Forest Products Industry

Lending for new home purchase and construction decreased by 3.3% in May. There were 4693 loans issued for the purchase and construction of new homes in the month of May in seasonally adjusted terms. Source: Timberbiz “This leaves the three-month period to May 2024 with 13,988 loans for new homes, which is 7.9% higher than in the previous quarterly period,” HIA Senior Economist Matt King said. “Lending for new homes in the most recent three-month period to May 2024 is up by 8.8% compared to the same time in the previous year. “Lending for new homes remains around the lowest levels observed since interest rates began rising, and well below the 20-year average. “This continued weak result in new home lending does not bode well for the supply and delivery of new homes to market in short to medium term,” he said. There were 66,818 loans issued for the purchase of established homes in the three months to May 2024 (in seasonally adjusted terms). “This is up by 6.1% compared to the same quarter in the previous year. Over the last year, lending for established homes has remained stable compared to new home lending,” Mr King said. Lending to first home buyers continued to remain soft in the face of historic affordability constraints. The number of loans issued to first home buyers was down 3.3% in May but was up 7.4% in the three-month period to May 2024. “All categories of home lending point to ongoing weakness in the new home market,” Mr King said. “Only 172,725 dwellings were completed in the calendar year 2023. With annual demand for housing sitting above 227,000 homes a year, and a resulting shortfall more than 50,000 homes a year, this will add further strain to historically high dwelling prices and rents across the country.” In original terms, the total number of loans issued in the three months to May 2024 for the construction or purchase of new homes rose in Western Australia by 49.0% compared to the previous year. This was followed by Queensland (+13.9%), Tasmania (+10.8%), and New South Wales (+4.6%). The other jurisdictions recorded a decline in lending for new homes, led by the Australian Capital Territory (-22.3%), followed by the Northern Territory (-13.1%), Victoria (-2.3%), and South Australia (-1.7%).

Australia’s packaging paper and paper board imports were up 4.3% in total, year-ended April 2024. Imports totalled 236.1 kt for the year. As the table shows, the major increase in imports has been in Corrugating Medium and Testliner/Multiply. For the most part, these are recycled grades, but the Corrugating Medium includes increased imports of ‘semi-chemical’ medium, which includes virgin fibre pulp. Source: Industry Edge At a time when the Australian economy is struggling under the heavy weight of cost-of-living pressures, it is unsurprising to observe relatively small movements in trade volumes of packaging products. As a further example, exports of packaging paper and paperboard were up 3.4% over the same period, but the order of magnitude is far greater, tracking above 800 kt per annum. This ‘raw’ paper and board data is relevant in another context. The material in the table below is all ‘unconverted’ or ready to be converted into finished packaging products. The modest movements in these volumes are notable, but most important is the context provided by the huge rise in pre-converted or finished packaging imports that are described below. Increases in finished goods imports are one of the drivers for increased local production of paper bags and sacks, as an example, but there is growth in other formats also. FINISHED PACKAGING IMPORTS Imports lift 23.5% to 193.8 kt tonnes, year-ended April Annual imports of pre-converted packaging products increased across the year-ended April 2024, up 23.5% to total 193.8 kt for the year. As shown in the table below, imports are dominated by three large grades. The largest proportion of annual imports are now taken up by the smaller sized Sacks & Bags, accounting for 45.1% of all imports. Folding Cartons make up the second largest proportion (28.5%), and Corrugated Cartons rank third (20.4%). For the year-ended April 2024, annual imports of Sacks & Bags <40cm grew 38.6% to 87.4 tonnes. Folding Carton imports were up 10.1% to 55.3 tonnes, and Corrugated Cartons were up 27.2% to 39.6 tonnes. MOULDED FIBRE PRODUCT IMPORTS Imports lift 8.8% year-ended April Australia’s imports of Moulded Fibre products increased in value across the year-ended April 2024, up 8.8% compared to the prior year. Import values steadily increased to peak around early 2023, then flattened out for the rest of that year. In January & February 2024, import values jumped, but have fallen back subsequently, totalling AUD6.5 million in April. Total annual imports for the year-ended April 2024 were valued at AUD73.7 million, compared to the AUD67.7 million imported during the year prior. Used for a variety of purposes, including disposable medical pans, imports were sourced from a variety of supplier countries, however the majority originated in the Asian region. The two key supplier countries continue to increase their share, holding 93.5% of the market, whilst supplies from most other countries fell. Chinese supplies continued to dominate, accounting for 65.6% of the total imported value (AUDM48.4), while Malaysia accounted for 27.9% (AUDM20.6). For more information visit: www.industryedge.com.au

