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STFFN newsletter - Autumn 2006

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Where plantations are a significant feature of a regions landscape, rural livelihood is enhanced...

The most recent Abare report predicts the real value of the beef, dairy and wool industry will decline over the next 5 years. The same report reveals that Australia has an almost $2 billion annual timber and wood products trade deficit. Although new plantations, especially hardwood in Southern Australia have dramatically increased in recent times, it has not been enough to stem our increasing demand for wood.

Lately there has been much criticism for the impact that plantation forestry is having on the value of rural properties, as well as the visual landscape changes. Regions with significant plantation industries on the other hand, have higher socio-economic conditions than regions without. Plantations not only bring jobs and new industry opportunities, but they can be used to complement traditional agricultural enterprises.

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The Family Forest Option by Francis Clarke

Francis Clarke has been a keen proponent of farm forestry, both plantation and native forests, for the past 34 years. He is a past President of Australian Forest Growers and is currently extending his house with timber he has planted, grown and sawn.

The most sustainable land use in New South Wales is well managed Private Native Forests. Only local native species are grown. Chemicals are rarely applied - no artificial fertiliser, few if any herbicides. Biodiversity is actively encouraged and the forest protected from wildfire, weeds and disease. Native forests can be managed – greenhouse positive, for continuous yield or on very long rotations (60-120 years) with good profits to the owner. There is little if any erosion - even at harvest time and water quality is improved compared to other land uses. All this is at no cost to the taxpayer, just improved local employment and social outcomes. What more could you ask for in a sustainable triple bottom line!

New South Wales has about eleven million hectares of Private Native Forest (PNF), very little of which is being actively managed for economic returns or for improved environmental outcomes. Most owners put low or negative economic values on their native ‘bush/scrub’. Many such areas have been degraded by constant grazing or the ‘high grade’ cutting of the best trees leaving only inferior trees to grow and propagate. Such land is usually just waiting for the next wildfire.

How can this be changed? Well there is a plan being developed for the private native forests located on ‘Pinebank’ near Tarago that could well point the way. The private native forest managed by Francis Clarke of Pinebank Pastoral Co recently achieved certification under the Australian Forestry Standard (AFS) – the fourth organisation to achieve such a distinction. The internationally recognised AFS is a very high bar for a small, family managed forest, to jump and ‘Pinebank’ is still the only private forest to become accredited.

Maintaining the forest management objectives over the full rotation, which at ‘Pinebank’ will be 100+ years (the forest is currently 78 years old), requires generational change but younger family members have other aspirations. A solution could be that a group of new forest owners continue the forest management objectives while benefiting from a tax deductible rural investment with life style attractions. Development approval has been obtained for the subdivision of five 40ha native forest lots with building permits. Most lots also have a small component of maturing pine plantation and grazing land suitable for a horse or two.

If the new owners of these lots choose to maintain the AFS certification and plan to operate their forests as a micro business, it would be possible to apply for Commissioners discretion to offset operational costs as a tax deduction. Family forest ownership is a common land use in Europe and North America, why should it not become the way of the future for Australia’s native forests.

For further information contact: Francis Clarke on 02 4849 4523 clarkef@gis.net.au

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Pine seedling sales 2006

Get Your Orders in now!

STFFN will again be selling pine seedlings in July/August 2006. Delivery dates will be 14th and 28th July, and 11th and 25th August. This is fewer delivery dates than 2005, as some delivery dates had less than 40 boxes. When you ring up to order, please have selected which delivery date(s) you want, as there will be no further follow up.

Seedling sales are only possible with the goodwill and assistance of a lot of people. Dan & Dan Landscaping Services allow STFFN the use of their depot in Dunkley Place, Spence, free of charge. Pick up times for seedlings are strictly 9am to 3pm, as Dan & Dan use the depot on a daily basis for their landscaping activities, so that it is essential that these pick up times are adhered to.

State Forests of NSW supply seedlings packed to STFFN specifications at a competitive price, and K&D Smith Transport fit in with the delivery schedule. There are 120 seedlings per box, as in past years.

There have been some price increases from 2005 in both seedlings and transport costs. STFFN has tried to minimise costs, but there will be a price rise for orders of nine or less boxes of seedlings, while orders for ten or more boxes will remain unchanged.

The new prices are:

GF19, DR16 9 or less boxes $35 per box
10 or more boxes $33 per box

Special Xmas trees 9 or less boxes $57 per box
10 or more boxes $55 per box

Please phone Ian McArthur on 0412 195 499 with your order and your selected delivery
date(s). Also, please inform Ian McArthur if you do not know where the pick up point is, as there will be no ‘chasing-up’ following the initial phone order.

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Westbourne woods arboretum walks

A free guided 2-hour walk through the grounds of the Royal Canberra Golf Club.
2nd Sunday of every month; 9.30 am at the entrance to Royal Canberra Golf Club,
Bentham street Yarralumla.

No dogs are allowed and the dress code of the Golf Club (no thongs, shorts) applies if you wish to accept the invitation of the Club to take refreshments at the Spike Bar after the walk. For further information contact the guide of the month or Friends of ACT Arboreta on 62887656.

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Socio-economic impacts of plantation forestry

The Bureau of Rural Sciences (BRS) has funded a major study into the socio-economic impacts of plantation forestry. The study was undertaken by Dr. Jacki Schirmer, who now works with the School of Resources, Environment and Society, Australian National University. The research project started because many local government councillors and their constituents were asking what effects plantations would have on their communities. The study examined the social and economic impacts associated with expanding plantation industries in two regions, the Great Southern Region of WA, around Albany, and the South West Slopes of NSW, stretching from Tumut to Albury.

The key results of the study were:


• In the Great Southern Region, where more than 127,000 hectares of plantations have been established since the start of the 1990s, expansion of the plantation estate has not exacerbated rural population decline in the three shires with large areas of plantation. In fact, nearby shires with few or no plantations generally experienced greater population decline from 1996 to 2001 than the shires where most plantations were established.

