Making Money from Stopping Logging

MEDIA RELEASE 31 October 2022

The North East Forest Alliance urges the NSW Government to obtain its own costings for stopping the logging of public native forests in light of Frontier Economic’s estimate that a generous government-funded structural adjustment package, including for the 1,000 affected workers, would only cost $302 million, with this cost greatly outweighed by a range of positive economic and environmental benefits.

Frontier Economic’s report ‘Transition support for the NSW native forest sector’ prepared for WWF, and released at The Vanishing Koala conference on the weekend, makes it clear that we would be far better off economically if we stopped logging public forests, NEFA spokesperson Dailan Pugh said.

“By stopping logging of public native forests we can re-direct the immense public subsidies into assisting affected workers and communities transition, while realising real economic and environmental benefits from avoiding CO2 emissions, increasing carbon storage, increasing tourism, increasing water yields and restoring habitats of threatened species, such as the Koala.

Clearing of high quality Koala habitat for plantation, Wild Cattle Creek State Forest, 2022.

In 2020/21 the Forestry Corporation lost $20 million from logging of public native forests, as well as obtaining tens of millions of dollars in public subsidies, as Frontier Economics state:

As shown in the report, the cost of the structural adjustment package is likely to be readily outweighed by a range of positive budget impacts including avoided ongoing structural adjustment and bushfire support to the hardwood sector, avoided equity injections to FCNSW and the likelihood of increased dividends from FCNSW over time by avoiding the loss making activities of the hardwood division which have been highlighted by the Independent Pricing and Regulatory Tribunal of NSW (IPART).

“Just stopping logging is likely to be beneficial to the NSW budget, though inclusion of the wider natural capital benefits to the economy from increased carbon capture and storage, tourism, water production, improving threatened species habitat, and mental health benefits make ending logging of public lands of real and lasting economic and environmental benefit to the people of NSW.

“A 2021 study by the University of Newcastle found that protecting 175,000 ha of State Forests between Coffs Harbour and Grafton as the Great Koala National Park would, over the next 15 years, generate additional regional economic output of $1.2 billion and create more than 9,800 extra full-time jobs compared to logging.

“A 2021 study by Frontier Economics found stopping logging of public native forests in southern NSW would produce a net economic benefit to the state of approximately $60 million, while also reducing net greenhouse gas emissions by almost 1 million tonnes per annum over the period 2022-2041, compared to logging.

“Under the NSW Koala Strategy the NSW Government proposes paying $3,353 a hectare to buy 15,000 ha of private properties over the next 5 years. By this metric protecting the more than 300,000 ha of potential high quality Koala habitat on State forests is worth over a billion dollars, and is essential if we want Koala populations, as well as Greater Gliders, Yellow-bellied Gliders, Gang Gang Cockatoos, Glossy Black-cockatoos and a host of other species to recover from logging and wildfires.

“We ask that the current NSW Government immediately commit to a truly independent cost-benefit assessment of the logging of public native forests, with the principal aim of building on the work of Frontier Economics in developing a fair and equitable structural adjustment package for affected workers and communities.

“If they continue to refuse to, we call upon the NSW Labor Party to commit to immediately undertaking such a review should they win government at the next election.

“The need for such a review is supported by the September 2022 recommendations 4, 5 and 19 of the NSW Upper House ‘Inquiry into the long term sustainability and future of the timber and forest products industry’ for a cost-benefit assessment of public native forests and development of strategies to support workers and communities transition away from native forests.

“We thank WWF for commissioning the Frontier Economic’s report which makes it clear that it is in the best interests of the people of NSW to stop logging public native forests, as they say “the forestry-to-plantations transition in NSW is inevitable, necessary, and overdue”, though we differ by demanding logging of public native forests ends now rather than in 2028.

“In light of our current extinction and climate crises taxpayers cannot afford to go on paying to log animal’s homes and cut down trees essential for storing and sequestering carbon on public lands any longer, the time for action is now” Mr. Pugh said.


Frontier Economic’s 2022 ‘Transition support for the NSW native forest sector

… Across selected regions with a public native forest logging footprint, ABS data shows that the hardwood and softwood forestry sectors (both private and public) contribute a small and often declining share of regional employment, tending to contribute less than 1% and but ranging from 0% 1.3% for Forestry and Logging and 0.4% 2.5% for Wood Product Manufacturing.

Narrowing down the focus to the public native forestry sector, we estimate direct employment numbers in FCNSW, harvest/haulage and mills associated with this business to be in the order of 1,070 across the State (made up of Northern, Southern and Western region employments levels at 590, 332, and up to 150 employees, respectively).

The estimated cost of the government-funded structural adjustment is $302 million in total. This includes:

  • Up front structural adjustment funding of $244 million, which it is assumed would be incurred at the beginning of 2028-29. This is the payments to support worker redundancies and retraining, capital redundancies and WSA buy-backs, and
  • Structural adjustment funding for regional economic diversification of $58 million, which is assumed to be spent over a 10-year period. Assuming this is spent in equal amounts over the 10 years to 2038-39, this provides a net present value (NPV)1 cost of $47 million.

In terms of FCNSW’s overall business, the hardwood division accounts for a much smaller proportion of timber volumes and revenue. In 2020-21, FCNSW’s softwood volumes harvested were close to 5 million m3 compared to just over 0.6 million m3 for hardwood. In terms of revenue, in 2020-21 hardwood sales revenue was $89 million and softwood sales revenue was $300 million.

Cover Page: Rachel Lowry, Acting CEO, WWF-Australia:

WWF-Australia considers that the forestry-to-plantations transition in NSW is inevitable, necessary, and overdue. Such a transition would support various NSW government initiatives: cutting emissions by 50% by 2030, doubling koala numbers by 2050, handback of lands to Indigenous communities, growth in nature-based tourism in the regions, increasing supply of low-carbon housing construction materials in the long term, reducing plastic pollution, and protecting and enhancing natural capital.

This transition should be efficient and equitable, end harmful and wasteful subsidies, minimise potential negative impacts and maximise the positive impacts on communities and the economy. Structural adjustment programs established by the governments of Victoria and Western Australia to support the transition from native forest logging to plantations demonstrates this is possible.

On behalf of our 2+ million supporters, we seek time-bound leadership on this issue, mindful of all that was lost in the recent 2019-20 bushfires, cognisant more native forest is being lost in NSW, and optimistic for a better future for forests and the timber and pulp industry.

‘Inquiry into the long term sustainability and future of the timber and forest products industry’:

Recommendation 4

That the NSW Government provide long term support to workers in the timber and forest products industry transitioning away from native forestry to other parts of the sector with access to worker transition services, training and retraining support, relocation support, and counselling.

Recommendation 5

That the NSW Government consider the impact of a transition away from public native forestry on communities where native forest logging currently occurs and provide investment and incentives to encourage new economic opportunities in publicly owned forests.

Recommendation 19

That the NSW Government consider commissioning a cost benefit assessment of the native hardwood forestry sector to consider the most beneficial use of public native forests and the long-term structure of the native hardwoods timber and forest products industry.

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