socioeconomic impacts of

plantation forestry in the (NSW)

introduction This information booklet summarises the key findings of a recent study conducted by the Bureau of Rural Sciences, examining socioeconomic impacts of plantation expansion in the South West Slopes of between 1991 and 2004. The study was funded by the Forest and Wood Products Research and Development Corporation.

The study examined key land uses and industries in the region and the history of plantation industry development. The level, type and location of employment and n o v e m b e r 2 0 0 5 spending by the plantation sector over time were identified. The study then identified links between plantation sector expansion and changes in the socioeconomic characteristics of the population of different parts of the region. the south west slopes The South West Slopes (SWS) is a rural region of New South Wales.1 Agriculture is the dominant land use of many parts of the SWS, which also contains large areas of national park and plantation estate. A broad mix of industries operates in the region, particularly in the two regional cities of and .

Local government areas (LGAs) of the SWS that remain highly dependent on agriculture include , , Holbrook and . The plantation sector is most significant as a proportion of economic activity in the LGAs of , Tumbarumba, Holbrook and Hume, although the activity in Hume is effectively spread across Albury as well.

A number of changes occurred in the SWS over the past two decades, one of which was continued expansion of the plantation industry.

Key changes in land use in the n establishment of vineyards and SWS over the past two decades some other new enterprises have included: n increasing numbers of rural n a shift to off farm employment residential blocks (commonly for many farming families called ‘hobby farms’) in some LGAs. n rapidly expanding harvesting and processing activities in All these changes have had the plantation sector socioeconomic impacts that n a shift from sheep grazing must be taken into account when to either grain growing or considering the impacts of the cattle grazing plantation sector.

1 A map of the region is provided on the back cover of this booklet.  overview of the plantation industry A large-scale, mature Employment in the Table 1 Volume of timber plantation industry has transported in the SWS developed in the South plantation sector (’000 tonnes or cubic metres) West Slopes since the 1920s, and continues to Direct employment 2006 expand. In 2003–04, a total of 1680 1991 2001 est. full time jobs were generated in managing, harvesting and Logs 1000 2050 2455 Softwood plantations, mainly of processing plantations in the SWS. Wood products 710 1612 1966 Pinus radiata, have been established This equated to an average of 1.53 and residue in the SWS since the 1920s. full time equivalent employees per 100 hectares of plantation. This Total 1710 3662 4411 By 2004, the total area of plantation figure includes all employment up in the region was 110,000 hectares, Note: Includes a small proportion of native forest timber to the point at which processed Source: PEECE Consulting (2005) of which 74% was publicly timber products left mills for owned and 26% privately owned transport to markets, with 0.50 full (Figure 1). A further 19,000 hectares time equivalent jobs in plantation of plantation are located in the management, harvesting and Shelley region of and haulage, and 1.03 in processing. Figure 1 Area of softwood form part of the wood supply in plantation in 2004 the region.2

In 2003–04, the 50,000 Most of the plantations are in the management, harvesting shires of Tumut, Tumbarumba 45,000 and processing of SWS and Holbrook, with a smaller area plantations directly 40,000 established in Gundagai Shire. generated 1680 jobs. 35,000 Since the 1950s, the volume of wood An estimated further 30,000

harvested from SWS plantations has National Inventory. Forest 3250 jobs were indirectly 25,000 grown steadily, as has the volume generated. of wood processed in the region 20,000 (Table 1). A number of processing 15,000 Area Area of plantation (hectares) facilities have been established in 10,000 the region, and most have expanded Changes in level of 5000 their processing capacities over direct employment time. Since 1993, there has usually been 0 Sciences, Bureau of Rural Source:

less than a 5% fluctuation in the Tumut Wood harvested in the SWS is Gundagai Holbrook number of people employed in Indigo (Vic) processed in Tumut, Tumbarumba, Tumbarumba Towong (Vic) the plantation sector in any one Note: Some LGAs in the region with Albury, Holbrook, Wagga Wagga, small areas of plantation have been year (Figure 2). This contrasts with excluded from this figure. Myrtleford and Canberra. the agricultural sector, in which URS Forestry (2004) provides a fluctuations in climatic conditions detailed overview of wood flows can result in rapid changes in from plantations in the region. In employment. For example, the recent years, more than $700 million 2002–03 drought led to an has been invested in establishing estimated 15% drop in agricultural new processing facilities and employment across expanding existing facilities in the (Productivity Commission 2005). region, with ongoing investment planned in coming years.

