July and has now been unanimously endorsed by the Commonwealth, State Premiers and Chief Ministers at the recent Special Premiers' Conference. This represents a major step forward when I consider that the conceptual approach was bom only just over a year ago.

The policy will involve the provision of legislation under which secure access to forest resources will be provided for major new wood processing projects on a case-by-case basis. This will follow successful completion of a thorough assessment of environmental, heritage, economic, cultural, and social issues.

The guiding philosophy is to ensure that the Commonwealth's responsibilities are applied once and for all in an up-front and integrated way. To minimise duplication, the assessments will take into account relevant work already undertaken at the State and Commonwealth levels.

Rather than weakening the Government's environmental and heritage legislation, the elements of resource security leading to legislatively backed access to forest resources will strengthen the integration of environmental considerations. It will do so by ensuring that all relevant

issues are addressed in advance of Government decisions on forest use.

To be eligible, a project must involve a capital investment of at least $100 million. This could include projects comprising integrated activities utilising wood harvested from the same resource area, and where a predominant proportion of the value of output is derived from activities other than logging for export or woodchipping for export.

For example, a project proposal which included a veneer plant, worldscale hardwood sawmills, a flitch mill, a woodchip plant,,and which collectively involved a total investment of at least $100 million, and was directed at import replacement or export, would be considered an eligible project under the legislation.

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In the case of new investment of over $100 million which adds new capacity to existing plant or value to its product, this would also be eligible, provided the proponent is prepared to put the entire operation through the integrated assessment process.

The Commonwealth envisages that umbrella legislation will be enacted and that conditions approved for individual projects will be set out in regulations. I am confident the legislation will be introduced into the Parliament in the forthcoming Budget sittings.

It is my firm view the resource security policy will provide industry with certainty and stability which it has long sought. It will also encourage a shift away from low value woodchips to high value-added products aimed at import replacement and the export market.

We should not underestimate the potential of new investment which could result from this decision.

According to the Australian Bureau of Agricultural and Resource Economics and the Bureau of Industry Economics, the macro-economic effects of increased investment in the hardwood industry are substantial.

An additional $4 billion of investment in the hardwood pulp and paper sector, for example, would result in

· an increase in GDP of $1.5 billidh per year

· an increase in real wages of 0.6%

· an improvement in Australia's trade account.

Provided the forest industries hold to their commitment to invest - as the public is entitled to expect - Australia could benefit from worldscale investments before the year 2000. Negotiations are well underway for a pulpmill in northern Tasmania and an extension of the existing mill at

Maryvale in Victoria.

Other major investments are planned for later in the decade in Western Australia and East Gippsland in Victoria. Of particular importance is the role of plantations in providing the necessary feedstock to sustain these developments.

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Whilst the importance of resource security is obvious, the National Forests Policy will also incorporate the outcomes of the work of the National Plantations Advisory Committee and the Young Eucalypt Program, as well as the proposed Forest Industry Research and Development Corporation.

In this context, I am keen to see arrangements for the proposed Forest and Forest Industries Research and Development Corporation finalised as soon as possible.

You will recall that the Government foreshadowed the establishment of a forest-based R&D Corporation more than two years ago. While consideration of a number of other forest issues such as resource security has stolen the limelight over recent months, I believe that industry should now accord this issue the priority it deserves.

The purpose of the Corporation will be to provide national strategy leadership to R&D and act as a catalyst to stimulate R&D interest within industry. v

It will have a proactive role but will neither subsume nor duplicate the research activities of CSIRO, individual companies or the States. Rather, it will set national priorities for forestry research, assess what research is actually being done and commission research in deficient areas. It will not actually undertake any research itself.

In line with arrangements in place for other portfolio R&D Corporations, it is proposed that this body be funded by an industry levy, for which I am seeking matching funds from the Commonwealth of up to 0.5% of the gross value of production. *

I urge the forest industries, State forestry agencies and the wider research community to work constmctively with my Department to resolve any outstanding concerns and expedite the establishment of the Corporation by the 1st of July next year.

Conclusion

I would like to conclude by emphasising the forests debate in Australia has progressed a long way in a relatively short time.

In that context, my vision for the forest industries in the year 2000 builds on the measures taken to date. These clearly indicate we are steering a path, consistent with our environmental objectives, to create a better and more productive industry; an industry which can become the base for a sophisticated papermaking industry in the future, providing more jobs for Australians and more prosperity for our nation.

I am confident that the endorsement of the resource security policy by the ALP Centenary Conference and by the Special Premiers' Conference has provided the foundation for this vision to be realised.

The task is not an easy one. But it is surely not beyond the wisdom of governments, industry, trade unions and the conservation movement to appreciate that our* forests are capable of providing benefits for all Australians.

Thank you.