The forest industry in Australia has some serious basic issues that need to be fixed before anyone is going to take the industry seriously.
This is one of them.
It has to do with competition, level (commercial) playing fields, ratepayer subsidies and community support.
In Australia we can have the situation of two forest owners who are neighbours, one of whom pays local Government rates (taxes) on their forest land and the other does not.
One owner gets to use local Government roads to carry logs for free, the other has to pay rates to help maintain the roads. The former gets a subsidy (free roads) from his neighbour (and other ratepayers), to the competitive disadvantage of his neighbour, and any other landowner thinking of growing trees for wood production. Why compete against growers who get to use the roads for free.
And why subsidise these forest growers anyway? Everyone else pays rates!!
It’s an astonishing situation.
And local Governments around Australia are complaining more and more. Here are two recent examples:
Oberon mayor will continue fight for better deal on forestry land
Lithgow City Council joins call to abolish Forestry rate exemption
This can be either a) State forest agencies not paying rates on either native forest or plantation land, or b) privatised former Government plantation owners being exempt from paying rates such as in Queensland.
The Mayor of Oberon says a lot of very good things in that article. Well worth reading.
How can the forest industry hope to gain community support if it treats local communities with such blatant contempt?
Ratepayers should be marching on City Halls around the country demanding action!
Why are Australians continuing to subsidise the forest industry?
How many Australians even realise they are subsidising the forest industry through their local rates?
Not very many is my guess.
No forest companies or State forest agencies tell us if they are paying rates on their forest land. And I bet no local Councils/Governments tell their rate payers if they are subsidising the industry. I went to the Oberon local government website and couldn’t find any mention of the issue. Not even the ratepayers of the Oberon Shire, NSW are allowed to know they are being ripped off!
https://www.oberon.nsw.gov.au/
Why does the forest industry accept these deliberate market distortions that destroy competition, inhibit investment and ultimately destroy the industry’s future?
Growing trees for wood production is a business right? Just like every other primary industry.
Removing these deliberate market distortions would help put the forest industry onto a level playing field. It would help make the industry more competitive and encourage investment.
The only basis for a successful forest industry is profitable (unsubsidised) tree growers.
NSW Forestry Minister Paul Toole responds
So the NSW Forestry Minister Paul Toole rushes in to confirm that the forest industry IS a taxpayer and ratepayer subsidised loss-making community service.
The forest industry IS NOT a primary industry at all!
It’s knowingly anti-commercial and anti-competitive!
https://www.oberonreview.com.au/story/5599831/think-about-the-affect-of-a-rates-change-on-forests-land-toole/
Firstly comes the threat of job losses from the Minister.
Yes the forest industry has been subsidised for so long that job losses are inevitable. The forest industry needs to become competitive in global wood markets otherwise it will wither and die. Subsidising the forest industry wont save it!
But once the industry becomes fully commercial and competitive comes the opportunity for growth and expansion, and more jobs. Curious that the Minister only focuses on the negative, not on the opportunities.
Second comes the idea from the Minister that State forest is Crown land and is not rateable. The fact that private forest owners are immediately disadvantaged by this situation is completely ignored. If anyone (Government or private) grows trees for wood production then that is a business and must be treated as such, and treated equally. A level commercial playing field is absolutely essential.
Talking about cemeteries, parks and racetracks is deliberate obfuscation!!
Finally the Minister tries to convince his readers that the NSW Forestry Corporation is a community service NOT a business.
Another furphy!
NSWFC’s primary purpose is to manage forests for wood production AS A BUSINESS!! Why else is it called a corporation? And as a corporation it must be managed like any other private tree growing business and pay rates.
The Oberon mayor Cr Sajowitz said last week that she wanted to stress that a “vibrant, expanding timber industry is absolutely vital to the economic stability, growth and prosperity of our towns”.
But she said “government profit at the expense of local communities is not tenable”.
The Oberon Mayor is completely correct but she could provide a broader, more forceful argument.
If the forest industry can’t operate in a fully commercial and fair manner then it’s future is indeed grim.
How is the forest industry going to remain competitive in global markets if it relies on increasing subsidies?
How is the forest industry going to attract private investment if private investors have to compete against a subsidised competitor?
These basic matters of proper commercial management need to be resolved if the forest industry in Australia is to have any future at all.
Unfortunately there are very few people who understand and even fewer who are pushing for change.
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Posted in Commentary, Markets, Politics