When the chips are down


The Hawke government's promise of "resource security" for the forestry industry appears to be premised on massive subsidies by the taxpayer. SID WALKER explains what's at stake.

Conservationists had good reason to be angered by the commitment to introduce federal resource security legislation. In effect, resource security will strengthen the hold of large timber companies over vast areas of native forests — entrenching high-volume pulpwood extraction from public forests for long periods of time. Projects over $100 million in value will be eligible for federal legislative backing, once they have passed state and federal environmental assessment processes.

Although conflict over the resource security issue was given extensive coverage by the mass media, the arguments against this legislation were generally obscured.

Almost without exception, the media portrayed the issue as a clash between jobs and the environment. In these difficult economic times, it was argued, Australia could no longer "afford" the same level of concern about the environment.

Clichés about swinging pendulums and balance were dusted off and recycled — and the prime minister, whose about-face on the issue had been crucial in determining the outcome of a close vote in cabinet, was depicted as responding to changing community concerns, facing up to the tough choices — and opting for jobs over trees.

The emotionalism of greens was the image shown in the media's 30-second response grabs; the issues were ignored.

Outcome assumed

Hawke said he decided to support resource security legislation only after legal advice from the Attorney General's Department. This advice, he claimed, proved that without legislation the government could not ensure resource security for the industry. This was an admission that he had already assumed the outcome — and that only the mechanism to deliver it had been in dispute.

Yet it is the precisely the intended outcome which was at issue for the conservation movement.

Although the legislation could be applied to any large forestry projects, it's clear that the government's objective was to facilitate construction of one or more world-scale bleached kraft eucalypt pulp mills (BKEPs), using native forests as their primary resource base.

There's no evidence that even environment minister Ros Kelly opposed these new mills in principle, so the key question — whether these pulp mills are truly in the public interest — was probably never discussed in cabinet.

In restricting the debate to how, as opposed to whether, new BKEPs should be built, the government made a farce out of the consultation processes it had established to develop a new long-term industry. The decision was made before the Resource Assessment Commission, or the Ecologically Sustainable Development Working Groups, had presented even their interim reports.

In a scene reminiscent of Alice in Wonderland, Australians have been told that we can have any sort of forest industry, as long as we continue large-scale intensive logging of native forests and build as many BKEPs as possible.

In fact, there is growing evidence that both are undesirable. Notwithstanding the forest industry's massive (and highly misleading) advertising campaign, the overwhelming majority of scientists with expertise in conservation biology or ecology believe that intensive native forest logging degrades native forests. Biological diversity is particularly at risk. Intensive logging is not "ecologically sustainable'.

Whether BKEPs are desirable is equally contentious. At present, most of Australia's exported woodchips are sent to Japan. They supply about half the requirement of Japan's pulp mills for eucalypt woodchips.

If one's thinking is static, bringing these processing plants onshore is an attractive proposition because, despite the pollution problems associated with these chlorine-bleaching mills overseas, most profits and jobs are generated by processing woodchips, not in their extraction. Industry minister John Button's description of export woodchipping as a "bastard of an industry" has nothing to do with its impact on native forests; he just doesn't want Australia to miss out on the lion's share of profits.


But static thinking is a mistake when playing for big stakes in a fiercely competitive international market.

Some 7 million hectares of fast-growing eucalypt plantations have been established overseas in recent years. Ready for harvesting from the mid-1990s, they will generate an estimated 20 times Japan's annual requirement for eucalypt pulpwood — and 10 times the total current world demand. These young, genetically selected eucalypts are far superior to old growth native forests as a source of fibre for pulp and paper.

So by the time they are built, Australia's new BKEPs would be competing either with similar pulp mills overseas, or with existing mills in Japan and elsewhere which will have a glut of cheap, high-quality woodchips at their disposal — most likely with both. It's hard to see how the Australian mills will be price competitive without massive public subsidies, hidden or otherwise.

For this reason, the unseemly scramble to build the new BKEPs makes little sense even by the neoclassical standards of economic "rationality" adopted by the Hawke government. It makes sense for timber companies only if high levels of public subsidies are maintained and increased — and it's a measure of the confidence of these corporations that continued subsidies will be forthcoming that they are showing any interest in investing in the new mills.

Some may already be getting cold feet: Harris-Daishowa's management recently stated that they believe Australia has "missed the boat" on new pulp mills — and that the company would consider a pulp mill only if timber royalties (already so low that they constitute a subsidy to the woodchip industry) were reduced to zero!


It is not a radical idea that a legitimate and necessary function of government is to invest strategically in the economy. Successful capitalist economies such as the Scandinavian countries and Japan have taken this approach for decades.

There has always been government investment in Australia's forest industry — whether explicit or concealed. More is amply justified to achieve a mix of social and ecological objectives.

But if the community as a whole is to continue subsidising the industry, the community should have a real say in setting the industry's goals. We should be sure that our taxes are not going to support an industry which continues to shed jobs and destroy our precious remaining old growth forests (especially when the forests in question are public land!).

A year ago, it appeared that the Hawke government might be willing to listen and learn from community concerns — at least in the case of the forest industry, whose environmentally destructive activities have outraged so many Australians. Last week confirmed the dismal suspicion that when the chips are down, this government will continue to listen first and foremost to big business, media barons and the IMF.