• In the SW Slopes of NSW, the establishment of plantation processing facilities in regional towns has contributed to growth of working age populations in those towns, and to stable economic growth.

• During periods of high demand for land by the plantation sector, the price of land suitable for plantation establishment increased at a higher rate than the price of most other land in the Great Southern region.

• Most people working in the plantation industry are based in regional towns, such as Tumut and Tumbarumba in the NSW case study, and Albany and Mt. Barker in the WA case study.

• In the Great Southern area, the number of people directly employed by the plantation industry increased from only 20 in 1991, when plantation establishment was beginning, to 500 by 2004. This is likely to increase further as more of the plantation reaches harvestable age.

• In the South West Slopes of NSW, where softwood plantations were established from as early as the 1920s, and there is a considerable processing industry, 1,680 people were directly employed by the plantation sector in 2003/04. This equated to 1.53 jobs per 100 hectares of plantation (including all direct employment to the point of processed timber products leaving the mill door). Of this employment, over 90% was based in the South West slopes region.

The study process examined independent data from sources such as the Australian Bureau of Statistics and state government agencies to answer some of the common questions on the socio-economic impacts of the plantation industry. The authors of the study spent almost two years analysing data and comparing trends in plantation and non plantation areas to find out whether, and how, plantation regions differed from other rural regions. For each question asked, the analysis was intensive. For example, data on over 3,000 individual land sales had to be analysed to compare the prices paid for plantation versus non plantation land in the Great Southern region.

To ensure the data used was accurate, the study authors held focus groups in the case study regions, with local experts such as shire employees and members of the local farming communities asked to examine data for their region to check for any inaccuracy or bias. By doing this, the study team was able to remove poor quality data.

While the study could not answer every question communities are asking about plantations, it did answer questions about the impact of plantation expansion on rural populations, on land prices, levels of spending and investment by the plantation sector, and how much employment is provided by the plantation sector and where that employment is located.

The study identified three phases in the development of a plantation industry, and the employment, expenditure and value of output, population change and the land and property markets for each of the phases.

The three phases of development are:

Phase 1: Establishment of the plantation resource.
Phase 2: Transition phase in which some harvesting and processing of early plantings occurs, along with ongoing establishment of the plantations.
Phase 3: Maturity of the sector, in which the plantation resource is harvested on a rotational basis and a range of products are manufacture by processing facilities.

These three phases are not mutually exclusive and often overlap. For example, 85% of the SW slopes plantation estate had been established by 1991. Since that time, ongoing expansion of processing capacity has occurred in the region. This expansion has created an impetus for the establishment of more plantations to supply processors in the region.

Development of a mature plantation industry generally requires a large area of plantation resource to support the establishment of world class processing facilities that can process a range of products from the plantation resource. It is important to put the plantation area required into perspective. In the Great Southern region, where the plantation area is large enough to support the development of processing facilities, plantations have been established on 10-22% of agricultural land in three local government areas, with traditional agriculture continuing to operate on most land in these areas.

Next newsletter: Will look at the employment, expenditure, value of output, population change, and the land and property markets for each of the three phases.

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Master Tree Grower course update

At the present time, STFFN has eight applicants for the proposed Master Tree Grower course as advertised in the last STFFN newsletter. As at least 12 participants are required per course, it has been decided to postpone the MTG course until early 2007. This will better fit with STFFN staff and leave proposals, and allow more time for members to assess whether they want to do the course.

If you have registered with Ian McArthur, you will still be on the list of possible course participants. If you wish to register for the MTG course, run over eight days, at one day per week, possibly starting early in 2007, please contact STFFN;

Ian McArthur on 0412 195 499 or stffn@bigpond.com

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Field day at Kowen


STFFN, along with Australian Forest Growers (AFG) and Friends of ACT Arboreta (FACTA) will be running a combined field day at Kowen on Sunday 28th May 2006.

The field day will visit:

• The black wattle species trial established in 1994 as a joint venture between ACT Forests and CRIRO Division of Forest Research. There were 24 species of wattle planted in a number of locations in Australia and overseas. Although the trial has been abandoned, it is still useful to see what species will grow in a low rainfall environment in the Southern Tablelands.

• The 1983 Community Employment Programme Eucalypt and Acacia species and provenance trial. This trial contains 121 different species and provenances of mainly Eucalypts, and was one of three sites established across the ACT. Unfortunately, the other two sites were destroyed in the 2003 Canberra bushfires, so this site is now unique. Past politically motivated decisions have seen the site degraded by becoming part of the Canberra International Shotgun Club lease, and the trial has been neglected for some years, but is still worth inspecting.

• A Eucalyptus polyanthemos trial established in the 1950s by Alan Brown. Although slow growing, there are some attractive specimens in the trial worth looking at.

• A small 1959 planting of the Guadeloupe provenance of Pinus radiata. Although slower growing than the Monterey provenance of Pinus radiata, this provenance shows excellent form with small branches at almost 90 degrees to the trunk, and very little taper.

• Time permitting, a stop will be made at the Redwood grove near the airport. This has been affected by drought and fire, but is still interesting to inspect.

It is planned to meet at 9.30am at the corner of Piallago Avenue and Sutton Road. Participants will need to bring their lunch and drinks, and it is anticipated that the field day will conclude at around 3pm.

Please phone:
Ian McArthur (STFFN) on 0412 195 499
Steve Thomas (AFG) on 6281 1587, or
Tony Fearnside (FACTA) on 6288 7656
If you wish to attend...