2 The spatial distribution of plantations in the region in 2001 is shown on the back cover of this booklet.  Figure 2 Direct employment generated by plantations in the SWS Type of employment Over 95% of direct employment in Processing Harvesting and haulage the plantation sector in 2003–04 Plantation management (in growing, harvesting and 2000 haulage, and processing) was full 1800 time employment, while less than 1600 5% was part time or casual. Part

1400 time and casual jobs are generally in areas such as the planting of 1200 seedlings and seasonal fire fighting. 1000

800

600 Location of employment

400 The SWS captures a large part of the Number of jobs (full-time equivalent) 200 direct employment impacts from the sector. Between 92% and 94% 0 1991–92 1993 1994 1996 1997 1998 1999 2001–02 2003–04 of direct employment generated by Data source: (a) Forests NSW — Forest Industry Census (b) Direct survey of plantation sector employers SWS plantations from 1991–92 to undertaken for this project (c) Margules Groome Poyry Pty Ltd (1995) 2003–04 was based within the region. Plantation sector employment In 2003–04, 66% of direct remained relatively steady even employment in plantation during periods of lower demand for management and processing wood products. This was a result generated by SWS plantations of the maintenance of processing was based in the towns of Tumut volumes through periods of lower (over 900 jobs) and Tumbarumba demand (eg through stockpiling (over 200 jobs). product) and increasing substitution of softwood for hardwood products in the construction sector, resulting More than 90% of direct in growing demand for softwood employment generated products even during periods of by the management, low demand for wood products harvesting and processing generally. of SWS plantations is based The number of people employed in the region. has remained relatively steady from the mid 1990s, while the volume of timber harvested has risen rapidly. This was a result of increasing efficiency of production, with fewer people required to produce the same volume of wood products.

In the processing sector, the total level of employment has remained steady because decreases in employment at some facilities have been balanced by new employment generated through the establishment or expansion of other facilities.

 Indirect employment Plantation sector Table 2 Value of output from For every $1 million spent by the plantations grown in the SWS, plantation sector, between 8.3 output and 1993–94 and 2002–03 and 15.7 jobs are created in the expenditure SWS, depending on which part of 1993–94 2002–03 the plantation industry is being Value of output ($ million) ($ million) examined. This includes both direct The value of output from Plantation 28.3 45.7 employment by the plantation plantations in the SWS rose from management industry, and flow-on employment $401.4 million in 1993–94 to generated as a result of demand $574.5 million in 2002–03 Harvesting and 21.6 32.1 for goods and services from the (measured in $2002–03 at the haulage plantation industry. In addition, point at which processed products Softwood 361.4 549.8 further flow-on employment is leave mills to be transported to processing created outside the region when market). Table 2 shows the value goods and services are imported of output at different stages. Total value of 401.4 574.5 from other . output (net) This equated to an increase from For every direct job in the plantation $4270 per hectare of plantation in Sources: Margules Groome Poyry Pty Ltd (1995) — used for 1993–94 data sector, this equates to flow-on 1993–94 to $5334 per hectare in URS Forestry (2004) — used for 2002–03 data employment equivalent to between 2002–03. Direct survey of plantation sector — used for both periods as appropriate to adjust data. 0.8 and 1.3 jobs within the SWS. For example, one job in the forestry The value of output and logging sector generated flow-on employment in the region produced per hectare of equivalent to 0.8 of a full-time plantation rose from $4270 job. One job in the pulp, paper and in 1993–94 to $5334 in paperboard sector generated flow- 2002–03. on employment of 1.3 jobs, which includes some employment in the forestry and logging sector. Location of expenditure A large proportion of expenditure by the plantation sector occurs within the SWS. In particular, most expenditure on wages and salaries and on plantation management occurs within the region. The key exception to this is processing inputs: while most roundwood and fibre input to processors is sourced within the SWS, some key materials, such as chemicals used in processing, are commonly purchased outside the region.

