Select Committee on Matters Relating to the Timber Industry in the Limestone Coast and Other Regions of South Australia

The Hon. N.J. CENTOFANTI (Leader of the Opposition) (16:10): I move:

That the report of the select committee be noted.

I rise today to discuss the findings and recommendations of the select committee's report on matters relating to the timber industry in the Limestone Coast and other regions of South Australia. The timber industry is a pillar of our regional economy, providing essential jobs sustaining local businesses and playing a crucial role in environmental stewardship. However, as this report has made clear, the industry faces pressing challenges that demand leadership: bold and decisive action.

The committee's work was a long and complex process marked by numerous delays, some due to external factors. As this chamber is aware, the committee was established by the former shadow, now Minister for Primary Industries and Forest Industries, back in 2019. Unfortunately, a report was unable to be finalised prior to the 2022 election, and a short interim report was instead tabled.

This is an important body of work that, in the opposition's view, needed to be finalised to ensure that the voices of the industry were heard, and that the government of the day was given a set of recommendations in response to industry concerns. Throughout the period of this parliamentary session the committee has held extensive consultation, receiving submissions from industry representatives, and has carefully reviewed all the evidence to ensure our findings were robust and comprehensive. I take this opportunity to thank all those individuals, businesses and associations who provided evidence to the committee. The evidence we received has provided the committee with a good understanding of the issues facing the industry and potential pathways forward for the long-term sustainability of the industry into the future.

One of the most significant findings of the committee was the pressing issue of log supply for domestic processors. Dating back to 2019, many processors expressed concerns that large volumes of sawlog were being exported, leaving local industries struggling to secure enough material to sustain operations. Evidence presented to the committee suggested that domestic processors were often disadvantaged in tendering processes, with long-term contracts favouring export markets over local manufacturing.

The committee found that a lack of transparency in the plantation lease agreement was exacerbating the issue, as domestic processors suggested they were unable to fairly compete with available timber resources. This raised concerns about compliance with the original sale agreement of forest rotations, which had conditions intended to prioritise domestic processing. The compliance of the sale and lease agreements were a key focus of the committee's investigation. Testimony from industry stakeholders revealed differing interpretations of the agreement's conditions.

While OneFortyOne Plantations, a major leaseholder, asserted they were fulfilling their contractual obligations, evidence from domestic processors and other industry representatives suggested otherwise. The committee found that compliance mechanisms could be improved, and that greater oversight and independent auditing could ensure that the terms of the sale were being upheld in the best interests of the South Australian timber industry.

Another critical issue explored by the committee was water availability. Water is a shared resource that plays a vital role in sustaining ecosystems and supporting industries, including the forest sector. The availability of water is essential for the growth of the forest, as it influences tree health, productivity and resilience to environmental stressors, such as drought and disease. The forest industry relies on consistent water access for processors, such as tree cultivation, harvesting and manufacturing wood products.

However, as water demand increases across various primary industries, such as agriculture, mining and energy, ensuring equitable access becomes crucial. A fair distribution of water resources helps maintain balanced economic growth while protecting ecosystems and sustaining rural communities. Effective water management policies must prioritise sustainable usage, collaboration and conservation to ensure that all sectors have access to this essential resource.

The committee found that a comprehensive review of water allocation policies was necessary to ensure that all industries, including forestry, agriculture and viticulture, had equitable access to this vital resource. The economic potential of the timber industry is vast, but it is currently underutilised. The committee's findings demonstrate that additional wood fibre based industries could significantly boost South Australia's economy. Retaining more logs for domestic processing could create up to 1,950 jobs and generate $15 million in value-added benefits annually. However, challenges, such as labour shortages and the need for greater investment in training and apprenticeships, must be addressed to fully realise this potential.

The lack of a clear investment strategy for domestic processing also means that many businesses struggle to secure the necessary capital to expand their operations and compete with export-driven forestry practices. The export of logs from the Limestone Coast has been a divisive issue in the past. Industry players during early evidence raised concerns that exports reduced availability for domestic processors, impacting local economic growth. The committee found that data on exports was difficult to obtain due to the inconsistencies in the classification of sawlogs and pulp logs.

Witnesses from the forestry sector highlighted that market forces often dictated log sales but local processors countered that better regulatory controls could ensure a steady supply of sawlogs for South Australian mills. Log availability for South Australian processors remains a pressing issue. Long-term contracts are crucial for domestic processors to maintain financial stability and ensure a reliable supply. Some processors have expressed concern about transparency and tendering processes and export parity, underlining the need to look at reforms in these areas.

Environmental and water resource management is another critical consideration. Forestry operations play a key role in carbon sequestration, which is vital for South Australia's sustainable goals; however, concerns have been raised about the ability of the industry to grow among limited water resources, prompting calls for a thorough review of water licensing laws. Agricultural representatives emphasised that the timber industry's water use must be assessed alongside broader land use strategies to ensure that South Australia's natural resources are managed sustainably. Additionally, the presence of non-native tree species such as Tasmanian blue gum must be carefully managed to protect biodiversity and maintain ecological balance.

The industry holds immense potential for growth, yet several barriers hinder expansion. Regulatory challenges, high land costs and water restrictions have limited opportunities for development; there is no doubt. However, the potential for value-added production remains strong. Initiatives such as establishing pulp mills and biomass energy projects could drive innovation and investment, strengthening the sector and ensuring its long-term viability.

Collaboration between government and industry is crucial to removing barriers and unlocking these opportunities. Establishing new plantations is essential to enhance log availability. However, the long maturation period of timber means that proactive planning is essential. Without immediate intervention there is a real risk that South Australian processors will continue to struggle against competition for access to quality timber resources.

To address these challenges and capitalise on growth opportunities the committee has put forward a series of ambitious yet achievable recommendations. First, the committee calls for an independent examination by the Auditor-General into the compliance of the sale of forward rotations of forests. This audit should focus on community service obligations and conditions of sale and lease to ensure transparency and accountability, reinforcing public confidence in the process.

To enhance data accuracy on timber exports the South Australian government should pursue a national forest industry code of conduct. This will ensure greater transparency in export reporting and standardise the classification of sawlogs and pulp logs, eliminating inconsistencies that have hampered clear industry oversight.

A comprehensive review of water allocation policies is necessary to ensure fair access for all industries, including forestry, agriculture, horticulture and viticulture. The state government must collaborate with primary production stakeholders to create a balanced water-sharing framework that safeguards long-term sustainability but also ensures that South Australians and the broader community are fed, are clothed and are housed.

The findings of this report present both significant challenges and remarkable opportunities. We stand at a crossroads, and the choices we make today will determine the future of South Australia's timber industry. By implementing these recommendations we can forge a resilient, competitive and sustainable industry that benefits local communities, strengthens the economy, and supports our growing population.

On behalf of the committee I would like to take this opportunity to extend our sincere gratitude to both the previous and current members of the select committee for their dedication and perseverance throughout this long process. I would also like to acknowledge the hardworking committee staff on behalf of committee members: committee secretary Emma Johnston and research officers Bernard O'Neil and Dr Merry Brown, whose diligence and commitment have been instrumental in compiling this comprehensive report.

Let us move forward with vision, with confidence, and a shared commitment to shaping a thriving future in the timber industry in South Australia.

Debate adjourned on motion of Hon. I.K. Hunter.