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Forests for the People: maintaining a balance
The International Forestry Students’ Symposium 2005

Forestry students from the University of Melbourne and the Australian National University were proud hosts of the 33rd International Forestry Students’ Symposium, Australia, 14-28th August 2005. The symposium is an annual event of the International Forestry Students’ Association (IFSA), and brings together forestry students from around the world to both share information and create opportunities to participate internationally in forestry events and issues. The 33rd IFSS drew on three primary goals:

  • To provide forestry students with a means to meet their peers from other countries, discuss and develop ideas and views, and to create an atmosphere of solidarity and inspiration;
  • To increase international understanding of economic, social and environmental issues surrounding Australian forestry and forestry practices;
  • To increase knowledge and understanding of common and unique forest issues from around the world.

The theme of the symposium; ‘Forests for the Future, Maintaining a Balance’ aimed to explore issues associated with forest management and the paradigm shift from managing for timber production, to managing forests for a multiplicity of values. This year was the first time in over a decade that the symposium was held in the Southern hemisphere and the two week event proved both exciting and challenging as forestry ‘the Australian way’ was presented to 100 forestry student from over 50 corners of the globe. The students toured from Canberra to Melbourne and experienced first-hand key forestry activities and issues in Australia, as well as meet both national and international prominent foresters.

Forest management for a range of values, unique in their Australian context, was covered through a wide variety of field visits. Production forestry was show-cased through visits to both native and plantation harvesting coupes, as well as the Neville Smith timber mills, in Victoria’s East Gippsland. Many students came within arms length of a harvester for the first time. Social values were explored in visits to Victoria’s first community forest management trial in the Wombat State Forest and a special day hosted at the Aboriginal Darnhya Centre in the Barmah Redgum forest, giving first-hand insight into Indigenous forest management issues. Farm forestry trials and successes were explored at Lynfield Park near Gunning, NSW, and throughout Victoria with sugar gum and acacia plantings. This gave the students a unique chance to see how trees can be incorporated with traditional farming enterprises. Management issues associated with forest fires in Australia were emphasised and ACT Forests hosted a full-day tour in which students learnt the impacts and issues of major wildfires. In addition, another session at the Victorian

School of Forestry gave an introduction to the fire ecology in native forests and the complexity its management in Australia; a new concept to many students. The comparative differences in management practices internationally, familiar to each student, were keenly expressed and explored by participants with wide ranging questions and views.

The symposium also offered a prime opportunity for students to present their studies and discuss issues relevant to their own countries, which was facilitated by both informal discussions and individual student presentations during workshop sessions. These presentations covered a wide variety of subject areas from Conservation reserves in Brazil to Harvesting systems in South Africa. As part of an IFSS tradition a cultural night was also held, full of food, song, fun and dance brought from all over the world by our participants.

‘After having spent two weeks with so many incredible people from all over the world, I did not feel to be anywhere else on earth, except to be in the ‘International’. This feeling was deliciously great and I keep from this experience some of the greatest souvenirs of my life.’

The success of this IFSS was reflected in an increased awareness and understanding expressed by the students towards their fresh experience in a broad range of values that people place on forests. This knowledge is invaluable in assisting them in their future careers as forest managers. The organising committee would like to sincerely thank all of our Australian sponsors*. Without there support this unforgettable experience for so many students could not have been possible.

Samantha Citroen, University of Melbourne, Australia.
On behalf of the IFSS 2005 organising committee*

The IFSS 2005 organising committee and sponsors

Organising committee: Emma Leslie, Geoff Roberts, Jacqui Slingo, Sam Citroen, Vince White, Roger Cross, Elspeth Coker, Angela Constantine, Amy Davidson, Loris Duclos, Michelle Freeman, Claire Johnsen, Emma Paulding, Michael Pescott, Emma Franks, Andrew Robertson, James Paulding, Mel Dyne, Nick Harris, Joseph Henry, Richard Laity, Charles Lawson, Robyn Sakkara, Heath Synnott.

Sponsors:

GOLD: Neville Smith Timbers, The Department of Sustainability and Environment, Victoria, ACT forests (now Environment ACT), Australian Government Forest and Wood Products Research and Development Corperation.

SILVER: The Crawford fund, Department of Agriculture Fisheries and Forestry, National Association of Forest Industries, University of Melbourne, Central Victorian Farm Plantations, Australia National University, Victorian Association of Forest Industries, Institute of Foresters Australia, Australian Forest Growers, Australian Centre for International Agricultural Research, Hancocks, Gunns, Jaakko Poyry.

BRONZE: Bob Newman, STFFN, Mawsons, TWFF, Forestry Tasmania.

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Planting Companion - A guide to native revegetation in the ACT region
Compiled by Lori Gould,
Greening Australia ACT & SE NSW
for ACT Forests

This publication draws together the experience and expertise of many revegetation practitioners around the country. It gives a wide range of useful information on topics such as site preparation, species selection, monitoring & evaluation and a guide to revegetation costs.

The Planting Companion is available for $10 (an additional $5 applies if postage is required). Please phone Rebecca from Environment ACT on 6207 2145.

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Swearing by the Windbreaks at Bannister...

Bannister is a little spot in between Gunning and Crookwell, where some of the locals have been getting into windbreaks and farm forestry to complement their cell grazing. This is cold country even for the Southern Tablelands, but rainfall is a bit better than most.

The Bannister boyz insist that windbreaks need to be at least 4-5 rows for maximum wind protection benefits, leaving enough space to grow timber down the middle.

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Using waste products to grow better trees

For the past 15 years, Georgina Kelly, a research officer with Forests NSW, has been focussed on boosting plantation growth by adding amendments to the soil. Initially, her work focussed on placing bio-solids (the soil like organic material resulting from treated waste water) around pine plantations in the Southern Highlands of NSW.

More recently, trials have focussed on eucalypt and other native species plantations, particularly on coal mines in the Hunter Valley, west of Newcastle. In the Hunter, Georgina has experimented with bio-solids, green waste and bottom ash (a by product of coal fired electricity generation), through to composted domestic garbage and mulch.