 Figure 3 Training investment through the Forest Industry Training Centre

SWS student contact hours Non-SWS student contact hours

$ cost trainingforestry in hours contact student of Number 120,000 180,000

160,000 100,000 140,000

80,000 120,000

100,000 60,000 80,000

40,000 60,000

$ direct teaching resources 40,000 20,000 20,000

0 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Forest Industry Training Centre

Indirect output Investment in training A total of $1.63 to $1.83 of output Employees in the plantation sector is generated in the SWS economy require considerable skills to operate for every dollar invested by the complex machinery and to ensure plantation sector; and $0.31 to compliance with environmental $0.49 income (eg wages and standards during plantation salaries paid to employees in the management, harvesting and region). This represents the flow-on processing. activity generated by the plantation sector in the regional economy, for Considerable investment in training example, through the purchase of has occurred in the region since supplies from regional businesses the mid 1990s through the Forest and plantation industry employees Industry Training Centre (Figure 3). spending their income on good and services in the region. Further flow-on activity is also generated outside the SWS, for example when goods and services are imported into the SWS.

 socioeconomic change and the plantation industry

Population change Figure 4 Total change in population of different towns in the In general, town populations in the South West Slopes, 1996 to 2001 SWS have followed trends common across Australia: the populations 5 Non-metropolitan Australia average of the regional cities of Albury and 0 Wagga Wagga have risen, while the -5 populations of most smaller towns have fallen (Figure 4). -10 -15 of town, 1996 of to town, 2001 However, smaller towns with large- % change in population scale plantation processing facilities -20

(Tumut, Adelong and Tumbarumba) Albury Henty Batlow Tumut Culcairn Adelong GundagaiHolbrook were more likely to experience Walla Walla Tumbarumba Wagga Wagga population growth or a stable Note: The colour coding in this figure indicates the location and key land uses of different population from 1996 to 2001. LGAs. Yellow indicates towns near large areas of plantation estate, while green indicates towns near plantations that also contain processing facilities processing large volumes of plantation wood. Purple indicates towns not close to plantations but with plantation The presence of the plantation processing facilities. Red indicates towns with a high proportion of employment in the agricultural sector and little or no plantation sector activity. industry in these towns provided a Source: Australian Bureau of Statistics source of diversification for the local economy and reduced the towns’ vulnerability to changes in the Sociodemographic Small towns with high agricultural or other sectors. levels of plantation sector change employment experienced In contrast, small towns in areas higher overall population of the SWS with high dependence Age structure growth, stronger growth on agriculture mostly experienced In general, the population of the population decline. in working age population, study region has aged, consistent and more consistent growth Holbrook, which has smaller scale with the overall ageing of the in household income over plantation processing facilities than Australian population. However, 1996 to 2001 than other Tumut or Tumbarumba, experienced SWS LGAs highly dependent small towns in the region. population decline. Holbrook’s on agriculture have tended to economy still depends mainly on experience higher growth in agriculture, despite the existence of retirement age population than plantation processing in the LGA. in working age population. In Qualifications contrast, LGAs with more diverse The SWS population in general economies, including those with has become more highly qualified, high plantation sector employment, with increases in the proportion have experienced greater increases holding a certificate, bachelor in working age population, degree or higher qualification. indicating that they have better Again, this is consistent with prospects for long term economic trends across Australia. LGAs with growth and population stability smaller populations generally than LGAs with higher economic experienced a slower growth in dependence on traditional the proportion of the population agriculture. holding qualifications beyond high school, although those with higher economic diversity tended to experience more rapid growth than those with high dependence on broadacre agriculture.

