The Tasmanian State Government and Forestry Tasmania regard special timbers production as a taxpayer-funded community service. Tasmania’s most valuable timbers are produced for the poor, the needy, and the deserving.
Forestry Tasmania recently released their annual report for 2015, and it provides another wonderful opportunity to demonstrate the disaster that is public native forest management in Tasmania in the 21st century.
http://www.forestrytas.com.au/news/2015/10/2014-2015-forestry-tasmania-annual-report
Things are going from bad to worse. For my review of last years Annual Report go here:
http://blackwoodgrowers.com.au/2014/10/31/continuing-the-decline-forestry-tasmania-2014-annual-report/
But first an apology to readers. I have just become aware that I have been a victim of Forestry Tasmania’s special timbers obfuscations. Forestry Tasmania has an obligation and commitment to supply and report on “millable” special timbers sawlog production. But by including non-millable “outspec” and “craftwood” products in the reporting mix since 2008, they have created confusion and obfuscation to the point where “non-millable” products now dominate special timbers production and reporting. But FT has no obligation or commitment to produce or report on non-millable special timbers. Reporting on special timbers “millable” products is now at a minimum. Sustainable yield has become irrelevant. See below for details.
Special timbers are mentioned in many places in the Annual Report with the main production discussed on pages 21-22. Once again there is absolutely no discussion of commercial matters.
Deception #1
In 1991 with the Tasmanian Forests and Forest Industry Strategy, again in 1997 with the Tasmanian Regional Forestry Agreement (RFA), and again in 2010 with the Special Timbers Strategy Forestry Tasmania made the commitment to supply 12,500 cubic metres per year of millable special timbers sawlogs to the market (see Table below). This comprised 10,000 cubic metres of blackwood with the remainder being other species. That’s 25 years of commitment to supply and report on special timbers sawlog production.
This commitment was given within the context of significant ongoing “sovereign risk” concerning access to and management of the public native forest resource.
There has never been an obligation or commitment to supply or report on non-sawlog special timbers production.
In addition in both 1999 and in 2013 Forestry Tasmania published sustainable yield estimates for blackwood sawlog production. This has significance as the only other sustainable yield calculation that FT produces is for native forest eucalypt sawlog.
FT is therefore obliged to report against their repeated special timbers commitments and against the blackwood sawlog sustainable yield estimates.
However you have to go all the way back to the 2007 Forestry Tasmania Annual Report to get a clear unambiguous report on the production of total special timbers “millable logs”. In that year there was a separate table showing non-millable (craftwood & outspec) production. This was the first time that non-millable production was ever mentioned in the annual report.
Between 1995 and 2007 (12 years) Forestry Tasmania did not publish special timbers sawlog production by species. Only total production figures are available for this period.
From 2008 onwards the reporting of special timbers production becomes increasingly obfuscated. From 2008 onwards it is unclear exactly what the actual sawlog production by species is, as non-sawlog (outspec and craftwood) becomes mixed into the reporting structure.
The use of simple production tables and charts to show production by product and species, and hence demonstrate sustainability/profitability is completely absent.
Instead FT uses charts to show production by species, but it is unclear whether these charts relate to combined millable and unmillable production, or just the millable production. By 2014 and 2015 however it is clear that the charts of production by species refer to the combined and not the millable sawlog production. [Never mind the fact that the 2015 chart (p. 22) shows “Area (hectares)” and not “Production (cubic metres)”].
These are experienced, professional people who know how to write reports.
This is pure obfuscation!
So much for commitment! So much for transparency!
It’s a deliberate attempt to obscure the fact that millable special timbers sawlog production has plummeted, due to decades of overcutting of the resource and sovereign risk. See Chart below.
Here is the table of special timbers millable sawlog production commitments made by Forestry Tasmania in 1991, 1997 and again in 2010, against which they have not reported since 1995.
Annual supply targets for special timbers millable* logs for the ten-year period to 2019.
| Species |
Annual volume (m3) |
| Blackwood |
10,000 |
| Silver Wattle |
500 |
| Myrtle |
500 |
| Sassafras |
500 |
| Celery-top pine |
500 |
| Huon pine |
500 |
| King Billy pine |
Arisings only |
| Other species (including figured eucalypt) |
Arisings only |
| Total |
12,500+ |
* Millable logs include ‘Category 4’ sawlogs and ‘utility’ logs (Special Timbers Strategy 2010, p. 21).