Working with a number of partners in the mining industry and government, eight plantation trials have been established on a variety of sites in the Hunter Valley. Sites have ranged from river flat buffer land to reclaimed overburden from open cut coal mining, all in areas of less than 650 mm of rainfall per year, poor soils and winter frosts.

Georgina is very excited about her most recent trial, established a year ago on Xstrata’s Narama Mine, midway between Singleton and Muswellbrook. The five hectare site has been planted with spotted gum (Corymbia maculata) and a river red gum/flooded gum hybrid (Eucalyptus camaldulensis X Eucalyptus grandis), with eight treatments used; bio-solids; mulch; soil conditioner; municipal waste compost; inorganic fertiliser; bio-solids plus mulch; fertiliser plus mulch; and an untreated (control) site.

So far, the areas treated with bio-solids and the bio-solid/mulch combination exhibit the best growth in both height and diameter. The benefits of mulch in moderating soil temperature and maintaining soil moisture would be of no surprise to most gardeners. The trial, funded by the Department of Environment and Conservation, will continue for another two years. Georgina is confident that the results will add further weight to the concept of eucalypt plantations supporting a future timber industry in the Upper Hunter.

The community, particularly local government, are very supportive of the plantation trials and are keen to explore opportunities for viable industries to complement the existing mining industry. The research demonstrates that it is possible to “boutique mix” combinations of treatments to each site to maximise tree growth and also ensure that plantation establishment and management costs are on par with other traditional forms of mine site rehabilitation. Plantations can be grown for timber, to create bio-diversity corridors, for carbon credits or for charcoal and power generation.

It is a fantastic concept, restoring land by establishing plantations, with their growth boosted by what has traditionally been regarded as waste. The social, environmental and economic benefits are obvious. Supporters of the concept are now focusing their efforts on how to best attract the private investment needed to establish large scale plantations in the area, utilising the knowledge that Forests NSW researchers have gathered over the past six years.

Georgina has said that Forests NSW is keen to see more plantations established in the Upper Hunter and hoped to be able to work with mine owners and operators to see this outcome realised.

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Australian Forest Grower - policy statement

This edition of the STFFN newsletter continues with the reproduction of AFG policy statements. These statements are reproduced with the permission of AFG.

Taxation: Non – commercial Loss and the Commissioner’s Discretion

Australian Forest Growers will work with the Australian Taxation Office to streamline the process by which private forest growers secure the Commissioner’s discretion under the non – commercial loss legislation.

Background:
The non – commercial loss provisions of the Tax Act enable a taxpayer to seek the Tax Commissioner’s discretion to claim business losses in the year they are incurred for a business activity that has a “lead time” between the losses claimed and the tax to be paid on revenue earned from that activity. Private forestry is the most common primary production activity for which the Commissioner’s discretion is sought.

Where the private forestry activity involves the common widely used “commodity” tree species, such as radiata pine, blue gum, shining gum, etc, and other species about which there is a substantial body of scientific and commercial information, private growers by and large are successful in being granted the Commissioner’s discretion.

However, private forest growers whose forestry activities involve species and forestry configurations that are less well known and less researched continue to face a difficult time with Australian Taxation Office (ATO) staff, involving repeated ATO requests fore more information from different independent sources. The lack of available information creates consistent and repeated challenges for the forest grower applicant, who must be able to compile sufficient independent evidence and cash flow information for the Commissioner’s discretion to be awarded.

Discussion:
The administrative burden imposed on many private forestry applicants for the Commissioner’s discretion is unnecessarily onerous and unacceptable. It is important that a mechanism be found by which private forestry applicants can more easily satisfy the Commissioner’s requirements in cases where there is very little readily available “independent evidence” to support the applicant’s claim to be carrying on a commercial forestry operation.

Australian Forest Growers is engaged in discussions with the ATO on this matter, and has the ATO’s agreement that an applicant’s case would be strengthened by relying on evidence provided by AFG as to the commerciality of the diverse silvicultural regimes for various forest tree species around Australia.

AFG Is developing the means to provide private growers with material to support their applications for Commissioner’s discretion.

Preferred Outcomes:
More willing and sympathetic ATO treatment of private forestry applications for the Commissioner’s discretion under the non – commercial loss provisions when the applications are supported by evidence derived from an AFG “reference guide” to private commercial forestry activity.

Taxation and Superannuation

Australian Forest Growers advocates that all relevant legislation should enhance the capacity for private forest growers to utilise their forests as a form of superannuation.

Background:
Many private plantations have been, and continue to be, established and managed as an important element, and in some cases the totality, of the grower’s superannuation.

Despite this admirable intention, such growers are subject to severe discrimination within the superannuation regulatory system. This failure takes two major forms.

One is the endemic problem of “lumpy returns”, whereby the grower receives “superannuation” income at harvest in one lump sum, almost all of which is taxable at the highest marginal rate, rather than at any form of concessional rate such as that applying to moneys withdrawn from a superannuation fund.

This problem is made worse for most private plantation growers by the limited and highly conditional access they have to the major income averaging provision available to other primary producers. First, Farm Management Deposits (FMDs) are only available to primary producers with “off – farm” incomes less than $50,000, which eliminates most private plantation growers. Second, any eligibility quickly evaporates if the grower does not carry on primary production after final harvesting (most common), because any income placed with an FMD must be withdrawn within 120 days of when primary production ceases.

The second important manifestation is the treatment of a private plantation with respect to its contribution to a grower’s self managed superannuation fund (SMSF). Although a private forest may be part of a SMSF in circumstances where the forest operation is commenced by the fund, transfer of an established forest into a SMSF can only occur in very specific and very rare circumstances that satisfy a number of the SMSF tests, such as “sole purpose”, “related party” and “business real property”.

Most private plantations now approaching harvest age were established well before the contemporary SMSF “revolution”, and have no chance of being made to fit

the SMSF conditions that would allow the growers to take advantage of the tax treatment of superannuation funds.

