Forest Products Industry

Master Builders Australia says that the Federal Government’s response to the Murray Review is a step in the right direction towards improving payment practices within the building and construction industry. Source: Timberbiz Building and construction is home to over 260,000 independent contractors and self-employed tradies, supported by over 450,000 businesses, of which almost 99% are small and medium enterprises. High standards of commercial conduct are crucial to ensuring that parties within the industry get paid on time and in full. Master Builders Australia CEO Denita Wawn said: “The Government’s acknowledgment that it has a stewardship role to address issues arising from state and territory regulation is an important recognition of the need to reduce inconsistencies between jurisdictions and restore their focus back to their original intent.” Boosting funding for ASIC to identify and take more effective enforcement through better usages of the Director Identification Number scheme (DIN) is long overdue and welcomed. “The director identification number is an effort to reduce the incidence of phoenix activity and other types of capricious commercial conduct that undermines and hurts the majority of businesses who do the right thing,” Ms Wawn added. “Master Builders has long supported a DIN as a way to help government agencies and regulators enforce existing laws far more effectively while avoiding the need for higher levels of red tape and regulation. “Unfortunately, the introduction of the DIN has not worked as effectively as the industry would’ve liked to see. “The additional funding for ASIC to implement and prioritise high risk individuals is a good first step. We would like to see this effort extended, to connect with other depart-ments including the ATO to identify potential phoenixing activity earlier.” The Federal Government also announced a range of other measures upon which it has committed to further consultation. “Master Builders is reviewing the detail of these changes and will consult with government so there are no unintended consequences and additional cost/regulatory burdens. “It’s essential to focus on preventing issues before they arise rather than dealing with the consequences when it’s too late.” Ms Wawn concluded. Master Builders has been advocating for additional measures including: A stable economy and increased productivity: We need to get housing inflation under control, which requires a focus on the supply side of the economy and a meaningful push to boost industry productivity which has been falling like many areas in the economy. Addressing inefficient and unnecessary business costs: Reducing burdensome regulations and ensuring laws operate effectively and consistently is essential to relieving businesses of cost and compliance pressures. State and territory security of payment laws need to be streamlined. Master Builders has long supported greater uniformity and simplicity in security of payment regimes based on principles such as prompt payment rights, a rapid adjudication process, and a simple, informal, and flexible approach. Establishing a fairer approach to risk: We need a better approach to the level of risk involved in construction so that it is shared more fairly by everyone in the chain and not just loaded up onto the builder. Enhanced enforcement of existing laws: It is crucial to enforce existing laws more effectively, condemning those who break them and ensuring rogue operators face the full force of the law. Building business resilience and education: Businesses, particularly small businesses, should be supported to develop resilience and operate sustainably and financially. Strengthening businesses’ skills benefits both the industry and the wider community.  

Members of the parliamentary committee examining the supply of homes in regional Victoria travelled to Colac in south-west Victoria recently, for the first public hearing held as part of the inquiry. Source: Timberbiz Associated Kiln Driers CEO Shane Vicary said the biggest issue for Australia’s largest sawmiller when it comes to building houses is time. “As the volume of houses under construction goes up, the time it takes to build a house goes up,” he said. “We have gone from an average for nearly eight years there of six and a half to seven months to build a house to now well over 10 months. “It is a national crisis, so it requires a bipartisan approach. It is too important to be political.” Mr Vicary said dwelling construction in Australia is an economic driver and the regions have a massive opportunity. “We have got a lot of land, and we do not need any-where near the amount of infrastructure,” he said. Victorian Forest Products Association CEO Andrew White said the timber industry is uniquely positioned to support the supply of housing, including renewable materials for sustainable development. “New lightweight framing options are a key opportunity for housing, particularly given steel production for an average four-bedroom home releases about seven times more CO2 compared with pine framing,” he said. However, Mr White said there’s currently a slump in demand, resulting in a surplus of wood products. “That is really putting a strain on both our mills and also on our processors, and this is quite ironic given that there are long-term projections that by 2050 there will be actually a shortage of timber.” Mr White said there are a range of actions which could be taken immediately. “One is to change the government procurement policies to enable and support the adoption of modern methods of construction, adjusting inadequate payment terms, setting mandated embodied carbon targets, protecting our plantation estate with fire surveillance cameras, investing in sawmills and workforce, improving our transport networks, streamlining regulations and consideration of other new modular forms of construction.” VFPA’s message was also heard across regional radio abd tv stations, with coverage including Triple M Sunraysia 97.9, Hit Goulburn Valley, hit104.9 The Border (Albury-Wodonga), hit91.9 Bendigo, hit99.5 Sunraysia, and Channel 10 Ballarat. Off the back of VFPA’s appearance at the Colac hearings, it will be making a formal submission the inquiry process, which closes on 31 March 2025.