I have contacted FT in the hope of gaining some clarity around their special timbers millable log production data.
Deception #2
The 2013/14 Forestry Tasmania Annual Report had a list of objectives for the 2014/15 year which included:
Produce 11,300 cubic metres of special species timber [quality unspecified], and conduct at least 12 tenders for special species logs (2014 Sustainability Report p.56).
That is an immediate breach of their commitment to produce 12,500 cubic metres per year of millable special timbers sawlog per year.
And so to this year’s Annual Report:
During 2014/15, Forestry Tasmania produced a total of 11,042 cubic metres of special timbers from Permanent Timber Production Zone land. This comprised 5,051 cubic metres of millable logs, with the remainder being [non-millable] ‘out of specification’ sawlog and craftwood.
Of the 11,042 cubic metres special timbers produced 3,744 cubic metres (34%) were “sold” through Island Specialty Timbers (IST). Of the 3,744 cubic metres “sold” through IST 220 cubic metres (2.0% and 5.9% respectively) were sold through the online tendering process to ensure that the best possible prices were obtained.
I created the chart below to clearly show what we currently know with certainty about special timbers production for the last 9 years from Tasmania’s public native forests. You won’t find a chart like this in any Forestry Tasmania publication.
Over the last 3 years FT has collected a whopping 17,700 cubic metres of special timbers non-millable craftwood off the forest floor at taxpayers expense for which they have no supply obligation or commitment!! That’s equivalent to 900 truck loads. For the same period only 15,700 cubic metres of special timbers sawlog was produced. That’s 20,000 cubic metres of sawlog short of the supply commitment!! Most of the missing volume is blackwood sawlog.
Why aren’t the alarm bells ringing??
Where is this vast volume of craftwood going? Who is buying it?
What are the sawmillers/boatbuilders/furniture makers doing with no sawlog resource?
Remember most of the special timbers story is about blackwood which makes up to 90% of annual production. So despite having a commitment to supply 10,000 cubic metres of blackwood sawlog per year, plus a sustainable yield estimate against which to demonstrate good forest management, we do not know with any certainly exactly how much blackwood sawlog has been harvested over the past 9 years.
Instead the chart shows the final declining years of Tasmania’s special timbers industry, including our iconic blackwood industry. Blackwood timber could be grown by Tasmanian farmers if they were encouraged. Instead all we get is politics, conflict and wasted taxes.
Welcome to Tasmania!
Only two other useful pieces of information are provided in the Report concerning special timbers production. One is that 216 cubic metres of Huon pine sawlogs and 128 cubic metres of Huon pine craftwood were recovered from West coast forests, rivers and beaches. No information is available on how much it cost Tasmanian taxpayers to have this timber brought to market.
The other information is the curious comment:
The [IST] tendering program received strong interest, with the highlight for the year being a 0.57 cubic metre blackheart sassafras log that sold for $3,815 per cubic metre.
It’s curious because a) the Government has absolutely no interest in the real market value of its special timbers assets, and b) my records show that the IST highlight for the year was in fact a Tiger Myrtle log which sold at the April 2015 tender for $5,900 per cubic metre!! Curious!!
http://blackwoodgrowers.com.au/2015/06/18/ist-blackwood-sawlog-tender-results-2014-15/
Clearly the market is prepared to pay exceptional prices for quality Tasmanian timber. But forestry is not about business or profits. It’s a community service funded by taxpayers. Prices apparently are completely irrelevant.
Deception #3
Finally after many years we get a clear statement of exactly how much taxpayers money is being wasted subsidising boat builders, furniture makers, guitar makers and Salamanca trinket makers.
The community service obligations costs are set out on page 64-65 of the 2015 Annual Report. They total $6.87 million dollars of which $0.9 million dollars (13%) is used to fund special timber workers. That is a subsidy of $81.56 per cubic metre of special timber produced.
Community Service Obligations
In August 2014 the State Treasurer and the Minister for Resources directed Forestry Tasmania to provide the following community services. In undertaking these community service obligations Forestry Tasmania incurred net costs and was funded to the extent indicated below.
Special species management
- Government funding $0.90million
- Identify, manage and harvest special species timber and manage the Huon pine log stockpile (Annual Report p. 64).
Tasmania is subsidizing wood that sells for hundreds to thousands of dollars per cubic metre in raw log form.
Tasmanian blackwood timber retails for $7,500 per cubic metre, and Tasmanian taxpayers subsidise this!! Why?
http://blackwoodgrowers.com.au/2015/10/26/blackwood-pricing-and-the-forest-industry-2/
Can anyone please provide me with some logic here?
