NSW Government looks to privatise state forests

The NSW Government is set to privatise the state’s plantation forests as part of a fresh round of sale and lease arrangements to fund ambitious infrastructure projects.

As reported by the Guardian Australia, the long-term lease of Forestry Corporation’s 230,000 hectares of softwood plantation, as well as other state owned assets, would look to raise about $1 billion.

The state forests produce about 14% of Australia’s timber, including much of the supply for the housing industry.

The transaction, reported as being ready to be announced early in the new year will involve a long-term lease of land and the right to grow timber, rather than the sale of land. The bank and financial services company UBS has undertaken a scoping study in the past three months while the accountancy firm KPMG has worked on the tax implications and the law firm Minter Ellison on the legal structures.

The sale will be controversial in regional areas such as Bathurst, Oberon, Bega, Tumut and the north-west, where large softwood plantations are important employers.

Forestry Corporation also manages 34,000 hectares of hardwood timber plantations and has stewardship of about 2 million hectares of coastal native forests, cypress forests and red gum forests. These are not proposed to be part of the deal.

However, their future could be uncertain once the money-making softwood division is sold or leased. Green groups want greater protections for native state forests, particularly after this summer’s fires, which have put pressure on habitats for koalas and other native animals.

The Victorian Government sold its softwood plantations in 1998, while the Queensland Government reaped $603 million when it sold Forestry Plantations Queensland in 2010.

James Tremain of the Nature Conservation Council warned of negative environmental impacts from privatisation.

Tremain told the Guardian Australia “privatisation will most likely result in worse environmental outcomes for forests because a private company will always seek to maximise its profit by fully exploiting the resource.

“The NSW EPA has failed to make Forestry Corporation, a government-owned enterprise, comply with environmental laws. What hope would it have of making a private company abide by the law?

“If the government proceeds with the sale, it should remove first the native forest logging division and use the money from the transaction to fund a just transition for affected communities and workers.”

Image: Burawan State Forest, courtesy of the Forestry Corporation.