AS each week passes more and more people are asking why the Liberal Federal Government has not acted on the huge amount of logs being exported out of Australia.
This is despite urgent calls in parliament by Liberal Member for Barker Tony Pasin and Member for Mount Gambier Troy Bell.
Both acknowledge something needs to be done to halt the imbalance between the needs of local processors – that is the timber mills – and what is being exported as raw product to Asia and China.
Not only do local mills miss out because they are unable to obtain the required number of logs to expand their business, which means jobs and boosts the economy, but with China subsidising its local mills they are able to send processed timber back to Australia where it goes head-to-head in opposition with the locally-made product, at a much cheaper price.
Some time ago I wrote how Russia, a country more renowned for communism, subsidies, tariffs and trade barriers than free enterprise, solved its export log problems very simply.
About 15 years ago Russia was the world’s largest exporter of logs.
It devastated many of its forests by over-harvesting to meet the huge demand of the export log market – sound familiar?
But then the Russian government realised the folly of its export trade in that it was affecting local mills, its national economy and jobs were being lost.
What Russia did was against all of its previously known business principles – it imposed a 15pc tax on all log exports, making it more expensive for overseas clients to purchase logs.
Market forces prevailed and the market looked elsewhere – notably Australia and New Zealand – two countries which could not believe their luck they could compete and take business off Russia, but in reality were just plain dumb because all it did was hurt local mills and hardly added to Australian’s economy because there is little tax on exported logs.
However, Russia was not yet finished and this is where they took the business world by storm.
Those previously exported logs were made available to their local mills for processing into timber and suddenly Russia went from the world’s largest log exporter to the one of the world’s major manufacturers of process timber.
This meant more jobs, added more to the Russian economy and it is a market over which they still maintain a stranglehold.
Now if Russia can do it why cannot our Liberal Federal Government – instead they ignore the issue.
There is plenty of talk about increasing the Australian plantation base and government seems to be keen to play a role in that with funding, which certainly should be applauded, but what is the point if there are more plantations, therefore more trees but it only results in more logs being exported?
There’s no benefit for local mills.
Also, the government makes virtually nothing in income from these exports, there is no GST component in exporting logs and it provides only minimal employment opportunities.
Getting more logs back to the local mills is one point where mills owners and local timber union boss Brad Coates agree.
Mr Coates has been a strong advocate in urging government action by cutting back export logs and allowing the local market to grow, thereby providing more job opportunities and add more to the local and national economy.
All local mills have been working hard to secure new markets, some overseas, but without a guaranteed opportunity to increase supply to meet the needs of this increased business, the sustainability of satisfying demands of new markets comes under question and jobs are under threat.
The Russian model and how they turned a negative into a positive is one which should be examined closely by the Federal Government.
In the meantime, more and more trees are being cut, more are being exported and apart from mill owners and few regional MPs, no-one seems to care that Australia is missing out on a great opportunity to not only boost its economy but create more sustainable jobs.
How hard can it be?