That’s a $900,000 Tasmanian taxpayer subsidy so that the best possible prices are achieved on just 2.0% of the special timbers produced!!
So what’s the deception?
The deception is that any of this special timbers management and sales are logical let alone reasonable. Logic and reason, let alone profitable, sustainable forest management are completely absent.
Our forest managers and our politicians are definitely playing us for fools.
That this fiasco provides a sound moral, political, social and commercial basis for logging the Tasmanian Wilderness World Heritage Area is just offensive.
That this fiasco is applying for Forest Stewardship Council (FSC) certification is just a joke. Forestry Tasmania is a million light years from good profitable, sustainable forest management.
That this fiasco already has PEFC Australian Forestry Standard (AFS) certification makes a complete mockery of that particular certification system.
For his usual brilliant review of FTs miserable commercial performance and management for 2014/15 you should read John Lawrence’s blog here:
http://www.tasfintalk.blogspot.com.au/2015/10/has-ft-turned-corner.html
My apologies for such a long blog but what can one do when faced with such a disaster.
When will Tasmania get a fully commercial, profitable forest industry?
Tasmanian Blackwood Growers Cooperative 
Legislative Council GBE Oversight Committee 2015 – Forestry Tasmania
Following on from my previous blog I have now reviewed the GBE Scrutiny transcripts in relation to special timbers. They provide me with no cause for optimism.
I don’t know why we have Corporate Governance standards in Australia.
Clearly they don’t apply to Government business enterprises.
Even more clearly our politicians have no understanding of their corporate governance responsibilities.
Friday the 4th of December was the annual fiasco called the GBE Oversight Committee with Forestry Tasmania as one of the performing circus acts.
The transcript from the 3.5 hour performance is available here:
http://www.parliament.tas.gov.au/ParliamentSearch/isysquery/9b76370a-4ba7-473d-9766-61717c5e7862/1/doc/
It makes for sad reading. In fact I would advise against reading all 52 pages. Severe brain haemorrhaging may result.
My review here focuses on special timbers/blackwood as they were discussed by the committee.
Special timbers are mentioned 28 times in the 52 pages of transcripts, on pages 2, 17, 18, 37, 39, 40, 49, 50, and 51.
Blackwood is mentioned only 3 times, even although blackwood comprises 80 % of special timbers harvest volumes, on pages 18, 49 and 51.
Community service obligations (CSO)/grants are mentioned only in relation to roads not special timbers!
The World Heritage Area is mention 9 times in the transcripts, on pages 39, 40, 46 and 48.
The word “profit” is mentioned 26 times even although Forestry Tasmania has no corporate objective to generate a profit.
So what matters pertaining to special timbers were discussed in the annual “scrutiny”?
What clarity, meaning and understanding does the annual scrutiny hearings provide for special timbers?
Page 2
Spin from the Resources Minister trying to oversell FTs performance including “and the speciality timbers effort has also been buoyant – I think more buoyant this year than even two years ago, at about 11 000 cubic metres of speciality timber”. Most of this 11 000 cubic metres is craftwood and outspec log for which FT has no supply contracts or commitments. FT is supposed to produce 12 500 cubic metres of special timbers sawlog per year.
Pages 17 & 18
A question from MLC Ivan Dean about the profitability of special timbers:
“CHAIR – That was the point of your question: how long before you can see the business becoming profitable as a whole?
Mr DEAN – That is very clearly it. With specialty timbers, is there a profit returned to Forestry Tasmania?
Mr ANNELLS – It depends who you ask.
Mr DEAN – That’s why I am asking you. You are the chairman and you ought to know – and with the minister here I would thought we would get the truth.
Mr ANNELLS – I certainly hope you would.
Mr DEAN – I would hope so.
Mr ANNELLS – I will flick it to my chief executive.
Mr WHITELEY – With special timbers, some portion of it is profitable and others it is done as a CSO. Things like blackwood swamps and those sorts of things are really profitable. Wood that is picked up associated with native forest harvesting is profitable in the sense that roading has been provided by an outscale operation. Things like Huon pine aren’t profitable in their own right. We receive some assistance in recovering Huon pine – and it varies. Within our operations there is a profitable component and another component that requires some support.
