The woodchipping industry in the south east is costing NSW taxpayers almost $5 million a year, according to information released in State Parliament today.

According to forest campaigner, Ms Harriett Swift, Convener of the Chipstop campaign, the figure can be calculated from the answer to a Question on Notice received by Greens MP Ian Cohen today.

Mr Cohen asked for details of what proportion of the total losses incurred by the Native Forest Division of ForestsNSW was attributable to woodchipping in the south east.

The answer*  supplied by the Minister for Primary Industries, Minister for Emergency Services, and Minister for Rural Affairs, Steve Whan reveals that 30.6% of the total loss is attributable to native forest logging on the South Coast.

In 2007/8 the total native forest logging loss was $14.4 million. A year later it was $15 million.

“On that basis, taxpayers are currently losing $4.6 million dollars a year to keep the woodchipping industry operating on the far south coast,” Ms Swift said.

“The chipmill’s profit last year was significantly lower than the FNSW loss and it is clear that without the underpriced, subsidised pulp logs from Forests NSW, South East Fibre Exports would have made a loss last year,” she said.

“While the Government figures do not separate losses from woodchipping from other operations, we know that woodchipping accounts for 95% of wood felled in the Eden Region.”

Ms Swift said that the woodchipping industry is bad enough even when it is not being subsidised, but for taxpayers to foot the bill adds insult to injury.

24th November 2010

*$file/Q101123.179.pdf *5583


Planning, Minister for Infrastructure, Minister for Lands representing the Minister for Primary Industries,
Minister for Emergency Services, and Minister for Rural Affairs
(a) When are the next Wood Supply Agreements to supply South East Fibre Exports from Southern
and Eden regions expected to be finalised?
(b) What has been the process for drawing up new agreements?
(c) For what period will they run?
Legislative Council Questions and Answers No. 179 Tuesday 23 November 2010
(d) Will there be any review mechanism?
(e) Will they contain 'take or pay' provisions?
(f) At what point do they become public?
(g) Will the new Wood Supply Agreements for wood from the southern region extend beyond the
life of the current Regional Forest Agreement for that region?
(h) What provisions exist for cancelling the Wood Supply Agreements or changing wood volumes
or royalty prices?
(i) Will the Minister for Primary Industries approve any new agreements?
(2) The Auditor General's performance report into Forests NSW found that native forest logging made a
loss of $14.4m in 2007.08. Does Forests NSW intend to keep on making a loss on native forest
(3) The Auditor General's performance report into Forests NSW did not look specifically at
woodchipping. Does Forests NSW have an estimate of what proportion of the $14.4 million loss was
from the following:
(a) The supply of pulp logs?
(b) The South Coast Southern Region (including Eden)?
(4) Recommendation 7 was that: Forests NSW "investigate the potential for developing commercial
markets for forest waste".
(a) What plans are there for this?
(b) What progress has been made?
(5) What is Forests NSW's definition of waste?
(6) When will Forests NSW increase its royalty prices in response to the Auditor General's report?
(a) Within the next few months.
(b) The proposed new agreements were drafted by Forests NSW as a basis for negotiations with
(c) to (e) Details of the new wood supply agreements are currently under negotiation.
(f) Public access to wood supply agreements is in accordance with the provisions of the
Government Information (Public Access) Act 2009.
(g) The terms of the Wood Supply Agreements are being negotiated with SEFE.
(h) Details of the new Wood Supply Agreements are currently under negotiation.
(i) The approving authority will depend on the proposed term of the new wood supply
agreements. The Commissioner for Forests may approve wood supply agreements of up to 5
years duration. Only the Minister for Primary Industries has authority to approve wood supply
agreements of more than 5 years duration.
(2) No. Forests NSW expects to achieve a cash neutral financial outcome for its Native Forests
Operations Branch by 2012.
(a) and (b) Forests NSW estimates that 30.6% of the loss of the Native Forest Operations Branch
was attributable to Southern region operations. The proportion of the loss attributable to pulplog
supply has not been estimated separately.
(a) and (b) One opportunity emerging for "forest waste" (as the term is used by the Auditor
General) is the renewable energy market. Forests NSW is undertaking a trial with Visy
Industries in the softwood plantations of Hume region on collecting post harvest waste for
biofuel and potentially additional pulp quality material.
(5) In the context of the Auditor General's Performance Audit report, the term is used to refer to
harvested wood fibre for which there is not a current market. The term may also encompass forest
residues burnt after harvesting to promote regeneration.
Legislative Council Questions and Answers No. 179 Tuesday 23 November 2010
(6) Yes, the first of a series of price increases commenced on 1 April 2010.