Crawford School Masters Program Agricultural Economics and Resources Policy (IDEC 8018)

Forest Policy in Australia Past and Present Dr Judith Ajani

ANU Fenner School of Environment and Society 21 September 2009

Australias softwood planting

1.2

1 Plantation estate (million hectares)

0.8

0.6 Commonwealth funding totalling $450 million (valued in $2005/06) 1966 to 1982

0.4

0.2

0 1920 1924 1928 1932 1936 1940 1944 1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

Source: Ajani (formerly Clark) 2002, The introduction of agriculture for wood production in Australia: public policy lessons from the softwood planting program, PhD thesis, figure 4.1 updated using BRS National Plantation Inventory.

A high sawn timber consumption projection set the planting target (not to be interpreted at face value)
12 1962 sawn timber consumption projection underpinning softwood plantation target and Commonwealth funding

10 Sa w n timb e r c o n s u mp tio n (millio n m )

3

4 Australia's sawn timber consumption 2

0 19 3 6 19 3 8 19 4 0 19 4 2 19 4 4 19 4 6 19 4 8 19 5 0 19 5 2 19 5 4 19 5 6 19 5 8 19 6 0 19 6 2 19 6 4 19 6 6 19 6 8 19 7 0 19 7 2 19 7 4 19 7 6 19 7 8 19 8 0 19 8 2 19 8 4 19 8 6 19 8 8 19 9 0 19 9 2 19 9 4 19 9 6 19 9 8 20 0 0 20 0 2 20 0 4 20 0 6 20 0 8

Source: Ajani 2007 The Forest Wars figure 4.2 updated using ABARE Australian Forest and Wood Products Statistics .

Plantation resource driven industry structural change

7 Sawn timb er p ro d uction (millio n m )

3

7 Woo d ch ip expo rts (millio n g reen to nn es) Native forest chip exports

4 Native forest sawn timber production 3

Plantation sawn timber production

0 193 6 193 8 194 0 194 2 194 4 194 6 194 8 195 0 195 2 195 4 195 6 195 8 196 0 196 2 196 4 196 6 196 8 197 0 197 2 197 4 197 6 197 8 198 0 198 2 198 4 198 6 198 8 199 0 199 2 199 4 199 6 199 8 200 0 200 2 200 4 200 6 200 8

Source: Ajani 2007 The Forest Wars figure 5.3 updated using ABARE Australian Forest and Wood Products Statistics and Ajani internal working papers.

Source: Ajani 2007 The Forest Wars.

Native forest chip exports (million green tonnes)

0 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1 2 3 4 5 6 7 8

Australias native forest chip exports through the prime ministerships

Gorton/McMahon (Liberal)

Whitlam (Labor)

Fraser (Liberal)

Year ending June

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Hawke (Labor)

Keating (Labor)

Howard (Liberal)

Building market share in the now growth Japanese hardwood chip market with deregulated Australian native forest supply
14 Australian hardwood chip export c prices ($A/BDT real) 200.0 Hardw ood chips (see note a for units) 10 Japan hardwood chip imports (million bone dry tonnes) Real fob export price ($A/bone dry tonne) 12
b

250.0

150.0

100.0

Australian native forest chip exports (million green tonnes) East Gippsland RFA signed February 1997 Tasmanian RFA signed November 1997

50.0

0 199 0 199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7

0.0

a. Aust exports reported in million green tonnes, Japanese imports reported in million bone dry tonnes. b. Prices deflated using Australian CPI 2006/07 = 100. c. Includes plantation chips with increasing share from 2000. Source: Ajani 2008 'Australia's transition from native forests to plantations: the implications for woodchips, pulpmills, tax breaks and climate change', Agenda 15 3 pp. 21-38; Ajani 2009 Submision to Parliamentary Com mittee on Corporations and Financial Services Inquiry into Agribusiness Managed Investment Schemes.

Australias continuous plantation estate expansion

1.2

1 Plantation estate (million hectares)

0.8

0.6

Hardwood plantation estate

0.4

Softwood plantation estate

Managed investment schemes stimulate hardwood planting

0.2

0 1920 1924 1928 1932 1936 1940 1944 1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

Source: Ajani (formerly Clark) 2002, The introduction of agriculture for wood production in Australia: public policy lessons from the softwood planting program, PhD thesis, figure 4.1 updated using BRS National Plantation Inventory.

Eucalypt plantation MIS costs and key assumptions

MIS Cost per hectare (including management over rotation) Land cost $9 300 Lease cost included in above Wood yield (m3/ha/yr) 27.3 17.0 $2 000 $2 500 Industry actual

Stumpage price ($/m3)

$36.72

$17-$19 (softwood plantation)

$4 -$15 (native forest)

Source: Ajani 2009, Submission to Parliamentary Committee on Corporations and Financial Services Inquiry into Agribusiness Managed Investment Schemes.

Hardwood plantation chip supply poised to surge

14

12

Projected plantation chip supply

Hardwood woodchips (million m )

10

Native forest chips used for domestic pulping (actual)

Native forest chip exports (actual)

Plantation chips used for domestic pulping (actual)

2

Plantation chip exports (actual)

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: Ajani 2008, 'Australia's transition from native forests to plantations: the implications for woodchips, pulpmills, tax breaks and climate change', Agenda 15 3.

2016

CPRS White Paper Proposed average accounting method for CO2 uptake in harvested and replanted plantations Cumulative net CO2 removals

Permit limit Risk buffer

2010

2020

2030

2040

2050

2060

2070

Reforestation entities can generate permits over the initial growing phase up to the risk buffer limit. Plantations must meet Kyoto forest definition and land must remain forested for 100 years. Permits must be surrendered if land is converted to non forest.

Summary key features of Australias forestry/forest policy

Resource driven industry policy disconnected from wood product market reality.

Government funding for plantations but no evidence of market failure: Public sector planting Commonwealth subsidies to States Private sector planting: tax engineered products with complementary tax arrangements proposed ETS rules privileging plantations.

Limited attention to plantation processing industry policy.

No connection of increasing plantation resources with native forest protection, with the exception of Qld and WA.