Discussion:
For more than a decade, policy makers in Australia have realised that, with an ageing population that will live longer, steps must be taken to encourage individuals to fund their own retirement.

Over roughly the same period, State and Federal Governments and industry have driven a plantation industry development strategy, Plantations for Australia: The 2020 Vision, and have recognised the simultaneous contributions that private plantations and farm forestry can make to natural resource management as well as social and economic development objectives.

However, many of the private growers who established long rotation plantations decades ago to fund their own retirement are now suffering personally from that decision. They are confronted by a tax regime that penalises “long term forestry with one final harvest”, and that also prevents them converting an older form of superannuation (plantation forestry) into a more contemporary form (SMSF).

Further, anecdotal evidence abounds that many potential farm foresters and private plantation growers are being discouraged from growing plantations because they learn from existing forest growers of the severe tax penalties they will face at the time of harvest.

All of these problems are separate from but not unrelated to the fact that the tax system also discourages trading in immature standing plantations (secondary markets), which, if it were readily achievable, would provide more flexibility and choice for private plantation investors, and perhaps diminish the pressure for superannuation change.

Preferred Outcome:
Australian Government recognition that amending the tax rules applying to superannuation and biophysical self generating assets (such as private forests) can help achieve its retirement policy objectives.

A tax regime that (i) recognises the “period inequity” that applies to long term plantation investment, and (ii) encourages private investment in plantation forestry at any scale.

Taxation: A Prepayment Rule for Managed Investment Plantations

Australian Forest Growers strongly advocates the retention of an appropriate prepayment rule for managed investment plantations, as a timing mechanism that recognises the complex and unique nature of plantation investment, and that enables plantations to be established in seasonally optimal conditions to maximise early survival.

Background:
Managed Investment Scheme (MIS) plantations, and the pre 1998 “prescribed interest” schemes have been subject to prepayment rules for many years. A 13 month rule applied from May 1988 to November 1999, but was removed as part of the Government’s response to the Ralph business tax review. A replacement 12 month prepayment rule was announced in October 2001 and became law in April 2002.

The 13 month prepayment rule was removed not because it was seen as a special tax concession for growers, but primarily because the tax mismatch guaranteed by the High Court “Arthur Murray Case” enabled the plantation manager to defer its tax liability on funds received from the grower until the contracted services had been completed – in effect, an unacceptable two tax years tax holiday.

But the loss of a prepayment rule had two serious unintended (but predictable) consequences. It forced MIS plantation managers to gamble massively on their requirements for land, seedlings and contractors well in advance of woodlot sales, and also to carry out plantation establishment operations in sub optimal seasonal conditions – both of which consequences occurred in financial years 2000 and 2001.

The new 12 month prepayment rule was introduced to correct the unintended consequences and the tax mismatch. Section 82KZMG of the ITAA 1997 allows growers to claim “year of expenditure” tax deductions for eligible services to be carried out in the following 12 months (just as if the eligible services were to be carried out in the same tax year; ie no difference in the grower deductions). At the same time, s15-45 requires that plantation managers must declare those gross receipts from growers as assessable income in the same year, whereas they would not otherwise have to do so until the services were completed.

Regrettably, the enabling legislation had a sunset clause inserted at the last minute by the Senate, which has the effect of terminating the 12 month prepayment rule on the 30th June 2006, an event that would once again (as in 1999) destabilize the only source of investment in new and replanted plantations, with potentially serious consequences for the plantation based processing industries.

Discussion:
A prepayment rule for MIS plantations is a timing device, not a special incentive or tax concession, as long as it also has a provision that prevents a mismatch of tax deductions and liabilities (as the 12 month prepayment rule does). The 12 month rule thus offers NO special incentive to growers and causes NO revenue tax leakage, other than whatever leakage may be created by the differential between personal and company tax rates, which cannot be fairly attributed to the 12 month rule.

The so called tax effectiveness of MIS plantations is merely the standard year of expenditure tax deductibility applied to the proven MIS model. As with other agricultural crops, all non capital costs of plantation establishment, management, harvesting and transport are legitimate tax deductible business expenses, claimable in the year that they are incurred. A grower in an MIS plantation is carrying on a business, and is entitles to claim the standard year of expenditure business tax deductions.

Maintaining the 12 month prepayment rule beyond its legislated June 2006 expiry date is essential for the stability of the MIS plantation sector, which has proven to be the only substantial source of private investment in new and replanted plantations in Australia. Successful plantation based industries require a stable and predictable operating environment, where the rules are not being continually changed or re-interpreted. Stable plantation investment in turn leads to the secure long term flow of harvested resource that underpins the viability of the plantation based processing and value adding industries in regional Australia.

Ideally, not only should the sunset clause be removed or extended for a substantial period, but the eligible service period should be extended from 12 months to at least 15 months to enable the maximum necessary flexibility in optimal planting times in both southern and northern Australia. Section 15-45 would still apply, meaning no leakage irrespective of the length of the prepayment period.

Concerns have been expressed about the social and environmental impacts of the rapid expansion of the new plantations. To the degree that governments may seek to influence where plantations should be grown, they must insist on the use of appropriate catchment and landscape planning policies and taxation incentives, and must leave alone the year of expenditure business tax deductions and the 12 month prepayment rule, which are neither the cause nor the solutions to perceived catchment and landscape problems.

Preferred Outcomes:
A stable, predictable and neutral taxation environment that, as a matter of course, incorporates an appropriate prepayment provision as a timing device to enable the MIS plantations sector to raise funds and establish plantations in the manner most likely to achieve maximum returns to growers.

Research and Development

Australian Forests Growers continues to seek that research and development outcomes in line with AFG policy priorities are pursued for private forestry through the Joint Venture Agroforestry Programme, the Forest and Wood Products Research and Development Corporation and other appropriate research and development providers.

