Cover Page

1. Stockyards with valuable shelter 2. Native and plantation forests providing shelter for cattle and pasture 3. PFT Agroforestry project – installing instruments at one of four trial sites 4. Harvesting Eucalyptus nitens shelter belt 5. Plantation hardwood framing 6. PFT field day at Preolenna, November 2015

30 Patrick Street HOBART TAS 7000

Email: [email protected]

Web: www.pft.tas.gov.au

Inquiries: Tom Fisk Phone: (03) 6165 4070 10th October 2016 Email: [email protected] Our Ref: 0507/3

The Hon Guy Barnett Minister for Resources Parliament House HOBART TAS 7000

Dear Minister

ANNUAL REPORT FOR YEAR ENDED 30 JUNE 2016

In accordance with section 32E of the Private Forests Act 1994, I hereby submit for your information and presentation to Parliament the Annual Report of Private Forests Tasmania for the year ended 30 June 2016.

Yours Sincerely

Tom Fisk CHIEF EXECUTIVE OFFICER

This page has been intentionally left blank Contents

CEO’s Year in Review...... 1

Private Forests Tasmania – Introduction ...... 7

Chapter 1 Reporting On the Private Forest Estate ...... 9

Chapter 2 Adding Value to the Private Forest Estate ...... 15

Chapter 3 Engaging with our Stakeholders ...... 23

Chapter 4 The Regulatory Regime ...... 33

Chapter 5 Administration and Finance ...... 39

Financial Statements ...... 47

Auditors Report ...... 71

Table Index

Table 1: Composition of privately owned/managed forests at 31 December 2015 ...... 10

Table 2: Private Forests Harvest Volumes 2011-12 to 2015-16 (tonnes) ...... 12

Table 3: Client Services Inquiries ...... 24

Table 4: PTR Applications 2015-16 ...... 35

Table 5: PTR Gazettals 1994-95 to 2015-16 ...... 36

Table 6: Service Levy Income ...... 37

Figure Index

Figure 1: Private Forest Harvest Volumes (including fuel wood)...... 13

Figure 2: Native Forest and Plantation (softwood and hardwood) Harvest from Private Forests ...... 14

Figure 3: Organisation Chart ...... 41

This page has been intentionally left blank CEO’s Year in Review

I am pleased to report that Private Forests Tasmania (PFT) has had another productive year and it gives me great pleasure to present this report that briefly describes our focus, our activities and our financial performance for the period.

Once again we have responded to requests for assistance and advice from a large number (552) of private forest owners; we have continued to build new, and strengthen current, relationships with companies and stakeholder groups; we have worked with others to research, pursue and promote new market opportunities for wood; we have continued our initiatives targeting an expansion of the private forest estate; and, we have provided input and advice to government on matters of relevance to the private forestry sector. All this while delivering a strong financial result from a tight budget. I am proud of these achievements and I am particularly proud of my small team who are largely responsible for their delivery.

Our state-wide operating structure continues to underpin our capacity to provide services that support private forest owners and engage in activities that add value to their forests. I know I have stated this in the past, but the adoption of a new operating structure some years ago was something that had to happen and, while I acknowledge that it didn’t go down well with everyone, this initiative has appropriately positioned PFT to more effectively champion the cause of our forestry stakeholders in a changing operating environment. In addition, and very importantly, our current structure continues to ensure that maximum value is delivered from the ongoing government and private financial support we receive and greatly appreciate. However, as forest industry activity grows and privately owned forests progressively assume greater dominance in the supply chain, it is appropriate that we consider ways to strengthen support for the sector.

Tasmanian private forest owners are in a unique situation of having an organisation like PFT available to them – this is not the case in other parts of Australia. A major objective of mine is to seize the opportunity that this provides and ensure that PFT continues to touch the lives of progressively more private land and forest owners in order to maximise our impact. To do this we have to offer services and pursue initiatives that are relevant to our stakeholders’ needs - which means everyone within the organisation has to be open to innovation and change. I believe that is now the case, with evidence provided throughout the report to support this claim.

Chapter 1 of this report provides some metrics on the private forest estate and I refer you to this chapter for greater detail. Importantly, these metrics remind us of the significance of this estate for Tasmania. Our capacity to provide this valuable information is totally reliant on the goodwill of forest owners/managers and primary wood processors and we work hard to maintain trusting relationships with these people. I take this opportunity to once again thank them for their co-operation.

At 1,110,000 hectares, the private forest estate comprises approximately 30% of Tasmania’s reported forest area. The native forest component (858,000 hectares) comprises 26% of the State’s reported native forest area and the plantation component (242,000 hectares) comprises 78% of the State’s reported plantation area. These metrics emphasise why the private forest estate (across all categories and ownership classes) is such an important asset for the forestry sector in particular and for the general economic, social and environmental well-being of Tasmania as a whole.

Last year I alluded to the latent potential the private forest estate has to underpin further growth in the forest products processing sector with associated benefits in economic growth for regional communities and the State more generally. Over the last year it is pleasing to see some of this latent

Private Forests Tasmania Annual Report 2015-16 1 potential being realised with the total private forest harvest increasing by 48.5% over the previous year, to 2.94 million tonnes. A level of production not experienced for 8 years.

As expected, the dominant contributor to this increase was the hardwood plantation estate (89% increase to 1.79 million tonnes) as the fall-out from the failed MIS era subsides and the new owners ramp up their harvesting and replanting activities. Of significance here is the substantial increase in the production of hardwood plantation export logs rather than wood chips, signalling that despite the estate being primarily developed for fibre production (pulp wood) a range of products are now being produced that provide better returns to forest owners. Further value adding within the State is hopefully the next step. At a little under 1.0 million tonnes across all log grades, the softwood estate continues to support (at its sustainable yield level) local processors and export activities alike, creating wealth and employment opportunities.

Nowhere near as significant in volume terms but nevertheless important, is the 86% increase in native forest production to 169,000 tonnes. While this remains a miniscule proportion of peak production (2.6 million tonnes) achieved historically it shows that there is ongoing interest in this very valuable forest asset that has largely remained dormant for many years. Importantly, these forests primarily belong to individual landowners who have witnessed the progressive destruction in the value of their forest assets over the last decade. These forests are an important environmental, social and economic asset for all Tasmanians and they are managed free of charge to the community by their owners. It is important that they are seen to have potential commercial value, realised or not, so that their survival is assured.

As previously predicted, the private estate’s contribution to State forestry production continues to increase. For the previous three years the contribution had risen to, and remained at, 58%. During the reporting period the contribution rose to 67% - reinforcing the importance of the estate to the Tasmanian forestry sector and its dominance in that regard from a log volume perspective – and there is more capacity to unleash.

Chapter 2 of this report highlights some of the specific activities of our Business Development group and I refer you to this chapter for greater detail.

During the year we had some staff changes within the Business Development group resulting from the retirement (at the end of 2015) of the group’s manager, Ian Ravenwood. Ian made an outstanding contribution to PFT’s activities in this area as we worked together to chart new territory for the organisation and I take this opportunity to thank him for his input and invaluable support. That said, Ian’s retirement created the opportunity for us to attract Dr Martin Moroni to the organisation and Martin has stepped into the role with gusto and enthusiasm. He brings a new set of skills and experience to the organisation that will be invaluable in the future. Martin’s team of Tracey King and Rob Smith (time shared with the Services group) are a dynamic group and I congratulate them on their output and achievements throughout the year.

Business development, from PFT’s perspective, is not about developing our own business, it is about PFT pursuing activities and initiatives that will hopefully assist our forestry stakeholders grow their businesses. We do this by focussing on initiatives that have the potential to add value to, or increase the size of, the private forest estate. Some of the priority areas are briefly mentioned below.

With increasing demand for products from the private native forest estate came an increased interest in forest management certification. Forest owners are coming to understand that without this voluntary, third party accreditation of their forest management practices, access to markets is not assured. Progress, albeit slow, continued to be made through the year by small groups keen to pursue

Private Forests Tasmania Annual Report 2015-16 2 independent group certification options that aren’t tied to forest management companies or wood brokers and PFT provided assistance and advice to these groups. That said, there are quality certification options available through the forest management companies and forest owners are encouraged to explore the options available to them. Ultimately, it is PFT’s objective that a range of cost-effective certification options exist that satisfy the needs of private forest owners who choose to actively manage their forests and we promote all options to interested parties as the need arises.

While many of our business development activities are quite diverse a major focus has been researching and promoting new market opportunities for wood and we do this together with staff from other agencies. From a new market perspective, we are concentrating on market opportunities for pulpwood quality material – particularly that derived from native forest harvesting operations and processing facilities. Without markets for this ubiquitous product the asset value of the private forest estate is severely compromised and in some situations totally destroyed. This work is of particular importance for private forests (including hardwood plantations) in the south of the State in which, since the closure of the Triabunna export facility, minimal harvesting activity has occurred. The Government’s initiative in pursuing ‘expressions of interest’ in relation to solutions for ‘southern residues’, albeit initially focussed on the State-owned forest resource, will hopefully assist with this resource utilisation challenge that impacts the capacity to productively manage forests across all tenures.

One of PFT’s major objectives is to expand the private forest estate and it is acknowledged that the only place that can now be achieved is on cleared agricultural land. It is widely held that increasing the area of farm tree cover to ten per cent can increase overall farm profitability by providing a tree crop without decreasing non-forest productivity. Most of the benefit to non-forest productivity comes from shelter trees provide to livestock and crops, increasing their yields. Overcoming the impact on many farmers of the failed MIS era is a hurdle we have to contend with in achieving this objective. However, we believe that if we can adequately demonstrate to farmers the real $ impact that trees can have on their agricultural systems, we will convince more of them to plant more trees.

The allocation of additional funding to PFT through the Government’s Agrivision 2050 Plan has provided additional capacity to pursue this objective that will ultimately result in a win-win for agriculture and forestry. As reported previously, UTas and the CSIRO were engaged towards the end of last year to work with us on this project and good progress has been made in the first stage of the project – data collection. Over the next three years we will quantify the biophysical interactions between trees and crops/pasture (both competitive and beneficial) and the productivity of trees in shelterbelts. The data collected will underpin economic analysis of the entire systems because to convince farmers to plant more trees we have to ‘show them the money’. Delivery of outcomes will be done through carefully planned information sharing and extension activities.

Chapter 3 of this report highlights some of the many activities performed by our Services group during the year and I refer you to this chapter for greater detail.

The Services group is PFT’s front line contact with, in particular, the non-industrial private forest owners. In essence they ‘man the shop front’ and they do that job very well. The group is managed by Arthur Lyons, and comprises two private forest advisors, David Bower in the north and Rob Smith (time shared with the Business Development group) in the south. This small group of dedicated forestry professionals have a large workload, made more challenging by the retirement of Henry Chan in the previous year, and I want to take this opportunity to thank them for their dedication to servicing their clients’ needs. The Services group responds promptly to the majority of the inquiries we receive for advice and assistance while managing many other ongoing and pro-active initiatives reported in Chapter 3. There is no doubt that our new structure is ensuring a more efficient use of our in-house

Private Forests Tasmania Annual Report 2015-16 3 skills and consistency of service provision state-wide but our resources in this area are now such that we have to consciously focus our activities in areas where we have maximum impact. However, as opportunities arise in the future, we should look to appropriately increase our resources in this area in order to match the growing vibrancy in the private forestry sector.

During the year Services staff responded to 552 inquiries on a range of matters in relation to private forestry which is a reduction of 33% from the previous year. I have often observed that it is at times when forestry activity is at its lowest that forest owners seek assistance and advice and this reduction in inquiries during the year seems to support that notion. I am absolutely convinced that many private forest owners in Tasmania don’t realise how lucky they are to have a dedicated group of forestry professionals freely available to them to provide impartial assistance and advice on matters of relevance to the management of their forests. The small contribution made through levy payments by individual forest owners seems insignificant when compared to the services it helps to underpin. Maybe we need to be more vocal about what we do rather than simply keeping our heads down and getting on with the job.

In addition to responding to this high level of inquiries, Services staff continued to provide ongoing support to long-term clients. The nature of this support is diverse and included activities such as (but not limited to) the facilitation of thinning operations in small farm woodlots, assisting private forest owners find markets for their wood and conducting field days in our own right and jointly with other organisations. In addition, we once again conducted a well-attended farm forestry evening event. These events provide opportunities for our stakeholders to come together, share information and network, promoting greater interaction and cohesion across the sector.

It is important that I once again acknowledge the value of the relationship we have developed with Esk Mapping & GIS (Esk) to whom we have outsourced our activities around GIS and resource information more generally. Their activities, while having PFT wide application, come under the management of the Services Manager. The Esk team continue to provide outstanding quality service and we have yet to find a challenge that this talented group could not respond to quickly and cost effectively. They have enhanced our capabilities in this highly technical area many fold, underpinning our capacity to participate in resource development project evaluations and the provision of advice in a far more professional way than was previously possible. Importantly, this enhanced capacity has come at a cost at, or below, that of our previous in-house capabilities.

In relation to our financial performance and other administration matters I refer you to the Financial Statements and other reports at the end of the Annual Report for greater detail.

Once again I am particularly proud of our financial performance this year and of the position of financial stability that we have achieved. I acknowledge the leadership in this area of our Finance and Administration Manager, Jeff Battersby, in supporting and assisting me deliver this outcome. Jeff is very ably assisted by Diana Hall who is a reliable and talented staff member who simply gets on with the job delivering quality outcomes in this important part of PFT’s business.

To operate effectively PFT has to be financially viable and it should be obvious by now that for the last 7 years we have had an unrelenting focus on strict financial control – and the results are now obvious. While the management team, with support from the Board, have led the charge to achieve this position, all staff have contributed and I thank them for their contribution. I know that the process to get to this point has caused a degree of frustration and anguish for some staff. It is pleasing to now be in a position to once again encourage our people to engage in appropriate professional development through attendance at conferences and other activities of importance to them as these opportunities become available.

Private Forests Tasmania Annual Report 2015-16 4

Historically, up to 20% of PFT’s income has come from the Private Forest Service Levy (the levy) which is directly related to forestry activity in private forests - but it is a long time since those levy income levels have been received. At its lowest point, levy income plunged to $42k in 2011-12. I have often commented that underpinning fixed costs with variable income can be problematic, particularly considering that demand for support services is often higher at times of reduced forestry activity. It is for this reason that I once again acknowledge the ongoing and unerring financial support that we receive from the Government, because this support underpins our capacity to support private forest owners when times are tough while continuing to pro-actively pursue initiatives that they (and the State more generally) will benefit from. That said, it is pleasing to report that (in line with an increase in private forestry activity particularly in the plantation sector) our levy income increased to nearly double that of the previous year – to $236k – and indications are that this important income source will continue to increase.

