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NSW Govt selling native timber from South Coast forests for between $6.90 and $16 a tonne to Japanese-owned woodchip mill; taxpayer loss of $3.5 million

Posted by gmarkets on 9 October, 2007

According to Wendy Frew, an environment reporter, industry experts said NSW taxpayers were subsidising a Japanese woodchip mill on the South Coast to the tune of $3.5 million a year because the State Government was selling native timber to the mill too cheaply, reported The Sydney Morning Herald (1/10/2007, p.5).

Government subsidy alleged: At a time when there were fears native forest logging was fuelling climate change, the Government was selling native timber from South Coast forests for between $6.90 and $16 a tonne to an Eden woodchip mill owned by Japan’s South East Fibre Exports. The Government said the operations “pay their own way” but environmentalists and forestry analysts believed it was under pressure from unions and Forests NSW to maintain industry jobs. “It is actually costing the Government money to run this operation … but the CFMEU gives a lot of money to the Labor Party,” said an anti-logging campaigner, Harriet Swift. “The bureaucracy of Forests NSW is very good at looking after itself, too.”

Windfall profits for foreign mill owners: The native timber prices for the 2003-04 year were so low they did not cover Forests NSW’s own costs, leading to windfall profits for the mill, said a forestry analyst, Terry Digwood. The figures were revealed following a freedom of information application to Forests NSW. The Government made a loss of $3.5 million in 2005-06 supplying native pulp-quality logs to the mill, analysis done by Mr Digwood showed. The Eden chipmill had made windfall profits for 35 years as a result of paying low royalty rates for its pulp logs. “All of these profits are foreign-owned and are a negative item in the current account in the balance of payments,” said Mr Digwood.

Forest agency defends practices: The mill also bought cheap native timber from Victoria. Mr Digwood estimated the combined NSW and Victorian subsidies were worth about $9 million a year. Forests NSW said less than one-fifth of the total volume of pulpwood was sold for $6.90 a tonne. It said pulp-quality logs from forest thinning and harvesting residues were “legitimate products that pay their own way”, but provided no information to back the statement. The government agency did not publish separate profit and loss statements for its native timber and plantation timber businesses. Forests NSW’s chief executive, Nick Roberts, defended the agency’s environmental credentials. “We are not clear felling huge acreages, we are selecting single trees or thinning,” he said.

The Sydney Morning Herald, 1/10/2007, p. 5

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