Election 2007: Ending the forest wars

Judith Ajani, Australian National University

Australia is awash with plantation resources. Plantations can meet virtually all Australia’s wood needs now and feed industry expansion into further processing and export markets. Government forest policy, however, remains glued to the commercial interests of the native forest based incumbents. Government subsidised native forest competition is systematically hampering Australia’s plantation processing industry, and so the potential to use native forests for ecological purposes and to defuse the conflict over native forest logging is being lost. Australia’s forest problem is not about the battle between the greenies and the loggers: it is about the systemic failure of state and federal governments, with the notable exceptions of Queensland and Western Australia, to come to grips with industry policy.

Forests collect political scalps: Paul Keating in the mid-1990s, Mark Latham in the 2004 federal election, and potentially Malcolm Turnbull over Gunns’ native forest pulp mill plan. Both major parties sweep forests under the carpet in an avoidance strategy that fails them because it fails a concerned public. The major parties’ disengagement probably means they misread the breaking-up of Australia’s long-entrenched forest conflict—by the combined forces of the plantation competition, climate change, and public opinion—as another problem to avoid, rather than a new force to help them drive fundamental change in Australia’s forest policy.

I propose a new forest policy that elevates plantation processing to the top forest industry goal and simultaneously ends logging in virtually all native forests. This policy acknowledges implicitly that commodity production dominates Australian forestry, as it does global forestry. Commodities, unlike specialities, are standardised products with producers competing mainly on price. Because most buyers are price conscious, commodity prices trend down over the long term and producers must constantly seek cost-cutting opportunities to maintain their profit margins. Commodity production in self-regenerating natural ecosystems—as native forests are—can never reconcile the interests of both industry and the environment. No government forest inquiry has ever acknowledged this reality. Australia’s forest policy frame assumes native forests must be logged and can be logged without damaging their ecological integrity, leaving governments to balance the competing interests.

Australia is awash with plantation resources.

The forest policy I propose comprises three complementary parts: shift Australia’s forest industry out of native forests and into plantations; embrace the plantation resource with a processing industry strategy; and use native forests for their ecological services. Australia’s softwood and hardwood plantation estate makes this shift possible for at least 95 per cent of the forest industry: the producers of commodity sawn timber, wood panels, pulp and paper. By shifting commodity production to plantations, we tackle the fundamental flaw in managing native forests for both cost-cutting commodity production and ecological integrity. We go to the core of the forest conflict and stop sweeping it under the carpet with word-crafted assurances of ‘ecologically sustainable forest management’. By embracing Australia’s plantation resources with a processing industry policy, we build regional wealth and jobs. We also buffer plantation growers from the price-cost squeeze inherent in commodity production: historically, raw materials exporters face the most intense price competition and pass their own cost-cutting survival strategies onto the land. By freeing native forests from logging, eleven million hectares of public native forests can return to the job they do best: carbon sequestration, water catchment protection, and biodiversity conservation.

Choosing to substitute economically inferior resources (native forests) with environmentally superior resources (plantations) eliminates the trade-off dilemma inherent in native forest logging. There is no irreconcilable conflict between development and environment concerning Australia’s longest and hardest fought environment battle.

Despite there being no irreconcilable conflict, there is a complex history of resource development and commonwealth-state relations behind the current state of affairs. Logging of native forests now occurs primarily in New South Wales, Tasmania, and Victoria, while plantations feed most of Queensland’s and Western Australia’s forest industry. Yet until recently, native forests were being heavily logged in Western Australia, and contributing more significantly to production in Queensland. Pragmatic—and effective—interventions by state governments resolved forest conflicts in these states. There is much to learn from the past and from the success of solutions found at the state level.

HISTORY

Australia’s 1.8 million hectares of plantations is largely the combined legacy of the Menzies 1960s government and more recent federal government tax-based incentives for commercial tree planting. These government-initiated wood resource shocks drive fundamental change in Australia’s forest industry. Menzies’ softwood plantation program drew—thirty years later when the plantations matured—a wave of investment in new and more efficient sawmills and wood panel plants. The battle for market share raged: a battle made more intense by Australia’s stagnating sawn timber consumption. There was simply not enough room for both native forest and plantation products in Australia’s sawn timber market. Market-based competition sorted out who survived and who departed. Plantation processors now make 80 per cent of Australia’s sawn timber and wood panels. Native forests generate 20 per cent and that production share continues to shrink.