Background:
Both government and industry in Australia have a long standing commitment to cost effective research. A number of programmes, such as the Joint Venture Agroforestry Programme and the Forest and Wood Products Research and Development Corporation, demonstrate this commitment in the forestry sector.

Discussion:
Returns on some types of investment take so long to realise, or the benefits cannot be quarantined and are available to so many individuals, that there is little or no incentive for individual firms to take on the task alone. This is true of research and development. Yet the results of this investment provide the foundation for programmes that yield more rapid returns and applied benefits that can be captured by forest growers and other entrepreneurs.

Reviews of government investment in agricultural research and development activities have shown that the expenditure generally provides a high rate of return on the public dollars invested. Moreover, much of the return has been in areas of “public good”. It is also clear that the programmes with the highest rate of return on public investment are those in which producers are involved in setting directions and identifying research priorities.

To simultaneously improve production, and therefore returns, and conform to environmental regulation, is difficult without access to advances in technology and management knowledge. If development of this technology results in achievement of environmental outcomes sought by the community, it is reasonable to expect the community to contribute to the costs of such development. Of all productive land uses, forestry provides the best chance of simultaneously achieving multiple outcomes. Research into silvicultural systems balancing trade-offs between production and environmental outcomes is vital to turning this from chance to manageable likelihood at farm level.

It is essential that governments act for the community in areas of pure research and development to maximise opportunities for sustainable economic growth. It is also vital that governments contribute to forestry research and development at a time when regulatory constraints on the ability of farmers to effectively manage their land is increasing. Small scale growers, particularly farmers, require support in research and development.

AFG seeks to ensure that as work is pursued on multiple products from Australian tree species, such as electricity, oils and liquid fuel, that the potential for farm scale methods of extraction and production is not neglected.

Preferred Outcomes:
• The priorities of government, joint venture and other appropriate research and development organisations reflect the priorities and outcomes sought by private forest growers.
• A coordinated national technology transfer infrastructure is established to realise the benefits of successful public research and development.

Government Responsibility, Road Funding

Australian Forest Growers seeks that:
Road funding be provided only by relevant agencies of government, and
The forest industry not be singled out for different treatment from other industries.

Background:
Maintenance and construction of the local road network in regional and rural Australia has not kept pace with the increase in size and number of trucks or with the increase in freight volumes carried. In many cases, roads and bridges that were not designed and constructed for modern heavy vehicles have not been upgraded to meet current needs. It is not surprising that, in the absence of adequate funding for maintenance, road quality has deteriorated. Councils and local communities have become concerned where there is an increase in the size and volume of trucks using local roads with the attendant deterioration and safety issues.

The Australian Government’s Roads to Recovery programme has begun to fill the funding gap, but only a small portion of road related taxes and charges are directed to local road maintenance and improvement. Some State and local governments have imposed mass limits on access to certain bridges and roads and others are considering imposing user charges based on the cost of repairing damage to roads. In some areas, it appears that the forestry industry has been unfairly targeted in this process.

Discussion:
Traditionally, funding for local roads has been raised from registration charges, fuel excise and local government rates, although the relative contribution from local government rates varies significantly from one region to another. The burden of maintaining local roads rests on inadequately resourced local governments. Only a small portion of the revenue raised from registration charges and fuel excise is allocated by State and Federal Governments to road funding. Either increased portions of this revenue must be returned to meet the cost of maintaining roads or the revenue raising methods must change.

The use of public roads by timber trucks during harvesting does not occur until many years after establishment of the plantation, during which period the landholder will be contributing to local road funding by paying annual local government rates. During timber extraction the landholder will also contribute in the same way as other landholders moving annual crops, through registration charges and fuel excise related (if somewhat clumsily) to mass and distance traveled. If prospective growers are expected to pay additional amounts, funding road repair after harvesting, this will add to the factors currently impeding plantings and limit the achievement of wider policy objectives.

In some regions studies have been undertaken assessing road use by the community and local industries. These quantify vehicle movements, road uses and heavily used routes. This information assists with planning and management, including supporting strategic allocation of available road funding to improve road capacity and safety, and separating road uses by careful route selection.

Preferred Outcome:
A fully integrated approach to planning for future road needs and to incorporate a suitable funding mechanism that sees all levels of government meet their responsibilities for funding road maintenance.
If direct private sector contributions to funding road maintenance are charged they should be offset by a reduction in existing indirect contributions (through rates, excise and registration charges) to road funding.
Funding mechanisms that apply sound, scientifically based principles equitably to all industries using local roads.

Government Responsibility, Land Valuation and Rates

Australian Forests Growers advocates that the land valuation practice underlying the setting of local government rates should apply consistent, transparent principles to all land uses and not disadvantage forestry by applying rates value only to plantation trees.

Background:
In most areas of Australia, local governments have limited resources and a limited revenue base. A primary source of income is revenue raised by levying rates from local landholders and charging users of services. Typically, local government calculates the rate as a percent of a recognised valuation, usually provided by a State Government valuer.

Recently, some local governments have considered, or have introduced, specific rates levied on plantation development only.

Discussion:
Credible land valuation practice applies consistent transparent principles when valuing property. Typically in Australia, reference is to the market value, particularly for urban residential property. As in any other competitive market, Australian property market prices reflect the value of the income generating potential of the property as agreed between the seller and the final bidder.
In many rural areas, market value cannot be the sole reference because of a lack of market activity or market distortions. For example, in areas suffering drought the demand for properties is low, and with sellers forced in to the market. Prices are depressed, at least in the short term. In these cases, valuation incorporates a calculation of the income generating potential of the property. There may also be reference to the values of comparable properties. Typically, improvements such as irrigation systems, and attendant rights, such as licences, are not included at their individual value but rather the additional income generating potential they confer is included.

It is unfair to levy rates on a stand of timber when the value of other standing crops is not similarly taxed. This places the farmer who includes trees in a farming system at a disadvantage.