Built by Nature is a “Network and grant-making fund dedicated to accelerating the timber building transformation in Europe. Radically reducing embodied carbon; safely stopping carbon in our buildings for generations; and sequestering carbon by championing forest stewardship and regeneration.” Wood is built by nature and I’m sure if it was only discovered in recent times, it would be heralded as the greatest product mankind had ever come across. Unfortunately, that’s not what governments believe as evidenced by the Victorian Government’s decision to end native forest harvesting. While softwood timber, from plantations, is the preferred timber for the framing of our new houses, the need for quality hardwood in joinery and feature house (and commercial) fittings is vital. Overall Australia is short of ‘shelter’ for our growing population. The call to reduce our migrant intake will not stop this demand as the need for ‘new’ accommodation is NOW. National Cabinet’s target is for 240,000 detached and multi-unit commencements per annum but only around 160,000 will be commenced in 2024. A shortfall of 80,000. While interest rates and overall cost of living increases are in the mix of why new house commencements have slowed, it does not help when manufacturers of hardwood finished products have had to source their raw material from overseas. The 0.04% (4 trees in 10,000) of the forest that the Victorian industry previously harvested annually, and replanted (is being) replaced now by imports of Tasmanian hardwood, European and American oak, and the durable hardwood species from tropical forests of countries where the forests are not necessarily certified to FSC or PEFC. The extra cost of imported timber will of course be passed on to the consumer. In an earlier Bowens Bulletin, I noted Forestry Australia’s comment that the Victorian government’s decision to end native forest harvesting is flawed and rather than being based on science, it is a decision motivated by ideology! The President of Forestry Australia added that this was a big step backwards for sustainability. ‘There are very few productive systems on the globe that offer stronger sustainability credentials than well managed native forests. In fact, we know that well managed native forests can actually provide superior biodiversity, fire, and climate outcomes.’ However, it is sad to me that only recently Dr Michelle Freeman found it necessary to put out an opinion piece: ‘Standing up for our Profession’. As President of Forestry Australia this was issued in ‘response to disturbing media coverage that is disrespectful of our profession and the scientists and growers who study, manage and care for our forests … Forestry Australia is an independent professional organisation with 1,200 members. (These) members are individuals who have high levels of scientific expertise and extensive operational experience. They operate across all aspects of forest, fire and land management farm, forestry and tree growing throughout Australia …’ My reason for including some points in Dr Freeman’s opinion piece is that whatever ‘side’ or ‘views’ one might have about our forestry, each party should respect competing arguments, and in particular respect the need for factual arguments, particularly from scientists who are at the top of their profession. Our forests are there for ALL Victorians and no one organisation, group or business (including timber sawmillers and timber merchants) has the right to claim them exclusively. The government has effectively shut out those of us who understand the need for timber in a built environment. Concrete and steel have a place in building houses and communities, but they account for around 8% of global GHG emissions. On average, two tonnes of CO2 are emitted to manufacture one tonne of steel. Whereas wood removes more CO2 from the atmosphere than it emits during manufacture. Some salient points are there for governments to consider: The need to interrogate the forest management research to understand broader views rather than to base forest management on narrow viewpoints. Our current situation enables the opportunity to consider forest management from scratch … a fresh start. This fresh start would not consider the industrial-type clear fall harvesting or coupe burning. Rather we could utilise ‘selective harvesting’ which is widely practised in the hardwood forests of Europe and USA for centuries have maintained the same forest and biodiversity in perpetuity. Selective harvesting incorporates all forest values and is now being successfully practiced in Tasmanian private forests, with the same species as in Victoria under strict improved forest practice’s plan. This is a low-cost model that enables funding for forest improvement and fire prevention work. It is also self-funding. Monitoring is an important component both before and after forest activities to both show improvement and improve forest management practices. Native forest timber harvesting sparks significant emotion, passion and energy. Differences of opinion around the issue have been ongoing in Australia for decades. However, the irony is that regardless of ‘sides’, we all care deeply about forests. We want to see biodiversity flourish, we want to prevent devastating bushfires, we want to be sustainable, and we want to find better building solutions to climate change. We recognise the dire need to manage our forests better for the health and prosperity of our environment and society. (Dr Freeman) In the meantime, Europe leads the way with many iconic buildings being built in timber – Australia is following with large-scale mass engineered timber buildings in WA, Victoria and NSW. The industry is also encouraged to see the Australian government join with 16 other countries at the GOP28 UN climate meeting in Dubai and agree to ‘advance policies and approaches that increase the use of wood in the built environment by 2030’. I live in hope! Jack Bowen is the Chairman of Bowens Timber

Gippsland Logging and Earthmoving has made the successful transition into plantation timber haulage through a grant provided by the Victorian Government’s Timber Innovation Fund (VTIF). Source: Timberbiz The Traralgon-based business took the initiative last year to transition to plantation timber haulage following the State Government’s closure of the native timber industry but needed to modify and purchase new equipment in order to do so. Gippsland Logging and Earthmoving applied for a $330,000 VTIF grant to redesign and repurpose a prime mover and purchase a crane unit that is suitable and compliant for haulage of plantation timber. The decision by the business to transition into plantation timber haulage has also supported the retention and training of six existing full-time employees. The move to plantation timber haulage also means employees who previously would have been working away from home for extended periods are now back with their families most nights. Native timber haulage often required workers to travel long distances, whereas the plantation timber is located closer to Traralgon. Gippsland Logging and Earthmoving has been operating since 2004, and while most of its work is in timber haulage, the business also specialises in earthworks and roading. The Victorian Timber Innovation Fund Grants Program Round 3 has grants of up to $1 million for eligible businesses to access. As part of Round 3, support will include a Grant Application Assistance Service for the first time. Businesses can apply for vouchers of up to $7,500 which will provide them with access to a panel of Registered Service Providers. These Providers will help businesses to prepare and submit strong submissions for the grants program. VTIF supports businesses to transition away from the native timber industry and diversify their business operations to pursue opportunities in other industries that will support jobs and the communities that depended on the native timber industry. It is a key part of the Forestry Transition Program to support timber businesses to explore, invest and implement new opportunities. For more information visit www.deeca.vic.gov.au/forestry