The Albanese Government will extend a crackdown on Unfair Trading Practices to small businesses after last year’s commitment to protect consumers. Source: Timberbiz The Government heard during consultation on protecting consumers from Unfair Trading Practices that it was important to extend protections to small businesses, who face power imbalances when dealing with larger businesses. This is why the Albanese Labor Government will address this gap in legal protections for small businesses, where thousands of businesses including in the construction, agriculture and retail sectors have experienced unfair practices that cause substantial harm. “Small businesses are vital to our economy, and we’re concerned about the disadvantages they face when dealing with unfair practices from larger players that might not breach existing laws but still cause harm,” Minister for Small Business, Julie Collins MP said. “We’ve heard from various sectors including farmers, subcontractors, and small online retailers about challenging practices they’ve encountered. That’s why we’re moving forward with plans to extend these important protections. “This builds on the extensive work our Government has already taken to level the playing the field for Australia’s record 2.6 million small businesses.” The Albanese Labor Government will ensure that small businesses are fairly protected when dealing with large businesses. This builds on action we have already taken to level the playing field for Australia’s record 2.6 million small businesses including: extending unfair contract term protections to more businesses and introducing penalties for firms that breach them improving the Franchising Code of Conduct and delivering new action to improve small business payment times. Treasury will consult this year on the design of protections for businesses, including on whether a principles‑based prohibition should apply and whether specific unfair trading practices should be targeted to protect small businesses. This will complement a statutory review of the amendments to strengthen unfair contract term protections that the Albanese Labor Government legislated in 2022. The consultation will consider how Unfair Trading Practice protections can be used to address practices that harm small businesses. In its submission to the Government’s consultation on protecting consumers from Unfair Trading Practices, the Australian Competition and Consumer Commission highlighted a number of unfair practices small businesses may face, such as: Situations where larger businesses use their superior bargaining power to pressure smaller suppliers into accepting unfavourable contract changes, including in markets like food production and construction. Commercial tactics where large businesses may discourage small businesses from exercising their legal rights by suggesting possible commercial consequences. Retailers threatening to de‑list suppliers in retaliation for seeking price increases to which they may have been contractually entitled. Online platforms making significant account changes with limited notice or without transparent process affecting Australian small businesses selling online. Platforms using complex digital interfaces that may lead small businesses into accepting disadvantageous terms when signing up for essential business services.  

In the last 10 years, between 2014 and 2024, the Australian agricultural sector has experienced steady growth of 4.7% per year. The gross value has increased from around $56 billion in 2014 to $88 billion in 2024. Sources: Timberbiz, FWPA The agricultural industry sub-sectors include crops, industrial crops, horticulture, livestock, livestock products, fisheries, and forestry. Livestock and livestock products are the largest subsectors, accounting for, on average, 40%-45% of total agricultural production, or $30 to $35 billion. Crops and horticulture are the second largest, valued at around $30 billion on average. Meanwhile, fisheries and forestry account for 7% of total agricultural production. Between 2014 and 2024, on average, the gross value of fisheries was around $3.1 billion, and forestry was $2.4 billion. Gross Value of Farm, Fisheries and Forestry in Australia 2014-2024 Figure 1: Gross Value of Farm, Fisheries and Forestry Australia 2014-2024 Sources: Department of Agriculture, Fisheries and Forestry, ABS, ABARES, FWPA Analysis The period between FY 2022-23 and FY 2023-24 was considered the highest growth rate in livestock gross value. Cattle and lamb (including sheep) were key livestock valued at around $13.3 billion and $4.4 billion, respectively. Barley and wheat are the main components of crops. During FY 2022-23, the gross value of barley and wheat reached the highest at $4.8 billion and $16.8 billion, respectively. Meanwhile, wool and milk remain key elements, accounting for 75%-80% of the total livestock products (Table 1). In the forestry sector, the gross value during the period indicates that softwood grows 2.5% per year and hardwood 1.9% per year. Detail Gross Value of Farm, Fisheries and Forestry Australia 2014-2024 Table 1: Detail Gross Value of Farm, Fisheries and Forestry Australia 2014-2024. Sources: Department of Agriculture, Fisheries and Forestry, ABS, ABARES, FWPA Analysis Note: Forecasts for FY 2024-25 were provided by the Department of Agriculture, Fisheries and Forestry. The global trade will face some challenges with the new administration in the United States. The additional 10% tariff on all Chinese goods entering the US market will impact the US economy and global trade in general. First, as businesses pass through the costs of exports to consumers, the price of popular goods will immediately adjust. As seen in Figure 2, sourced from The Economist, laptops and smartphones will adjust their prices. The combined export value of those products in 2023 was nearly 80 billion US dollars. Laptops from China account for 60% of the global and 25% of the US markets. It will be challenging for the US to find alternative suppliers. Moreover, the laptop is classified as a complex product, making relocation to production expensive. The consequences are inflationary and will increase prices in the US and global markets. Most valuable export goods from China to US and their complexity Figure 2: Most valuable export goods from China to US and their complexity Sources: The Economist, Atlas of Economic Complexity, BACI trade database. Product complexity from China to the US Figure 3 Product complexity from China to the US Sources: The Economist, Atlas of Economic Complexity, BACI trade database Related to the timber industry, increasing tariffs on Canadian products, including timber, will also disrupt the global timber trade. In 2024, Canadian exports of softwood timber to the US were the lowest in a decade due to duties applied by the US. They accounted for around 25 million m3, which dropped to almost 10 million m3 compared to the level in 2015. Additional tariffs will increase the price. In the short term, the US will find other suppliers, and Canada will find other markets. This will create an adjustment in the market, which increase the cost and then the global price of timber. In the long term, when the market reaches stability, the price will be in the new equilibrium, which is higher than before. Figure 3 shows historical data on the Canadian export of softwood timber to the US. Imports Softwood timber from Canada to the US Figure 4: Imports Softwood timber from Canada to the US Sources: The Economist, USDA, Parliament of Canada.