Mr DEAN – Why can’t it be profitable? It’s a very sought-after timber worldwide. The users of it tell us they are paying higher prices for it where they are getting it from – obviously a lot of it through Forestry Tasmania. Why is it not possible to make it profitable in the circumstances – Huon pine, for instance?
Mr ANNELLS – Basically because the market will only pay a certain price. It is not an inexhaustible or elastic price mechanism. Huon pine is harvested like a lot of specialty timbers, as a by-product of our main activity. At the moment we have very significant costs for roading and other establishment costs that if we try to apply it against Huon pine, for example, would take it beyond the reach of all but the very few. We choose to sell special species timber at what we think the market will bear, but we do not seek to gouge in that process because to do so, we think, would lead to more bad publicity and, quite frankly, the market would simply dry up until we reduced the price again.
I have a lot of confidence in our people who are setting the price for this sort of stuff. You will always be able to find examples where people say, ‘You could have got more for this or that’. That is why we set up Island Specialty Timbers, much criticised in certain places, but it was a genuine attempt to bring some stability into the marketplace and to test the marketplace pricewise on a more regular basis”.
And the answer is a lot of mealy-mouth waffle.
No mention of the fact that in 2014-15 FT received a $900 000 taxpayer subsidy for it special timbers operations. That’s $82 per cubic metre subsidy.
Given the context of the question I find Chairman Bob Annell’s answer “It depends on who you ask” to be highly offensive; as if squandering taxpayers money is of no consequence whatsoever. And none of the MLCs called him on his attitude!
Mr Dean was after “the truth”. Instead he got obfuscation.
Some parts are profitable some parts aren’t. Why can’t it be profitable? “because the market will only pay a certain price!” “we choose to sell special species timber at what we think the market will bear!”
Has anyone heard of competitive market-based pricing?
It’s enough to make you cry!
These are adult businessmen talking as though they know absolutely nothing about economics and markets.
“That is why we set up Island Specialty Timbers, much criticised in certain places, but it was a genuine attempt to bring some stability into the marketplace and to test the marketplace pricewise on a more regular basis.”
Even although the tiny amount of wood that IST sells through tender and the prices they get bear no relationship at all to the administered price that FT sells to its long term customers.
And no member of the oversight committee sought any further clarification or understanding around wood prices and markets!!
No mention of the CSO grant and no question about how the $900 000 of taxpayers money was spent?
Pathetic!!
Page 37
A very specific question about 72 kilometres of new roading for special timbers from Ivan Dean, for which he got no answer.
Page 39
A question from Rob Valentine about special timbers regeneration following clearfelling. A question that seems completely irrelevant as it is generally known that the eucalypt regeneration will be harvested again long before the special species are of any commercial value for wood or honey.
Page 40
A question from the committee Chair MLC Tania Rattray about the UNESCO delegation visit and special timbers harvesting in the World Heritage Area.
Given the political and social significance of special timbers logging in the World Heritage Area the lack of any serious questions from the committee about this subject is truly negligent. True it doesn’t directly involve Forestry Tasmania, but this is the main forum for discussing public native forest management and special timbers, so why the silence?
Pages 49, 50 and 51
More questions from MLCs Ivan Dean and Tania Rattray about special timbers supply and demand, which produce no clear credible answers. A new management plan is mentioned. The Three Year Wood Production Plan is mentioned. Hydrowood is mentioned, but not by name. By page 51 the mind is confused and exhausted.
Not one of the committee members seems to understand that the Hydrowood project may have significant positive and negative impacts on the special timbers industry. Certainly no one asked any questions in this regard.
Mssrs Dean and Rattray seem to be the committee members who have an interest in special timbers, but they seem to share the general view that our forests are a community service not a commercial resource. Never mind the fact that private growers are also competing with FT in the special timbers market.
I guess our elected representatives are busy people and just don’t have the time or interest to understand the special timbers industry and forest economics generally.
Three and a half hours and barely one useful question and certainly no useful answers.
I’m not sure what is more pathetic – the lack of quality and depth of the questions or the lack of quality and depth of the answers.
Even reading small parts of these transcripts is a mind numbing experience. The lack of clarity, purpose and outcome in these scrutiny hearings is truly staggering.
Twelve highly paid people in one room for 3.5 hours wasting time and money.
Three and a half hours of scrutiny and the special timbers industry is no better off than before.
Perhaps I should send a list of questions to the committee members next year so that they may better perform their corporate governance responsibilities, and the Tasmanian community may actually get some useful information from this circus act.
When will Tasmania get a fully commercial profitable forest industry?
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