 Length of residence Service provision Most LGAs in the region Limited data were available on experienced a decline in the changes occurring to service proportion of population made provision in the SWS. The data up of recently arrived residents that were available indicated that between 1996 and 2001, with the changes in the level of education, exception of the shires of Tumut health, government and retail and Holbrook. In both these LGAs, services and community groups changes in wood processing were generally influenced by a (particularly the establishment of range of factors. Probably the the Visy Industries pulp and paper greatest of these was overall mill in Tumut) probably contributed population change. to an increase in the proportion of new residents; no other major Key trends in service provision changes identified by local residents included the following: are likely to have been associated n School enrolments declined with the shift. in most areas. This reflects the decline in the proportion Expansion of processing of children in the population facilities led to higher and low population growth in numbers of new residents the region. The Shire of Tumut shifting to some parts of experienced less decline in the region over the period enrolments than other LGAs. from 1996 to 2001. n Membership of community groups and the number of community groups were greater Unemployment in areas experiencing higher population growth. However, Unemployment fell in all LGAs in shift workers employed in the region from 1991 to 2004, with processing facilities can find it most jobs growth coming from difficult to attend meetings or part time employment. This was sports games on a regular basis. consistent with broader national trends. The exception is the Shire n The Shire of Tumut had of Tumut, where both full time somewhat stronger growth and part time jobs have been in the retail sector than other created, possibly reflecting the ‘small population’ LGAs of high proportion of full time work the SWS. This is likely a result available in the plantation sector. both of the strong plantation processing sector in Tumut and of the general trend in which the Household income town of Tumut has been acting Household income growth has as a small regional centre for generally been more reliable surrounding areas. over time in LGAs with higher economic diversity. The plantation In focus groups, many participants sector has been one of the sectors reported that Forest NSW’s contributing to this diversity in LGAs considerable investment in fire where processing facilities have fighting services to protect the been established and plantation large plantation estate has provided managers and employees are based. important benefits in the region.

 Other landholders have benefited Figure 5 Rate of increase in average rent paid across all types from rapid response to fire incidents of dwelling, 1991 to 2001 by Forests NSW, which reduces fire damage on both plantation land 1996-2001 and other land in the SWS. 1991-1996 14

12 Residential property 10 NSW 1991-2001 average markets 8 6 Rental markets 4 2 In Tumut, rental vacancy rates Increase rent in (%) average have been low since the 1980s. 0 Construction and expansion of Albury Hume Tumut Culcairn plantation processing facilities has Gundagai Holbrook Tumbarumba further constrained vacancy rates. Wagga Wagga During the construction of the Visy Source: Australian Bureau of Statistics, Census of Population and Housing Industries pulp and paper mill from 1999 to 2001, it became extremely difficult to find housing to rent. In Tumbarumba, upgrading of the Hyne and Son sawmill over 2003 Plantation sector expansion and 2004 resulted in a similar fall Transportation in rental vacancy rates. Because has further constrained The amount of timber transported local accommodation is scarce, availability of housing in in the SWS has increased some workers have had to rent or areas with limited and/or substantially since 1991 and is purchase housing in towns some poor quality housing stock. expected to increase further in distance away and commute to the coming years (Table 1). towns of Tumbarumba and Tumut. Plantation sector transportation Average rents rose more rapidly Residential property values needs have the potential to place than the NSW average in Tumut, Sales data show an overall trend of a significant burden on road Tumbarumba, Gundagai and rising residential property prices in networks in the region, some of Holbrook from 1991 to 2001 recent years. Local real estate agents which were originally designed (Figure 5). Some real estate agents believe the key factor causing these and built to carry lower weights. observed rental prices increasing price rises has been increased The plantation industry and local more rapidly in the town of Tumut demand from investors outside and state governments have been in recent years, and believed that the region and rising residential working together on an ongoing this was at least partly a result of property values nationwide. This basis to plan for funding required increasing numbers of highly paid trend has dominated overall price to maintain and upgrade roads workers shifting into the region to movements, generally masking in the region, and to prioritise work in the plantation sector. other influences, such as any that transport infrastructure needs. This, may have resulted from expansion together with ongoing discussion of of the plantation sector. alternative transportation options — such as a proposed re opening of the Tumut to Cootamundra railway line — is essential to meet the transport infrastructure needs of the expanding plantation sector.