In some areas, this may be an attempt to recover the cost of repairing road damage attributed to timber harvested and transported on local roads. If so, there are fairer ways of recovering costs. AFG does not support this approach and is actively campaigning for better and fairer ways of funding the maintenance and development of the local road network. If local users were to contribute directly to road funding, a user charge should bear a direct relationship to the costs incurred, not be levied in each year the trees remain standing.

Preferred Outcomes:
Equitable levying of local government rates so that forestry is not disadvantaged by being required to pay higher contributions to general local government revenue than other land uses in the area.

Government Responsibility, Extension and Technical Support Services

Australian Forest Growers seeks to ensure adequate provisions of forestry extension and technical support services by Government funding.
The Australian Government does not directly undertake extension and advisory activities but supports various state and non government agencies, such as Greening Australia and AFG in performing these roles. This community led approach has proved successful and deserves on going support.

Discussion:
Almost all government policy and programmes supporting an increase in plantation resources and the role of farm forestry in NRM include actions reliant on extension services and/or technical support services. However, not all jurisdictions are supporting policy implementation through extension provision.

NRM programmes have limited funds, so additional investment is sought from the private sector. Properly resources programmes, like Landcare and Farm Forestry Support, can influence community opinion and facilitate behavioural change. Such change will not occur quickly so these and other mechanisms for technical support and extension, including Private Forestry Development Committees, require secure long term funding.

The complexities of farm forestry achieving its role in NRM, and the importance of meeting the requirement for technical support, should not be underestimated. The right trees must be planted in the right place and new regional enterprises will need to emerge to provide commercial returns. Public and private benefits are intertwined, making it difficult to distribute returns to extension services.

Background:
Over the past decade policy directions in natural resource management (NRM) have changed significantly. At the same time, governments have significantly reduced their contribution to extension services. There is a greater reliance on private sector delivery and user pays, with government services increasingly limited to perceived public goods. Development of policies and programmes supporting the timber industry’s role in NRM has coincided with a decline in government extension services.

Australia has an excellent record in government provision of technical, production related extension, and there are examples of unique success in specific programmes such as Landcare.

Restricting funding for extension and technical support services to areas with perceived public good characteristics is likely to hinder success, particularly in the early stages of implementing new policy directions. It is also clear that there are market failures for some information, such as market intelligence. Government support in addressing these needs is a necessary condition of achieving the broader, public good objectives possible from private forestry.

Preferred Outcomes:
• Sufficient government funds allocated to ensure the achievement of Plantations for Australia: the 2020 Vision and NRM policy outcomes, including accessible and valued farm forestry extension services in each region.
• Effective dissemination of research and development findings and the underpinning of policy debate by scientific reasoning.
• Regional afforestation plans based on sound analysis of land capability, resource condition, economic opportunity and social values that have been agreed by well informed communities.

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Join up with AFG...
The national association representing private forestry and commercial treegrowing interests in Australia.

Special services
• Standing up for growers rights… AFG represents its members and all private forestry interests to the appropriate levels of government. At present we are actively lobbying the NSW State Government for legislative reforms in government policies and strategies relating to all private forestry interests.
• Encouraging government investment into market developments for forest products and the creation of better linkages for grower access to domestic and international markets is another high priority area for AFG. This includes close involvement and support in the development of the Australian Forestry Standard, as well as for treegrower cooperatives and looming environmental services markets.
• We have close relationships with reputable and reliable plantation insurance agencies. AFG can always source a competitive premium from plantation insurance companies for our members.
• The ‘Pruned Stand Certification Scheme is an AFG initiative to ensure growers earn the highest premium possible from the harvest of their plantation. This recognised certification process provides lumber markets with confidence in the quality of log resource they are buying from growers.
• State and National Treefarmer of the year awards is a stand out AFG event, with cash prizes presented at our popular biennial conference, this year held in Launceston.
• Representatives from all 24 AFG branches Australia wide attend a biennial policy forum, where AFG priorities in policy direct that best represents our growers is compiled.

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Two new and interesting honours projects at the ANU

Two Forestry students are currently undertaking Honours in the School of Resources Environment and Society at the Australian National University. Their projects are addressing issues related to impediments to farm forestry and dry sclerophyll forests on the Southern Tablelands.

Project 1: Conducted by Melinda Mylek

Title

Socio-economic survey of perceptions of different landholders about impediments to private forestry in the Southern Tablelands.

Purpose

To help address perceived impediments to farm forestry on the Southern Tablelands.

Methods

Surveys of a diversity of landholders to compare demographic characteristics with responses about perceptions of impediments to the uptake of private forestry on the Southern Tablelands.
Interviews of people chosen to represent the diversity of perceptions that may exist about impediments.

Project 2: Conducted by Emily May

Title

Landholders’ perspectives on their dry sclerophyll forests on the Southern Tablelands.

Purpose

To understand how farmers use, value and perceive their dry sclerophyll forests.

Methods

Surveys of dry sclerophyll forest landholders on the Southern Tablelands to identify landholders’ attitudes towards their forests. Interviews of a selection of dry sclerophyll owners that represent the diversity of issues that may exist.

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Friends of the ACT Arboreta
Contribution to National Parks Association newsletter or journal, 12 November 2005. Prepared by Alan Brown 02 6281 1569 alan.and.erika@mintbow.com

Arboreta are sites where trees are planted for evaluation or display — ‘living experiments’. Charles Weston commenced planting the first arboretum in the ACT — Westbourne Woods — in 1914 at Yarralumla to ‘add ornament to the city’ and ‘so all classes of trees could be tested with a view to being planted throughout the Territory’. In 1929, Charles Lane-Poole commenced planting an arboretum — Blundells — at the foot of Mt Coree, with a particular emphasis on species which might be used in industrial forest plantations. Blundells eventually became the largest of the non-urban arboreta in the Territory. It was progressively complemented by more than 30 others at sites ranging from Mt Ginini to the Cotter Homestead, Kowen and Jervis Bay.