As a result of improving private forestry activity levels and our unrelenting focus on cost containment we have once again delivered a comprehensive financial surplus – this year being $309k. This outstanding result is more than double that achieved last year, proving once again that the organisation is now well and truly financially sustainable. I am very proud of this achievement.

As reported last year the PFT Board entered a period where it was operating without a quorum and this continued for the majority of the reporting period until the appointment of two new directors (Andrew Morgan and Tony Cannon) in May 2016. During the non-quorum period the Board continued to meet informally and provide appropriate oversight and guidance to management. The term of one existing director, Arnold Willems, expired just after year end and I would like to take this opportunity to once again thank Arnold for his service and input over the last five years. Our new directors, Andrew and Tony, bring a wealth of new experience and fresh perspectives to the Board and I am confident that they have the capacity to add value to the future strategic direction of the organisation. The Board now continues to operate formally despite having two vacant director positions, a situation that is thought to be appropriate in the short term. Now the Board is once again formally constituted the matter of the appointment of a Chairman is being considered.

I would like to take this opportunity to thanks all of my fellow directors for their guidance, support and input during the last 12 months.

While PFT continues to face challenges in balancing the demands and expectations of our diverse stakeholder group, I feel I can justifiably claim that we are making a valuable contribution to Tasmania’s forestry sector, adding value that exceeds our costs. I remain very positive about the opportunities we see emerging and I commit PFT to continuing to play an active role in pursuing these opportunities to the benefit of private forest owners, the forestry sector generally and Tasmania as a whole.

Tom Fisk CHIEF EXECUTIVE OFFICER

Private Forests Tasmania Annual Report 2015-16 5

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Private Forests Tasmania Annual Report 2015-16 6 Private Forests Tasmania – Introduction

Private Forests Tasmania (PFT) was established in 1994 under the Private Forests Act 1994 with governance responsibilities that recognise the economic, environmental and social importance of Tasmania’s private forests.

The objective of PFT as set out in Schedule 1 of the Private Forests Act 1994 is:

“…to facilitate and expand the development of the private forest resource in Tasmania in a manner which is consistent with sound forest land management practice”.

PFT’s core functions and powers are set out in Sections 6 and 7 of the Act, and can be broadly summarised as follows:

 to develop and advocate strategic and policy advice to the Minister responsible for forestry on all matters relating to private forestry in Tasmania;  to work in partnership with private forest owners and users by providing advice on all aspects of forest management; and  to initiate extended or new market opportunities.

The organisation now has a functional rather than a geographically based administrative and operational structure and maintains regional representation through an office in Launceston (Prospect) and another in Hobart. The Burnie office was closed in December 2015. Regional representation facilitates good access for stakeholders to the organisation while the operating structure enables the organisation to more efficiently utilise in-house skills and resources while ensuring consistency of service provision across the State.

The operating costs of PFT are underpinned by three income streams – State Government appropriation, the Private Forest Service Levy and fees for services. State Government appropriation provides the bulk of the income with the other two sources being variable and largely dependent on the industry activity – which can be problematic for the organisation. Underpinning fixed costs with variable income is not an ideal model, particularly considering that assistance is often most in need when the operating environment is most challenging.

The majority of the services PFT provides are quite obvious to our stakeholders – collection, collation and reporting of data on the private forest estate, advice to private forest owners in relation to the sustainable management of their forests and the provision of advice to Government on matters relating to private forestry. However, activities that often go unnoticed are those that occur behind the scenes without our stakeholders even being aware of them and it should not be underestimated how much of the organisation’s resources are directed towards these activities. Broadly, they are activities that directly or indirectly benefit all private forest owners who choose to actively manage their forests including, but not limited to, the following:

 Representation on Boards and committees that feed directly into state and national forest policy formulation of relevance to private forest owners and forest operations regulation;  Direct input to government forest policy matters either direct to the Minister or via the Department of State Growth Resource Policy Unit;  Playing an advocacy role for private forest owners generally and specifically in meetings with the Minister and his staff and as appropriate with other state and federal politicians;  Assisting landowners with test case forest management issues in the Forest Practices Tribunal;

Private Forests Tasmania Annual Report 2015-16 7  Field days open to all;  Researching and developing new business opportunities of direct relevance to private forest owners;  Research activities from which the results are freely available; and  Securing external financial assistance including grant funds that directly benefit private growers.

There can be no doubt that without PFT’s involvement in these activities, the operating environment for private forest owners who actively manage their forests would be very different.

Ongoing budget constraints have necessitated that all staff members accept the need for review and analysis of our activities and operational methods in order to find the most cost effective way to deliver our services. As a result PFT has now attained a stable financial position and with a refocussed operational model is well positioned to retain its role as a valued service provider to the forestry sector.

This Annual Report on the operations of PFT provides a review of the organisation’s activities and the audited Financial Statements for the year ended 30 June 2016. It also includes production and area- based metrics related to the private forest estate – both industrial and non-industrial. The organisation’s operations are reported under chapters that reflect our new operating structure which focuses on business development opportunities that have the potential to directly benefit private forest owners and service provision, together with a chapter providing an overview of administration and finance and a separate section containing the financial report for the 2015-16 financial year.

Private Forests Tasmania Annual Report 2015-16 8 Chapter 1 Reporting On the Private Forest Estate

One of PFT’s functions is to collect and collate data that enables us to describe the private forest estate and the quantities of logs of varying grades extracted from these forests. We commenced collecting data in 1994 and, since the 2012 Annual Report, have included some data that dates back to this time enabling longer term trends to be shown. The collection of data is dependent on the cooperation and goodwill of many individuals and organisations throughout the private forestry sector. PFT is thankful to those organisations and hopes that this cooperation ultimately benefits those who participate through developing a greater understanding of the private forest sector and by enabling PFT to better support participants. Provided information allows PFT to design and implement activities and initiatives to benefit our stakeholders – be they private forest owners or forest products processors – and represent the interests of these stakeholders in appropriate forums.

The Extent of the Private Forest Estate

PFT maintains a spatial dataset of the Tasmanian private forest estate that facilitates reporting on this estate at a state and national level. This dataset is updated annually to reflect changes in the estate over time, the degree of updating being dependent on data availability and PFT’s resources. Updates related to the industrial estate are facilitated by data licencing agreements PFT has with the forestry companies. On the other hand, updating the non-industrial estate area (which comprises the majority and is owned by thousands of individual forest owners, largely farmers) is done with remote sensing technology, which is considerably more challenging.

Our private forest estate spatial dataset is used by other agencies to update state‐wide and national data on forest extent and forest type. For example, The Australian Government’s Department of Agriculture, Fisheries and Forestry, through its Australian Bureau of Agricultural and Resource Economics and Science (ABARES) agency, annually reports statistics on the extent of forests across Australia and individual states. PFT provides data to ABARES to support this reporting process.

Tasmania’s private forest estate covers 1,100,000 ha (Table 1) and comprises approximately 30% of Tasmania’s reported forest area. The area reduced by approximately 13,000 ha since 2014-15, primarily due to the transfer of ownership of ex-Gunns MIS plantations on crown land to Forestry Tasmania. However, we now include private/public joint venture areas in the total reported for privately owned/managed forest on crown land. Privately owned native forest occupies 858,000 ha, approximately 26% of the State’s reported native forest area. Privately owned native forest is dominated by Eucalypt forest (both low and tall) that occupies 809,000 ha, leaving 49,000 ha supporting rainforest and other native forest.

The private plantation estate (i.e. privately owned plantation regardless of species and land tenure) covers 242,000 ha, 78% of the State’s reported plantation area. Hardwood plantations comprise 71% (172,000 ha) of the State’s total private plantation estate.

Clearly, the private forest estate (across all categories and ownership classes) is an important asset to the Tasmanian forestry sector and makes a strong contribution to Tasmania’s economy, often regionally, and is important to Tasmania’s social and environmental values.

Private Forests Tasmania Annual Report 2015-16 9 Table 1: Composition of privately owned/managed forests at 31 December 2015

Privately Total privately Privately owned/managed owned/managed owned/managed forest on private forest on all Forest Group forest on crown land land tenures Area (hectares) Eucalypt low forest 651,000 0 651,000 Eucalypt tall forest 158,000 0 158,000 Rainforest 17,000 0 17,000 Other native forest 32,000 0 32,000 Total Native Forests 858,000 0 858,000 Plantation ‐ hardwood 169,000 3,000 172,000 Plantation ‐ softwood 22,000 48,000 70,000

Total Plantations 191,000 51,000 242,000

Total native forests and 1,049,000 51,000 1,100,000 plantations

Harvest Summary for the Private Forest Estate

PFT summarises and reports on activity in the private forest estate from data collected from wood processors and exporters. From this, the contribution of forest products from the private forest estate to the total Tasmanian forestry sector is estimated. Our Annual Report provides a summary of collected data to the Government and other stakeholders. These summaries provide an important measure of the contribution the private estate makes to employment and wealth generation throughout regional Tasmania and the State as a whole.

The collection of data describing private forestry in Tasmania is entirely dependent on cooperation of the many forest products processors and log exporters throughout the State who willingly provide PFT with information on their forest products intake. PFT acknowledges the participation of these processors and is proud of the relationship of trust that has been developed between us and the many companies and individuals involved. Importantly, the processors provide this information to PFT on the understanding that the raw data will be aggregated for reporting purposes and the confidentiality of each individual processor’s data will be strictly maintained.

Fifty five individual Tasmanian forest products processing businesses were contacted this year and fifty three responded to the request for data on log products harvested from private forests that were delivered to their mills or yards. The two that did not respond are very small operators and any private forest harvest they may have processed is unlikely to have any material impact on the summary totals.

Twenty four of the responding processors reported that they did not receive any logs sourced from private forests during 2015-16. Four of these processors reported that they closed and did not operate during the year, continuing the long term trend of processors ceasing operations. However, one new mill has reported to have opened during the year.

Private Forests Tasmania Annual Report 2015-16 10 The six largest volume businesses processed almost 93% of Tasmania’s private forest harvest during 2015-16. When the next three are included, the proportion is just over 96%.

Wood Production Statistics

The total private forest harvest in 2015-16 increased by 48.5% from 2014-15 supplying 2.94 million tonnes of logs to the market, levels of production not observed for 8 years. The increase in log supply was predominantly from logs sourced from hardwood plantations, however there were also modest increases in the supply of logs from softwood plantations and native forests. This continues the trend of increasing production that commenced from the record low of 2011-12.

Native Forests

At 169,000 tonnes, despite being an 86% increase on the volume reported for 2014-15, the private native forest harvest for 2015-16 remains small compared to the record of 2.6 million tonnes in 1999-00. 2015-16 saw increases in harvest quantities of sawlog and veneer logs of 478% and pulp log quantities of 34% when compared to 2014-15 harvest quantities.

Hardwood Plantations

Harvesting of hardwood plantations increased significantly in 2015-16, increasing 89% when compared to 2014-15, reaching a new high, 60% greater than the previous 2007-08 high. In 2015-16, 1.79 million tonnes of plantation hardwood was harvested. Increases included a 91% increase in sawlog, veneer and ply log and an 89% increase in pulp log supply over 2014-15 harvest quantities. This increase was expected following the increased processing capacity bought on-line in northern Tasmania recently, resulting from the finalisation of the Gunns assets sale. There remains capacity to further increase output from the plantation estate and processing facilities in this region as the estate matures and the backlog of harvesting, not carried out over the last five years, comes on line.

Softwood Plantations

The private softwood harvest increased modestly in 2015-16, by 37,000 tonnes (4%) to 979,000 tonnes. These levels of production are closer to the long term expected production levels of between 1.0 and 1.1 million tonnes reflecting what is thought to be a long term sustainable yield of the estate.

Contribution to Overall Tasmanian Forestry Production

By combining production statistics for the State owned forests (provided by Forestry Tasmania) with the private estate figures detailed above, we can estimate the annual contribution of the private forest estate to total state forestry production. In 2012-13 the private estate, for the first time, contributed more than half (58%) of the State’s total wood harvest. The contribution remained at this level until 2014-15. In 2015-16 the contribution increased significantly to two thirds (67%) of Tasmania’s wood production, once again reminding us that the private estate is now the dominant supplier of forest products in Tasmania.

Private Forests Tasmania Annual Report 2015-16 11 Table 2: Private Forests Harvest Volumes 2011-12 to 2015-16 (tonnes)

2011-12 2012-13 2013-14 2014-15 2015-16 NATIVE HARDWOOD Native Sawlog, Veneer & Ply 28,894 21,110 12,355 10,694 61,801 Hardwood Pulpwood 105,064 57,202 76,632 79,661 106,665 Minor Log Products 84 36 55 278 247 Fuel Wood 4,812 1,325 1,486 863 6,487 Total NF including fuel wood 138,854 79,674 90,529 91,496 175,200 Total NF Excluding Fuel Wood 134,042 78,349 89,043 90,633 168,713 PLANTATION HARDWOOD Hardwood, Sawlog, Veneer & Ply 364 1,264 0 37,466 71,611 Hardwood Pulpwood 252,657 220,790 820,228 910,414 1,719,770 Minor Log Products 1,500 0 0 0 0 Fuel Wood 0 0 300 1,090 1,240 Total HW including fuel wood 254,520 222,054 820,528 948,970 1,792,621 Total HW Excluding Fuel Wood 254,520 222,054 820,228 947,880 1,791,381 PLANTATION SOFTWOOD Softwood Sawlog, Veneer & Ply 384,601 547,909 522,689 568,979 561,378 Pulpwood 327,972 585,133 507,108 371,314 407,185 Minor Log Products 2,968 10,179 2,156 773 10,828 Fuel Wood 40 1,212 1,724 921 0 Total SW including fuel wood 715,581 1,144,433 1,033,677 941,988 979,391 Total SW Excluding fuel wood 715,541 1,143,221 1,031,953 941,067 979,391

GRAND TOTAL including fuel wood 1,108,955 1,446,161 1,944,734 1,982,454 2,947,212 GRAND TOTAL excluding fuel wood 1,104,103 1,443,624 1,941,224 1,979,580 2,939,485

Private Forests Tasmania Annual Report 2015-16 12 Figure 1: Private Forest Harvest Volumes (including fuel wood)

Private forests harvest volumes 1994-95 to 2015-16 (Including Fuelwood) 3,500,000

3,000,000

2,500,000

2,000,000 Tonnes 1,500,000

1,000,000

500,000

0

Native Forest Plantation Hardwood Plantation Softwood Total (all including fuel wood)

Private Forests Tasmania Annual Report 2015-16 13 Figure 2: Native Forest and Plantation (softwood and hardwood) Harvest from Private Forests

Total Private Harvest (1994-95 to 2015-16)

Native Forest Plantation

3.0

2.5

2.0

1.5

1.0 Tonnes (Millions) Tonnes

0.5

0.0

Private Forests Tasmania Annual Report 2015-16 14 Chapter 2 Adding Value to the Private Forest Estate

PFT actively seeks and pursues business development opportunities related to the management and use of private forests throughout Tasmania, seeking to add value to the private estate and hence benefit private forest owners. Opportunities explored are diverse and include seeking to secure the role of private forests in the forest products market place, researching and promoting new market opportunities for forest products, addressing the many impediments that stand in the way of integrating more trees into the agricultural landscape and developing innovative systems to attract investment to expand the private forest estate. Key initiatives are discussed below.

