Private Annual Report 2012-13

A brief reflection of typical PFT activities and areas of work

Cover Page:

1. Shelterbelt, North Motton 2. Coastal Redwood (Sequoia sempervirens), Milabena 3. Bio-ethanol Pilot Plant in NSW 4. Stand of Eucalyptus nitens 5. Hardwood thinning 6. PFT staff providing advice to private owner 7. Shelterbelt, NW Coast 8. & native forest integrated into the landscape 9. Attendees at a PFT Field Day 10. Field Day attendees, NW Coast 11. Example of Resourcing Model output map PRIVATE FORESTS TASMANIA

Enquiries Tom Fisk Ph 03 6233 7255 Fax 03 6233 7009 Email [email protected] www.privateforests.tas.gov.au

Hon Bryan Green MP Minister for Energy and Resources Parliament House HOBART TAS 7000

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2013

Dear Minister

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 2013.

Yours sincerely

Mark Leech DEPUTY CHAIRMAN

10TH OCTOBER 2013

Contents

Deputy Chairman’s perspective ...... 1 Year in Review ...... 3 Private Forests Tasmania – Introduction ...... 9 Chapter 1 Reporting on the Private Forest Estate ...... 11 Chapter 2 Business Development – adding value to the private forest estate ...... 21 Chapter 3 Services – engaging with our stakeholders ...... 33 Chapter 4 The Regulatory Regime ...... 45 Chapter 5 Administration and Finance...... 51 Financial Statements ...... 59

Table Index

Table 1: Private forest areas – 31 December 2010 to 31 December 2012 (hectares) ...... 12 Table 2: Private forests harvest volumes 2008-9 to 2012-13 (tonnes) ...... 16 Table 3: Native forest and plantation (both softwood and hardwood) harvest from private forests as a percentage of the total harvest* ...... 18 Table 4: Plantation hardwood pulpwood as a % of total hardwood pulpwood from private forests . 19 Table 5: Client Services Inquiries ...... 38 Table 6: PTR Applications 2012-2013 ...... 47 Table 7: PTR Gazettals 1994-95 to 2012-13 ...... 48 Table 8: Service Levy Income ...... 49

Figure Index

Figure 1: Private forests harvest volumes 1994-95 to 2012-13 (Including fuel ) ...... 17 Figure 2: Organisation Chart ...... 53

Deputy Chairman’s perspective

I am pleased to present the Annual Report of Private Forests Tasmania (PFT) for the year ending 30th June, 2013. It demonstrates a commitment by all staff to furthering the vision and delivers high order outcomes from the restructure with reduced resources.

The Tasmanian forest industry has experienced a continued period of extreme uncertainty in a difficult economic climate with challenging market conditions. The Tasmanian Forest Agreement extended period of deliberations contributed to the uncertainty and had a significant impact on the whole forest industry. At the time of writing, the agreement reached appears to provide some confidence in moving forward, albeit with a significantly reduced State resource.

The private forest estate has provided an anchor in the resource base and contributed a greater percentage of the total harvest than before as noted in the report. The increasing importance of the private estate is evident and PFT is uniquely placed to provide direction and support to the grower base and emerging opportunities. As our highly respected champion of the private forest estate Ian Dickenson AO stated and is often quoted, “the Sleeping Giant” is beginning to awaken.

PFT’s new business focussed structure has delivered some significant outcomes clearly demonstrating that this major strategic overhaul of the organisation, the vision of the CEO Tom Fisk, has positioned the organisation in a place where it is seen as a valued, honest broker providing independent expert advice. This role has been clearly demonstrated through knowledge and understanding of the failed plantation investment schemes and advice to affected growers and investors as well as the administrators, receiver/managers and Government. The plantation resource that remains growing on mostly private land has the potential to provide the main furnish to a number of regionally based forest industry developments, subject to its future ownership and management.

PFT continues to champion the certification of sustainably managed private forests whether through existing channels or exploring new initiatives and potentially delivering an independent certification option.

The future of the Tasmanian forest industry does not lie in ‘the Private vs. the State’ but in a Tas Inc approach to resource delivery. Regionally based forest industry development is being explored using 3rd wave technologies such as biofuels, bioenergy, , cross laminated timber, other modern composites and the introduction of integrated design and supply chains. These modest capital businesses can be owned at least in part by community members, employ local people, provide shorter cart distances, products for Tasmanian consumption and be competitive in local and export markets. Some of these opportunities are being grasped by regional community groups such a those formed in Dorset and Huon

Private Forests Tasmania Annual Report 2012-13 1 where PFT has been able to provide invaluable input by way of an innovative resource model.

High level extension to interested parties, from private landowners, family forest owners to potential investors, is our way of spreading well researched, valuable and often leading edge information. PFT’s senior management team, supporting the vision of the organisation, provides the leadership to deliver outcomes to both forest owners and the Tasmanian community. Our organisation, while understanding the financial constraints, seeks an improved future for an innovative forest industry supported by a well managed, certified, private forest estate.

I wish to thank long serving staff member Michael Castley, recently retired, for his valuable contribution to a better understanding of in the rural landscape. Mike pioneered the use of direct seeding for vegetation establishment in Tasmania, leaving a legacy of biodiversity on many farms.

All our staff have risen to the challenge of diminished resources, a changed operating environment and a new vision, I congratulate them. We are well positioned going into the next phase of consolidation. I particularly want to thank Jeff Battersby our Finance Manager who has so capably managed the organisations finances delivering a very credible outcome with diminished income and unplanned redundancies.

In conclusion, PFT’s CEO Tom Fisk has championed the private forest estate, delivered results of a larger organisation and positioned PFT to support an innovative vibrant new forest industry in Tasmania. To my other fellow directors, Brett Hooper and Arnold Willems, thank you for your continued support, direction and invaluable contribution.

Mark Leech DEPUTY CHAIRMAN

Private Forests Tasmania Annual Report 2012-13 2

Year in Review

This year has seen the continuation of the restructuring program of Private Forests Tasmania commenced last year. Our new structure has moved the organisation away from its traditional regional operating model, providing predominantly low level extension services, to a functional model that focuses on business development opportunities that will add value to private forests and high level extension activities. It is designed to ensure that PFT is positioned to more effectively champion the cause of our stakeholders in a changing operating environment. In addition, and very importantly, our new structure will ensure maximum value is achieved from the ongoing government support we receive and greatly appreciate. I remain absolutely committed to the objective of achieving maximum impact from our diminished resources and adding value to the private forestry sector well beyond the cost of providing the service.

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 – and a major objective of mine is for PFT to touch the lives of many more private forest owners than we have done in the past. Private land provides the only opportunity to expand our forest estate and private forests stand to play an even more important role in emerging forest-based activities and industries. Add to that the positive impact trees can have on agricultural production and farm values (when sensibly integrated into agricultural systems) and we have a multitude of compelling reasons for PFT to realign and refocus our activities in order to help realise the opportunities that are available.

As reported last year the most tangible evidence of PFT’s structural change was the conversion of three Regional positions into two state-wide management roles – Manager Business Development and Manager Services. This is the first time PFT has had a senior management position focussed entirely on business development initiatives and it shows how serious we are about focussing our activities on progressive, forward thinking initiatives designed to add value to the private forest estate and hence be of direct value to private forest owners. Additionally, having state-wide leadership for our Services Group is ensuring a more streamlined and consistent service delivery program. I am very pleased to report that the incumbents of these two new positions have settled into their roles and their contribution over the year has been outstanding. Progressively, the full impact of our new operating structure is bedding down within the organisation but there is still some distance to travel in this regard. This is to be expected because, in part, it requires considerable change in the work practices and responsibilities of many of our staff who have been diligently going about their activities in the same way for many years. For some, change is not easy, for others, it is exciting and stimulating. I understand this and I would like to take this opportunity to thank PFT staff members for their largely positive acceptance of the need to change and refocus. I am confident we will emerge from this process as a stronger and more valued component of the private forestry sector as the sector inevitably changes.

Private Forests Tasmania Annual Report 2012-13 3

Apart from the broad ‘service provision’ realignment described above another compelling reason to restructure the organisation relates to our current and projected financial position. It is imperative that we do the best we can with the income we receive and maximise the impact from every dollar we spend. It is no news to anyone that the sale of forest products across Tasmania from all tenures of forest continues to be negatively impacted by lower market demand in conventional forest products markets. PFT is not isolated from this impact. Historically, up to 20% (~$400k) of PFT’s income has come from the Private Forest Service Levy (the levy) which is directly related to forestry activity in private forests – be it from the establishment of new (plantation) forests or the majority of harvesting activities in all types of private forests. During the reporting period income from the levy dropped to a little over 3% (~$56k) of our reported income. That said, government support by way of appropriation has continued to provide ongoing support for the Authority, enabling us to continue to serve our stakeholders. This support and the value it creates for private forest owners is acknowledged and appreciated.

Chapter 1 of this report provides some statistics on the private forest estate and reminds us of the significance of this estate for Tasmania. At 1,057,560 hectares, the private forest estate comprises approximately 31% of Tasmania’s reported forest area, the native forest component (858,000 hectares) comprises slightly over 27% of the State’s reported native forest area and the plantation component (199,686 hectares) comprises 64% of the State’s reported plantation area. These statistics 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. It truly is a ‘sleeping giant’ (as it was described some years ago) with, as yet, considerable untapped potential.

Generally poor market conditions have continued to impact the private estate log off-take across all categories despite the report showing an increase compared to last year. More detailed data is provided in Chapter 1 but in summary the total harvest from private forests during the reporting period reveals an increase of some 337,000 tonnes – or 30% more than last year – attributed to an increase in softwood sales. Unfortunately, this is an illusion as the increase in mainly due to the inclusion in 2012-13 of the first full-year harvest from the ex-Forestry Tasmania pine estate which is now 100% in private ownership and hence regarded as part of the private forest estate. If the total reported volume was adjusted for the pine estate tenure change it would be little changed from last year, which is a more welcome result than the precipitous falls in preceding years.

Of significance, however, is that the contribution from the private forest estate to the overall log production levels from all forests (State owned and private) during the reporting period has maintained the welcome trend commenced last year of an increased contribution to overall state production after several years of reducing contributions. After a high of 40% in 2008-09 the contribution reduced to 34% in 2010-11, rising to 46.5% last year and over the reporting period has now risen to 58.5%. While volumes are still generally depressed this is

Private Forests Tasmania Annual Report 2012-13 4 a welcome statistic again indicating the importance of the private forest estate to our forestry sector in general.

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. Our certification project remains a major focus albeit that progress continues to be impacted by the general downturn in forest-based activity with many potential clients of this project adopting a “wait and see” attitude. That said we have made a great deal of progress with the project during the reporting period and I refer you to Chapter 2 for greater detail.

Importantly, reacting to feedback from private forest owners received via our project survey process, we have committed to investigate the potential of an ‘independent group scheme’ to fill a perceived gap in the Tasmanian marketplace of certification options currently available. Such a scheme would give group members more independence in wood marketing than the various certification options that currently exist or are under development while significantly reducing costs by spreading the high overheads and workload further. To test the appetite for such a scheme, in 2013-14 PFT will convene a small working group of leading private forest owners who may be interested in becoming members of a group scheme in the future or are simply keen to assist with the process. Where this leads is hard to predict. Regardless, we are bound to investigate the option.

Another Business Development activity of which we are particularly proud is the ongoing development and application of our Private Forest Resourcing Model developed in 2012. The model has been further refined and applied in two detailed resource modelling applications to support initiatives by two community based organisations to prove up the strategic estimates of potential woody resource availability from the non-industrial private forest estate surrounding Scottsdale and Huonville, as potential feedstock for new processing industries in those regions. The work was supported by funding from the Department of Economic Development Tourism and the Arts (DEDTA) and was conducted by PFT’s GIS consultant, Esk Mapping and GIS. This is further evidence of our commitment to support initiatives that add value to the private forest estate and contribute to the strength of regional communities.

