Motions: Timber Industry

Thursday April 04, 2019

Mr BELL (Mount Gambier) (11:02): I move:

That this house establish a select committee to inquire into and report on the exporting of wood fibre and other matters regarding the timber industry in the Limestone Coast of South Australia, and in particular—

(a) whether the exporting of wood fibre is in compliance with the conditions of sale of the radiata pine forests in the Limestone Coast, sold by the previous state Labor government;

(b) the volume of radiata pine log being exported from the Limestone Coast area;

(c) the economic benefit and employment opportunities through additional wood fibre based industries should the current exported logs be made available for processing in South Australia;

(d) the supply agreements between forest growers and processors; and

(e) any other matter the committee deems relevant to the wood fibre industry in the Limestone Coast.

A broader inquiry is needed into the Limestone Coast region's forestry sector taking into account what has happened in the past, the present and the future. It has been nearly nine years since the harvesting rights to the South-East forests were sold off by the previous Labor government, but this is still an incredibly contentious issue for my electorate.

Many questions remain about the finer details of this sale, including the value of the asset. Many questions remain about compliance with the conditions of this sale. Many questions remain about the harvest rates of the forests and many questions remain about the supply agreements with processors and the amount of wood fibre exported from the Port of Portland. This week, the state government announced an independent audit on the lease agreement with OneFortyOne Plantations, something I have been asking for for quite some time, and it is perhaps in response to part A of the inquiry, but it is interesting to note that the independent audit is only for the 2018 calendar year.

Many questions remain about the number of trees harvested from 2012, when the forward rotations were sold, up to the current year of 2019. In my opinion, a limited audit of just 12 months does not capture past practices that may have been in breach of the forward sales agreement. I would ask the government to expand that audit from a 12-month audit to one that includes the period of time from 2012 so that any breaches and fears of overharvesting can be allayed once and for all in my community.

It is interesting that the Marshall Liberal government came to the 2018 election with a stated policy of an independent audit. We are now 12 months past that time, and there is a concern in my community that, if there have been breaches in the past, the company has known about this for 12 months and has had at least 12 months to rectify any previous breaches. I am not saying that there have been breaches. All I am saying is that that is a concern in the community if the independent auditor is limited to just the previous 12 months. It is well past 12 months since the state election.

A genuine concern for many in my community, including processors, is that the company may have improved its practices and that it will not address the overharvesting. My community has called for this inquiry. They would like to get to the bottom of what is going on in terms of the amount of wood fibre being exported. I want to assure companies that this is not a witch-hunt and I am not targeting one particular grower. This inquiry would look at all companies exporting wood fibre, not limit it to just one company.

My community is requesting that the inquiry look into issues directly affecting the future of the Limestone Coast timber industry—that local processors are missing out when it comes to competing for log supply with the export market. In short, a large volume of our wood fibre is going offshore when processors are telling me that it can be utilised locally. There are hundreds of jobs that can be created in the Limestone Coast if exports of raw log was reduced or quotas introduced.

Over the last 24 months, I have been approached by three separate companies—established companies—wanting to invest or expand in Mount Gambier. These three companies have a potential investment of more than $300 million in the South-East, and around 600 jobs on offer. If you sit back and look at that from a government's point of view, we are exporting raw product out of the Port of Portland that could be invested or lead to investments in the South-East of $300 million and 600 new jobs. That is the basis for me and my community calling for this inquiry.

These companies that would love to invest and employ are hamstrung by the fact that they cannot access the additional wood fibre. It is a tragedy when you see truck after truck transporting that raw product over the Victorian border to be exported out through the Port of Portland. It does not even come up to a South Australian port where the benefit would be realised by the South Australian government and the people of South Australia. In my opinion, wood grown on the Limestone Coast should be available to the Limestone Coast businesses first. We need to have policy measures that incentivise these companies to look locally first.

Growing our economy should be our priority, not shipping off raw product and jobs overseas. In short, South Australia and our communities are missing out. Believe it or not, Australia has a $2 billion trade deficit when it comes to importing sawn wood products. That means that we are sending our raw product overseas and importing $2 billion more in value of processed wood product. Much of that product can be processed locally. It makes sense to me to look more closely at this for the benefit of not only those living in the South-East but those living in South Australia.

Countries across the world are beginning to put in place export tariffs to protect local jobs. I am not suggesting that we go that far, but it is interesting that other countries are looking at this to protect local jobs. In fact, Australia and New Zealand are the only countries that provide no protection for local manufacturers. Meanwhile, the shortage of timber is now affecting other industries. Vignerons, like Coonawarra's Doug Balnaves, are waiting up to 12 months for timber posts to grow and maintain their vineyards.

In a news story last year, Doug spoke about how ridiculous it is that the Coonawarra wine region is smack bang in the middle of a large and successful timber region but they cannot get access to these vital products. Primary producers, like Mingbool potato grower Terry Buckley, have also spoken out about having to use imported timber products for storage and transportation pallets because their local suppliers cannot access the raw product.

David Quill is the CEO of the SA Timber Processors Association (SATPA), and he has been outspoken on this issue for many years. SATPA member companies are all family-owned businesses and directly employ South Australians. I agree with David when he says it:

…makes no sense to sell our natural resources from under local jobs.

Australian domestic manufacturers need reasonable terms of contract in any supply agreement and a level playing field.

OneFortyOne Plantations recently announced that they will not export sawlog from their estates, with their executive general manager saying that it is the 'strongest domestic market they have seen for more than 15 years'. I applaud OneFortyOne for their decision. It is important to note that OneFortyOne is only one supplier, and this commitment is only until June 2020. So you have the problem that local processors, who are investing millions of dollars into their plant and equipment, only have that guarantee for another 12 months.

The forestry industry is one of the Limestone Coast's key economic drivers and supports thousands of jobs, both directly and indirectly, through services and employment. When I say I have the full support of my community, that includes the council, and I will read out one letter of support from the City of Mount Gambier:

At a meeting of the City of Mount Gambier convened on 19 March 2019 Council resolved to express its full support for your proposed Notice of Motion to Parliament recommending 'That a Select Committee of the house be appointed to inquire into the Economic Impact Exports of wood fibre is having on processors of the South East of South Australia'.

The letter goes on to talk about the importance of that industry for our community. The future of our forests and our timber industry depends on better management, support and regulation, where it is needed, from this state government. There needs to be some greater scrutiny on what is going on from an independent regulator.

In closing, this inquiry is not trying to target one company. This inquiry will look at the lost economic opportunities for the South-East and for South Australia. If you saw the photos and the evidence of how much wood product is being exported out of the Port of Portland, they are missed opportunities for our state and lost jobs for our region.

What I am seeking, with this inquiry, is the facts. How much product is being exported? What is the economic loss to our state and to the community? It does not go as far as to seek tariffs or other mechanisms; all I am trying to establish is the facts, so that when policy is developed it can be done with the facts in mind to grow jobs in South Australia, jobs in the South-East and revenue for this state. With that, I commend this motion to the house.