 key challenges for the plantation sector As the plantation sector expands Although increasing mechanisation in the region, some key challenges Overall conclusions in the plantation sector has led arise. Expansion of the SWS plantation to higher output per employee, sector from 1991 to 2004 has the expansion in wood volumes Ongoing planning for future contributed to stable economic processed has been rapid enough to transportation needs is essential growth in the region, and to stable keep employment needs steady. as increasing volumes of logs or growing populations in some and processed wood products are towns that otherwise would have transported within and outside been likely to experience population the region. decline. Strong growth in working It is also important to put in place age population in towns with high strategies to manage temporary plantation sector employment increases in population related to indicates high potential for ongoing the establishment or expansion of stable or growing population and processing facilities. economic activity in these towns over time. Obtaining skilled labour to work in the industry is a continuing challenge. Training of the existing labour force is an ongoing need. Considerable training resources have been established in the SWS to support the plantation sector. Basing resources in the region has allowed training of SWS residents, reducing the need to import skilled labour from outside the region. Continuing to invest in development of a highly skilled labour force is essential as the industry evolves and new technologies are used.

10 Further information Acknowledgments The information in this booklet has We would like to thank all the been drawn from the results of the members of the plantation industry, FWPRDC Project No. PN04.4007 local government and regional report ‘Socioeconomic impacts of communities who contributed their plantation forestry in the South time and resources to the project. West Slopes of NSW’ report. The project was funded by the Data analysis for the project was Forest and Wood Products Research undertaken by the Bureau of Rural and Development Corporation, Sciences, with indirect economic which is jointly funded by the impacts calculated using models Australian forest and wood products provided by National Economics. industry and the Australian Government. The full report can be downloaded from the websites of the Bureau of Rural Sciences (www.brs.gov.au) References or the Forest and Wood Products Research and Development Margules Groome Poyry Pty Ltd Corporation (www.fwprdc.org.au). (1995). The Economic Impact of the New South Wales Timber Industry. For further information, December 1995, State Forests of please contact: New South Wales, . Bureau of Rural Sciences Photo credits PEECE Consulting (2005). Regional GPO Box 858 Transport Plan for the Timber Cover page, top left: ForestrySA Canberra ACT 2601 Cover page, bottom left: Ian Frakes Industry in the South West Slopes Email [email protected] Page 2: FWPRDC file photo of NSW. Report prepared for the Phone 02 6272 4282 Page 4: Forests NSW Softwoods Working Group. Page 5: Mark Parsons Page 6 - top: Michael F. Ryan Productivity Commission (2005). Page 6 - bottom left: Timber 2020 Inc Trends in Australian Agriculture. Page 6 - bottom right: BRS file photo Research paper, Canberra. Page 8: Mark Parsons Page 10: University of Tasmania URS Forestry (2004). Profile of the Page 11: Michael F. Ryan Value of the Timber Industry in the South West Slopes Region of New South Wales. Report prepared for the Regional Development Board, August 2004.

Disclaimer The Commonwealth of Australia acting through the Bureau of This work is copyright. Apart from any use as permitted Rural Sciences and the Forest and Wood Products Research and under the Copyright Act 1968, no part may be reproduced Development Corporation has exercised due care and skill in the by any process without prior written permission from the preparation and compilation of the information and data set out Commonwealth. Requests and inquiries concerning reproduction in this publication. Notwithstanding, the Bureau of Rural Sciences and rights should be addressed to the Commonwealth Copyright and the Forest and Wood Products Research and Development Administration, Intellectual Property Branch, Department of Corporation their employees and advisers disclaim all liability, Communications, Information Technology and the Arts, including liability for negligence, for any loss, damage, injury, GPO Box 2154, Canberra ACT 2601 or at www.dcita.gov.au/cca expense or cost incurred by any person as a result of accessing, Design by Carbon Creative Pty Ltd, Canberra using or relying upon any of the information or data set out in this publication to the maximum extent permitted by law. © Forest and Wood Products Research and Development Corporation 2005 ISBN 0 642 47565 7 11 the south west slopes region

This map shows the distribution of plantations in the case study region in September 2000. The area of plantations is not to scale, with smaller areas of plantation enlarged so they are visible on the map.

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