Chapter 3 of this report highlights some of the many activities performed by our Services group during the reporting period. Despite the ongoing industry downturn PFT Services staff responded to 854 (a 30% increase on last year) inquiries on a range of matters in relation to private forestry. In addition, staff continued to provide ongoing services to established clients, including the facilitation of thinning operations in small farm woodlots. They also ran another successful AGFEST event promoting market opportunities for private forests, several successful field days and two well attended private forestry dinners. Testing of the updated Farm Forestry Toolbox continued throughout the year after the updated version of the model was launched at the Australian Forest Growers National Farm Forestry Conference in October 2012. After the launch our staff provided training on the model’s use to 42 landholders, scientists and consultants. The completed product and online tutorials are

Private Forests Tasmania Annual Report 2012-13 5 available through our web site and have received over 2,500 visits from users across Australia, New Zealand, USA, Canada and Asia.

An important and ongoing aspect of the work of the Services group is collaborating with other organisations in order to maximise the benefits of our complementary services and skills in projects that deliver good outcomes for private forest owners. This occurred again this year through the ongoing delivery of several projects in association with other organisations, in particular the NRM groups in the north of the State that were commenced last year. Importantly, as part of the drive to focus our activities in areas of most relevance to our forestry stakeholders, and not duplicate services accessible elsewhere, we stopped providing services associated with non-commercial growing in the latter part of the year, satisfied that these services are adequately available through other public and private sector providers.

As we look to the future our Services activities will start to focus more on the provision of high level extension advice based on the use of demonstration and ‘case study’ farms. Anecdotal evidence abounds providing evidence that trees, sensibly and sensitively integrated into agricultural systems, can enhance farm productivity. Unfortunately, however, the evidence often lacks compelling, real impact data sufficient to convince many more farmers of the values that flow to their farming business. This is a perfect space for PFT to operate in and I am pleased to report that we have started to plan activities that will be put in place over the next year to progress this initiative. I am convinced that focussing on this type of activity will assist us with my objective of increasing our impact from our diminished resources, promoting an expansion of the private forest estate while enhancing overall farm productivity and resilience.

Despite the ongoing challenging fiscal environment our financial performance this year is one that I am proud of. While our Financial Statements, that are included in this report, do not report our performance on a ‘cash’ basis, this reporting method is the major financial focus of the management team and Board as it highlights our capacity to live within our means. During the 2012-13 year we incurred two unbudgeted redundancies that cost the Authority in excess of $243,000 but despite this considerable impost our overall result reflects a cash loss of just over $57,000 ($66,800 loss 2011-12). Under the circumstances this is an exceptional result with the loss being adequately serviced from accumulated cash reserves.

As reported in the Financial Statements the Authority recorded an operating loss of $257,000 for the 2012-13 year, which is a marked improvement on the 2011-12 result ($413,000 loss). Taking into account our diminished income stream, the unbudgeted redundancy payments outlined above and the fact that the cost of financing ongoing work on our certification project is drawn from income received and accounted for two years ago, this result can only be regarded as outstanding. The result reflects the ongoing impact of the introduction of a strict regime of tight financial controls and debt reduction introduced some four years ago that I remain absolutely committed to in order that we achieve and maintain

Private Forests Tasmania Annual Report 2012-13 6 a sustainable financial footing. I believe we are getting close to that point while still ensuring that we provide a valued and valuable service to all our stakeholders. I contend that the highlights of our activities reported in the following chapters of this report bear witness to that fact.

The Board has continued to function well during the year without a full time Chairperson, and with two vacant Director positions, but the appointment by the Board in July 2012 of a Deputy Chairperson, Mark Leech, has provided some consistency and focus for the Board’s activities. From a personal perspective I would like to take this opportunity to thank my fellow Directors for their guidance and support for me personally and the organisation as a whole during these challenging times.

PFT continues to face considerable challenges in balancing the demands and expectations of our many stakeholders during these considerably challenging times for our industry. However, I am comfortable that the progressive transformation of the organisation achieved through our ongoing restructuring process, our new focus on business development initiatives and a developing new approach to service provision, are all positioning us to continue to meet the expectations of our stakeholders, albeit with diminished resources.

I know that many of our staff have found the last few years particularly challenging for all sorts of reasons but regardless they continue to take immense pride in the service they provide to our stakeholders. I want to take this opportunity to applaud their hard work and commitment and thank them for their efforts during this year.

I remain positive about the opportunities we see immerging for the private forestry sector and commit to PFT continuing to play an active role in pursuing these opportunities to the benefit of private forest owners and Tasmania as a whole.

Tom Fisk CHIEF EXECUTIVE OFFICER

Private Forests Tasmania Annual Report 2012-13 7

Private Forests Tasmania Annual Report 2012-13 8

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”.

Its 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 but maintains regional representation in order to facilitate good access for stakeholders to the organisation. In addition, this new structure enables the organisation to more efficiency utilise in-house skills and resources.

The operating costs of PFT are underpinned by a variety of income streams – State Government appropriation, the Private Forest Service Levy and consulting income. State Government appropriation provides the bulk of the income with the other two sources being variable and largely dependent on the industry activity – which is problematic for the organisation. In the last three years reduced industry activity has impacted, in particular, the Service Levy creating a considerable challenge for the organisation to cover its costs. 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:

Private Forests Tasmania Annual Report 2012-13 9

. PFT 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 (e.g. Forest Practices Advisory Council, Vegetation Management Policy Advisory Group, and the Forests and Forest Products Committee); . direct input to government forest policy matters either direct to the Minister or via DIER Forest 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; . 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 grant funds that directly benefit private growers – $8 million over the last 10 years.

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 all staff members to 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. Unfortunately there are times when the level of service delivered in the past simply cannot be maintained. That said, throughout all PFT’s activities the staff of the organisation work hard every day to ensure they provide quality service to their stakeholders and take pride in the service they deliver.

This Annual Report on the operations of PFT provides a review of the organisation’s activities during the year together with the audited financial statements for the year ended 30 June 2013. It also includes production and area-based statistics related to the private forest estate – both industrial and non-industrial. The organisation’s operations are reported on under chapters that reflect our new operating structure which focuses on business development opportunities that have 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 2012-13 financial year.

Private Forests Tasmania Annual Report 2012-13 10

Chapter 1 Reporting on the Private Forest Estate

One of PFT’s functions is to collect, collate and report forest related statistics in relation to the private forest estate. This includes data related to the extent of the estate and conventional forest products harvesting statistics. PFT has been collecting, collating and reporting these statistics since 1994 and commencing from the 2012 Annual Report we have included some data that dates back to this time in order to display longer term trends. The efficient collection of some of these statistics is dependent on the co-operation and good will of many individuals and organisations throughout the private forestry sector. It is PFT’s hope that this co-operation ultimately benefits those who participate because the information provided assists PFT design and implement activities and initiatives designed specifically to benefit our stakeholders – be they private forest owners or forest products processors alike – and represent the interests of these stakeholders in appropriate forums.

The extent of the private forest estate

PFT maintains a spatial dataset of the extent of the private forest estate. This dataset is updated annually and the extent of the update depends on data availability and PFT’s resources. Updating data related to the industrial estate is streamlined by data exchange agreements PFT has with the industrial forestry companies. On the other hand, updating the non-industrial estate data is considerably more challenging because this component of the estate, which is owned by thousands of individual forest owners (largely farmers), can only be achieved using remote sensing technology which is time consuming and not particularly accurate. Importantly, this component of the estate, which is largely native forest, is fragmented and comprises nearly 858,000 hectares or 81% of the private forest estate.

The private forest estate spatial dataset is used by other agencies to update state‐wide data on forest extent and forest type.

Table 1 provides a broad outline of the composition of the private forest estate at December 2012 and reveals some indicative changes in the estate during the previous 12 months. The updating of eucalypt low forest, eucalypt tall forest and rainforest forest groups was not completed because up-to-date imagery, against which the forest changes are validated, was not available.

Of interest in Table 1 is that following a reduction in total plantation area from 201,527 ha in December 2010 to 199,402 ha in December 2011, a decrease of 2,125 ha, the plantation area has increased by 284 ha to 199,686 ha in December 2012.

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Table 1: Private forest areas – 31 December 2010 to 31 December 2012 (hectares)

Increase As at 31 December As at 31 December As at 31 December Forest group (2011 to 2010 2011 2012 2012)

Eucalypt low forest 649,373 649,569 649,569*

Eucalypt tall forest 160,716 160,324 160,324*

Rainforest 16,569 16,563 16,563*

Other native forest 31,394 31,418 31,418

All native forests 858,052 857,874 857,874

Plantation ‐ hardwood 178,624 177,045 177,297 252

Plantation ‐ softwood 22,903 22,357 22,389** 32

All Plantations 201,527 199,402 199,686 284

Total native forest and 1,059,579 1,057,276 1,057,560 284 plantation

* Forest groups not updated as at December 2012. ** This does not include around 46,000ha of softwood plantation acquired in early 2012 by New Forests PL (on behalf of the Australia New Zealand Forest Fund) from Taswood Growers, a 50:50 joint venture between Forestry Tasmania and the global investment management firm GMO. This estate is managed operationally by Timberlands Pacific PL. Given the increase in recent years of private wood on Crown land, PFT are currently reviewing the way it calculates private forest areas.

The Australian Government’s Department of Agriculture, Fisheries and Forestry, through its ABARES agency, annually reports statistics relating to the extent of forest areas across Australia and on an individual state basis. PFT provides data to ABARES for use in this process. At the time of preparing this Annual Report the most recent data published by ABARES had not yet been updated from that used the year before (Australia’s forests at a glance 20121). The comparative data is therefore unchanged from last year’s report. The total Tasmanian private forest estate continues to comprise approximately 31% of Tasmania’s reported forest area. The private native forest estate comprises slightly over 27% of the State’s reported native forest area and the private plantation estate comprises 64% of the State’s reported plantation area. These statistics emphasise why the private forest estate (across all categories and ownership classes) is such an important asset for the

1 http://www.daff.gov.au/abares/publications_remote_content/publication_topics/forests

Private Forests Tasmania Annual Report 2012-13 12 forestry sector in particular and for the general economic, social and environmental well being of Tasmania as a whole.

Harvest summary for the private forest estate

PFT annually collects and collates quantitative data on the private estate harvest in order to track the contribution that the private forest estate makes to the supply of conventional forest products to the Tasmanian forestry sector. Summarised data is made available to government and other stakeholders and is an important reflection of the contribution the private estate makes to employment and wealth generation throughout regional Tasmania and the State as a whole.

The collection of this information is entirely dependent on the co-operation and goodwill of others - in this case the many forest products processors throughout the State who willingly participate by providing PFT with sourcing information for 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 that the confidentiality of each individual processor’s data will be strictly maintained. It is important to remember that the provision of the data is on a voluntary basis and while PFT cannot control the accuracy of it steps are taken to ensure it is as accurate as possible.

Of the 68 individual forest products processing businesses throughout the State contacted this year, 63 responded to the request for data on log products harvested from private forests that were delivered to their mills. Twenty six of the responding processors reported that they did not receive any logs from private forests during 2012-2013 with another two reporting that they closed during the reporting period. This continues a long term trend, bringing the total to 23 primary wood processors that PFT is aware of ceasing operation in the last four years.

This year we continued last year’s initiative to graphically display harvest extending back to when PFT first reported in 1994-95. The longer time frame allows trends to be more clearly seen.

