VicForests has been left without a market for hundreds of thousands of tonnes of so-called “residual” timber following the loss of a key contract with Japanese-owned wood-chip company South East Fibre Exports (SEFE).
In response, a rule requiring local processing before export has now been relaxed in a bid to open up new markets for the struggling state-owned wood business.
“VicForests indicates the Victorian Association of Forest Industries (VAFI) now supports relaxing certain aspects of the export restrictions,” the briefing to former treasurer Michael O’Brien, said. “Such a change should lead to improved outcomes for both VicForests and industry. DTF supports the reconsideration of the timber export policy.”
It is unclear whether the Andrews government will re-instate the clause. In a written response to Parliament, Agriculture Minister Jaala Pulford last month said the situation was “under active consideration” by her department following the “sunset” of the clause on July 1. Her spokeswoman said the clause had been introduced in 2004 to help the industry transition to a fully competitive market system.
“I have asked my department to prepare advice on the appropriate mechanisms to formally require VicForests to explore all options for domestic processing before any straight export contracts are considered,” Ms Pulford said.
Under the plan, higher grade saw-logs would continue to be processed locally, but lower grade timber would be shipped to countries such as China with the technology to use it to produce veneers and other products.
A December 2013 report by the Victorian auditor-general found in 2012-13 at least 250,000 cubic metres of residual wood, representing 16 per cent of the total harvest, was left on the forest floor and burnt because no one wanted to buy it.
MyEnvironment director Sarah Rees said the move represented a “race to the bottom”. “Australia cannot legitimately compete with the price of wood coming out of Indonesia and Vietnam, so this is another desperate, loss-making venture to keep logging native forests, only now VicForests are compromising Australian jobs to keep it going.”
“Clearly our view is if you want a successful forest industry you need more high value processing in this country,” Mr O’Connor said.
“If exporting residual timber opens up new opportunities for the forest and wood products industry in Victoria and continues to support local businesses and jobs, then VAFI will support the move,” Mr Johnston said.