There is no irreconcilable conflict between development and environment.

As the battle for market share raged—very much off the public radar—the incumbent native forest based industry successfully lobbied state governments to mainstream clearfell-logging in native forests. Export woodchipping flourished and brought native forest logging to a new high, despite the sawmill closures. Today, between 80 to 90 per cent of the log cut from Australia’s main native forest logging regions is woodchipped.

In the 1990s, the federal government engaged once again to escalate tree planting. This time it encouraged private investment in hardwood plantations for woodchips using tax-based incentives. The investment, once again, created new competition for the native forest based industry and, once again, predictions of a rosy market remain unrealised. Japan’s chip importing stagnated in the mid-1990s: Japan buys nearly 90 per cent of Australia’s hardwood chip exports. Developing countries including China, Korea, and India are yet to boost demand for hardwood chips. Australian exports of plantation chips lag behind government projections of plantation supply and real (inflation adjusted) prices for hardwood chip exports continue to trend down. The glut is likely to worsen over the next five years as plantation supply trebles and the three native forest chip exporting states—Tasmania, Victoria and New South Wales—show no sign of relinquishing their supply of cheap logs from public native forests. Just as the softwood plantation sawmillers were forced into a commercially damaging knock-down drag-out fight against state government subsidised native forest sawmillers, the hardwood plantation owners face a similar commercially damaging battle against state government-supported incumbents in the hardwood chip market.

While Australia’s hardwood plantation chip producers battle for markets, the Howard Government lends support to Gunns’ native forest pulp mill proposal in Tasmania. Labor under Rudd also supports the mill. Australia’s hardwood plantations can supply three new pulp and paper complexes: one each in Tasmania, Western Australia and the South Australian/Victorian border region. Quite possibly not one will be built, irrespective of its feedstock. In the decades-long commotion over the environmental effects of native forest pulp mills, government has left unattended a very high economic hurdle. Because Australia’s monopoly producer of printing and writing paper, PaperlinX, has the domestic market stitched up through its own production or imports through its subsidiaries, any new hardwood pulp mill is forced to compete in the global market. This market is both a dumping ground for old players and the target of new, extraordinarily low cost producers. Real (inflation adjusted) pulp prices follow a roller coaster down. A more gruesome commodity market is difficult to find. Gunns’ pulp mill proposal exemplifies Australia’s forest policy mess. Public pressure drives an initially supportive federal government into backpedalling over the environmental approval for a commercially dubious native forest pulp mill whilst plantation resources stand in the wings. Meanwhile, the core economic problem of PaperlinX effectively blocking a new, import-replacing entrant in the domestic market goes unremedied.

COMMONWEALTH-STATE RELATIONS

Commonwealth-state relations weave through Australia’s forest epic. The public will never stop turning to the commonwealth when the states and territories fail to protect native forests whether that is to feed a native forest pulp mill or to clear native forests on the Tiwi Islands for plantations. The federal government’s problem for the last decade is that while it is enthusiastically promoting the ‘forest’ industry through direct grants, tax based incentives and so on—with virtually no strategic industry policy thinking—it has voluntarily shed its legislative powers to protect native forests. In government, both parties try to keep the public at bay without understanding that they have already created the economically pragmatic solution to the forest conflict by subsidising plantations.

In government, both parties try to keep the public at bay.

The states, through Australia’s Constitution, retain responsibility for Crown land and therefore most native forests. The states are therefore the main suppliers of native forest wood to industry. The inevitable industry-conservation clashes saw every prime minister from John Gorton through to, and including, Paul Keating progressively build-up the commonwealth’s legislative powers to protect native forests. They hooked most of the legislation to Australia’s Constitution through the commonwealth’s controls over woodchip exports. Inevitably the annual export approval process became politically hot, climaxing in December 1994 when David Bedall as resources minister and John Faulkner as environment minister brawled publicly over the native forests from which woodchip exports should not be sourced. A furious Prime Minister Keating turned the then embryonic regional forest agreement process (aimed at reducing duplication and uncertainty in commonwealth and state government decision making) into a disguised retreat by the federal government. It would pass future responsibility for native forests protection back to the states after just one go at securing a national system of native forest reserves.