Although the volume is still small, we have also continued last year’s re-introduction of the reporting of fuel wood. This volume is more likely to be associated with industrial (e.g. boiler) fuels than for domestic firewood. Domestic firewood harvest data from private forests is generally unavailable though past surveys have revealed it is very large. We still anticipate that, as alternative uses for biomass, such as bioenergy and biofuels mature, there may be growth in industrial fuel wood volumes in the near to medium future.

Private Forests Tasmania Annual Report 2012-13 13

Wood production statistics (see Table 2)

In 2012‐13 the total harvest from private forests across the native and plantation hardwood categories continued the decline that commenced with the 2008 Global Financial Crisis. Although the total harvest of private plantation softwood increased significantly, it unfortunately does not reflect a net increase in pine harvest from combined private and Crown tenures – it is mainly due to 2012-13 being the first full year the harvest from the ex- Forestry Tasmania pine estate, which transferred 100% to private ownership half way through 2011-12, has been attributed to the private harvest tally and reported fully by PFT rather than by Forestry Tasmania.

Consequently, even though the total reported volume across all categories was 1,446,161 tonnes for 2012-13 (around 337,200 tonnes or 30% more than the 1,108,955 tonnes reported for 2011-12) it is apparent that if the total reported volume was adjusted for the pine estate tenure change it would be little changed from the year before. At least a flattening out of the decline is more welcome than a continuation of the precipitous falls since 2008-09.

The total volume of private native hardwood harvested fell a further 59,180 tonnes (-43%) to 79,674 tonnes in 2012-13. It is now only a faint shadow of the peak of 2,584,454 tonnes in 1999-2000. The rate of fall was similar for the sawlog/veneer/ply category as it was for pulpwood. The private native forest estate yielded 36.9 tonnes of sawlogs, veneer and ply for every 100 tonnes of native hardwood pulpwood, continuing the trend seen in 2011-12 (27.5 tonnes compared to 12.7 tonnes in 2010-11), indicating the positive impact of a veneer market on the utilisation of the higher quality component of the native hardwood pulp wood category.

The rate of decline in the volume of hardwood plantation harvested has started to level out - a 13% decrease from 254,520 tonnes in 2011-12 to 222,054 tonnes in 2012-13. We witnessed a decline from 745,819 tonnes (-66%) the previous year. Judging by the renewed activity observed at wood chip ship loading facilities at the time of preparing this report, we may see a very welcome increase in 2013-14.

Table 3 and Table 4 reveal the trends since 1994-95 in the relative contribution that broad forest types make to the total private forest estate harvest.

The plantation harvest consisted solely of softwood until 1998-99 when the first hardwood pulpwood harvest began. Apart for 1999-00, the proportion of plantation to native forest increased regularly each year and in 2005-06 it exceeded native forest harvested for the first time. In 2010-11 and 2011-12 136.7% and 598.6% respectively more plantation was harvested than native forest (Table 3). In 2012-13 the ratio increased to 1,663.8%, albeit on a very small overall volume, a very significant fall in the native forest harvest and the inclusion of a full year’s pine harvest from the fully privatised ex-State owned pine estate.

Private Forests Tasmania Annual Report 2012-13 14

Notwithstanding the very low volumes of hardwood harvested in 2012-13, the long term trend of an every-increasing proportion of plantation hardwood pulpwood to the hardwood pulpwood total continued (Table 4). In the 2012-13 financial year plantation hardwood accounted for 79.4% of the total compared to 70.6% the year before.

Contribution to overall Tasmanian forestry production

Production statistics for the State owned forests (provided by Forestry Tasmania) have been combined with the private estate figures detailed above. A comparison of the data reveals that the reversal of the trend in recent years of a diminishing contribution from the private estate continues. In 2008-09 the private estate contributed 39.7%, 36.7% in 2009-10, 34.0% in 2010-11, and in 2011-12 the contribution rose to 46.5%. For the 2012-13 year the contribution to the overall Tasmanian production climbed back to 58.5%. As we counselled in last year’s Annual Report, some caution needed to be exercised then in drawing profound conclusions from this analysis due to the changes in the ownership status of the previously State owned pine estate. However, the 2012-13 year consolidated that reporting change and the trend continues even more strongly. All sources of forest products have been severely impacted by market conditions since 2008-09 but it is now clear that the production level from the private estate has reduced to a lesser degree than that from State owned forests.

Private Forests Tasmania Annual Report 2012-13 15

Table 2: Private forests harvest volumes 2008-9 to 2012-13 (tonnes)

2008-09 2009-10 2010-11 2011-12 2012-13

NATIVE HARDWOOD

Native Sawlog, Veneer & Ply 39,435 54,067 54,133 28,894 21,110

Hardwood Pulpwood 891,641 537,740 426,650 105,064 57,202

Minor Log Products 912 1,250 321 84 36.45

Fuel Wood 2,110 1,170 800 4,812 1,325

Total NF including fuel wood 934,098 594,227 481,904 138,854 79,674

Total NF excluding fuel wood 931,988 593,057 481,104 134,042 78,349

PLANTATION HARDWOOD

Hardwood, Sawlog, Veneer & 4,977 3,712 4,514 364 1,264 Ply

Hardwood Pulpwood 998,512 807,411 741,124 252,657 220,790

Minor Log Products 0 0 181 1,500 0

Fuel Wood 0 0 0 0 0

Total HW including fuel wood 1,003,489 811,123 745,819 254,520 222,054

Total HW excluding fuel wood 1,003,489 811,123 745,819 254,520 222,054

PLANTATION SOFTWOOD

Softwood Sawlog, Veneer & 46,164 64,991 125,495 384,601 547,909 Ply

Pulpwood 192,878 230,646 268,655 327,972 585,133

Minor Log Products 3 339 901 2,968 10,179

Fuel Wood 0 2,320 0 40 1,212

Total SW including fuel wood 239,045 298,296 395,051 715,581 1,144,433

Total SW excluding fuel wood 239,045 295,976 395,051 715,541 1,143,221

GRAND TOTAL including fuel 2,176,632 1,703,646 1,622,774 1,108,955 1,446,161 wood GRAND TOTAL excluding fuel 2,174,522 1,700,156 1,621,974 1,104,103 1,443,624 wood

Private Forests Tasmania Annual Report 2012-13 16

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)

Figure 1: Private forests harvest volumes 1994-95 to 2012-13 (Including fuel wood) Private Forests Tasmania Annual Report 2012-13 17

Table 3: Native forest and plantation (both softwood and hardwood) harvest from private forests as a percentage of the total harvest*

Plantation harvest exceeds Native forest harvest Plantation harvest native forests Year Tonnes Percentage Tonnes Percentage Percentage

1994-95 1,686,599 85.2 293,270 14.8 -82.6

1995-96 1,325,943 83.7 257,650 16.3 -80.6

1996-97 1,404,418 78.2 392,000 21.8 -72.1

1997-98 1,875,336 85.0 330,000 15.0 -82.4

1998-99 1,759,473 79.2 462,523 20.8 -73.7

1999-00 2,584,454 80.9 609,527 19.1 -76.4

2000-01 2,053,089 76.7 622,205 23.3 -69.7

2001-02 1,812,871 67.6 868,551 32.4 -52.1

2002-03 1,894,197 66.7 945,427 33.3 -50.1

2003-04 1,789,426 65.3 950,847 34.7 -46.9

2004-05 1,740,261 61.1 1,107,226 38.9 -36.4

2005-06 1,020,122 43.5 1,324,258 56.5 29.8

2006-07 1,005,831 44.3 1,262,466 55.7 25.5

2007-08 1,186,870 41.4 1,679,488 58.6 41.5

2008-09 934,098 42.9 1,242,534 57.1 33.0

2009-10 594,227 34.9 1,109,419 65.1 86.7

2010-11 481,904 29.7 1,140,870 70.3 136.7

2011-12 138,854 12.5 970,101 87.5 598.6

2012-13 79,674 5.5 1,366,487 94.5 1615.1

* Since 2011-12 the data includes fuel wood so comparisons with annual reports before then will show slight differences in the numbers.

Private Forests Tasmania Annual Report 2012-13 18

Table 4: Plantation hardwood pulpwood as a % of total hardwood pulpwood from private forests

Native forest pulpwood Plantation hardwood pulpwood

Year Tonnes Tonnes Percentage

1994-95 1,460,599 0 0.0

1995-96 1,109,525 0 0.0

1996-97 1,188,000 0 0.0

1997-98 1,713,728 0 0.0

1998-99 1,557,397 209,215 11.8

1999-00 2,367,089 210,237 8.2

2000-01 1,912,616 238,104 11.1

2001-02 1,669,348 511,436 23.5

2002-03 1,792,636 628,921 26.0

2003-04 1,668,762 549,988 24.8

2004-05 1,628,739 799,280 32.9

2005-06 944,096 973,209 50.8

2006-07 955,879 921,679 49.1

2007-08 1,134,118 1,103,366 49.3

2008-09 891,641 998,512 52.8

2009-10 537,740 807,411 60.0

2010-11 426,650 741,124 63.5

2011-12 105,064 252,657 70.6

2012-13 57,202 220,790 79.4

Private Forests Tasmania Annual Report 2012-13 19

Private Forests Tasmania Annual Report 2012-13 20

Chapter 2 Business Development – adding value to the private forest estate

PFT’s organisational restructure and the new role of Manager Business Development, implemented at the beginning of 2011-12, bedded down through 2012-13. The position objective is to research and develop business development opportunities in relation to the management and use of private forests throughout Tasmania.

Broadly, our business development focus encapsulates activities designed to add value to the private forest estate and hence be of direct value to private forest owners. This includes activities as diverse as initiatives that secure the place 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. In addition, our business development activities include the conduct of a small forest research and development program that includes alliances with research providers and support for initiatives that are of specific relevance to private forest owners.

This chapter reports on the progress of activities commenced in 2011-12 as well as new activities initiated in 2012-13.

Business Development Initiatives

Forest Management & Chain of Custody Certification

The Board of PFT believes that assisting private forest owners achieve forest management certification could be one of the greatest contributions the organisation may make to the future of private forestry in Tasmania, and in fact the future of the forestry industry in general, and strongly supports the priority given to this business development project. In addition, in 2010 the Tasmanian Government allocated $500,000 to PFT to assist the organisation lead more NIPF owners down the certification pathway showing the Government’s strong support for this initiative. Substantive work on this project commenced in July 2011 following the appointment of a staff member with specific responsibilities to drive this initiative.

First, some background is worth repeating.

Forest management certification is a system of private voluntary standards for sustainable forest management developed and managed by independent bodies (i.e. “third-parties”).

Private Forests Tasmania Annual Report 2012-13 21

The standards are made up of environmental, economic and social criteria and associated performance expectations. Owners of forests with certified forest management agree to abide by that standard. An enterprise’s compliance with the criteria, regularly audited by accredited certifying bodies, transforms the standard into concrete practices on the ground.

Chain of custody certification schemes operate in conjunction with forest management certification. They allow the accurate and verifiable tracking of from the forest, through the changes of custodianship at the primary and secondary processors, on to the manufacturer and finally to the retail product in an outlet, eco-labelled with the schemes’ label or logo. That label provides the ultimate assurance to consumers that a wood-based product has come from sustainable sources and that claim has been verified by a third party.

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 certification (FSC). 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.

Only a few thousand of Tasmania’s 858,000 hectares of non-industrial private forest (NIPF) estate is currently certified and to maintain market access many smaller NIPF owners may also need to follow the certification pathway. However, this is complicated by forest management certification being expensive to achieve and then maintain. Unfortunately, the impact of this expense on the forest owners’ business is currently unlikely to be recovered, as certification has rarely resulted in a price premium being paid to forest owners for their timber anywhere in the world.

Very few NIPF owners in Tasmania are large enough to justify going alone with certification in their own right. However, some will find they are certified by default when industrial forest growers with forest management certification have retained legally definable management control over the forest on their land and include it in their total certified forest management unit. An example would be share farms, in which industrial forestry organisations like Norske Skog or have management control as well as a proportional equity interest in the trees with the landowner.

Specific activities undertaken in relation to this priority project during the year include:

Survey of NIPF owners’ knowledge of and attitudes to forest management certification

The first goal has been to identify pathways and mechanisms for industry stakeholders to increase adoption of forest certification. The University of Tasmania’s Cradle Coast Campus based Institute of Regional Development (IRD) partnered with us to survey NIPF owners’ knowledge of and attitudes to forest certification, their interest in participating in forest

Private Forests Tasmania Annual Report 2012-13 22 certification, and the barriers or challenges that would inhibit them from seeking certification. The survey (report published in November 2012 and available on PFT’s website2), revealed a number of barriers to NIPF owners certifying their forests.

We found that most NIPF owners had little or no understanding of forest certification prior to being surveyed. The survey included a brief leaflet explaining forest certification and although 10% indicated they were interested in certifying their forests, almost 35% declared they would not certify their forests. The reasons for not wanting to certify fell into four categories: financial – the cost of certification; private property rights – many forest owners were concerned that certification may enable additional government control over their lands that impedes their rights as landowners; forest management process – many landowners find there is enough complexity in the current processes without adding another layer with an unclear benefit; and uncertainty - about the future of Tasmania’s forest industry and the likelihood of any benefits being realised in future harvests.

The largest barriers to certification can be summed up as its cost, uncertainty over its benefits, and the loss of some management control. We also found that incentives to certify could be broken down into three categories: monetary, assistance with the certification process, and policy based.

Importantly, we found that any framework created to encourage NIPF certification would need to involve NIPF owners directly in the forest certification process, would preferably be managed by a not-for-profit such as a forest owners association, and would not require forest owners to pay for the cost. This strongly pointed to an independent group forest management scheme being the framework most likely to succeed in Tasmania.

Development of a framework for an independent Tasmanian group forest management certification process

In a group scheme an individual forest owner (or ‘group member’) doesn’t get certified – it is the ‘group manager’ that gets certified. Group member’s forests become a component of the total certified forest area of the group manager and only a sample of member’s forests is audited annually. The group manager establishes and oversees processes and procedures, maintains group records and overall manages the membership and their performance. Group schemes are characterised by the following core relationships: members enter a binding membership agreement with the group manager; the group manager is directly accountable to the certification body; and the certification body is accountable to the certification scheme – such as AFS/PEFC and FSC. This means that when putting together group schemes it is just as much about the group manager as the individual members, if not more.

2 http://www.privateforests.tas.gov.au/files/PFT_ForestCert_Report_final_Nov2012.pdf

Private Forests Tasmania Annual Report 2012-13 23

An ‘independent group scheme’ can fill a gap in the Tasmanian marketplace of forest management certification options currently available. Such a scheme would give group members more independence in wood marketing, which some NIPF owners seek, than the various certification options that currently exist or are under development while significantly reducing costs by spreading the high overheads and workload further.

To test the appetite for such a scheme, in 2013-14 PFT will convene a small working group of leading private forest owners who may be interested in becoming members of a group scheme in the future. They will be representative of a cross section of private forestry owner types. The objective of the working group will be to ensure that potential members fully understand the role played by the group manager, the relationships between the parties and the commitments that individual group members have to make to be part of the ‘group’. It will also help tease out other matters for investigation and quite possibly identify barriers to entry that may either be solvable or insurmountable in some circumstances. A part of this working group process will be comparing and contrasting the Group scheme option with other options currently available.

Where this process leads will deliberately be kept open – it may lead to the development of an independent group scheme or, just as equally, it may demonstrate NIPF owner’s have insufficient will to form one and are currently happy with what is available.

Survey of primary wood processors’ knowledge of and attitudes to chain of custody certification

Encouraging the supply chain beyond the forest provides positive context for non-industrial private forest owners to seek forest management certification. Chain of custody certification by primary wood processors will create a market for forest management certified logs. That will, in turn, encourage non-industrial private forest owner support for forest certification.

Last year we provided a preview of the results of a 2012 state-wide survey of all Tasmanian primary wood processors designed to help us understand their knowledge and attitudes, and the barriers and incentives to achieving certification.

In January 2013 PFT reported the results3. A strong conclusion drawn from this project was that Tasmanian primary wood processors, driven by signals coming from their customers and their perception of where the marketplace in general was headed, were keen to hold chain of custody certification.

3 http://www.privateforests.tas.gov.au/files/ChainOfCustodySurveyReport.pdf

Private Forests Tasmania Annual Report 2012-13 24

Project to encourage a Tasmanian FSC group chain of custody scheme

PFT recognised that, although there is a critical mass of small to medium-size primary wood processors and manufacturer/retailers in the State who have AFS chain of custody certification, particularly through Fine Timbers Tasmania’s (FTT) group scheme, there were no small to medium size processors with FSC chain of custody certification.

To support FSC forest management certification, particularly for non-industrial private forest owners, by facilitating Tasmanian processors into FSC Chain of Custody certification, in June 2012 PFT initiated a project to assist with the development of a FSC chain of custody option to complement the AFS scheme already in place. In partnership with SFM Forest Products and FTT we have made a strategic investment in a pilot project to initiate a Tasmanian-based FSC group chain of custody scheme. This project should be completed in 2013-14.

Forest Owner Intent Survey

We commented on this project in the 2012 Annual Report. The last owner intent survey was carried out by PFT in 2001 and much has changed within Tasmania’s forest industry since that time. Consequently, a new survey was conducted in 2012 as part of the forest management certification survey reported above. The results have now been published4.

We found that more NIPF owners preferred non-timber forest management objectives than in 2001 (88% versus 83%). Harvest intent was influenced by forest size (owners of larger forest more likely to intend to harvest), previous harvest experience (more likely to harvest in the future if they have harvested timber in the past). The survey findings highlighted the importance to forest owners of the policy tools and extension services available in Tasmania.

Market Update

Private forest owners need to be as fully informed as possible about the market for their logs to be able to achieve the best outcomes from harvest on their land. PFT is one of their few remaining sources of neutral advice and has worked through the year on enhancing the information available to NIPF owners. A number of small projects were commenced:

4 http://www.privateforests.tas.gov.au/files/Forest_Owner_Intent_Survey_2013.pdf

Private Forests Tasmania Annual Report 2012-13 25

List of Tasmanian primary wood processors and log exporters

To assist private forest owners market their wood PFT needs to have a reliable record of Tasmania’s primary wood processors and log exporters. Some of this information has a short life as the number of Tasmanian businesses engaged in primary , especially at the smaller end of the scale, can be very fluid. PFT’s continues to maintain this important database.

Directory of Tasmanian Primary Wood Processors

PFT commenced preparation of a Directory of Tasmanian Wood Processors in 2012, using the list of primary wood processors and log exporters prepared for internal use. It catalogues the 47 primary wood processors and log exporters who provided their consent to be included in this publicly available document. 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 now publicly available on PFT’s website5 as a handy reference for private forest owners looking for information on potential outlets for their forest products.

Small Harvest Operation Plans

PFT continued to actively promote the concept of a much simpler forest practices plan – one that can be used for small plantation woodlots in non-contentious locations. The current Tasmanian Forest Practices Regulations mandate the need for a full Forest Practices Plan (FPP) if the area on a property being harvested in any year is greater than 1 hectare or if over 100 tonnes of wood will be harvested before the one hectare limit is reached. There are many hundreds of plantation woodlots and shelter areas on farms in Tasmania that are up to 1 hectare in size but, with yields over 300 tonnes per hectare being common, easily exceed the 100 tonne threshold. The wood volume is, however, too small to effectively recover the cost of preparing the mandated FPP from the harvest proceeds, especially when the other impediments of small-scale harvest, such as the size of harvesting equipment used in Tasmania, are taken into account. Although PFT hoped for a successful resolution to this proposal in 2012-13 it is still a ‘work-in-progress’.

5 http://www.privateforests.tas.gov.au/files/FINAL_WoodProcessorsDirectory_August2013_Version4.pdf

Private Forests Tasmania Annual Report 2012-13 26

Biomass

Any new potential uses for NIPF wood are important to PFT’s stakeholders. Processing of what is generically described as ‘biomass’ is gaining worldwide attention and it has the potential to provide another market for pulp quality wood and residues. For this reason, in keeping with our charter, PFT has kept a watching brief on Australian and international developments in this area and continued to provide support and advice to parties interested in potential biomass processing initiatives in Tasmania.

Biomass is defined as any organic material, including wood, which has stored sunlight in the form of chemical energy. Currently, interest in the processing opportunities for biomass can be subdivided into three main areas but with some interchange of definitions between them:

1. Bioenergy - renewable heat energy made available by combusting biomass; 2. Biofuels – usually liquid or gaseous fuels made from biomass, e.g. bioethanol, biodiesel, biogas (e.g. methane from landfill), and synthesis gas (syngas); and 3. Biorefinery - the sustainable processing of biomass into a spectrum of bio-based products (food, feed, chemicals, materials) and bioenergy (biofuels, power and/or heat). 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.

PFT has been providing resource information in a form that is suitable for project proponents.

PFT has continued to provide private forest resource advice for two community based groups (based in Dorset and Huon local government areas) looking at the feasibility of biomass projects for their regions.

Resourcing Model 2012

In last year’s Annual Report we reported on our development of a strategic Private Forest Resourcing Model. To recap, the overriding criterion was that the output needed to be useful to those with a project proposal in mind and needing a quantitative basis for choosing initial locations for further evaluation, including a more detailed investigation of the available resource.

Private Forests Tasmania Annual Report 2012-13 27

Dorset and Huon Woody Biomass Pre-Feasibility Studies 2013

During 2012-13 PFT participated in two more detailed resource investigations, in Dorset and Huon, which built on the strategic Resourcing Model developed in 2012. The studies were commissioned by the Department of Economic Development Tourism and the Arts (DEDTA) to prove up the strategic estimates of potential woody biomass resource availability from the NIPF estate surrounding Scottsdale and Huonville. We engaged Esk Mapping and GIS to undertake the work.

It involved a comprehensive landscape-level model of existing reserves and covenants on private freehold land, sustainable harvest and regeneration practices and the legal harvesting restrictions imposed by the Forest Practices Code. Unlike the 2012 Resourcing Model which applied a simple radius to each catchment centre, a high resolution road distance model was applied to each property with available NIPF woody biomass so that actual road distances to either Scottsdale or Huonville could be determined.

The results of this modelling were then validated via detailed desktop analysis for a significant representative sample of properties across the project area, carried out by experienced forest harvest planners. This validation work identified operational issues not accounted for in the landscape-level modelling, to arrive at a final estimate of available woody biomass from the resource.

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, therefore, to champion the forestry interests of private landowners and confront the unique challenges of small‐scale forestry.

Small-scale harvesting systems

One of the major disincentives for the integration of more (commercial) trees into the agricultural landscape (as shelter belts and small scale block plantings) is the cost of harvesting or removing these trees at maturity. In general, mechanised harvesting equipment commonly used in Tasmania is more appropriately suited to broad acre forestry application and is simply not cost-effective when wood volumes are low. Considering that

Private Forests Tasmania Annual Report 2012-13 28 this style of forest resource development offers significant potential to expand the forest estate while enhancing agricultural production and farm values, it is imperative that PFT focuses on solving this problem and work has commenced in this regard. PFT continues to review technology developments that are relevant to small-scale harvest.

Australian Forest Operations Research Alliance (AFORA)

With the end to the CRC for Forestry in June 2012 this collaborative alliance of around twenty Australian forestry organisations keen to retain and build on the momentum of research in Australian forest supply chain operations was formed, based at the University of the Sunshine Coast. The priorities of AFORA are 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 system and supply chains. PFT became a founding member of AFORA and recently renewed its membership for a further two years. This continues to give us an opportunity to encourage new research into operational farm forestry related challenges (as referred to above) that will benefit NIPF owners.

As well as maintaining industry access to and updating reports published by the CRC supply chain research program, AFORA has continued to develop practical tools and new industry reports, including some that can improve farm forestry productivity.

Impact of Trees Integrated into Farming System

The impact of trees in agricultural landscapes has been extensively researched both within Australia and overseas. There is clear evidence that trees planted commercially on farms can also be a net benefit to the profitability of the rest of the farm enterprise.

PFT has, therefore, prepared a literature review for use by staff to support advice they provide to farmers who may be contemplating establishing a plantation or shelter planting on their farm. We also continued to add to the anecdotal evidence of Tasmanian farm forest owners finding benefits beyond their plantation or shelter belt.

Over 2013-14 we will develop a broad extension program, including field days, brochures and web content, to bring this information to landowners.

Private Forests Tasmania Annual Report 2012-13 29

Adaptation strategies to manage risk in Australia’s plantations

The Manager Business Development continued as a member of the steering committee for the Forest and Wood Products Australia (FWPA) funded research project that is looking at ways climate change impacts can be managed. This project will draw to a close by the end of 2013 but the draft reports generated by it are confirming the anticipated benefit of increased knowledge that will assist in expanding the integration of trees (back) into drier areas of Tasmania such as the Midlands.

Research Trials

PFT maintains a range of demonstration plantings and trials throughout the State to provide data that underpins the quantitative advice it provides to private forest owners. Most of these trials are on cleared agricultural land considered marginal for traditional plantation forestry.

They evaluate and demonstrate pruning, thinning and fertiliser options for the production of high-quality wood products to assist private forest owners maximise their investment returns. There is a focus on expanding plantation development into areas of cleared private land not traditionally considered suitable for commercial plantations and where potential climate change impacts may be mitigated. These trials provide valuable baseline data to underpin that initiative.

Two of the five eucalypt plantation silvicultural trials (7-11 years old) at Cressy, Blackwood Creek, Poatina, Rosevale and Carrick and two of three similar Radiata pine silvicultural trials (9-11 years old) at Rosevale, Carrick and Hagley were measured during the year. These trials are long term and the first published reports are due in 2013-14.

Three new silvicultural sites were established in well managed pine and other coniferous species plantations on three properties at Wilmot, North Motton and Milabeena to complement existing Acacia melanoxylon (Blackwood) silvicultural trials at Sheffield and Abbotsham for which ongoing monitoring continued. The final and full 15 year assessment of the Sheffield trial was completed.

PFT expanded its permanent sample plots from 125 to 135 to monitor tree growth of Radiata pine, eucalypt and special species plantations across the north of the State. They will allow staff to better predict plantation site suitability and likely products that plantations 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

Private Forests Tasmania Annual Report 2012-13 30 in the north-west, with annual rainfall varying from 500mm to 1600mm. These plots are regularly measured under a long term assessment schedule.

PFT has encouraged the expansion of farm forestry in these areas to meet land holder demand. PFT has over the last 15 years been continually monitoring tree performance in its silvicultural trials and permanent sample plots so as to better estimate plantation productivity and economic viability. New opportunities for expansion of integrated farm forestry across farms and broader landscapes may result following the development and expansion of irrigation.

In conjunction with Forestry Tasmania and two participating landholders, PFT successfully established four trial sites on two properties at White Hills and Blackwood Creek in 2010. These trials field-test a number of local and introduced tree species, including Eucalyptus globulus (Blue gum), deemed suitable for commercial wood production in areas with low rainfall and subject to frost. Forestry Tasmania monitored the trial at White Hills and some E. globulus seed lots have performed very well. Consequently, some have now been used to propagate trees for planting next year on sites in the Biodiversity in Irrigated Landscape project.

PFT and Forestry Tasmania also plan to establish a 2ha seedling seed orchard at Westwood in the second half of 2013. The seedlings have been propagated at Forestry Tasmania’s Perth nursery.

The Wattle Grove, ‘Willow Bend Farm’ project, established in 2007 and 2008 by the landowner and PFT, aims to improve stream water quality and increase habitat for native fauna and flora by excluding livestock from riparian areas and revegetating stream-sides. The project partner, CSIRO, undertook a scientific analysis of the effects of streamside vegetation on water quality and published some preliminary findings. They have now reduced their involvement in the project. The E. globulus, E. nitens and A. melanoxylon plantation trees continue to be managed for timber production. In December 2012 PFT held a field day at Willow Bend Farm (reported in Chapter 3).

Private Forests Tasmania Annual Report 2012-13 31

Private Forests Tasmania Annual Report 2012-13 32

Chapter 3 Services – engaging with our stakeholders

PFT’s Services Group brings together our entire forestry stakeholder servicing activities including Resource Information Management, Forestry Services and Communications. It includes state-wide responsibilities delivered through regional representation to ensure a more efficient use of our in-house skills and capabilities.

It is the specific intent of the Services Group to engage with PFT’s many forestry stakeholders (individuals and organisations) and provide services to those stakeholders that will add value to their forest based enterprises. The Services Group is also the conduit for the delivery of the outcomes of some of the Business Development initiatives outlined in the previous chapter of this Annual Report. While the full benefits of this operational restructure are still to be realised there can be no doubt that a service provision model with state-wide responsibilities will ultimately ensure a more streamlined and consistent service delivery program.

PFT’s service provision model operates at a variety of levels including: the development and maintenance of in-house systems, tools and models that support the provision of advice to stakeholders; 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 organising other events. In participating in all of 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 sustainably and (if appropriate) profitably manage their forests.

This chapter summarises the significant activities of PFT’s Services group during the 2012-13 year.

Resource Information Services

The Geographic Information System (GIS) continues to be a key resource for PFT. Combined with a spatial data management system, the GIS is a vital tool used to underpin the provision of advice and assistance to forest owners and advice to government and others. Collection and collation of information on changes to the private forest estate is obtained through links with other data collectors, the use of satellite imagery and from direct on- ground interaction with private forest clients. This information is shared with other organisations and in particular, the LIST and the Australian Government.

Private Forests Tasmania Annual Report 2012-13 33

PFT uses spatial datasets created by others, in particular datasets under the custodianship of the Land Information System Tasmania (the LIST), managed by the Department of Primary Industries, Parks, Water and Environment. During the year the Tasmanian Spatial Information Council and the Tasmanian Government Spatial Committee, on which PFT is represented, have been active in implementing effective governance arrangements for spatial information across the public sector.

Late in the year, PFT engaged ESK Mapping & GIS to deliver PFT’s GIS in-house needs and this has proved an excellent arrangement. 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 the bringing together of 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. While much of this work is largely routine, the output is often used in one off projects. For example, during the reporting period PFT supported investigations into potential biomass supplies in three regional areas. The report, Private Forest Resourcing Model 2012 - Where are the best locations for a hypothetical wood processing plant?, prepared for Private Forests Tasmania, by Jeremy Wilson, Esk Mapping & GIS, May 2012. This study uses new modelling methodology to map the minimum wood catchment size required to maintain a nominated annual sustainable supply of feedstock for a processing plant over its life. A second more detailed study was commenced to validate the estimated wood supplies and will be completed in 2013. This modelling approach is likely to play an even more important role in the future of Tasmania’s forest‐based ‘industries’ as new uses for wood and associated supply requirements develop.

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.

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 reporting purposes.

Private Forests Tasmania Annual Report 2012-13 34

Forestry services

Stand History and Management Information Systems

PFT’s database tool SHAMAS (Stand History and Management Assessment System) enables PFT to record work undertaken by forest owners to manage their plantations and to assist PFT staff in advising the forest owner on the scheduling of important silvilcultural operations such as thinning and pruning. This ensures that non-industrial private forest owners continue to manage plantations to industry standards and schedules. Over 500 stands covering 1,850 hectares of plantation forest are recorded in SHAMAS.

During the year PFT provided forest owners with information on timing and quality of pruning and thinning operations for a small number of stands, facilitated contract pruning and monitored the quality of operations. Most plantations recorded in SHAMAS have now reached or are reaching final pruning age and the management focus is on commercial thinning operations.

In addition, data contained in this system enabled PFT staff to facilitate the thinning of relatively young plantations at a time of general downturn in demand for pine and hardwood pulpwood and small pine sawlogs. Despite restrictive wet weather and contract quotas limiting harvesting this year, a reasonable amount of harvesting was facilitated during the 2012/13 summer. PFT’s strong connections with industrial processors helped to facilitate a reasonable level of sales of these products in order to assist in the maintenance of stand health and ongoing growth of higher quality products. In order to improve the cost effectiveness of these small scale harvesting operations PFT liaised 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, viable. These markets for small quantities of pine pulpwood allowed for a small return to growers at a time when the industry has been depressed which assists in maintaining interest in trees as a supplementary income stream for farmers.

There can be no doubt that this service has assisted the forest owners involved maximise their chances of achieving best possible returns in what is often a difficult market.

The Farm Forestry Toolbox

PFT maintains various models that are of value in providing services to private forest owners. The most popular of these is the Farm Forestry Toolbox. During the reporting period an update of the Farm Forestry Toolbox was nationally released at the Biennial Australian Forest Growers National Farm Forestry Conference in October 2012 followed by training for 42 landholders, scientists and consultants. This sophisticated computer program is the culmination of over 10 years of work by PFT, and now Bushlogic, assisted by a series of grants the most recent being a $105,000 grant under the Australian

Private Forests Tasmania Annual Report 2012-13 35

Government’s Forest Industries Climate Change Research Fund. This 3 year grant project was concluded in January 2013 with an in-kind contribution of over $86,000 by PFT and $20,000 by Bushlogic. The completed product and online tutorials are available through PFT’s web site. The site has received over 2,500 visits from all Australian States, New Zealand, USA, Canada and Asia.

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

Strategic Alliances - Farm Forestry and other Organisations

PFT liaises with other organisations including the Australian Forest Growers (AFG), Tasmanian Farmers and Graziers, Timber Communities Australia and Private Forest Services Queensland and to a lesser extent the New Zealand Farm Forestry Association. In this context communication is largely information sharing and in the case of the AFG, co- ordination of activities such as annual field days, farm forestry dinners, the biennial AFG Tree Farmer Award in Tasmania followed up by supporting nominated private forest owners for the National Tree Farmer of the Year Award. PFT has hosted visiting members of these organisations and reciprocal arrangements apply.

A close liaison is maintained with regional NRM bodies and sub-regional NRM facilitators. PFT is represented on, or has an association with, the NRM North Association, NRM South, Cradle Coast NRM, Tamar NRM Association and Management Committee and both Meander Valley and Dorset NRM groups. During the reporting period PFT provided technical and other advice on a range of proposed and existing projects involving woody vegetation and forests at both property and landscape levels. In addition, PFT continued to educate and inform NRM North staff on non-commercial tree growing and carbon farming.

Collaborative Projects

PFT engages with other groups in order to ensure the interests and aspirations of private forest owners are adequately represented and to provide opportunities for them to come together to share knowledge and experiences and be exposed to experts in various fields of relevance to the management of their forests. To that end, and in addition to field days and dinners, PFT:

. Collaborated with Bushlogic to complete the development, validation and testing of an update to the Farm Forestry Toolbox in January 2013. In June 2010 PFT received, under

Private Forests Tasmania Annual Report 2012-13 36

the Australian Government’s Forest Industries Climate Change Research Fund, a grant of $105,000 to update the popular and widely-used Farm Forestry Toolbox and to develop software, in partnership with Bushlogic, to take account of carbon sequestration and improved growth modelling of tropical plantations. PFT conducted an introductory workshop and two national training workshops in October 2012 for a total of 42 people during and after the Australian Forest Growers National Farm Forestry Conference in Gympie. The Farm Forestry Toolbox is available on PFT’s web site.

. Contracted with NRM North to deliver over two years the plantation establishment and direct seeding components of the Biodiversity in Irrigated Landscapes project. This project strategically reforests areas on farms in irrigation areas in the northern Midlands. PFT, in close consultation with participating landholders, planned on-ground works and operational plans for 9 properties for 2013. PFT also liaised with farmers to plan and lay out projects, develop site specific operational prescriptions to meet best management practices consistent with the Forest Practices Code and brought professional knowledge and expertise to manage and supervise the initial on ground works to deliver the projects.

Client Servicing

The on-ground extension focus of PFT is based on case study farms, field days and dinners and other related services.

The delivery of client services is a major focus of the PFT Service group. The nature of service provision can range from simple advice over the phone to field visits and extensive field-based analysis and report preparation by way of consultancies. It may also include the provision of long-term support to many private forest owners. The value of this service is reinforced by new landholders seeking advice and assistance and the repeat business from long-term clients. This is more so given the increasing complexity and sophistication of forest management, forest practices regulation and changing market conditions. Enquiries received increased from 656 last year to 854. These enquires were from forest owners (58%), industry (27%) and others (15%). Of these, 70% were existing clients and 30% were new clients. It is interesting that enquiries are up 31% considering the fall in forestry activity and the high level of uncertainty among private forest owners about the future of the industry. PFT provides a high level of service and of these enquiries, 72% were serviced immediately, 18% the following day and 10% within 2-5 days. Staff conducted over 130 field visits as a result of initial enquiries. Table 5 lists the nature of client service inquiries.

Private Forests Tasmania Annual Report 2012-13 37

Table 5: Client Services Inquiries

Topic 2011/12 2012/13 Environmental Services 12% 14% Forest Practices 20% 16% Markets 5% 4% Native Forests 9% 7% Plantations 31% 22% Policy/Legislation 1% 2% Projects 7% 9% Other 15% 26%

For internal use only PFT estimates the value of its commercial forestry advisory services to individual forest owners by predicting the likely outcomes of initiatives implemented as a result of the advice we provide. Analysis is performed on costs incurred and likely returns including estimated income for harvesting, environmental services, carbon and livestock productivity as a result of shelter, over appropriate periods of time. While the analysis is indicative only it helps prioritise work programs in order to focus activities on areas of greatest impact.

Case Studies (demonstration farms)

PFT has, over many years, developed strong relationships with many private forest owners and a considerable number of these people are well-recognised as leaders and peer group farmers or business people. This relationship, while not formalised but based on trust and goodwill, enables the farm forestry activities on their properties to be promoted in various ways and for data to be collected and promoted as case studies of good practice. Often these forest owners have willingly promoted their successes and learnings directly to others through field days. There is considerable evidence that this type of peer-group experience- sharing, results in more landowners taking the step of introducing more trees into their farming landscape. Further, PFT has, on these properties, established both long term monitoring plots, to assess plantation growth, and trials to assess management options. This provides information and demonstrations to advise private forest owners and other forest managers on appropriate plantation practices, management regimes and financial options.

Private Forests Tasmania Annual Report 2012-13 38

Field days and farm forestry dinners

The direct delivery of information to clients and other interested stakeholders is undertaken through field days, and 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:

. The annual Australian Forest Growers/PFT farm forestry dinner was held in Launceston on 8th August 2012 and the 33rd North West Farm Forestry Annual Seminar/Dinner was held in Burnie on 9th August 2012. The latter is a joint PFT and NW Farm Forestry Group event. Guests were less than last year and totalled 72 and 42 persons respectively. Feedback revealed guests learnt much about new development opportunities and most sought updates at future dinner events. The theme was, ‘Innovation – light at the end of the tunnel’. Presentations included:

. Can forestry once again be a base load economic generator for Tasmania? John Lord, company director and private forest owner. . Bioenergy Developments: An Opportunistic Glimpse - overview of bioenergy policy, management, production and use from his recent visit to Germany, Austria and California. Mark Leech, Deputy Chairman, PFT Board. . Cross Laminated Timber (CLT) and Plantation Forests, Cross Laminated Timber and its use outside Australia? Why is CLT the ‘hot’ new material? How can CLT be used in Australian homes? What does CLT mean for regional communities, Dr Mark Dewsbury, School of Architecture, University of Tasmania.

. PFT, together with the support of CSIRO, Greening Australia and NRM South conducted a field day at ‘Willow Bend’ near Cygnet to showcase a trial to grow commercial tree species in streamside reserves to improve water quality, biodiversity and provide shelter for livestock. Plantation management options for E. nitens, E. globulus and A. melanoxylon were demonstrated and CSIRO presented preliminary findings on water quality.

. PFT’s 2013 AGFEST exhibit was conducted in collaboration with SFM Forest Products, TAS Land and Forests and AKS Forest Solutions. The theme was ‘Market Opportunities’. This event successfully built on similar arrangements in 2012 and provided visitors with independent advice from PFT as well as access to the major private wood buyers and forest managers. PFT provided information about native forest and plantation management, and the suite of PFT products, services and equipment available to landholders. The industry representatives were interviewed by the ABC.

Private Forests Tasmania Annual Report 2012-13 39

. PFT exhibited at a Winter Warmer Weekend. This was a community organised event in May to provide firewood to persons affected by the Dunalley bushfires. PFT promoted sustainable forest management for fire affected forests.

. PFT hosted a visit by a representative of Department of Conservation and Environment, Western Australia to view eucalypt species trials.

. PFT, in conjunction with CSIRO, hosted a visit by local, national and international delegates to an Australasian soils conference to the farm forestry demonstration at ‘Willow Bend’ Cygnet.

Other Services

Other services provided during the year included:

Forest Practices Plans

The Forest Practices System in Tasmania is regarded as one of the most outstanding forest operations regulatory systems in the world. However, it is complex and often challenging for private forest growers to step through the system efficiently. During the year PFT assisted private forest growers in this regard by:

 preparing both certified and non-certified Forest Practices Plans, the latter for small-scale farm forestry; and  assisting the Forest Practices Authority in a number of investigations into alleged breaches of Forest Practices Plans.

Equipment Hire

PFT maintains a selection of cultivation and weed control equipment not readily available in the hire market place. The mound plows generated $970 income compared to $5,254 the previous year. The Quikspray unit generated $1,194 income compared to $1,527 the previous year. PFT disposed of its Quikspray unit through a competitive tender process, after being satisfied that such services are provided by both private and ENGO service providers.

Direct Seeding

In the earlier part of the year PFT continued to provide a direct seeding service to assist in the establishment of biodiversity and environmental plantings. PFT, through its contracted

Private Forests Tasmania Annual Report 2012-13 40 delivery of the NRM North Biodiversity in Irrigated Landscapes project, planned direct seeding operations across 5 properties in spring 2013. In the latter part of the year PFT disposed of its direct seeding equipment through a competitive tender process, after being satisfied that such services are provided by both private and ENGO service providers. One of these providers expanded its service by acquiring the PFT equipment and a new provider entered the market. Works undertaken in the previous year were monitored and have been generally successful. Often the true measure of success is not evident for some years after the seeding operation. High populations of native browsing animals initially browse germinating seedlings but often germination occurs over several years.

Pruned Stand Certification

The Pruned Stand Certification (PSC) scheme is promoted by PFT to help add value to private plantations managed for high value clearwood. This certification process is administered by the Australian Forest Growers (AFG) nationally to provide smaller growers with a certified audit process that verifies pruned log quality and provides assurance to future log buyers in that regard. As a consequence tree growers are more likely to receive a higher stumpage price for their logs at the time of sale. PFT, under consultancy to AFG, conducts national PSC training courses, and oversees and approves all PSC assessments for certification. This year no assessments were conducted nationally and only one PSC assessment was conducted in Tasmania. No audits were conducted nationally and three audits were conducted locally. PSC has continued to decline because large industrial companies have not pursed PSC. The relatively high cost of PSC for smaller forest owners in times of market uncertainty is also a deterrent.

NRM advice and information

PFT continued to provide a range of information to related property management based projects led by other groups including TAMAR NRM, NRM North, and the TFGA, and sought opportunities for private landowners to be involved.

Education

Schools continued to benefit from the expertise of PFT, with visits to primary and secondary schools, both public and private. Three northern schools participate in an ongoing and annual program where themes have been mainly aligned to the schools’ environment curriculum, with a focus on seed collection, storage and germination, species advice, design of plantings for shade and shelter on the school properties, and appreciation of native

Private Forests Tasmania Annual Report 2012-13 41 forests. This service was discontinued late in 2012/13 as other organisations, particularly ENGO’s, as well as other resources are available to meet this need.

Trees in Land Management

In April 2013 PFT scaled back its involvement in this area, traditionally know as ‘Trees in Land Management’. This program focused on non-commercial tree growing and management advice largely for farmers and individual private land holders of smaller properties. PFT is satisfied that such advisory services are offered by the private sector, NRM bodies and ENGO’s.

Sponsorship

PFT provided $3,000 to assist fund a University of Tasmania student with an honours project to compare the biodiversity in four forest types - one unmanaged, two managed native forest and the other plantation. This extends the work done at the Blackwood Creek property by PFT and others and was reported on at the National Biodiversity Conference 2008.

Farm Forestry Toolbox

Following the completion of the Farm Forestry Toolbox update, PFT continues to assist the developer through scrutiny of new versions and product testing with data from private plantations on different sites throughout the State. PFT has now assembled detailed and substantial data on commercial tree growth in the north of the State to further improve the modelling capability on sites previously considered marginal for plantations.

Consultancies

Consultancies generated $3,336 and included forest practices plans, plantation management reports and valuations.

Communications

PFT employs a variety of mechanisms in order to communicate with our target audiences. Direct communications with landowners were via the phone, email and in person and comprised over 854 contacts during the year. This does not include the numerous contacts at field days and other events. In addition, topical articles were provided to quarterly issues of the national Australian Forest Grower journal. In order to more broadly engage with the

Private Forests Tasmania Annual Report 2012-13 42 wider community PFT utilises opportunities as appropriate to advertise our services or engage in topical issues in relation to the private forestry sector. To that end advertisements, editorials and advertorials were placed in The Examiner newspaper, Tasmanian Country, The Advocate newspaper and the TFGA’s electronic newsletter Fastnews. Radio and television interviews were conducted by staff on a range of topical matters relevant to landowners. The AGFEST event continues to provide an excellent communications opportunity for PFT.

Private Forests Tasmania Annual Report 2012-13 43

Private Forests Tasmania Annual Report 2012-13 44

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.

In addition, there are a number of Acts, and associated regulations, that regulate other aspects of forestry as a land use including:

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

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

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

. Historic 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; and

. Weed Management Act 1999 Management of weed control.

There is a second set of Acts, regulations and codes of practices that regulate directly various activities, the important instruments being the:

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

Work Health and Safety Act 2012

Private Forests Tasmania Annual Report 2012-13 45

In addition, there are 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 significant are:

. 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; and

. Permanent Native Forest Estate Policy In February 2007 a policy was issued to meet the requirements 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. The original policy has been changed to provide an orderly phase out of broad-scale conversion on private land by 2015, while maintaining the policy commitment to maintain the state-wide level of native forest above 95 per cent of the 1996 area. The policy sets threshold levels for the maintenance of a permanent native forest estate by forest communities 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.

In September 2011 the Policy was further revised to clarify terminology and implementation mechanisms.

Private Timber Reserves

The concept of private timber reserves (PTRs) was created by parliament in 1985 to enable landowners to have their land dedicated for long-term forest management. The legislation

Private Forests Tasmania Annual Report 2012-13 46 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 2012-2013 and to-date progressive totals are summarised in Table 6.

Table 6: PTR Applications 2012-2013

Period 1 July 2012 to 30 June 2013 Progressive total to 30 June 2013* Applications advertised 8 2,199 Applications approved by the Board of the Forest Practices 11 2,140 Authority Private timber reserves 13 234 revoked Total area gazetted (hectares) 1,097 472,067

*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 a 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 numbers of applications approved by the Board of the Forest Practices Authority and the number revoked.

The total area gazetted during 2012-13 was 1,097 hectares. During the same period 4,351 hectares of previously gazetted PTRs were revoked. As a consequence, the overall area of current private timber reserves decreased by 3,254 hectares in 2012-13. The average area gazetted annually since 1994-95 to the present, is 17,439 hectares.

The history of annual PTR gazettals is outlined in Table 7.

Private Forest Service Levy

Private Forests Tasmania (PFT) is empowered to raise funds from private forest owners through the private forest service 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 nett area of a forest operation permitted pursuant to the certification of a forest practices plan by the Forest Practices Authority. Forest owners have

Private Forests Tasmania Annual Report 2012-13 47 six months from the date of certification of their forest practices plan in which 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 owners’ organisations. On 23rd June 2011, the Minister increased the rate for the 2011-12 year to $15 per hectare, representing the first increase in the rate since the levy was introduced in 2001. On the recommendation of the Board of PFT, the Minister maintained the rate at $15 per hectare for 2012-13 and that rate will continue to apply in 2013-14.

The levy generated $56,561 during 2012-13. This continues to highlight the extreme decline in levy revenue and reflects the overall decline in activity within the forestry industry in Tasmania. Over the course of the past five years the levy has generated an average yearly income of $186,970, as Table 8 displays.

Table 7: PTR Gazettals 1994-95 to 2012-13

Period Annual area gazetted (hectares) Progressive total (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

Private Forests Tasmania Annual Report 2012-13 48

Table 8: Service Levy Income

Financial year Income generated from the private forest service levy 2008-09 $465,931 2009-10 $252,392 2010-11 $117,842 2011-12 $42,123 2012-13 $56,561

5-year average $186,970

Note: since the private forest service levy was introduced in 2001-02, the average annual return over this 12 year period is $267,393.

Private Forests Tasmania Annual Report 2012-13 49

Private Forests Tasmania Annual Report 2012-13 50

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 Schedules 2 and 3 to the Act. By resolution of the Board, meetings were held monthly.

Chairperson

Vacant in 2011-12. The Board appointed Mark Leech as Deputy Chairperson in July 2012.

Members

Member with practical knowledge of, and experience in, industry, commerce or economic development: Position vacant.

Member with expertise in forest or related sciences: Mr Mark Leech, from 31 December 2012 to 30 June 2014.

Member representing industrial private forest growers: Mr Arnold Willems, from 8 February 2011 to 31 January 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.

Private Forests Tasmania Annual Report 2012-13 51

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 industry including forest planning, road construction, harvesting, , 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 Mark Leech B.Sc. (Forestry), M.I.F.A. Member with expertise in forest or related sciences. Director of the Forest Practices Authority to 31st January 2009; Winner 2001 Tasmanian World Forestry Day Award. Mark is a former regional private forester with PFT and is currently a consultant specialising in private forestry, special timbers and the apiary industry. He has a particular interest in the promotion of excellence in both the Tasmanian forestry industry, and Tasmania in general, and is passionately involved in humanitarian work in Africa and Haiti.

Mr Tom Fisk B.Sc. (Forestry) (Hons 1) Chief Executive Officer of PFT, 15 June 2009 – 14 June 2014. Tom completed his studies at ANU Forestry School in 1976 and has subsequently worked in the forestry industry for over 34 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 2012-13 52

Figure 2: Organisational Chart

Private Forests Tasmania Organisational Chart June 2013

Minister for Energy and Resources BusinessHon Bryan Development Green MP

Ian Ravenwood

Private Forests TasmaniaBusiness Development Board Initiatives Department of Infrastructure Energy and Resources Arnold Willems, Forest Brett Management Hooper, Certification Norm McIlfatrick Mark Leech, Research Tom Fisk & Development Annual Harvest Returns Management team Chief Executive Officer Tom Fisk (strategic imperatives; business development; business management; stakeholder engagement; representative on committees and councils)

Finance and Administration Services Business Development Administration Jeff Battersby Arthur Lyons Ian Ravenwood Wendy Bowman Agency Policies Forestry ExtensionDiana Services Hall Business Development Initiatives Board Secretariat Resource/GeographicTracey King 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 Services Arthur Lyons

Forestry Extension Services Forestry Advisors Resource/GeographicAdministration Information Services

Farm Forestry Organisations David Bower NRM groupsWendy Bowman Henry Chan ManagementDiana team Hall Rob Smith Tracey King

Chief Executive Officer Private Forests TasmaniaTom Fisk Annual Report 2012-13 53 (strategic imperatives; business development; business management; stakeholder engagement; representative on committees and councils)

Private Forests Tasmania Board 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 2013

Category No Administration 5 Services 3.5 Business Development 1.5 Total 10

Staff by gender 30 June 2013

Male Female Permanent 7 3 Total 7 3

The reduction in staff numbers during 2012-13 is because two staff members working in Geographic Information Systems and Trees in Land Management accepted voluntary redundancies.

Occupational health and safety and managing diversity

The Authority 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 2012-13.

Private Forests Tasmania Annual Report 2012-13 54

Occupational Health and Safety training and activity

. First Aid . Occupational Health and Safety Working Group

Staff training and professional development

During 2012-13 PFT staff were involved in professional development courses and attendance at conferences, including:

. Work Health & Safety Training . First Aid Course . Australian Forest Growers Conference . Biodiversity and botany field days . Biomass/bio-energy Conferences and Forums . Regional Development Workshop . Records Management (TRIM) Training

Superannuation declaration

I, Tom Fisk, hereby certify that Private Forests Tasmania has met its obligations under the Superannuation Guarantee (Administration) Act 1992 (Cw’lth) 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 2013

Private Forests Tasmania Annual Report 2012-13 55

Representing PFT and private forest owners

During 2012-13 PFT staff represented PFT and the interests of private forest owners by consulting with, being representatives on, or members of:

State

. Residues Solutions Advisory Group . Regional Resources Development Group, Huon . Forest Industries Association of Tasmania . Forest Practices Advisory Council (representative) . Natural Resource Management Committees (representatives) . Tourism/Forestry Protocol Committee (representative) . Vegetation Management Policy Advisory Group (representative) . Department of Primary Industries, Parks, Water and Environment . Tasman Landcare . Greening Australia, Tasmania . Tasmanian Farmers and Graziers Association . Tasmanian Government Spatial Committee (representative) . Tasmanian Agricultural Productivity Group

National

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

Right to Information Statistics

During the 2012-13 year PFT received no requests under the Right to Information Act 2009.

Private Forests Tasmania Annual Report 2012-13 56

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.

The Authority is committed to the aims and objectives of the Act. The Authority also recognises the value of transparency and accountability in our administrative and management practices. The Authority 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.

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

During 2012-13 there were no Public Interest Disclosure reports.

Legislation administered by Private Forests Tasmania

The Department of Infrastructure, Energy and Resources is responsible for administering the Private Forests Act 1994.

PFT undertakes the functions of this Act and 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 major driver in the Tasmanian economy, and operates in a collaborative and communicative manner, utilises best-practices approaches and

Private Forests Tasmania Annual Report 2012-13 57

be 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 of native forests and plantations on private land in Tasmania by – . providing advice and information to governments and forest owners; . working collaboratively to ensure the adoption of best practices; and . supporting a sound regulatory environment.

Strategic actions

The six strategic actions are: . Provision of advice to all levels of Government on matters affecting the private forestry sector; . Provision of advice to the private forest sector to ensure sound stewardship of the private forest estate; . Maintain role as independent authority providing accurate and timely advice on private forest matters to stakeholder, including growers, processors and the community; . Maintain a leadership role in forest data collection and analysis of the private forest estate; . Provision of extension services to enable private forest owners to continuously improve the management of forests; and . Act under delegation from the Forest Practices Authority to administer the private timber reserve application process.

Private Forests Tasmania Annual Report 2012-13 58

PRIVATE FORESTS TASMANIA

Financial Statements

For the year ended 30 June 2013

Private Forests Tasmania Annual Report 2012-13 59

Private Forests Tasmania Annual Report 2012-13 60

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 2013 and the state of affairs at 30 June 2013 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.

Signed in accordance with a resolution of the Directors.

M Leech T Fisk

Deputy Chairperson Chief Executive Officer

15/ 08/ 2013 15/ 08 / 2013

Private Forests Tasmania Annual Report 2012-13 61

Statement of Comprehensive Income FOR THE YEAR ENDED 30 JUNE 2013

NOTES 2013 2012 $’000 $’000 Revenue and other income from transactions Appropriation revenue - recurrent 1,414 1,408 Other Non- Government Grants 14 20 0 Commonwealth Grants 14 0 0 Private Forest Service Levy 56 42 Interest on investments 143 67 Interest on pine loans 9 10 Private Timber Reserve Fees 4 4 Other 57 49

Total Revenue and other income from transactions 1,703 1,580

Expenses from transactions Employee entitlements 1,375 1,311 Motor vehicle and travel 55 62 Depreciation and amortisation 3 16 72 Directors allowances & expenses 8 83 88 Interest on pine loans 9 10 Consultancies & contractors 49 80 Office rental 168 162 Provision for impairment 2.2 (11) (22) Communication & information technology 102 120 Other 114 110 Total expenses from transactions 1,960 1,993

Total Comprehensive Result for the year (257) (413)

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

Private Forests Tasmania Annual Report 2012-13 62

Statement of Financial Position AS AT 30 JUNE 2013

NOTES 2013 2012 $’000 $’000

CURRENT ASSETS Cash & deposits 2.1 1,250 1,500 Receivables 2.2 110 80 ______TOTAL CURRENT ASSETS 1,360 1,580

NON-CURRENT ASSETS Property, plant & equipment 3 6 22 Receivables 2.2 108 131

TOTAL NON-CURRENT ASSETS 114 153

TOTAL ASSETS 1,474 1,733

CURRENT LIABILITIES Creditors and accrued expenses 4 55 50 Provisions 5 202 206 Borrowings 6 25 15 _ TOTAL CURRENT LIABILITIES 282 271

NON-CURRENT LIABILITIES Borrowings 6 675 701 Provisions 5 69 56 ______TOTAL NON-CURRENT LIABILITIES 744 757

TOTAL LIABILITIES 1,026 1,028

NET ASSETS 448 705

EQUITY Accumulated Surplus (Deficit) 448 705 ______TOTAL EQUITY 448 705

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

Private Forests Tasmania Annual Report 2012-13 63

Statement of Changes In Equity FOR THE YEAR ENDED 30 JUNE 2013

2013 2012 $’000 $’000 Accumulated Surplus

Balance at the beginning of the financial year 705 1,118

Increase (decrease) in net assets resulting from operations (257) (413)

Comprehensive result at the end of the financial year 448 705

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

Private Forests Tasmania Annual Report 2012-13 64

Statement of Cash Flows FOR THE YEAR ENDED 30 JUNE 2013

NOTES 2013 2012 $’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers 134 259 Cash receipts from government 1,414 1,408 Interest received 145 69 GST received from Taxation Authority 187 134 Total Cash Received 1,880 1,870

Payments to suppliers and employees (1,938) (1,949) GST Paid to Taxation Authority (190) (143) Total Cash Used (2,128) (2,092) NET CASH PROVIDED BY OPERATING ACTIVITIES 10 (248) (222)

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 17 92 Tasmanian State Government loan repayments (19) (89) NET CASH FLOWS USED IN FINANCING ACTIVITIES (2) 3

NET INCREASE (DECREASE) IN CASH HELD (250) (219)

Cash at the beginning of the financial year 1,500 1,719 ______CASH AT THE END OF THE FINANCIAL YEAR 1,250 1,500

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

Private Forests Tasmania Annual Report 2012-13 65

Notes to and Forming Part of the Financial Statements FOR THE YEAR ENDED 30 JUNE 2013

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.

Private Forests Tasmania Annual Report 2012-13 66

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.

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 reporting period.

(ii) Pending Accounting Standards

Certain accounting standards and interpretations have been published that are not mandatory for 30 June 2013 reporting period. The Authority’s assessment of the impact of these new standards and interpretations is set out below:

AASB 9 Financial Instruments, associated standards, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2012-6 Amendments to Australian Accounting Standards - Mandatory Effective Date of AASB 9 and transitional disclosures (effective from 1 January 2015).

AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and liabilities. The standard is not applicable until 1 January 2015 but is available for early adoption. Initial review has indicated that there is not expected to be a significant impact on the Authority’s financial statements.

AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013).

Private Forests Tasmania Annual Report 2012-13 67

AASB Fair Value Measurement sets out a new definition of ‘fair value’ as well as new principles to be applied when determining the fair value of assets and liabilities, The new requirements will apply to all of the Authority’s assets and liabilities (excluding leases) that are measured and/or disclosed at fair value or another measurement based on fair value.

Initial review has indicated that there is not expected to be a significant impact on the Authority’s financial statements.

Revised AASB 19 Employee Benefits, AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) and AASB 2011-11 Amendments to AASB 119 (September 2011) arsing from Reduced Disclosure Requirements (effective 1 January 2013).

This revised standard includes significant revisions to the recognition, remeasurement, presentation and disclosure of defined benefit liabilities/assets. The standard also clarifies criteria for accounting for ‘short-term employee benefits’ including treatment of terminations.

These changes are being reviewed and are not expected to have a material impact in relation to the Authority’s financial statements.

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.

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.

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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 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 cash received 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

Private Forests Tasmania Annual Report 2012-13 69

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 affect 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 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 2013, 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.

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A liability for on-costs (payroll tax and workers compensation premiums) is recognised and disclosed.

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 original maturities of three 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.

(e) Taxation

The Authority is exempt from all forms of taxation except Fringe Benefits Tax, Payroll 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.

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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

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

Private Forests Tasmania Annual Report 2012-13 72

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 2013 2012 $’000 $’000 2.1 CASH AND DEPOSITS

Cash on hand 143 500 Term deposits 1,107 1,000

Total cash and Deposits 1,250 1,500

2.2 RECEIVABLES

Current Trade Debtors 82 97 Less: provision for impairment (17) (56) 65 41 Accrued Revenue 9 5 GST Debtor 3 9 Prepayments 5 5 Loans for private forestry 28 20 Total current receivables 110 80

Non-current Loans for private forestry 108 131

Total non-current receivables 108 131

Movements in provision for Impairment of Receivables 2013 2012 $’000 $’000 Balance at beginning of year (56) (105) Movement in provision 11 22 Amounts provided for and written off as uncollectable 28 27 Balance at end of year ( 17) ( 56)

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3. PLANT AND EQUIPMENT

Property Plant and Equipment Movement

Item Plant/ Office Total Equipment & Equipment Other $'000 $'000 $'000 2013 2012 2013 2012 2013 2012 Gross Value at 1 July 646 646 253 253 899 899

Additions-Purchase of Assets 0 0 0 0 0 0 Disposals (21) 0 (156) 0 (177) 0

Gross Value at 30 June 625 646 97 253 722 899 Accumulated Depreciation/ Amortisation at 1 July 627 558 250 247 877 805 Depreciation/amortisation charge for the year 15 69 1 3 16 72 Accum Dep - Disposals (21) 0 (156) 0 (177) 0

Accumulated Depreciation/ Amortisation at 30 June 621 627 95 250 716 877

Net Book Value as at 30 June 4 19 2 3 6 22

4. CREDITORS AND ACCRUED EXPENSES 2013 2012 $’000 $’000

Creditors 22 9 Accrued expenses 33 41

Total Creditors & Accrued Expenses 55 50

5. PROVISIONS

Current Employee entitlements: Annual leave 91 82 Long service leave 99 112 On-costs 12 12 202 206

Private Forests Tasmania Annual Report 2012-13 74

2013 2012

$’000 $’000

Non-current Employee entitlements: Long service leave 65 53 On costs 4 _ 3 69 56

Total Provisions 271 262

Employee Numbers 10 12

6. BORROWINGS

Current Tasmanian Government 25 15

Non-current Tasmanian Government _ 675 701 Total Borrowings 700 716

7. AUDITORS REMUNERATION

Amounts received or due and receivable by the auditors 10 9

8. DIRECTORS’ REMUNERATION

Amounts received or due and receivable by the Directors of the 83 88 Authority. Total remuneration paid to non-executive Directors of Private Forests Tasmania fall within the following bands:

$1,000 $9,999 0 1 $20,000 $29,999 2 3 $30,000 $39,999 1 1

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

$140,000 $149,999 1 1

Private Forests Tasmania Annual Report 2012-13 75

9. RELATED PARTIES

Directors The Directors of the Authority during the year were Mr Brett Hooper (5/3/2012 to 28/2/2017), Mr Mark Leech (31/12/2012 to 30/6/2014), Mr Arnold Willems (8/2/11 to 31/1/2016), and Mr Tom Fisk, Chief Executive Officer (15/6/2009 to 14/6/2014).

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 $11,416 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 (deficit) to Net Cash from Operating Activities 2013 2012 $’000 $’000 Net operating surplus (deficit) (257) (413) Depreciation & amortisation 16 72 Provision for impairment in receivables (11) (22) Change in assets and liabilities: Increase (decrease) in provisions 9 (13) Increase (decrease) in creditors & accrued expenses 5 (2) (Increase) decrease in receivable (3) 144 Increase (decrease) in loan liabilities (7) 12

Net cash provided by operating activities (248) 222)

Private Forests Tasmania Annual Report 2012-13 76

11. FINANCIAL INSTRUMENTS

Accounting policy, terms and conditions

Financial instruments Accounting policy Terms and conditions Financial assets

Cash and Cash on hand, at bank and in On call deposits interest rate at deposits cash management accounts balance date was 3.85% (3.85% in are valued at face value. 2011/2012). Term deposit interest rate at balance date was 3.79%. 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 and recognised on other debtors arrears do not attract interest. when there is objective 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 unsecured, not amounts to be paid in the subject to interest charges and are future for goods and services normally settled within 30 days of provided to the Authority as at invoice receipt. balance date whether or not invoices 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 borrowings is period it becomes due and 7%. recognised as part of payables.

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:

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2013 Floating Fixed interest maturing in: Non- interest One year Over 1 to 5 More than 5 interest rate or less years years bearing Total Financial assets $’000 $’000 $’000 $’000 $’000 $’000 Cash and deposits 407 700 0 0 143 1,250 Other financial assets 0 28 75 33 0 136 Receivables 0 0 0 0 65 65 Accrued revenue 0 0 0 0 12 12 Total financial assets 407 728 75 33 220 1,463

Financial liabilities Creditors 0 0 0 0 22 22 Other liabilities 0 0 0 0 33 33 Borrowings 0 25 105 570 0 700 Total financial liabilities 0 25 105 570 55 755

Net financial assets (liabilities) 407 703 (30) (537) 165 708

2012 Floating Fixed interest maturing in: Non- interest One year Over 1 to 5 More than interest rate or less years 5 years bearing Total Financial assets $’000 $’000 $’000 $’000 $’000 $’000 Cash and deposits 500 1,000 0 0 0 1,500 Other financial assets 0 20 93 38 0 151 Receivables 0 0 0 0 41 41 Accrued revenue 0 0 0 0 14 14 Total financial assets 500 1,020 93 38 55 1,706 Financial liabilities Creditors 0 0 0 0 9 9 Other liabilities 0 0 0 0 41 41 Borrowings 0 15 133 568 0 716 Total financial liabilities 0 15 133 568 50 766 Net financial assets (liabilities) 500 1005 (40) (530) 5 940

Private Forests Tasmania Annual Report 2012-13 78

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 2013 30 June 2012 Carrying Net Fair Carrying Net Fair Fair Values amount Value amount Value Financial assets $’000 $’000 $’000 $’000 Cash and deposits 1,250 1,250 1,500 1,500 Receivables 65 65 41 41 Other financial assets 136 136 151 151 Accrued revenue 12 12 14 14 1,463 1,463 1,706 1,706

Financial liabilities Creditors 22 22 9 9 Borrowings 700 700 716 716 Other liabilities 33 33 41 41 755 755 766 766 Net financial assets 708 708 940 940

Carrying amounts classified as: 30 June 2013 30 June 2012 Financial assets $’000 $’000 Cash and deposits 1,250 1,500 Loans and receivables 213 206 1,463 1,706 Financial liabilities Financial liabilities measured at amortised cost 755 766 755 766 Net financial assets / (liabilities) 708 940

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.

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

Private Forests Tasmania Annual Report 2012-13 79 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.

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

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

Gross Impairment Gross Impairment 2013 2013 2012 2012 $,000 $’000 $’000 $’000 Not past due 59 0 35 0 Past due 0-30 days 1 0 8 0 Past due 31-90 days 3 0 9 0 More than 90 days 47 (17) 65 (56) 110 (17) 117 (56)

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.

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The table below lists the contractual maturities for Financial Liabilities. These amounts represent undiscounted gross payments including both principal and interest amounts.

Less More Total than 1 1-2 2-5 than 5 contractual Carrying year years years years cash flows amount $’000 $’000 $’000 $’000 $’000 $’000 30 June 2013 Payables 22 0 0 0 22 22 Other liabilities 33 0 0 0 33 33 Borrowings 34 25 71 570 700 700

Total 89 25 71 570 755 755

30 June 2012 Payables 9 0 0 0 9 9 Other liabilities 41 0 0 0 41 41 Borrowings 25 25 98 568 716 716

Total 75 25 98 568 766 766

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 3.35%.

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. 2013 2013 2012 2012 Profit & Loss Equity Profit & Loss Equity $’000 $’000 $’000 $’000 + 1% (100 basis points) 12 12 15 15 - 1% (100 basis points) (12) (12) (15) (15)

Private Forests Tasmania Annual Report 2012-13 82

12. COMMITMENTS 2013 2012 $,000 $,000 By type Lease commitments Operating lease commitments 377 411 Total lease commitments 377 411

By maturity Operating lease commitments One year or less 157 161 From one to five years 220 250 More than five years 0 0 Total operating lease commitments 377 411

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. GOVERNMENT GRANTS

FOREST CERTIFICATION GRANT – STATE GOVERNMENT

During 2010-11 the Authority received $500,000 to assist it to lead private forest growers down an appropriate certification pathway. The forest products market place is giving forest growers and forest products processors a clear message that forest and chain of custody certification is required in order for products to be regarded as being produced in a sustainable way, and hence be accepted in the market place. A project manager has been appointed to manage this important project and this project continues to be delivered over 2012-13 and 2013-14.

Private Forests Tasmania Annual Report 2012-13 83

Private Forests Tasmania Annual Report 2012-13 84

Private Forests Tasmania Annual Report 2012-13 85