Forest Certification

Forest certification includes Forest Management Certification and Chain of Custody Certification. Certification is increasingly required to access markets, however it is expensive to achieve and then maintain, adding costs to forest managers. There are several certification options available to Tasmanian private forest growers and while all industrially managed forests are certified, only small areas of non-industrially managed private forest (NIPF) are certified. There are certification options available to NIPF owners that PFT promotes, and PFT is supporting the development of an option not yet available in Tasmania.

Forest management certification is a system of private voluntary standards for sustainable forest management developed and managed by independent bodies (i.e. ‘third-parties’). Owners of forests with certified forest management accreditation agree to abide by accrediting forest management standards. An enterprise’s compliance with the standard, regularly audited by accredited certifying bodies, flows through to on-ground practices. Chain of custody certification schemes operate in conjunction with forest management certification. They allow custodianship of certified wood to be tracked from the forest to the products being sold through harvest, manufacture and retail stages. A label on the end-product provides independent assurance to consumers that a wood-based product has come from sustainably managed forests.

In Australia, we have two main performance based forest certification schemes, the Australian Forestry Standard (the AFS or AS 4708:2013) and Forest Stewardship Council (FSC) certification. AFS is, in turn, recognised by the international mutual recognition scheme ‘Program for the Endorsement of Forest Certification’ (PEFC). Both these schemes have a chain of custody component. Participation by forest owners and processors in either scheme is voluntary.

Tasmania’s industrial forest owners have independently achieved forest management certification by one or both schemes, resulting in all of Tasmania’s industrially owned forests being certified. Industrial forest managers have the sophistication and resources needed to independently achieve and maintain certification.

Few NIPF owners in Tasmania are large enough to justify going alone with certification with only a few thousand hectares of NIPF being certified. However, some NIPF owners are certified by default when industrial forest owners have retained a legally definable management control over the forest on their land and include it in their total certified forest management area. A typical example would be share farms, in which large forestry companies such as Norske Skog or Forico have management control as well as an equity interest in the trees in conjunction with the landowner. Tasmania is also fortunate to have some smaller forest management companies who have forest

Private Forests Tasmania Annual Report 2015-16 15 management certification and the forests of owners who engage with these private sector organisations will become certified under their multi-site wood broker umbrella.

NIPF owners may also access markets requiring certification by collaborating with certified mills/suppliers. The chain of custody aspect of both certification schemes can allow a modest proportion of non-certified wood from non-controversial sources to be included under a ‘mix claim’ where a mixture or certified and non-certified wood is sold. The availability of this option depends on the chain of custody arrangements of the wood purchaser who has either ownership or management control of sourced wood.

AFS has the capacity to allow wood to be sold as AFS Controlled Sources, but not with the AFS/PEFC logos, where the wood purchaser confirms that wood is sourced from uncertified but non- controversial sources. A due diligence process must be undertaken to demonstrate such wood is sourced from non-controversial sources.

FSC has a Controlled Wood standard that requires FSC Chain of Custody to support the Controlled Wood standard. FSC Controlled Wood cannot be sold as a certified final product but needs to be mixed with FSC Forest Management Certified wood and sold as a mixed claim. FSC Controlled Wood is a preliminary step toward FSC Forest Management Certification.

The above options, which relinquish a component of forest or wood sales management, does not suit some owners of private forests who are ‘hands-on’ and capable managers and marketers of their estate’s forest products. For such individuals, an independent group scheme can allow them to become certified while maintaining management and marketing control of their estates (albeit within the constraint of the schemes policies and procedures, and wood marketing that they require), which is a gap in the current certification market. In group schemes it is the ‘group manager’ that is certified rather than individual forest owners (or ‘group members’). Group members’ forests become a component of the total certified forest area of the group manager and only a sample of members’ forest is audited annually. The group manager establishes and oversees processes and procedures, maintains group records and overall manages the membership and their performance.

An independent group scheme, ideally owned and controlled by the group members, also ensures certification costs are fully transparent. Once established, additional forest owners, including owners of smaller forests would find it easier to join, allowing the high fixed cost of certification to be reduced on hectare per hectare basis by spreading the certification costs over more hectares.

During 2015-16 PFT largely completed the template documentation needed for a Tasmanian independent group forest management certification option under the AFS. This documentation has been provided to two parties interested in exploring group certification and is available to other parties (through PFT) who are interested in exploring independent group certification.

PFT also actively participates in the certification stakeholder consultation processes related to initial certification audits, annual surveillance audits and recertification audits that typically occur annually for each certificate holder.

Accessible Information

PFT seeks to provide private forest owners and government with access to relevant and helpful information. A number of initiatives are maintained to help us achieve this outcome:

Private Forests Tasmania Annual Report 2015-16 16 PFT Website and Social Media

The PFT website is an easily accessed source of information for Tasmanian private forest owners and other stakeholders. In 2015-16 the site was visited by 3,500 users, 69% were new visitors and 31% were returning visitors.

One of the pages with the highest number of views was the ‘Hardwood Plantation Portal’ which provides useful information for stakeholders affected by the plantation forestry MIS collapse. The Portal has information on removing Forestry Rights, plantation insurance, sources of information on the Gunns liquidation process, and information on forest management companies who could assist landowners who have ‘inherited’ an interest in ex-lease plantations.

We also now have a presence on both LinkedIn and Facebook, providing us with another way to provide information to stakeholders and other interested parties on PFT events such as field days and seminars.

In 2015-16 we posted to our website a Forest and Wind Risk report that enables forest growers to understand and manage wind risk. This will be supported with a Wind Risk calculator and topographic exposure web map for Tasmania. We will also be adding agroforestry case studies and forestry information sheets that cover a range of forest management and operational topics.

List of Tasmanian Primary Wood Processors and Log Exporters

PFT maintains a reliable record of Tasmania’s primary wood processors and log exporters. This confidential database is very fluid as the number of Tasmanian businesses engaged in primary wood processing, especially at the smaller end of the scale, continues to decrease. While one new small mill has opened in the last year, four have closed. We use this information to identify businesses for inclusion in the annual harvest survey.

Directory of Tasmanian Primary Wood Processors

PFT first prepared a Directory of Tasmanian Wood Processors in 2012. It is regularly updated and currently lists 42 primary wood processors and log exporters. It includes information on each organisation’s location, business address, contact person including phone numbers and email, type of mill operated, log types purchased, products produced and chain of custody certification status.

The Directory is publicly available on PFT’s website as a handy reference for private forest owners looking for information on potential outlets for their forest products.

Biomass

Biomass processing continues to capture worldwide attention and can be defined as any organic material, including wood, which has stored sunlight in the form of chemical energy. Biomass is often subdivided into three main areas of interest:

1. Bioenergy - renewable heat energy made available by combusting biomass;

Private Forests Tasmania Annual Report 2015-16 17 2. Biofuels – usually liquid or gaseous fuels made from biomass, e.g. ethanol, biodiesel, biogas (e.g. methane from landfill) and synthesis gas (syngas); and 3. Biorefinery - the processing of biomass into a range of bio-based products (food, feed, chemicals, materials). The focus is often on the higher value chemicals that are equivalent to, or fulfil the same role as those produced in petroleum refineries and form the building blocks for plastics and other products.

Currently about 400,000 tonnes of bone dry forest biomass are used for producing energy in Tasmania. This is equivalent to about 6% of Tasmania’s total primary energy supply. All of this energy is used for generating heat, mostly for domestic space heating, with about one-third used for industrial heating. A recent study indicates considerable opportunity to expand the amount of energy generated from forest biomass, estimating that 1.8 million tonnes of bone dry forest biomass is potentially available for energy production*.

* Rothe, A., Moroni, M.T., Neyland, M., Wilnhammer M. 2015. Current and potential use of forest biomass for energy in Tasmania. Biomass and Bioenergy 80: 162-172

In 2016, PFT supported a successful application for funding from State Growth to participate in the Australian Biomass for Bioenergy Assessment (ABBA) Project. The project will provide PFT’s data on forest residues to a national map showing where biomass can potentially contribute to bioenergy. The ABBA project was established to engage state teams to collect, prepare and maintain data on the locations, volumes and availability of biomass resources, to be displayed on the Australian Renewable Energy Mapping Infrastructure (AREMI) platform as geospatial datasets nationwide. This platform will contribute to the long term interest and investment in the renewable energy sector by providing relevant spatial data to assist investors in their understanding of the extent and availability of renewable resources in Australia.

Any new potential uses for NIPF wood are important to PFT’s stakeholders as it has the potential to provide another market for pulp quality wood and residues. For this reason PFT keeps a watching brief on Australian and international developments in this area and continues to provide support and advice to parties interested in potential biomass processing initiatives in Tasmania. We also work closely with the Resources and Energy group in the Department of State Growth who also have an interest in this area.

PFT received numerous queries on bioenergy in 2015-16 and has helped several companies explore bioenergy options in Tasmania. Several publications on PFTs web-site indicate where wood is potentially available from both the public and private forests that could be used for energy production.

Massive Timber Construction

Massive timber construction is a growing phenomenon around the world. Products such as cross laminated timber (CLT), laminated veneer lumber (LVL) and glue laminated timber (glulam) are being increasingly used to build larger and taller buildings. Melbourne now boasts two significant massive timber buildings. The ten storey Forté apartment building in the Docklands precinct was the first Australian building constructed with CLT and, standing at 32.2m tall, was the world’s tallest modern timber apartment building when completed in 2012. Just a short distance from Forté is the even newer Library at the Dock community building which utilises CLT, glulam and recycled timber in its construction.

Private Forests Tasmania Annual Report 2015-16 18 As of 1st May 2016 the National Construction Code was modified to allow timber buildings to reach 8 stories or 25m in height. New ‘deemed to satisfy’ provision of the code allows the use of timber construction systems in apartments, hotels and office buildings. This increases the opportunity for more wood to be used in construction and PFT recognises that this developing construction method has the potential to one day generate new markets for Tasmanian timber. We encourage parties interested in new uses for Tasmanian timber to consider massive timber as an option.

Research Program

Tasmania’s private, non‐industrial land base now provides the most acceptable option to increase Tasmania’s forest estate and in the future small-scale forests integrated into agricultural systems are likely to become more important sources of forest products. PFT continues to champion the forestry interests of private landowners and confront the unique challenges of small‐scale forestry. To this end one of our business development initiatives is a small forest research and development program that forges alliances with researchers and supports projects that are of specific relevance to private forest owners.

Agroforestry Program

Agroforestry, where trees are grown around or among crops or pasture, benefits landowners in many ways. When trees are added to farmland, land values increase and land productivity increases. It is widely held that increasing the area of farm tree cover to ten per cent can increase overall farm profitability by providing a tree crop without decreasing non-forest productivity. Most of the benefit to non-forest productivity comes from the shelter trees provide to livestock and crops, increasing their yields.

Even though Tasmania has an ideal climate to grow trees of commercial value, there is a paucity of Tasmanian based research on agroforestry that demonstrates the benefits of adding trees to agricultural landscapes. This adds to the difficulty in convincing Tasmanian farmers to increase the extent of commercial tree plantings on their farms.

In 2014-15 PFT received funding from the State Government’s Agrivision 2050 Plan for a Private Forest Development Program with the principle objective of increasing the extent of commercial tree plantings on Tasmanian farms. PFT partnered with the University of Tasmania (Professor Mark Hunt) in collaboration with CSIRO (Dr Daniel Mendham) to implement this keystone project.

Outcomes of the PFT Agroforestry project will be achieved by providing our farmers with compelling Tasmanian derived and science based evidence of the contribution these plantings can make to sustainable land use and the value that can accrue from these plantings to their other agricultural activities prior to the commercial harvest of the trees.

The program will provide a win-win for agriculture and forestry, enhancing farm productivity, profitability and resilience whilst simultaneously expanding the volume of forest product available to processors.

Four farms, one in southern Tasmania and three in northern Tasmania, have been selected for study. All study sites comprise pasture and crop land adjacent to established shelterbelts.

Private Forests Tasmania Annual Report 2015-16 19 Instrumentation of sites has commenced and is expected to be completed by early 2017. At these sites we will monitor changes in pasture and crop productivity and soil and air temperature and humidity with distance from shelter. We will also measure wind direction and speed at all sites. This will allow us to observe the expected increase in crop production close to shelterbelts and then explain how shelter increased crop production. We have also measured the trees in the shelterbelts and will be able to provide a valuation of the wood they contain.

Over the next three years we will quantify the biophysical interactions between trees and crops (both competitive and beneficial) and the productivity of trees in shelterbelts. This will allow us to perform an economic analysis of cash flow and net present value of commercial trees on farms through the development and update of a bio-economic model. We will apply the project outputs to case study sites and develop material to promote agroforestry among and between researchers and farmers (e.g. fact sheets, web pages and a decision support system tool) and, most importantly, to promote adoption of agroforestry among Tasmanian farmers (e.g. working with innovative farmers already engaged in agroforestry to collect on-farm data that quantifies the impact of their tree plantings on livestock, crops, pasture, and water protection as well as conducting field days).

The CSIRO has leveraged the PFT Agroforestry project to receive a Commonwealth Grant for Research for Profit entitled ‘Lifting farm gate profit through high value modular agroforestry’, for which PFT is a partner. This project will enhance the outputs from the PFT Agroforestry Project.

Australian Forest Operations Research Alliance (AFORA)

PFT was one of the 20 or so founding members of AFORA, an organisation formed after the conclusion of the Cooperative Research Centre for Forestry in 2012. AFORA continues to carry out research into the management and control of operational costs for existing and new harvest systems, planning and managing value recovery within harvest operations, and optimising the efficiency of supply chains. Membership gives us the opportunity to encourage new research into operational challenges, including around agroforestry.

AFORA has continued to develop practical tools and produce new industry reports, many of which can improve farm forestry economics.

Non-toxic Wood Preservatives

In 2013-14 PFT agreed to provide some financial support for a research project being conducted by a PhD candidate at the University of Tasmania which is focused on adding value to small- diameter logs from private forests. The researcher is developing low-toxicity or non-toxic wood preservatives with a range of applications, but significantly they will be safe enough to be used in low-technology application systems on farms for treating round wood for use as posts and poles. Some of these preservatives may also act as fire retardants.

Private Forests Tasmania Annual Report 2015-16 20 Research Trials

PFT maintains a range of demonstration plantings and trials throughout the State to provide data that helps underpin the advice we provide to woodlot/plantation owners. The trials are designed to evaluate and demonstrate various silvicultural treatments including pruning, thinning and fertiliser regimes, across different landscapes and environments. Some of the trials are located in areas not normally considered suitable for commercial plantations and some of these areas are suffering (to a greater or lesser degree) from ‘tree decline’. There is considerable interest in addressing this environmental challenge through the introduction of appropriate commercial trees species. Specifically, during the year the following initiatives were undertaken:

 Following the substantial reporting in 2014-15 on the eight silvicultural trials, five eucalypt trials at Cressy, Blackwood Creek, Poatina, Rosevale and Carrick and two radiata pine trials at Carrick and Hagley, were incorporated into the Permanent Sample Plot (PSP) program and are now less frequently monitored for plantation productivity. The information gained in 2014-15, and through the PSP assessments, is used to inform landowners about silvicultural management.

 Acacia melanoxylon (Blackwood) silvicultural trials at Sheffield and Abbotsham are now occasionally monitored for tree health following the substantial research reports in 2014-15 and were also incorporated into the PSP program. Thinning of the Sheffield trial has not yet commenced in accordance with the Forest Practices Plan that has been prepared – this is expected to occur next year depending on local market demand. This work shows that Blackwood can be successfully grown with a sacrificial Eucalyptus nitens nurse crop for (potentially) high quality timber production. This long-term trial is an asset for those interested in the successful growth of Blackwood in a man-made woodlot/plantation environment.

 Permanent sample plots are maintained across the north of the State to monitor tree growth of radiata pine, eucalypt and special species plantations. They are regularly measured under a long term assessment schedule. The data collected allows PFT to better predict woodlot/plantation site suitability and likely products they should be managed for, depending on the prevailing site conditions. These plots are located across a variety of soil types, from leached sands in the Midlands to basaltic soils in the north-west, with annual rainfall varying from 500mm to 1,600mm.

 PFT has encouraged the expansion of farm forestry in these areas and has been continually monitoring tree performance in these sample plots over the last 18 years to better estimate woodlot/plantation productivity and economic viability and underpin advice to landowners. New opportunities for the expansion of integrated farm forestry across farms are emerging, following the expansion of irrigation and the information collected from this network of sample plots will further assist in that regard.

 In conjunction with Forestry Tasmania (who have now withdrawn) and two participating landholders, PFT continued to oversee four trial sites planted in 2010 on two properties at White Hills and Blackwood Creek. These trials field-test a number of local and introduced tree species, including Eucalyptus globulus (blue gum), which may be suitable for commercial wood production on challenging sites.

Private Forests Tasmania Annual Report 2015-16 21  The Wattle Grove, ‘Willow Bend Farm’ project, established in 2007 and 2008 by the landowner and PFT, aimed to improve stream water quality and increase habitat for native fauna and flora by excluding livestock from riparian areas and revegetating stream-sides in a cleared agricultural landscape. The CSIRO (an original project partner, now withdrawn) has published some preliminary findings on the effects of streamside vegetation on water quality that are of interest. PFT continues to monitor the E. globulus, E. nitens and A. melanoxylon for timber production under a pruning regime. The site may be considered for longer term inclusion as a small-scale case study site in the agroforestry project reported elsewhere, if it is seen to have broader application.

Private Forests Tasmania Annual Report 2015-16 22 Chapter 3 Engaging with our Stakeholders

PFT’s Services group brings together our forestry stakeholder servicing activities including forestry services, resource information management and communications. The group engages with PFT’s many forestry stakeholders (individuals and organisations) to provide services that are the conduit of information and advice designed to add value to their forests and/or their forest based enterprises. Some of what is delivered are outcomes of some of the business development initiatives outlined in Chapter 2 and as the new operating model of PFT matures this flow will increase. This will apply, in particular, to the agroforestry program in future years. Other services provided are underpinned by the experience of the forestry professionals within the Services group and across the organisation more broadly. In essence, the Services group is PFT’s main interface with the forest owners – both current and future.

Forestry Services

PFT’s service provision includes direct interaction with private forest owners and forest owner representative groups; the delivery of services through collaborative projects with other organisations; conducting field days, seminars, and farm forestry dinners; and, the development and maintenance of in-house systems, tools and models that support the provision of advice to stakeholders. In all these activities, PFT has a simple objective – to ensure that private forest owners have access to impartial and reliable information and advice to assist them to meet their objectives, including the sustainable and profitable management of their forests.

Client Servicing

There were 552 inquiries received this year, a 33% reduction from the 2014-15 year. Of the 552 enquires, 26% were new clients, similar to that in the preceding year. Our responses to these inquiries varies with their complexity and ranges from advice provided over the phone to solutions provided after a field visit – 38 this year. Of the inquiries received this year, 82% were serviced immediately, 6% the following day and 12% within 2-5 days. Table 3 lists the range of inquiry types over the last three years. The increase in environmental services inquires is a reflection of the non-commercial tree growing activity occurring and PFT is renowned for having knowledgeable and experienced staff who provide high quality advice with respect to planning, integrating and establishing trees on farms using forestry practices and standards. The decline in forest practices inquiries reflects the low level of harvesting activity in native forest on private land.

As part of this process we continue to assist landowners navigate the complexity of the ‘Refusal to Certify a Forest Practices Plan’ compensation process within the Nature Conservation Act 2002. To facilitate the process we provide the Compensation Panel with background information, provide data to DPIPWE to assist them prepare any conservation covenants and process applications to revoke any private timber reserves.

Private Forests Tasmania Annual Report 2015-16 23 Table 3: Client Services Inquiries

Percentage of Calls Received Topic 2013-14 2014-15 2015-16 Environmental Services 10% 7% 20% Forest Practices 14% 22% 5% Markets 3% 4% 6% Native Forests 9% 5% 7% Plantations 32% 26% 23% Policy/Legislation 2% 2% 1% Projects 2% 13% 5% Other 28% 21% 33%

Stand History and Management Information Systems (SHAMAS)

SHAMAS (Stand History and Management Advisory System) is a PFT database that contains information on over 500 individual woodlots/plantations, the majority being over 7 years old, which collectively cover an area of 1,850 hectares in the north of the State. This database provides private forest resource information including details of stand history and silvicultural treatments applied over time, e.g. thinning and pruning. Importantly, this tool enables PFT to pro-actively advise forest owners on the timing of relevant silvicultural activities appropriate for the forest management and stand health objectives of the individual woodlot/plantation owner.

During the year PFT provided forest owners with information on timing and quality of a few pruning but mainly thinning operations, for a small number of stands. However, most pine woodlots/plantations recorded in SHAMAS have now reached, or are reaching, final pruning age and the management focus is on commercial thinning operations. Unfortunately, the reality is that scattered, small scale woodlots/plantations that only produce relatively small volumes of wood, particularly from thinning operations, have limited appeal as sources of wood for industrial processors, regardless of prevailing market conditions. This is because of inherent harvesting diseconomies of scale, wood quality issues and other logistical challenges, particularly all-weather access. To date, the primary outlet for wood from these forests has been in the south of the State, further reducing their appeal due to long cart distances. However, PFT continues to pursue alternative processing opportunities closer by and it is pleasing to report that realistic opportunities are developing. In addition, it is anticipated that PFT’s agroforestry project will eventually increase the number of these woodlots/plantations to the extent that issues of scale will be diminished.

That said, within the constraints outlined above, PFT works to improve the cost effectiveness of current small scale harvesting operations by liaising with harvesting contractors to facilitate coordinated wood sales from local areas, reducing the overall operational costs and helping to make what would normally be sub-optimal harvesting operations as viable as possible. These markets for small quantities of pine pulpwood, in particular, provide a small return to growers and assist in maintaining landholder interest in trees as a supplementary income stream.

Private Forests Tasmania Annual Report 2015-16 24 The Farm Forestry Toolbox

The Farm Forestry Toolbox is a computer based tool that is the culmination of over 12 years of work by PFT and Bushlogic, assisted by a series of Australian Government grants. The Toolbox is continually upgraded (now Version 5.3.8) as routine use highlights opportunities for improvement.

Users can model forest management regimes, carbon sequestration and financial returns in temperate and sub-tropical plantations. Such regimes include traditional plantation forests, woodlots, wide-spaced trees in agroforestry enterprises and, for the first time, shelterbelts.

The Toolbox has 282 registered users from around the world and is known to be used in universities in Germany, Thailand, Portugal, Ireland, Spain and Australia. Bushlogic is actively seeking to adapt the Toolbox to the Chinese market.

PFT has planned a Toolbox workshop for users in October 2016 and a number of forest growers/managers have already registered. The training activity will be led by the software developer and PFT staff.

To further improve the Toolbox modelling capability on sites previously considered marginal for woodlots/plantations, PFT continues to assess and assemble detailed and substantial data on commercial tree growth on such sites, largely in the north of the State.

Strategic Alliances – Farm Forestry and other Organisations

PFT maintains networks and associations with a range of organisations and stakeholder representative groups in order to enhance the services we provide to private forest owners. To that end, during the year PFT actively engaged with the Australian Forest Growers (AFG), Tasmanian Farmers and Graziers Association (TFGA), Forestry Tasmania, Private Forest Service Queensland, Institute of Foresters of Australia (IFA), Tasmanian Agricultural Productivity Group (TAPG), Australian Agroforestry Foundation (AAF) and to a lesser extent the New Zealand Farm Forestry Association (NZFFA). The nature of our interaction with these organisations varies as appropriate, but it all has one objective in mind – supporting private forest owners and expanding the private forest estate. PFT has traditionally maintained a close working relationship with the AFG around activities such as annual field days, farm forestry dinners and the biennial AFG Tree Farmer of the Year Award in Tasmania. PFT is also a collaborative partner assisting with the organisation of the AFG Biennial National Farm Forestry Conference planned to be held in Launceston in October 2016.

In addition, PFT maintains close contact with regional Natural Resource Management (NRM) bodies and sub-regional NRM facilitators. We are represented on, or have an association with, the NRM North Association, NRM South, Cradle Coast NRM, Tamar NRM Association and Management Committee and the Meander Valley NRM group and Greening Australia. During the year we provided technical advice on a range of proposed and existing NRM projects involving woody vegetation and forests at both property and landscape levels. PFT assisted Tamar NRM organise and deliver a Master Tree Growers (MTG) Course in Northern Tasmania from August to September 2015 which was attended by 20 people at various times including Rowan Reid, Director, Australian Agroforestry Foundation who developed MTG. These courses have been conducted nationally for many years on the mainland under the auspices of the University of Melbourne and, in recent years, by the Australian Agroforestry Foundation. At

Private Forests Tasmania Annual Report 2015-16 25 this course, PFT delivered a peer reviewed workshop on tree establishment and maintenance and an unexpected result was that NRM North approached PFT to assist in the production of a booklet for famers on best practice tree establishment.

PFT signed up to Business Events Tasmania’s (BET) ‘Ambassador‘ program as a result of the valuable support provided by BET to PFT and the forthcoming AFG National Conference.

Collaborative Projects

PFT engages with other groups in order to ensure the interests and aspirations of private forest owners are adequately catered for across a wide range of areas. During the year the following activities occurred:

 PFT’s two year contract with NRM North to assist in delivering their ‘Biodiversity in Irrigated Landscapes’ project was completed in February 2016. This project strategically reforested areas on farms in irrigation areas in the northern Midlands with biodiversity plantings in riparian areas, shelterbelts and blocks. PFT, in close consultation with participating landholders, planned and implemented initial on-ground works consistent with the Forest Practices Code to deliver the projects effectively and efficiently.

Under this project this year, PFT worked closely with 8 landowners across 9 properties on projects from 0.8 to 3.5 hectares in size. Tree survival after the first summer was an outstanding 82%, which in a very dry year is exceptional, and demonstrates the skills and expertise PFT brings to such projects. That said, our professional supervision, importantly, encourages landholders to adopt both best practice plantation establishment techniques and sound forest practices, in future tree planting projects. Projects where PFT was not involved had relatively poor tree survival. Devonfield Enterprises, a registered provider under the National Disability Insurance Scheme, again provided outstanding tree planting and maintenance services.

A new $20,000 two year contract for a similar project, ‘Provision of Technical Advice and Logistics for Revegetation Projects’ under the Australian Government’s $20 Million Trees Program, is being negotiated with NRM North.

 PFT is the Principal Sponsor of the Australian Forest Growers Biennial National Conference being held in Launceston between 23- 26 October 2016. The Conference was previously held in the State in 1994 and 2006 and has been well supported by PFT, industry and landholders on all occasions. PFT is working closely with the AFG Conference Organising Committee and AFG National Office to plan and deliver this premier event in the 2016 national forestry calendar. PFT is also organising 4 of the 8 field tours which will have a currency for some years after the Conference.

 PFT assisted two visiting post graduate (environment and agriculture) students from France to organise farm visits and accommodation and view commercial and non-commercial forestry and agroforestry on farms in Tasmania. The students also visited the mainland and produced a series of video interviews available to the public on line. The best of the interviews are being produced by Victorian interests as an ‘Agroforestry in Australia’ video for release in October 2016. The video will be screened at the AFG conference.

Private Forests Tasmania Annual Report 2015-16 26 Case Studies (Demonstration Farms)

Over the years, PFT has developed strong relationships with many private forest owners, many recognised as peer group leaders. Consequently, we have been able to establish long term monitoring plots within their forests to assess woodlot/plantation growth and trials to assess management options. This enables long-term data to be collected and demonstration farm forestry activities to be conducted within these forests, enhancing our capabilities to assist and educate private forests owners about forest management options within native and planted forests. There is considerable evidence to show that this type of peer-group experience sharing encourages other landowners to establish and/or sustainably manage trees in their farming landscapes, be they planted or naturally occurring.

These demonstration sites are used for field days and for host tours for visitors. This year PFT hosted five separate one day tours for senior forestry extension staff from University of West Virginia, USA; agricultural and forest researchers from University of Tasmania and CSIRO; a senior forest engineer from Spain together with Professor Mark Hunt, University of Tasmania; and, a forester from the Philippines and four visiting foresters from the Institute of Forestry, Ministry of Agriculture, Chile, who were investigating eucalypt genetics, silviculture and extension methodologies suitable for adoption in Chile to increase farm forestry on private land.

PFT’s new agroforestry program, reported in Chapter 2, will ultimately add further to our portfolio of case study properties by establishing trial sites across a range of agricultural systems that demonstrate the tangible financial impact of appropriately integrated trees. These case studies will be used as platforms to roll out our agroforestry initiative that will target the establishment of more commercial tree species within agricultural enterprises to enhance agricultural production and increase the forest resource available for forest based processing industries.

Events and Field Days

The direct delivery of information to a large number of clients and other interested stakeholders is undertaken through field days, farm forestry seminars and dinners. These activities promote sustainable, best-management forestry practices, inform growers of market intelligence and new market opportunities and highlight excellence in farm forestry. Below is a list of the events that occurred during the year:

 Two ‘Plantation and Native Forest Management’ field days, held in the north west and south of the State, to assist private forest owners who had/were either taking control of ex-MIS or plantation sharefarms, or who had invested themselves in eucalypt or pine plantations and wished to maximise their value in light of current and future markets. Seventy four people attended the first day at Preolenna on 13 November 2015 which was supported by Forico Pty Ltd, Pentarch Forestry Services Pty Ltd, Technical Forest Services Pty Ltd, IFARM, TAS Land and Forests, Ta Ann Tasmania Pty Ltd, SFM Forest Products, Matthew Britt, Department of Primary Industries, Parks, Water and Environment and Preolenna Community Centre. Fifty six people attended the second field day at Runnymede on 27 November 2015. This event was supported by Technical Forest Services Pty Ltd, IFARM, SFM Forest Products, Pentarch Forestry Services (Tas), and private forest owner Robert Downie. Comprehensive field day notes are available to the public on PFT’s web site.

Private Forests Tasmania Annual Report 2015-16 27  Thirty nine people attended a farm forestry seminar dinner event ‘Dinner with the Stars’ on 8 October 2015, in Launceston. Guest speakers were two senior extension foresters from the University of West Virginia. This event was organised by PFT with assistance from the IFA and the AFG.

 PFT attended the ‘Ahead of the Game’ TAS Farming Futures Workshop, an initiative under the Australian Governments’ Carbon Farming Initiative Outreach and Extension programme, held at Carrick on 17 March 2016. PFT provided a manned exhibit on agroforestry and integrating trees on farms. PFT interviewed, in front of nearly 100 visitors, local farm forestry leader Mr Stephen Creese. PFT produced, ‘A Guide to Planting and Establishing Trees on Farms’ for the event.

 PFT delivered a presentation at NRM South’s Smallholders’ PMP (property management planning) Workshop on 14 May 2016 in the Huon Valley. PFT advised on basic planning considerations when managing native forests and/or plantations on private land.

Long-term Forest Practices Plans

Tasmania’s Forest Practices System, by its very nature, focuses on the regulatory control of specified operational forest practices and the outcome is widely accepted as being one of the strongest forestry regulatory systems in Australia. This situation assists in underpinning compliance with market based forest management certification schemes that are progressively becoming more widely accepted. When applied in native forests managed by Forestry Tasmania, where overarching forest management plans exist, our forest practices system works well in demonstrating that the forests are being sustainably managed over time. However, in private native forests, where there is less evidence of an overarching commitment to long-term sustainable forest management, it is PFT’s belief that longer term forest practices plans would assist in demonstrating this commitment. It is for that reason PFT continues to pursue the concept of long-term forest practices plans – for periods greater than 2-5 years. Further, long- term plans may well benefit forest owners by reducing costs, providing market flexibility to meet dynamic market conditions and facilitating certification requirements.

In 2014-15 PFT worked closely with the Forest Practices Authority and an individual forest owner to successfully develop a certified 10 year Forest Practices Plan for native forest management on one of his properties. This important breakthrough has the potential to significantly reduce the cost of planning for many forest owners but importantly works towards ensuring that forest owners’ long-term commitment to sustainable forest management is more adequately represented. At this still preliminary stage, each long-term plan is treated on a case- by-case basis by the Forest Practices Authority. During the year PFT continued to pursue further application of this initiative.

Resource Information Management

Collecting, maintaining and reporting private forest resource information is a key activity for PFT and a statutory obligation under the Private Forests Act 1994. Combined with a spatial data management system, our Geographic Information System (GIS) is a vital tool that underpins our capacity to provide advice and assistance to forest owners, government and, importantly, to engage in resource modelling studies of potential value to the forestry sector.

Private Forests Tasmania Annual Report 2015-16 28 PFT continues to be represented on the Tasmanian Spatial Information Council and the Tasmanian Government Spatial Committee.

For the third year ESK Mapping & GIS provided GIS services to PFT and this has continued to prove an excellent arrangement. ESK Mapping & GIS also provided training and tools to assist PFT staff with GIS mapping and processing Private Timber Reserve applications.

PFT’s GIS services play an important role in the collation and reporting of forest extent statistics related to the private forest estate as reported elsewhere in this Annual Report. The collation of this data involves bringing together information provided by our industrial forestry stakeholders and spatial data produced in-house from a variety of sources relating to the non-industrial private estate. There can be no doubt that the private forest estate, in particular the non-industrial component of that estate, will become an even more important asset for a newly emerging forest based industry. This will in turn increase the demand for access to quality data on this important forest asset. This year the inventory of the private forest estate (current at 31 December 2015) was modified to cater for the estates now managed by Timberlands Pacific Pty Ltd, FORICO and RMS Timberlands Australia.

On occasions, PFT enters into commercial arrangements to provide spatial data and imagery of a variety of types to external parties. The extent of this is governed by the provisions of the data exchange agreements PFT has with, in particular, the industrial forestry companies that provide PFT with extensive data sets for consolidation and state and national reporting purposes. This year revised Data Licence Agreements were formalised with all but one of the new plantation managers/owners from which PFT receives GIS information. PFT shares this data (in a summary form) with other organisations including the Land Information System Tasmania (theLIST) and the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). This year PFT provided ABARES with data on plantations and land use change on private land for the 2015 National Plantation Inventory as well as usual state-wide spatial and tabular data on privately owned native forests and plantations for annual reporting purposes.

Other Services

PFT provided a range of other services during the year including:

Forest Practices Plans

The Forest Practices System in Tasmania is regarded as one of the more effective forest operations regulatory systems in the world. However, it is complex and often challenging for private forest owners to step through the system efficiently. During the year PFT assisted several private forest owners in this regard by preparing both certified FPPs and other informal plans (the latter for small-scale farm forestry).

Equipment Hire

PFT continued to hire our three mound ploughs and smudger to landholders to assist in the establishment of woodlots/plantations. Forestry equipment of this type is not readily available for hire for small scale applications and while this situation continues PFT will continue to maintain this service. The availability and use of this equipment is often promoted and

Private Forests Tasmania Annual Report 2015-16 29 demonstrated at field days. The equipment was hired 28 times during the year, generating an income of $9,115, compared to $4,850 last year. We believe this reflects the increasing understanding by farmers that tree planting for production of non-wood products including biodiversity, shade and shelter, erosion control, amenity as well as agroforestry and small scale farm forestry, requires adoption of forestry practices and standards to increase tree survival and avoid the need to replant.

Pruned Stand Certification

The Pruned Stand Certification (PSC) scheme was, until 2014, promoted by PFT to help add value to private plantations managed for clearwood production. This scheme is administered by the Australian Forest Growers (AFG) nationally to provide smaller growers with a certified audit process that verifies the timing of pruning and pruned log quality, and provides assurance for future log buyers. As a consequence, tree growers with PSC may receive a higher stumpage for their logs at the time of sale. After a 20 year long standing consultancy to AFG to conduct national PSC training courses and to oversee, audit and approve PSC assessments for certification, PFT has relinquished this role as the demand nationally for this scheme is now very low. The Scheme had been successful largely because of the quality of training, professional auditing and adherence to standards provided by PFT. During the year PFT completed the 14 remaining PSC certificates, bringing the scheme to an end.

Private Timber Reserve Officer Accreditation

PFT conducted a training workshop on 3 March 2016 to train Forest Practices Officers (FPO’s) to complete Private Timber Reserve Part B applications and as a result six FPO’s were accredited by the Board of the Forest Practices Authority on 31 March 2016. This ensures that forest management companies have the expertise to prepare applications for Private Timber Reserves and that expertise is available to non-industrial landholders through consultants.

Other Advice

During the year PFT provided input to a range of projects led by other groups, including Tamar NRM, NRM North, and NRM South, and sought opportunities for private landowners’ involvement in the projects.

Communications

We connect with forest owners via phone, email, social media and in person. Of growing importance are the contacts we establish at field days and seminars. The PFT Facebook site had 177 likes and the PFT LinkedIn site has 55 followers.

In order to more broadly engage with the wider community, PFT utilises opportunities to advertise our services or engage in topical issues in relation to the private forestry sector. Advertisements, editorials and advertorials are, from time to time, placed in The Examiner, Tasmanian Country and The Advocate newspapers and the TFGA’s electronic newsletter Fastnews. In addition, articles are occasionally provided for inclusion in the quarterly national Australian Forest Grower e-bulletin.

Private Forests Tasmania Annual Report 2015-16 30 PFT maintains publications and reports, including field day notes, on our website and the Farm Forestry Toolbox software can be download from this site (free of charge). Along with the Hardwood Plantation Portal, these were the more frequently accessed web pages.

Private Forests Tasmania Annual Report 2015-16 31

Private Forests Tasmania Annual Report 2015-16 32 Chapter 4 The Regulatory Regime

Forestry operations or practices on all land in Tasmania are subject to the regulatory regime created by the Forest Practices Act 1985, regulations to the Act, the Forest Practices Code created under the Act, and administrative instructions issued by the Forest Practices Authority. The Private Forests Act 1994 also contains some regulatory-type powers impacting on private forest growers, such as the private forest service levy.

There is a number of other Acts and associated regulations that regulate various aspects of forestry as a land use and these are provided in the list below.

. Aboriginal Relics Act 1975 Provides for the identification and protection of all Aboriginal relics (sites).

. Agricultural and Veterinary Chemicals (Control of Use) Act 1995 Regulating chemical use and applications.

. Environmental Management and Pollution Control Act 1994 Establishes duty of care on everyone to prevent or minimise environmental harm.

. Fire Services Act 1979 Provides for the control and use of fire in the urban and rural environment.

. History Cultural Heritage Act 1995 To identify, assess and protect historic (post-settlement) cultural heritage.

. Land Use Planning and Approvals Act 1993 Establishes the Resource Management and Planning System for Tasmania and local government planning schemes that regulate land use and development.

. Nature Conservation Act 2002 Provides for the conservation management of scheduled threatened native vegetation communities.

. Threatened Species Protection Act 1995 Provides for the conservation management of scheduled threatened species of flora and fauna.

. Weed Management Act 1999 Management of weed control.

. Work Health and Safety Act 2012

Private Forests Tasmania Annual Report 2015-16 33 There is a number of agreements between Australian and state governments and policies created under legislation, or otherwise, that regulate forestry as a land use. The most pertinent are listed below.

. Tasmanian Regional Forest Agreement 1997

A legally binding 20 year agreement, with a five-yearly review period, that applies to all of Tasmania and provides specific actions which create a balance between the environmental, social, economic and heritage values found in forested areas.

. Tasmanian Community Forest Agreement 2005

A supplement to the RFA increasing the reserve system and revitalising the timber industry.

. State policy on the Protection of Agricultural Land 2009

This policy created under the State Policies and Projects Act 1993, aims to foster sustainable agriculture in Tasmania by ensuring the continued productive capacity of the State’s agricultural land resource. Under the revised policy, new plantation forestry must not be established on prime agricultural land unless a planning scheme reviewed in accordance with this policy provides otherwise. Planning scheme provisions must take into account the operational practicalities of plantation management, the size of the areas of prime agricultural land, their location in relation to areas of non-prime agricultural land and existing plantation forestry and any comprehensive management plans for the land.

. Permanent Native Forest Estate Policy 2007

In February 2007 a policy was issued to meet the requirement of Clause 45 of the Tasmanian Community Forest Agreement requiring that a policy be developed to describe the agreed approach to the phasing out of broad scale clearing and conversion of native forest in Tasmania. Between 2009 and 2011 a number of amendments were made to the policy to provide an orderly phase-out of broad-scale conversion on private land by January 2015 and to clarify terminology and implementation mechanisms, while maintaining the policy commitment to maintain the state-wide level of native forest above 95 per cent of the 1996 area. The phase out date has since been postponed to June 2017 pending completion of a review of the Policy commenced in 2015. The policy sets threshold levels by forest community for the maintenance of a permanent native forest estate at both the bioregional and state levels and comprises areas of native forest managed on a sustainable basis both within formal reserves and within multiple-use forests across public and private land.

Private Forests Tasmania Annual Report 2015-16 34 Private Timber Reserves

The concept of private timber reserves (PTRs) was created by the Tasmanian Parliament in 1985 to enable landowners to have their land dedicated for long term forest management. The legislation provides that forestry activities on the land are subject to a single, consistent, state-wide system of planning and regulation through the Forest Practices Act 1985, rather than to variable systems that may be applied under different planning schemes through the Land Use Planning and Approvals Act 1993.

Details on PTR applications during 2015-16 and to-date progressive totals are summarised in Table 4.

Table 4: PTR Applications 2015-16

1 July 2015 to Progressive total Period 30 June 2016 to 30 June 2016*

Applications advertised 5 2,236

Applications approved by the Board of the Forest 5 2,173 Practices Authority

Private timber reserves revoked 32 329

Total area gazetted (hectares) 1,196 442,623

* Progressive total contains adjustments to figures in previous periods. Progressive totals are adjusted primarily because original applications to declare areas as private timber reserves have been followed in later years with an application to revoke part or all of the area declared as a private timber reserve. When part of a private timber reserve is revoked the original application is split and recorded as two applications in the database, hence inflating the progressive totals of the number of applications approved by the Board of the Forest Practices Authority and the number revoked.

The total area gazetted during 2015-16 was 1,196 hectares. During the same period a total area of 2,357 hectares of previously gazetted PTRs was revoked. The overall area of current private timber reserves decreased by 1,583 hectares in 2015-16, reflecting a range of influences including, but not limited to, revocations. The average area gazetted annually since 1994-95 to the present is 15,131 hectares.

The history of annual PTR gazettals is outlined in Table 5.

Private Forests Tasmania Annual Report 2015-16 35 Table 5: PTR Gazettals 1994-95 to 2015-16

Annual area gazetted Progressive total Period (hectares) (hectares)

1994-1995 6,524 168,212 1995-1996 36,037 204,249 1996-1997 38,620 242,869 1997-1998 40,800 283,669 1998-1999 6,190 289,859 1999-2000 23,813 313,672 2000-2001 11,570 325,242 2001-2002 31,813 357,055 2002-2003 14,370 371,425 2003-2004 5,783 377,208 2004-2005 26,101 403,309 2005-2006 22,590 425,899 2006-2007 9,261 430,019 2007-2008 12,709 441,734 2008-2009 17,758 457,793 2009-2010 7,949 458,328 2010-2011 13,088 471,255 2011-2012 5,262 475,321 2012-2013 1,097 472,067 2013-2014 34 449,444 2014-2015 308 444,206 2015-2016 1,196 442,623

Private Forest Service Levy

Private Forests Tasmania (PFT) is empowered to raise funds from private forest owners through the private forest service levy (the levy) as a means of securing private sector funding contributions to support the operations of PFT. The levy was introduced in 2001-02 after consultation with the Forest Industries Association of Tasmania and the Tasmanian Farmers and Graziers Association.

The levy is calculated on the net area of a forest operation permitted pursuant to the certification of a forest practices plan by the Forest Practices Authority. Forest owners have six months from the date of certification of their forest practices plan to pay the levy.

Pursuant to the provisions of Section 25I of the Private Forests Act 1994, by 30 June each year the Minister must determine the levy rate for the financial year commencing 1 July of that year. The Minister must determine the rate after consulting with forest owner organisations. On 23 June 2011, the Minister increased the rate from $14 to $15 per hectare, for the 2011-12 year,

Private Forests Tasmania Annual Report 2015-16 36 representing the first increase in the rate since the levy was introduced in 2001. On the recommendation of the Board of PFT (after consultation with forest owner organisations) the Minister maintained the rate at $15 per hectare for 2015-16 and that rate will continue to apply in 2016-17.

Activity within the private forestry sector declined markedly for at least four years commencing in 2008-2009, due to a variety of issues, resulting in a dramatic decline in levy income for PFT during this time. To quantify the impact, levy income reduced from $0.466m in 2008-2009 to a low of $0.042m in 2011-2012. Since that time levy income has progressively risen and it is pleasing to report that the levy generated $0.237m of income in 2015-16, reflecting the ongoing increase in sustainable private forestry activity.

Further details on levy income is provided in Table 6.

Table 6: Service Levy Income

Financial Year Income generated from private forest service levy

2011-2012 $42,123

2012-2013 $56,561

2013-2014 $135,428

2014-2015 $121,795

2015-2016 $236,676

5 year average $118,517

Note: since the private forest service levy was introduced in 2001-02, the average annual return over this 15 year period is $246,841.

Private Forests Tasmania Annual Report 2015-16 37

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Private Forests Tasmania Annual Report 2015-16 38 Chapter 5 Administration and Finance

Board of Directors

The Board of Directors consists of the Chief Executive Officer, and five Directors appointed by the Minister. Directors other than the CEO are appointed pursuant to Part 3 of the Private Forests Act 1994 and the powers, functions, responsibilities and operating procedures of the Board are set out in that Part and Schedule 2 and 3 to the Act. By resolution of the Board, meetings are held monthly.

Chairperson

The position is currently vacant.

Members

Member with practical knowledge of and experience in industry, commerce or economic development: Mr Andrew Morgan, from 23 May 2016 to 22 May 2017.

Member with expertise in forest or related sciences: Mr Anthony (Tony) Cannon, from 23 May 2016 to 22 May 2017

Member representing industrial private forest growers: Mr Arnold Willems, from 8 February 2011 to 31 January 2016, and from 1 February 2016 to 30 July 2016.

Members representing non-industrial private forest growers (2): Mr Brett Hooper, from 15 March 2012 to 28 February 2017. Second position – vacant.

Chief Executive Officer: Mr Tom Fisk, from 15 June 2009 to 14 June 2014, and 15 June 2014 to 14 June 2019.

Member Profiles

Mr Arnold Willems B.Sc. (Forestry) (Hons) Member representing industrial private forest growers. Fibre, Supply and Logistics Manager, Norske Skog. Arnold has worked in the forestry industry for over 30 years with extensive experience in managing many aspects of a large forestry business and associated manufacturing industry

Private Forests Tasmania Annual Report 2015-16 39 including forest planning, road construction, harvesting, silviculture, procurement, contract management and manufacturing.

Mr Brett Hooper, Dip. Farm Management (MOFAC) Member representing non-industrial private forest growers. Chairman TFGA Forestry Committee; Chairman Tamar Valley Weed Strategy; Secretary TFGA Tamar Valley Branch; Member Tamar Natural Resource Management Group. Brett is a primary producer in partnership with his wife, Elizabeth, at Mt Direction, managing cattle, sheep and forestry.

Mr Anthony (Tony) Cannon, B.Sc. Forestry, MAICD Member with expertise in forest or related sciences. Tony graduated from the Australian National University in 1976 and has worked in the forestry industry for over 35 years, including the establishment of Forest Enterprises Tasmania. Forestry roles have included harvest supervision, plantation establishment and reforestation, asset procurement, forest practices officer and consulting services. Tony is a life member of the Australian Forest Growers and has had a number of roles at a local and national level including National President and Treasurer. Tony currently manages a range of family investments and provides a forestry consultancy service.

Mr Andrew Morgan, B.Sc. (Hons) Vegetation Ecology, B.Sc. Plant Science, Zoology Member with practical knowledge of and experience in industry, commerce or economic development. Andrew graduated from the University of Tasmania with a Bachelor of Science with Honours in the fields of Forest Ecology and Management. Andrew is the Managing Director at SFM Environmental Solutions Pty Ltd and Hydrowood. SFM provides a range of land and forest management solutions across Australia. Andrew is also a Director of the Forest Industry Association of Tasmania, Oak Tasmania, and Forest Stewardship Council of Australia and is a member of the Forest Practices Advisory Council. Andrew maintains a range of professional management and scientific skills having assessed, produced and managed a variety of projects and programs. Andrew has overseen the diversification and growth of SFM into a national forestry company and was heavily involved in the development of the company’s Forest Stewardship Council Certification and Hydrowood.

Mr Tom Fisk, B.Sc. (Forestry) (Hons 1) M.I.F.A., GAICD Chief Executive Officer of PFT. Tom completed his studies at ANU Forestry School in 1976 and has subsequently worked in the forestry industry for over 36 years. He has worked in a variety of forestry roles including research, operational management, business development, industry engagement and consulting at the ANU, Conservation Commission of the NT, APPM / North Forest Products (Tas) and the CRC for Forestry (Tas). He has also spent a period of time outside the forestry industry owning and operating a small business in Hobart.

Private Forests Tasmania Annual Report 2015-16 40 Figure 3: Organisation Chart Figure 2: Organisation Chart

Private Forests Tasmania Organisational Chart as at June 2016

Minister for Resources Guy Barnett

Private Forests Tasmania Board Arnold Willems, Brett Hooper, Andrew Morgan, Tony Cannon Tom Fisk

Chief Executive Officer Tom Fisk (strategic imperatives; business development; business management; stakeholder engagement; representative on committees and councils)

Finance and Administration Services Business Development

Jeff Battersby Arthur Lyons Martin Moroni

 Agency Policies  Forestry Extension Services  Business Development Initiatives  Board Secretariat  Resource/Geographic Information Services  Forest Management Certification  Financial Management  Farm Forestry Organisations  Research & Development  Human Resources Management  NRM groups  Annual Harvest Returns  Occupational Health and Safety  Management team  Management team  Management team

Administration Forestry Advisors

Diana Hall David Bower Tracey King Rob Smith

Private Forests Tasmania Annual Report 2015-16 41 Human Resource Management

Staff

Permanent and fixed-term (project) officers undertake the functions of the Authority and work from three offices located in Hobart, Launceston and Camdale. These officers work closely with private landowners and major stakeholders.

Staff by category 30 June 2016

Category No Administration incl. policy & strategy 2.7 Services 2.5 Business Development 2.2 Total FTE’s 7.4

Occupational Health and Safety and Managing Diversity

PFT is committed to maintaining high standards of performance in respect to occupational health and safety and equal employment opportunity. All employees are expected to participate in maintaining safe working conditions and practices and to promote and uphold the principle of fair and equitable access to employment/promotion, personal development and training, and the elimination of workplace harassment and discrimination. There were no worker’s compensation claims submitted in 2015-16.

Staff Training and Professional Development

During 2015-16 PFT staff were involved in professional development courses and attendance at conferences, including:

 Wood Innovations Conference  Bioenergy Australia Conference  WorkSafe Tasmania Month  First Aid Course  Private Timber Reserves  CPA Congress  Bio-based Products

Private Forests Tasmania Annual Report 2015-16 42 Superannuation Declaration

I, Tom Fisk, hereby certify that Private Forests Tasmania has met its obligations under the Superannuation Guarantee (Administration) Act 1992 (Commonwealth) in respect of any employee who is a member of a complying superannuation scheme to which PFT contributes.

T Fisk Chief Executive Officer 30 June 2016

Representing PFT and Private Forest Owners

During 2015-16 PFT staff represented PFT and the interests of private forest owners by consulting with, being representatives on, or members of:

State

 Ministerial Advisory Council on Forestry (representative)  Forest Practices Advisory Council (representative)  Natural Resource Management Committees (representatives)  Huon Diversified Industries Group (member and representative)  Huon Resource Development Group (member and representative)  Tasmanian Government Spatial Committee (representative)  Residues Solutions Advisory Group  RFA Implementation Group  Forest Industries Association of Tasmania  Department of Primary Industries, Parks, Water and Environment  Tasman Landcare  Greening Australia, Tasmania  Tasmanian Farmers and Graziers Association  Tasmanian Agricultural Productivity Group

National

 Primary Industries Ministerial Council Standing Committee - Forestry and Forest Products Committee (representative)  Australian Forest Growers (member)  CSIRO  Australian Forest Operations Research Alliance (member)

Private Forests Tasmania Annual Report 2015-16 43 Right to Information Statistics

During the 2015-16 year PFT received no requests under the Right to Information Act 2009.

Public Interest Disclosure

The Public Interest Disclosures Act 2002 came into effect on 1 January 2004. The purpose of the Act is to encourage and facilitate the making of disclosures about the improper conduct of public officers or public bodies.

PFT is committed to the aims and objectives of the Act. The organisation also recognises the value of transparency and accountability in our administrative and management practices. PFT supports the making of disclosures that reveal corrupt conduct, conduct involving a substantial mismanagement of public resources, or conduct involving a substantial risk to public health and safety or the environment.

PFT does not tolerate improper conduct by our employees, nor the taking of reprisals against those who come forward to disclose such conduct. The organisation will take all reasonable steps to protect people who make such disclosures from any detrimental action in reprisal for making the disclosure. PFT will also afford natural justice to any person who is the subject of a disclosure.

During 2015-16 there were no Public Interest Disclosure reports.

Legislation Administration

The Department of State Growth is responsible for administering the Private Forests Act 1994.

PFT undertakes the functions of this Act and also has delegated authority under the Forest Practices Act 1985 to undertake processing of Private Timber Reserve applications.

Statement of Corporate Intent

The Vision Statement

That the Tasmanian private forestry sector is well informed, respected, sustainable, environmentally sound and a major driver in the Tasmanian economy; operates in a collaborative and communicative manner; utilises best-practices approaches; is at the forefront of the adoption of appropriate technologies; and works within a sound regulatory environment.

This vision statement is for the Tasmanian private forestry sector. Various individuals, private and public organisations fulfil various roles or missions, who together seek to achieve this vision.

Our Mission

The mission of Private Forests Tasmania, as a government authority, is to facilitate the sustainable management and development of native forests and plantations on private land in Tasmania by:

Private Forests Tasmania Annual Report 2015-16 44

 Providing advice and information to governments and forest owners;  Pursuing initiatives that add value to, and the expansion of, the private forest estate;  Working collaboratively to ensure the adoption of best practices; and  Supporting a sound regulatory environment.

Strategic Actions

PFT’s six strategic actions are:

1. Provision of advice to all levels of government on matters affecting the private forestry sector. 2. Provision of advice to the private forest sector to ensure sound stewardship of the private forest estate. 3. Maintain role as an independent authority providing accurate and timely advice on private forest matters to stakeholder, including growers, processors and the community. 4. Maintain a leadership role in forest data collection and analysis of the Tasmanian private forest estate. 5. Provision of extension services to enable private forest owners to continuously improve the management of forests. 6. Act under delegation from the Forest Practices Authority to administer the private timber reserve application process.

Private Forests Tasmania Annual Report 2015-16 45

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Private Forests Tasmania Annual Report 2015-16 46 Financial Statements

For the year ended 30 June 2016

Private Forests Tasmania Annual Report 2015-16 47 Statement by Directors

In the opinion of the Directors of Private Forests Tasmania:

(a) the financial statements are drawn up so as to give a true and fair view of the results and cash flows for the year ended 30 June 2016 and the state of affairs at 30 June 2016 of Private Forests Tasmania;

(b) the accounts are drawn up in accordance with the provisions of the Private Forests Act 1994;

(c) as at the date of this statement, there are reasonable grounds to believe that the Authority will be able to pay its debts as and when they fall due.

The financial statements are drawn up in accordance with the applicable Australian Accounting Standards including Australian Accounting Interpretations.

B Hooper T Fisk Director Chief Executive Officer/Director 2/9/2016 2/9/2016

Private Forests Tasmania Annual Report 2015-16 48 Statement of Comprehensive Income FOR THE YEAR ENDED 30 JUNE 2016

NOTES 2016 2015 $’000 $’000 Revenue and other income from transactions Appropriation revenue – recurrent 1,578 1,561 Other Non-Government Grants 0 10 Private Forest Service Levy 237 122 Interest on investments 50 60 Interest on pine loans 4 3 Private Timber Reserve Fees 2 4 Other 16 35

Total Revenue and other income from transactions 1,887 1,795

Expenses from transactions Employee entitlements 872 1,099 Motor vehicle and travel 36 49 Depreciation and amortisation 3 1 2 Directors allowances & expenses 8 49 67 Interest on pine loans 3 4 Consultancies & contractors 95 93 Agroforestry program 14 165 0 Office rental 140 148 Provision for impairment 2.2 0 (6) Communication & information technology 93 94 Other 124 103 Total expenses from transactions 1,578 1,653

Net operating surplus for the year 309 142

Total Comprehensive Result for the year 309 142

The above statement is to be read in conjunction with the accompanying notes

Private Forests Tasmania Annual Report 2015-16 49 Statement of Financial Position FOR THE YEAR ENDED 30 JUNE 2016

NOTES 2016 2015 $’000 $’OOO

Current Assets Cash & deposits 2.1 1,883 1,643 Receivables 2.2 176 126

Total Current Assets 2,059 1,769

Non-Current Assets Property, plant & equipment 3 0 1 Receivables 2.2 20 36

Total Non-Current Assets 20 37

TOTAL ASSETS 2,079 1,806

Current Liabilities Creditors and accrued expenses 4 89 62 Provisions 5 192 211 Borrowings 6 0 5

Total Current Liabilities 281 278

Non-Current Liabilities Borrowings 6 603 612 Provisions 5 46 76

Total Non-Current Liabilities 649 688

TOTAL LIABILITIES 930 966

NET ASSETS 1,149 840

Equity Accumulated Surplus (Deficit) 1,149 840

TOTAL EQUITY 1,149 840 The above statement is to be read in conjunction with the accompanying notes

Private Forests Tasmania Annual Report 2015-16 50 Statement of Changes In Equity FOR THE YEAR ENDED 30 JUNE 2016

2016 2015 $’000 $’000 Accumulated Surplus Balance at beginning of financial year 840 698

Increase (decrease) in net assets resulting from operations 309 142

Comprehensive result at the end of financial year 1,149 840 The above statement is to be read in conjunction with the accompanying notes

Statement of Cash Flows FOR THE YEAR ENDED 30 JUNE 2016

NOTES 2016 2015 $’000 $’000 CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers 199 183 Cash receipts from government 1,578 1,561 Interest received 52 62 GST received from Taxation Authority 329 278 Total Cash Received 2,158 2,084

Payments to suppliers and employees (1,584) (1,615) GST Paid to Taxation Authority (334) (282) Total Cash Used (1,918) (1,897) NET CASH PROVIDED BY OPERATING ACTIVITIES 10 240 187

CASH FLOWS FROM INVESTING ACTIVITIES Payments for acquisition of equipment 0 (0) NET CASH FLOWS USED IN INVESTING ACTIVITIES 0 (0)

CASH FLOWS FROM FINANCING ACTIVITIES Loan repayments for private forestry 26 42 Tasmanian State Government loan repayments (26) (42) NET CASH FLOWS USED IN FINANCING ACTIVITIES 0 0

NET INCREASE (DECREASE) IN CASH HELD 240 187

Cash at the beginning of the financial year 1,643 1,456

CASH AT THE END OF THE FINANCIAL YEAR 1,883 1,643 The above statement is to be read in conjunction with the accompanying notes

Private Forests Tasmania Annual Report 2015-16 51 Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2016

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Private Forests Tasmania was established on 1 July 1994 as a statutory authority by the Private Forests Act 1994. It is not required to pay guarantee fees, tax-equivalent payments or to pay a dividend to the Tasmanian government.

Private Forests Tasmania has taken over the assets, liabilities, functions and responsibilities previously managed by the Private Forestry Division of the former Forestry Commission. This is in accordance with Sections 6 and 7 of Schedule 5 to the Private Forests Act 1994, which provides for Private Forests Tasmania to take over matters covered by Division II of Part IIA, and, Part IIB of the Forestry Act 1920.

The objective of the Authority is to facilitate and expand the development of the private forest resource in Tasmania in a manner which is consistent with sound forest land management practice.

The Authority is dependent on appropriations from the Parliament of Tasmania and external funds for its continued existence and ability to carry out its normal activities.

(a) Basis of accounting

The financial statements are required by Part 5A, clause 32B of the Private Forests Act 1994. This financial statement is a general purpose financial report that consists of a Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows, and notes accompanying these financial statements.

The general purpose financial report has been prepared in accordance with:

. Australian Accounting Standards, including Australian Accounting Interpretations; and . Other authoritative pronouncements of the Australian Accounting Standards Board.

Financial Statement complies with AIFRS

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Some Australian equivalents to IFRS’s contain requirements specific to not-for-profit entities that are inconsistent with IFRS requirements.

These financial statements have been prepared on the accrual and going concern basis and in accordance with the historical cost convention, except where specifically stated. The accounting policies are generally consistent with the previous year except for those changes outlined in Changes in Accounting Policies. The Authority has determined that it does not have profit as a prime objective. Consequently, where appropriate, the Authority has elected to apply options and exemptions within accounting standards that are applicable to not-for- profit entities. As a result this financial report does not comply with International Financial Reporting Standards.

Private Forests Tasmania Annual Report 2015-16 52 Assets and liabilities are recognised in the Statement of Financial Position when and only when it is probable that future economic benefits will flow and the amounts of the assets or liabilities can be reliably measured.

Revenues and expenses are recognised in the Statement of Comprehensive Income when and only when the flow or consumption or loss of economic benefits has occurred and can be reliably measured.

Changes in Accounting Policies

(i) Impact of new and revised Accounting Standards

In the current year the Authority has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to its operations and effective for the current annual reporting period. These include:

- AASB 1031 Materiality - (effective from reporting periods beginning on or after 1 January 2014). The objective of this standard is to make cross-references to other standards and the Framework for the Preparation and presentation of Financial Statements (as identified in AASB 1048 Interpretations of Standards) that contain guidance on materiality. There was no impact on the financial statements.

(ii) Impact of new and revised Accounting Standards yet to be applied

The following applicable Standards have been issued by the AASB and are yet to be applied:

- AASB 9 Financial Instruments – This Standard supersedes AASB 139 Financial Instruments: recognition and Measurement, introducing a number of changes to accounting treatments. The Standard was reissued in December 2010. The Standard was issued in August 2011 and is available from 1 January 2017 for application by not- for-profit entities. Initial review has indicated that there is not expected to be a significant impact on the Authority’s financial statements.

-2015-16 Amendments to Australian Accounting Standards – Extending Related Party Disclosures to Not-for-Profit Public Sector Entities – The objective of this Standard is to extend the scope of AASB 124 Related Party Disclosures to include not-for-profit public sector entities. Additional disclosure may be required.

Capital Management

The Authority manages its capital to ensure that it will be able to continue as a going concern. This management of capital, including reserves, and including the receipt of recurrent funding from consolidated revenue and the setting and receipt of fees and charges ensures it has adequate revenue to cover anticipated expenditure.

The capital structure of the Authority consists of cash and cash equivalents and equity. The Authority is subject to borrowing limits established under the Private Forests Act 1994.

Private Forests Tasmania Annual Report 2015-16 53 Operating cash flows are used to maintain and expand the Authority’s property plant and equipment as well as to meet routine recurrent expenditure.

There were no changes in the Authority’s approach to capital management during the year.

Judgements and Assumptions

In the application of Australian Accounting Standards, the Authority is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by the Authority that have significant effects on the Financial Statements are disclosed in the relevant notes to the Financial Statements.

The Authority has made no assumptions concerning the future that may cause a material adjustment to the carrying amounts of assets and liabilities within the next reporting period. Judgements made by the Authority that have significant effects on the financial report are disclosed in note 1 (b).

(b) Income from transactions

Income is recognised in the Statement of Comprehensive Income when an increase in future economic benefits related to an increase in an asset or a decrease of a liability has arisen that can be measured reliably.

Revenue from Government

Appropriations, whether recurrent or capital, are recognised as revenues in the period in which the Authority gains control of the appropriated funds.

Grants

Grants payable are recognised as revenue when the Authority gains control of the underlying assets. Where grants are reciprocal, revenue is recognised as performance occurs under the grant. Non-reciprocal grants are recognised as revenue when the grant is received or receivable. Conditional grants may be reciprocal or non-reciprocal depending on the terms of the grant.

Private Forests Tasmania Annual Report 2015-16 54 Private Forest Service Levy

Revenue from the private forest service levy is recognised when an obligation to pay arises, pursuant to the issue of an assessment.

Fees

Revenue from fees is recognised when obligation to pay arises, pursuant to the issue of an assessment.

Interest

Interest on funds invested is recognised as it accrues using the effective interest rate method.

Other revenue

Revenue from sources other than those identified above are recognised in the Statement of Comprehensive Income when an increase in future economic benefits related to an increase in an asset or a decrease of a liability has arisen that can be measured reliably.

Impairment – Financial assets

Financial assets are assessed at each reporting date to determine whether there is any objective evidence that there are any financial assets that are impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss, in respect of a financial asset measured at amortised cost, is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

All impairment losses are recognised in the Statement of Comprehensive Income.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in the income statement.

(c) Employee Entitlements

Provisions

A provision arises if, as a result of a past event, the Authority has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by

Private Forests Tasmania Annual Report 2015-16 55 discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and the risks specific to the liability. Any right to reimbursement relating to some or all of the provision is recognised as an asset when it is virtually certain that the reimbursement will be received.

Liabilities for wages and salaries and annual leave are recognised when an employee becomes entitled to receive a benefit. Those liabilities expected to be realised within 12 months are measured as the amount expected to be paid. Other employee entitlements are measured as the present value of the benefit at 30 June 2016, where the impact of discounting is material, and at the amount expected to be paid if discounting is not material.

A liability for long service leave is recognised, and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Expected future payments are discounted using interest rates attaching, as at the reporting date, to Commonwealth Government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outflows.

Superannuation

New public sector superannuation arrangements, commencing on 1 July 1994, were introduced with the proclamation of the Retirement Benefits Act 1993. One consequence of this Act is that superannuation arrangements previously covered by the Retirement Benefits and Superannuation Accumulation Funds, as well as the Retiring and Death Allowances scheme, are now replaced by one fund, i.e., the Retirement Benefits Fund, and administered by the Retirement Benefits Fund Board.

As the Authority is funded from Consolidated Fund, the Government will assume liability for past, present and future employees. The Authority’s superannuation obligation is met by regular remittances to the Department of Treasury and Finance where contributions are held in the Special Deposits and Trust Fund. Consequently, a provision for superannuation is not included in the financial statements.

Sick leave

No accrual is made for sick leave as the Authority’s experience indicates that on average, sick leave taken in each reporting period is less than the entitlement accruing in that period, and this experience is expected to recur in future reporting periods. The Authority does not make payment for sick leave entitlements which have not been taken.

(d) Cash and Deposits

Cash and deposits includes cash on hand, deposits held at call with a bank or financial institution and highly liquid investments with maturities of six months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Term deposits are held to maturity and are measured at amortised cost using the effective interest method less any impairment losses subsequent to initial recognition.

Private Forests Tasmania Annual Report 2015-16 56 (e) Taxation

The Authority is exempt from all forms of taxation except Fringe Benefits Tax and the Goods and Services Tax.

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and creditors are recognised with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(f) Property, Plant and Equipment

Acquisition

The purchase method of accounting is used for all transactions of assets, being the fair value of assets provided as consideration at the date of acquisition plus any incidental costs attributable to the acquisition. Fair value is the amount for which the asset could be exchanged between knowledgeable willing parties in an arm’s length transaction. The asset capitalisation threshold adopted by the Authority is $5,000. Assets valued at less than $5,000 are charged to the Statement of Comprehensive Income in the year of purchase (other than where they form part of a group of similar items which are material in total).

Impairment Amount

The carrying amount of all non-current assets are reviewed at least annually and are not stated at amounts in excess of their impairment amount. All non-financial assets are assessed to determine whether any impairment exists. Impairment exists when the recoverable amount of an asset is less than its carrying amount. Recoverable amount is the higher of fair value less costs to sell and value in use.

All impairment losses are recognised in the Statement of Comprehensive Income.

Depreciation

Depreciation is calculated on a straight-line basis to write off the net cost of items of property, plant and equipment over their expected useful lives. Assets are depreciated from the date of acquisition. The expected useful lives are: Furniture, Equipment, software and satellite imagery 3 – 15 years

Private Forests Tasmania Annual Report 2015-16 57 Valuation

The Authority has adopted the cost basis for the valuation of property, plant and equipment.

Leases

The Authority has entered into a number of operating lease agreements for property, plant and equipment where the lessors effectively retain all the risks and benefits incidental to ownership of the items leased. Equal instalments of lease payments are charged to the Comprehensive Income Statement over the term of the lease.

(g) Functional and Presentation Currency

These financial statements are presented in Australian dollars, which is the Authority’s functional currency.

(h) Rounding

Amounts have been rounded to the nearest $1,000.

2. ASSETS 2016 2015 $0,000 $’000

2.1 CASH AND DEPOSITS

Cash on hand 383 1,643 Term deposits 1,500 0

Total Cash and Deposits 1,883 1,643

Private Forests Tasmania Annual Report 2015-16 58 2.2 RECEIVABLES

Current Trade Debtors 126 87 Less: provision for impairment (0) (0) 126 87 Accrued Revenue 40 18 GST Debtor 5 4 Prepayments 0 5 Loans for private forestry 5 12 Total Current Receivables 176 126

Non-Current Loans for private forestry 20 36

Total Non-Current Receivables 20 36

Movements in provision for Impairment of Receivables Balance at beginning of year 0 (12) Movement in provision 0 6 Amounts provided for and written off as uncollectable 0 6 Balance at end of year 0 0

Private Forests Tasmania Annual Report 2015-16 59 3. PLANT AND EQUIPMENT

Property Plant and Equipment Movement

Plant/ Office Equipment & Total Equipment Item Other $'000 $'000 $'000 2016 2015 2016 2015 2016 2015 Gross Value at 1 July 625 625 97 97 722 722

Additions-Purchase of Assets 0 0 0 0 0 0 Disposals 0 0 0 0 0 0 Gross Value at 30 June 625 625 97 97 722 722 Accumulated Depreciation/ Amortisation at 1 July 624 623 97 96 721 719 Depreciation/amortisation charge for the year 1 1 0 1 1 2 Accum Dep - Disposals 0 0 0 0 0 0 Accumulated Depreciation/ Amortisation at 30 June 625 624 97 97 722 721 Net Book Value as at 30 June 0 1 0 0 0 1

4. CREDITORS AND ACCRUED EXPENSES

2016 2015 $0,000 $’000

Creditors 77 20 Accrued expenses 12 42

Total Creditors & Accrued Expenses 89 62

5. PROVISIONS

Current

Employee entitlements: Annual Leave 69 76 Long Service Leave 123 135

192 211

Private Forests Tasmania Annual Report 2015-16 60 2016 2015 $0’000 $0,000 Non-current Employee entitlements: Long Service Leave 46 76

46 76

Total Provisions 238 287

Employee Numbers 8 8

6. BORROWINGS

Current Tasmanian Government 0 5

Non-current Tasmanian Government 603 612

Total Borrowings 603 617

7. AUDITORS REMUNERATION

Amounts received or due and receivable by the Auditors 11 11

8. DIRECTORS’ REMUNERATION

Amounts received or due and receivable by the Directors of 49 67 the Authority.

Total remuneration paid to non-executive Directors of Private Forests Tasmania fall within the following bands:

$10,000 $19,999 0 1 $20,000 $29,999 2 2 $30,000 $39,999 0 0

Remuneration for the Chief Executive Officer falls in the following band:

$170,000 $179,999 0 1 $180,000 $189,999 1 0

Remuneration includes salary/allowance plus superannuation.

Private Forests Tasmania Annual Report 2015-16 61 9. RELATED PARTIES

Directors The Directors of the Authority during the year were Mr Brett Hooper (5/3/2012 to 28/2/2017), Mr Arnold Willems (8/2/11 to 31/1/2016, 1/2/2016 to 30/7/2016), and Mr Tom Fisk, Chief Executive Officer (15/6/2009 to 14/6/2014, 15/6/2014 to current). Mr Tony Cannon and Mr Andrew Morgan were appointed on the 23 May 2016 for a term of 12 months expiring on the 22 May 2017.

Where applicable, the Authority conducts business with all of the Directors on the same terms and conditions as those entered into with other individuals and organisations.

During the financial year, Norske Skog had a number of transactions with the Authority totalling $5,475 for the private forest service levy. A Willems, is a Director of the Authority, and, is an employee of Norske Skog.

10. CASH FLOW RECONCILIATION

Reconciliation of operating surplus (deficit) to Net Cash from 2016 2015 Operating Activities $’000 $’000

Net operating surplus (deficit) 309 142 Depreciation & amortisation 1 2 Provision for impairment in receivables 0 (6)

Change in assets and liabilities: Increase (decrease) in provisions (49) 38 Increase (decrease) in creditors & accrued expenses 27 2 (Increase) decrease in receivable (34) 45 Increase (decrease) in loan liabilities (14) (36)

Net Cash provided by operating activities 240 187

Private Forests Tasmania Annual Report 2015-16 62 11. FINANCIAL INSTRUMENTS

Accounting policy, terms and conditions

Financial instruments Accounting policy Terms and conditions Financial assets Cash and deposits Cash on hand, at bank and in On call deposits interest rate at cash management accounts are balance date was 1.3% (1.7% in valued at face value. 2014/2015).

Interest is recognised as it accrues. Investments are held to maximise interest returns of surplus cash.

Receivables A provision for impairment is General debtors are unsecured recognised on other debtors and arrears do not attract when there is objective interest. evidence that an impairment loss has occurred. Collectability of overdue accounts is assessed on an ongoing basis.

Financial liabilities Creditors Liabilities are recognised for General Creditors are amounts to be paid in the future unsecured, not subject to for goods and services provided interest charges and are to the Authority as at balance normally settled within 30 days date whether or not invoices of invoice receipt. have been received.

Borrowings Loans are carried at their Borrowings are unsecured. principal amounts, which represent the present value of future cash flows associated with servicing the debt. Interest is accrued over the The interest rate on period it becomes due and borrowings is 7%. recognised as part of payables.

Private Forests Tasmania Annual Report 2015-16 63 Interest rate risk

The exposure to interest rate risk and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised, at balance date are as follows:

Fixed Interest maturing in: 2016 Floating One year Over 1 More Non- Interest or less to 5 than 5 Interest TOTAL rate years years Bearing Financial Assets $’000 $’000 $’000 $’000 $’000 $’000 Cash and deposits 0 1,500 0 0 383 1,883 Other financial Assets 0 5 20 0 0 25 Receivables 0 0 0 0 126 126 Accrued revenue 0 0 0 0 45 45 Total Financial Assets 0 1,505 20 0 554 2,079

Financial Liabilities Creditors 0 0 0 0 77 77 Other liabilities 0 0 0 0 12 12 Borrowings 0 8 17 578 0 603 Total Financial Liabilities 0 8 17 578 89 692

Net financial assets 0 1,497 3 (578) 465 1,387 (liabilities)

Fixed Interest maturing in: 2015 Floating One year Over 1 More Non TOTAL Interest or less to 5 than 5 Interest rate years years Bearing Financial Assets $’000 $’000 $’000 $’000 $’000 $’000 Cash and deposits 1,301 0 0 0 342 1,643 Other financial Assets 0 12 36 0 0 48 Receivables 0 0 0 0 87 87 Accrued revenue 0 0 0 0 22 22 Total Financial Assets 1,301 12 36 0 451 1,800

Financial Liabilities Creditors 0 0 0 0 20 20 Other liabilities 0 0 0 0 42 42 Borrowings 0 9 36 572 0 617 Total Financial Liabilities 0 9 36 572 62 679

Net financial assets 1,301 3 0 (572) 389 1,121 (liabilities)

Private Forests Tasmania Annual Report 2015-16 64 Net fair values

The fair values of financial assets and liabilities, together with the carrying amounts shown in the Statement of Financial Position, are as follows:

30 June 2016 30 June 2015 Carrying Net Fair Carrying Net Fair Amount Value Amount Value Fair Values $’000 $’000 $’000 $’000 Financial Assets Cash and Deposits 1,883 1,883 1,643 1,643 Receivables 126 126 87 87 Other Financial Assets 25 25 48 48 Accrued Revenue 45 45 22 22 2,079 2,079 1,800 1,800

Financial Liabilities Creditors 77 77 20 20 Borrowings 603 603 617 617 Other Liabilities 12 12 42 42 692 692 679 679 Net Financial Assets 1,387 1,387 1,121 1,121

30 June 2016 30 June 2015 Carrying Amounts Classified As: $’000 $’000 Financial Assets Cash and Deposits 1,883 1,643 Loans and Receivables 196 157 2,079 1,800

Financial Liabilities Financial liabilities measured at amortised cost 692 679 692 679 Net financial assets / (liabilities) 1,387 1,121

The basis for determining fair values is disclosed in Note 1.

Credit risk

The maximum exposure to credit risk at balance date in relation to each class of recognised financial asset is represented by the carrying amount of those assets as indicated in the Statement of Financial Position.

Private Forests Tasmania Annual Report 2015-16 65 Risks and mitigation

The risks associated with our main financial instruments and our policies for minimising these risks are detailed below.

Market risk

Market risk is the risk that the fair value or future cash flows of our financial instruments will fluctuate because of changes in market prices. The Authority’s exposures to market risk are primarily through interest rate risk with only insignificant exposure to other price risks and no exposure to foreign currency risk. Components of market risk to which we are exposed are discussed below.

Interest rate risk

Interest rate risk refers to the risk that the value of a financial instrument, or cash flows associated with the instrument, will fluctuate due to changes in market interest rates. Interest rate risk arises from interest bearing financial assets and liabilities that we use. Non derivative interest bearing assets are predominantly short term liquid assets. Our interest rate liability risk arises primarily from long term loans and borrowings at fixed rates which exposes us to fair value interest rate risk.

Investment of surplus funds is made with approved financial institutions in accordance with the provisions of the Private Forests Act 1994. We manage interest rate risk by adopting an investment policy that ensures:

. conformity with State and Federal regulations and standards, . capital protection, . appropriate liquidity, . monitoring of return on investment.

Credit risk

Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument and cause the Authority to make a financial loss. The Authority has exposure to credit risk on some financial assets included in our Statement of Financial Position. To help manage this risk:

. we only invest surplus funds with financial institutions in accordance with the provisions of the Private Forests Act 1994.

Credit risk arises from the Authority’s financial assets, which comprise cash and cash equivalents, and receivables. The Authority’s exposure to credit risk arises from potential default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note.

The Authority generally trades with recognised, creditworthy third parties, and as such collateral is generally not requested, nor is it the Authority’s policy to securitise its receivables.

Private Forests Tasmania Annual Report 2015-16 66 In addition, receivable balances are monitored on an ongoing basis with the result that the Authority’s exposure to bad debts is not significant.

Ageing of trade and other receivables

The following table provides an ageing of the Authority’s Current trade and loan receivables at the reporting date.

Gross Impairment Gross Impairment 2016 2016 2015 2015 $’000 $’000 $’000 $’000 Not past due 105 0 66 0 Past due 0-30 days 2 0 1 0 Past due 31-90 days 4 0 10 0 More than 90 days 20 0 22 0 131 0 99 0

A provision for impairment loss is recognised when there is objective evidence that an individual receivable is impaired.

Liquidity risk

Liquidity risk includes the risk that, as a result of our operational liquidity requirements:

. we will not have sufficient funds to settle a transaction on the date; . we will be forced to sell financial assets at a value which is less than what they are worth; or . we may be unable to settle or recover a financial asset at all.

To help reduce these risks we:

. have a liquidity policy which targets a minimum and average level of cash and cash equivalents to be maintained; . monitor budget to actual performance on a regular basis.

The Authority’s exposure to liquidity risk is deemed insignificant based on prior periods' data and current assessment of risk.

The Tasmanian Government provided funds via loan agreements for the initial purpose of assisting in the establishment of Pinus radiata plantations on private land, and, secondly, for improvements to these plantations. The life span of these loan agreements is 30 years. Plantation owners may defer the repayment of their loan for the first 10 years, thereafter they have 20 years to repay the loan balance. It is noted that interest is capitalised on the loan balance each year during the first 10 years. The current interest rate on the loan is 7%. Loan instalments are raised by the Authority and repayments received each year are then remitted to the Department of Treasury and Finance.

Private Forests Tasmania Annual Report 2015-16 67 The table below lists the contractual maturities for Financial Liabilities. These amounts represent undiscounted gross payments including both principal and interest amounts.

More Total Less than than 5 contractual Carrying 1 year 1-2 years 2-5 years years cash flows amount 30 June 2016 $’000 $’000 $’000 $’000 $’000 $’000 Payables 77 0 0 0 77 77 Other Liabilities 12 0 0 0 12 12 Borrowings 8 8 9 578 603 603 Total 97 8 9 578 692 692

30 June 2015 Payables 20 0 0 0 20 20 Other Liabilities 42 0 0 0 42 42 Borrowings 12 12 21 572 617 617 Total 74 12 21 572 679 679

The Authority has not defaulted on or breached the conditions of any loans payable recognised at balance date.

Sensitivity disclosure analysis

Taking into account past performance, future expectations, economic forecasts, and management's knowledge and experience of the financial markets, the Authority believes the following movements are 'reasonably possible' over the next 12 months (base rates are sourced from Reserve Bank of Australia):

. A parallel shift of +1% and -1% in market interest rates (AUD) from year-end rates of 1.3%.

The table below discloses the impact on net operating result and equity for each category of financial instruments held by the Authority at year-end, if the above movements were to occur.

2016 2016 2015 2015 Profit & Equity Profit & Equity Loss Loss $’000 $’000 $’000 $’000 + 1% (100 basis points) 19 19 16 16 - 1% (100 basis points) (19) (19) (16) (16)

Private Forests Tasmania Annual Report 2015-16 68 12. COMMITMENTS

2016 2015 $’000 $’000 By Type Lease Commitments Operating Lease Commitments 371 112 Total lease commitments 371 112

By Maturity Operating Lease Commitments One Year or Less 102 104 From one to five years 269 8 More than five years 0 0 Total operating lease commitments 371 112

NB: Commitments are shown as GST exclusive.

The majority of the Authority’s leases are represented by land and building rental costs and vehicle lease costs. The total lease commitment exclude local government and other executory costs where they are paid directly to a party other than the lessor. These costs are included elsewhere in the Authority’s expenditures.

The Authority also has entered into contingent rental arrangements. Contingent rental costs relate to land and building leases, and in the main comprise local government charges and the periodic escalation of leases by the Consumer Price Index. Since Contingent Rentals cannot be reliably determined, they have been excluded in the calculations of Total Lease Commitments.

The Authority does not have any purchase rights flowing from the lease of the land and buildings. Some buildings have renewal options exercisable by the lessee. There are no building leases that have renewal rights exercisable at the sole discretion of the lessor.

13. SUBSEQUENT EVENTS

There were no subsequent events.

14. AGROFORESTRY PROGRAM

Private Forests Tasmania leads an agroforestry project that includes the University of Tasmania and the CSIRO as partners. The objective of the project is to increase the extent of commercially orientated tree plantings on farms by the provision of compelling evidence to farmers of the contribution these plantings can make to sustainable land use and the value that can accrue to their other agricultural activities prior to commercial harvest of the trees. The project is funded primarily by PFT funds and a grant of $350,000 from the Government’s 2050 Agrivision Plan. The $350,000 grant is payable in instalments over 4 years. PFT has contracted the University and CSIRO as part of the project delivery program.

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