Labor lost the 1996 election, leaving John Howard to implement the commonwealth’s retreat through ten regional forest agreements with the four native forest woodchipping states. Each commonwealth-state signed agreement confirmed that the federal government’s environmental obligations had been met. The Howard Government, with Labor support, also exempted forestry operations undertaken in accordance with a regional forest agreement from the commonwealth’s more recent environmental protection legislation, the Environment Protection and Biodiversity Conservation Act 1999. The Howard Government, with Labor support, threw away most of its powers to address public demands. Despite this, the demands on the commonwealth to protect native forests have not evaporated, as environment minister Malcolm Turnbull now understands. Perhaps one or both major parties will spend the time to understand how in government they create the big opportunities (plantations) which the states undermine, then try to make themselves irrelevant over environmental protection, but still cop the political damage.

PRAGMATIC SOLUTIONS

So far, just Queensland and Western Australia have resolved their forest problems, with some outstanding mopping up. Queensland was destined to be the break-through state because it did not open the doors to native forest woodchipping. As the softwood sawmillers rode the resource wave to dominate Queensland’s sawn timber market, native forest logging stagnated. In the late 1990s, the environment movement and industry protagonists reached a government-backed unprecedented agreement over Queensland’s south-east forests. Industry was already heavily dependent on plantations: nearly 90 per cent of its public logs came from plantations, leaving around ten per cent from native forests. (Private plantations and private native forests contribute smaller volumes of wood.) Yet, tackling this remnant market share was seriously hard work. It required destroying the obsolete ‘environmentalists are the common enemy’ nexus—connecting industry, unions, foresters and conflict-feeding politicians—by building new relationships that matched Queensland’s plantation reality and the public’s environmental values.

So far, just Queensland and Western Australia have resolved their forest problems.

The Agreement is beautifully pragmatic. Logging would cease from the bulk of the region’s native forests, immediately. The government created room to move by buying Borals’ native forest sawmilling assets: thereby limiting the job losses (and proper compensation for workers) to one relatively large company. Sawmills with feet in both camps—native forests and softwood plantations—were offered additional plantation resources (from unused but mature plantations: a symptom of the forest problem) to relinquish their native forest allocations. The remaining native forest sawmills were guaranteed logs from environmentally less sensitive native forest areas outside the ramped-up protected area. The government is now planting hardwood resources (boosting Queensland’s plantation estate by less than five per cent) for their ultimate shift out of native forests by December 2024. At that time, all logging in Queensland’s south east native forests will cease.

In contrast to Queensland, native forest logging in New South Wales, Victoria, Tasmania and Western Australia soared as more and more woodchip-laden ships sailed for Japan’s booming pulp and paper industry over the past three decades. In 1999, Richard Court, Western Australia’s Liberal premier, became the first political leader to tackle native forest chip exporting. Facing public uproar on the eve of an election over logging old growth native forests, Court himself engaged to deal with the pressure-cooker at the thirteenth hour. He brought the softwood and, most importantly, the hardwood plantation resources into the strategy. The West had led Australia in hardwood planting (primarily for woodchips) and the early plantings were ready for logging. Court, together with Wesfarmers the chip exporter, made hardwood plantations substitute for native forests. Labor, under Geoff Gallop, won the election and implemented Court’s strategy and its own ‘no old growth logging’ policy. Native forest logging in Gallop’s first term of office halved as the state’s forest industry moved deeper into plantations. One day we will look back at the forest conflict and muse at our compliance in letting defunct alliances, serving a handful of companies, determine how we use large areas of public native forests in Australia.

MAKING WHO WINS WORK

Kevin Rudd has aligned Labor’s forest policy with the position Prime Minister John Howard has had since going into the 2004 election. Rudd has ruled out any more conservation reserves in Tasmania and remains silent about the other states. So far, Howard has kept his bridges intact. These timid plays reveal political parties with either a deficient understanding of Australia’s forest problem or a preparedness to sacrifice Australia’s plantation processing industry and environment for electoral gain, or both. Whoever wins the election will need determined individuals in the power sector—business people and politicians—to drive economic, environmental and political sense into their forest policy.

Judith Ajani has 22 years of Australian forest industry research and policy experience. She is based at the Australian National University’s Fenner School of Environment and Society and is the author of the recently released The Forest Wars (2007, Melbourne University Press). This article draws on the argument and information presented therein.

View other articles for Election 2007: