ANNUAL REPORT 2015-2016 Photo: 3.4 million seedlings at our /fpcwa Manjimup nursery ready for planting ISSN 1838-5362 (print) ISSN 1838-5370 (online) ISBN 978-0-9953869-0-7 (print) ISBN 978-0-9953869-1-4 (online) Statement of compliance September 2016 For year ended 30 June 2016 Copyright © 2016, Forest Products Commission. All rights reserved. Hon Mia Davies MLA | Minister for Forestry All materials, including Internet pages, documents and online graphics, audio and video are protected by copyright law. Copyright of these materials resides with the State of Western Australia. Apart from any fair dealing for the purposes of private study, research, criticism or review, as permitted under provisions of the Copyright Act 1968, no part may be In accordance with Section 63 of the Financial Management Act 2006, we reproduced or re-used for any purposes whatsoever without prior written permission hereby submit for your information and presentation to Parliament, the Annual of the General Manager, Forest Products Commission. Report of the Forest Products Commission for the financial year ended Permission to use these materials can be obtained by contacting: 30 June 2016. General Manager The Annual Report has been prepared in accordance with the provisions of Forest Products Commission the Financial Management Act 2006 and any other relevant written law. Locked Bag 888 PERTH BUSINESS CENTRE WA 6849 AUSTRALIA Phone: +61 8 9363 4600 Fax: +61 8 9363 4601 Email: [email protected] www.fpc.wa.gov.au Mr Ross Holt Mr Stuart West Copies of this document are available in alternative formats on request. Chairman General Manager 9 September 2016 9 September 2016 All our annual reports can be found at fpc.wa.gov.au/annualreport Contents Commission overview 1 Disclosures and legal compliance Chairman’s report 2 Financial statements 52 General Manager’s year in review 3 Operating and financial review: 2015–16 highlights 4 Certification of the financial statements 56 Corporate snapshot 5 Statement of comprehensive income 57 Organisational structure 8 Statement of financial position 58 Legislative requirements 14 Statement of changes in equity 59 Performance management framework 15 Statement of cash flow 60 Notes to the financial statements 61 Performance report Key performance indicators 114 Our performance: operational report 18 Certification of the key performance indicators 115 Key effectiveness indicators 117 Sustainable forest management performance 19 Key efficiency indicators 123 Softwood plantations 22 Sandalwood 25 Disclosures 126 South West native forests 30 Ministerial directives 127 Community and stakeholder engagement 33 Governance disclosures 127 Efficient, effective and safe delivery of business outcomes 40 Other legal requirements 129 Our workforce 44 Government policy requirements 133 Performance summary 46 Additional Financial performance 47 Summary of key performance indicators 48 Statistics 135 Key effectiveness indicators 48 Glossary 143 Key efficiency indicators 49 Contact details 144 Forestry features Significant issues impacting the Commission Waroona wildfire 23 Looking forward: current issues and emerging trends 50 Sandalwood industry 26 Auswest timbers 31 Silviculture education 36 Furnitex 38 Forest Products Commission | Annual Report 2015-2016 iii Commission overview Forest Products Commission | Annual Report 2015-2016 iv Commission overview COMMISSION OVERVIEW Find out more about us Chairman’s report 2 General Manager’s year in review 3 Operating and financial review: 4 2015–16 highlights Corporate snapshot 5 Sustainable forest management 7 Organisational structure 8 Board of commissioners 9 Our executive team 12 Legislative requirements 14 Performance management framework 15 Outcome based management framework 16 Our jarrah forest management practices are internationally recognised, find out more fpc.wa.gov.au/nativeforestsForest Products Commission | Annual Report 2015-2016 1 Commission overview CHAIRMAN’S GENERAL MANAGER’S REPORT YEAR IN REVIEW This is my first report as Chairman of the Forest Products Commission (the Commission). The Board also welcomed the appointment of Ms Amelia Yam and the I am pleased to be a part of the forest products industry, which is an important reappointment of Mr Robert Pearce. contributor to Western Australia’s regional communities and economy. I wish to thank my fellow Board members for their support and consistent Since becoming Chairman I have visited a range of regional areas and met stakeholders to contribution to the Commission's performance throughout the year. discuss key industry strategies. Most importantly these meetings provided an opportunity The year also saw the appointment of Mr Stuart West as General Manager of the to discuss long-term strategies and effective support for industry development. A key Commission. The Board and I look forward to working with Stuart to strengthen focus will be to put in place policy frameworks for the industry segments (sandalwood, the forest and timber products industry. plantations and native forest) with the active support and encouragement of the Minister and government. We will also focus on fostering innovative solutions and efficiencies to In addition, I would like to recognise the valuable contribution to the Commission build capacity throughout the forest products industry. Collaboration with industry is vital by Vince Erasmus during his 16 month tenure as General Manager and by Gavin and it is excellent to see the high level of industry engagement in this process. Butcher for his leadership and management of the Commission for the six months prior to Stuart’s appointment. For the Western Australian forest products industry to be sustainable and play its role in a diversified state economy there also needs to be an alignment of State Government I would also like to acknowledge the professionalism and support the Board and Commonwealth objectives. We will continue to work closely with the Forest Industries received from the Executive team, and thank our staff for their contribution Federation WA and other forestry representative groups to achieve this. throughout the year. The Forest Industry Working Group was formed by the Minister for Forestry to provide I also recognise the Minister for Forestry, the Hon Mia Davies MLA, for her advice to government on the forest and forestry products industry. As part of the group, leadership and guidance. I have enjoyed the opportunity to work closely with industry to provide advice on our long term strategic direction, as well as identify opportunities to encourage innovation, research and development. Several changes occurred to the Board during the year, with the terms of commissioners Mr Robert Fisher (Chairman) and Mr Stuart Morgan finishing on 15 November 2015. Mr Ross Holt | Chairman I would like to thank both Robert and Stuart for their valuable contribution. 9 September 2016 Forest Products Commission | Annual Report 2015-2016 2 Commission overview GENERAL MANAGER’S YEAR IN REVIEW The Forest Products Commission is continuing to make good progress to ensure The strategy will also assist with a smooth transition to a mix of wild and plantation that it and the forest products industry are well positioned to meet future based sandalwood industries into the future. challenges and opportunities. New investments and developments by the forest industry sector are very positive Since joining the Commission in June 2016 I have met a number of key stakeholders and important innovations for the future of the forest products industry. The to learn and discuss our role and activities. investment in technologies and processing enables the use of available regrowth and lower grade timber resources. This is important as this resource will form a major part Key themes from the year have been around strengthening collaboration with of the industry going forward. industry and community, recovering from the Waroona bushfire and developing a new structure for the Western Australian sandalwood industry. All of this occurred The reopening of the Greenbushes sawmill in February 2016 has provided a while we continued our day-to-day operations – planning, harvesting, regeneration significant boost to the native forest sector and local communities. of forest and focussing on efficiency and safety. We have a holistic corporate governance system incorporating our Risk Management During the devastating January Waroona fire, our staff worked alongside the Framework to identify and mitigate strategic and operational risks, and to drive Department of Parks and Wildlife to assist with the fire-fighting effort. The fire continuous improvement. resulted in the loss of 3,300 hectares of plantation resource. The strategic planning process has commenced to ensure we focus on the key areas Following the fire staff worked quickly to identify opportunities to salvage timber. of our business and look forward to a productive 2016–17. In addition to supplying timber to our current domestic customers, new markets I have been impressed by the passion and commitment of our employees and would were identified which has helped offset the salvage and clean-up costs ahead of like to thank the Executive and staff for their hard work over the last 12 months. new plantings. We consulted with sandalwood stakeholders ahead of key sales, processing and marketing contracts coming to an end. The new industry arrangements have been designed to ensure market stability, to create opportunities for new entrants, and to increase regional and Aboriginal