During the war years, interest in fuel prompted the establishment of small trials of eucalypts around the city to assess the prospects of growing firewood. In the 1950s, Lindsay Pryor tested newly-introduced trees and shrubs at a site near the Yarralumla Woolshed, and (1954–1957) on the now-northern shore of Lake Burley Griffin, opposite the Governor-General’s residence. This latter site was gazetted as the Lindsay Pryor National Arboretum on 1 August 2001 to commemorate Lindsay’s contribution to the city.

Fire has been a significant factor in the history of the ACT arboreta. Much of the early planting at Blundells and Reids Pinch was burnt in 1939, while the 2003 fires destroyed almost all sites west of the city — only Bendora escaped. Plans for the large new Canberra International Arboretum and Gardens, adjacent to the Pryor Arboretum have emerged from the ashes of the 2003 fires.

Arboreta are long-term enterprises, and it is not surprising that they may outlive the organisations and arrangements that led to their establishment, while new stakeholders emerge. Thus the forest research interest in the non-urban arboreta has moved to semi-arid and tropical climates, while Westbourne Woods is now the home of a major golf club. Despite these changes, the maturing, diverse trees in the arboreta are a significant and increasingly-valued community asset. Westbourne Woods was placed on the Register of the National Estate in 1981 as an historically-important arboretum, and the heritage value of Bendora Arboretum was officially recognised in 2004.

More than two decades ago, Brian Haddy and Ken Eldridge formed the Westbourne Woods Action Association and, with the cooperation of the Royal Canberra Golf Club and participation of colleagues, instituted free monthly guided public walks in the Woods, which have continued to this day (the second Sunday of each month at 9.30 am). A small guide book was published in 1983.

Tony Fearnside and Kim Wells have taken an increasing interest in the non-urban arboreta over the last decade, assisting in maintenance and labelling. Following the 2003 fires, they organised a final measurement of trees in the burnt arboreta and at Bendora. Grants were obtained to assess future options for Blundells and to prepare conservation management and communication plans for Bendora. Staff of Environment ACT welcomed offers of further assistance, for example through responses to opportunities for public comment on various post-fire studies.

These activities were undertaken within the framework of the embryonic ‘Friends of the ACT Arboreta’. From September 2003, a periodic Newsletter was issued and a series of Fact Sheets was initiated. Charlotte Keller prepared a demountable display to serve as an introduction to local arboreta. Periodically field days have been organised to the Bendora, Blundells, Blue Range, Pryor and International arboreta.

On 19 July 2005, FACTA adopted an interim set of rules as the first step towards incorporation, a move that will enhance the status of the organisation. The prime purpose of FACTA is ‘to foster the management and appreciation of arboreta in the Canberra region’.

FACTA warmly welcomes new members: it is a community venture, the success of which will depend on an ‘us’ rather than ‘them’ approach. An early activity has been to assume responsibility for organising the monthly walks in Westbourne Woods, a task which James Gray had undertaken for a number of years.

Contacts are Tony Fearnside (President, 6288 7656, janton@netspeed.com.au);
Steve Thomas (Treasurer, 6281 1587, sgandmlthomas@netspeed.com.au) or
Charlotte Keller (Vice-President, charlotte.keller@mdbc.gov.au).

Bendora Arboretum

The arboretum is an interesting example of the scientific approach taken to ameliorate Australia’s chronic shortage of construction timber. Most of the trees were planted between 1940 and 1958. The arboretum, at an elevation of 1265 m on a gentle east-facing slope, is in an attractive mountain setting surrounded by native forest in Namadji National Park. A small adjacent hut marks the site of a camp used in building the road to Mt Franklin and the arboretum. The arboretum and hut are accessible by foot from a point 1.3 km along narrow Chalet Road, leading off to the east from Mount Franklin Rd at a point about midway between Bulls Head and Mount Franklin.
Of the 40 or so species planted, radiata pine has proved to be the best and is widely used in forest plantations in southern Australia.

A brochure is available from FACTA, and a self-guided trail is under development.

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A summary of the Economic Impact & Perception of the Plantation Forest & Timber Industries in the Central Tablelands Region of NSW

Extracted from a recent report by the Western Research Institute

Overall the Plantation Forest and Timber Industry is the mainstay of the economy of the Oberon Local Government area. In 2003 this industry accounted for 59% of the gross regional product of the area and 33% of the employment.

As to be expected, the impact is reduced when considered for the Central Tablelands region and for the state of NSW as a whole, but given that the Plantation Forest and Timber Industry accounts for approximately 4% of the total land area of the Central Tablelands the industry has been estimated to provide almost 4% of the employment for the region, 5.4% of the household incomes and 6.9% of the Gross Regional Product. As such the Plantation Forest and Timber Industry is a valuable contributor to the economic well being of the Central Tablelands region of NSW.

From a series of focus groups and telephone interviews of 400 residents of the Oberon area, conducted between March and June of 2005, it would appear that overall the community of Oberon have positive view about the industry, including its potential to expand both in the processing and forest plantation sectors. There was a clear differentiation between peoples understanding of the forest issues and the processing sector and subtle differences in the views between residents of the town of Oberon and those living in the villages and farms of the region.

From the perspective of investment by the industry into the community, it was interesting to note that very few respondents to the survey knew of any sponsorship or support provided by the industry to the Oberon community. This is despite an on-going investment by the industry in sponsorship and support to community events such as the daffodil festival and forest based activities such as car rallies, support of local sporting teams, development of major road infrastructure in the region and the provision of on-going support of community groups.

Whilst the community of Oberon would appear to currently have a high level of satisfaction with the Plantation Forest and Timber Industry it is likely that a continued change in the demographics of the population will bring about an eventual change in the expectations of the population.

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  © Southern Tablelands Farm Forestry Network Last updated 25 July, 2006
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