Forest Growers Levy
The Australian Forest Products Association (AFPA), the national peak body for Australia’s forest, wood and paper products industry, is looking for industry feedback on a proposal to ask Australia’s forest growers to support measures to increase the sector’s commitment to research, development and extension (RD&E) and biosecurity. The aim is to address the decline in funding and capacity for vital forest science RD&E and to tackle ever-increasing biosecurity threats.
Working with governments, AFPA, Forest and Wood Products Australia (FWPA) and Plant Health Australia (PHA) developed an RD&E and biosecurity strategy that, if supported across the sector through an increase to the forest grower levy, will grow the value of the industry, boost productivity, lower costs, increase resilience and reduce losses from drought, fire, pests and diseases.
An increase of $0.13 per m3 to the forest grower levy is proposed, in two parts:
- an additional $0.085 per m3 to significantly increase investment in forestry research through FWPA; and
- an additional $0.045 per m3 to the biosecurity levy for PHA to protect our trees and forests against the threat of exotic pests.
If the Australian Government agrees, the increase to the forest grower levy will have a staged implementation. An additional $3.45 million will be raised annually with matched funding from the Australian Government of up to $2.55 million. AFPA is also proposing that small and medium growers who harvest less than 20,000 m3 annually be exempt from paying the forest growers levy. If the exemption is successful, 96 per cent of industry by volume would be paying the newly increased forest grower levy.
The first stage in this process will involve extensive consultation with all forest growers to provide feedback to help refine and further develop this proposal, for more information see here and frequently asked questions here.
As a forestry grower, you can offer your feedback in the manner that best suits you, for example, one-on-one conversations, telephone conferences and virtual town hall-style meetings. It is AFPA’s intention once there is broad consensus to engage a third party to conduct a ballot in which all potential or existing forest grower levy payers can vote. For the proposed levy increase to be successful it needs the support of the majority of forest growers who participate and vote.
- The current forest grower levy
- The future forest grower levy
- The RD&E forest component of the grower levy
- The increase to the biosecurity component of the forest grower levy
- An exemption point for the forest grower levy
Forest growers currently pay a compulsory levy to the Department of Agriculture, Water and the Environment (DAWE) based on the volume of logs produced. The current levy components and rates for logs are as set out in Table 1 below, also viewable here.
Who pays the forest grower levy?
- All private growers of plantation-logs – exotic softwood (Pinus sp.), all plantation logs – eucalypt and other species and all other (native forest) logs pay the RD&E / marketing levy.
- Private growers of plantation-logs – exotic softwood (Pinus sp.), all plantation logs – eucalypt and other species and all other (native forest) logs pay the RD&E / marketing levy.
- Growers of plantation-logs – exotic softwood (Pinus sp.) and all plantation logs – eucalypt and other species pay the PHA levy.
- Growers of all other (native forest) logs do not pay the PHA levy and the current Emergency Plant Pest Response (EPPR) levy.
- Growers of all plantation logs – eucalypt and other species do not pay the current EPPR levy.
- Growers managing State forests do not pay the forest grower levy, but do currently contribute an amount equivalent to the RD&E / marketing component to FWPA.
Usage of the RD&E / marketing levy
- DAWE passes the ‘RD&E / marketing’ component levies collected from private growers to Forest & Wood Products Australia (FWPA) for the for use in RD&E and/or marketing activities.
- The RD&E and marketing levy currently raises around $1.7 million each year, and the Federal Government provides matching payments for investments in RD&E
- The RD&E and marketing levy has not increased since it was introduced in 2007 at $0.05 per m3.
Usage of the PHA levy
- DAWE passes the levies collected from private growers for the PHA component of the Forest Grower Levy to PHA, to cover the cost of membership fees (e.g. $65,000), with the remainder used for small biosecurity projects.
- The PHA levy currently raises approximately $105,000 annually.
What would the proposed change cost and how much will it raise?
The proposed change would see the new forest grower RD&E levy introduced through a three-year staged process, while the biosecurity levy increase would be implemented in full during the first year (new rates shown in blue in Table 2):
The proposed forestry RD&E levy of $0.085 per m3 will raise an additional $1.05 million in the first year, $1.8 million in the second year, and $2.55 million annually from the third year onwards. Matched funding from the Australian Government would effectively double these figures. Additionally, large growers representing 90 per cent of all levy payments collected, will voluntarily contribute extra funding to deliver the RD&E program.
The increase to the biosecurity levy from $0.005 per m3 to $0.05 per m3 will raise an additional $900,000 for biosecurity surveillance. These activities will not be eligible for matched funding.
Who would pay the proposed RD&E levy?
- The RD&E levy will apply to all plantation-logs – exotic softwood (Pinus sp.), all plantation logs – eucalypt and other species and all other (native forest) logs produced by private growers harvesting 20,000m3 or more per annum.
- The forest grower is liable for payment of the levy, however it is normally paid by the processor on behalf of the grower.
When would the RD&E levy be payable?
- If the levy increase is agreed upon, the RD&E levy becomes payable when the log is harvested and is intended to be processed for use by forest industries or exported.
Why is coordinated, industry-wide RD&E important?
- Investment in RD&E is critical to securing Australian forest grower productivity, profitability, sustainability and international competitiveness into the future.
- Significant challenges exist for forest growers including climate change impacts, fire management, genetics and tree breeding, environmental management, native forest silviculture, plantation nutrition and silviculture practices. The availability of RD&E funds will go a long way towards overcoming some of these.
- Levied industry RD&E funds can be used to leverage additional matched Government funding.
How would the proposed new RD&E levy benefit levy payers?
- Over the last three years, forest grower-led groups have been working with AFPA, FWPA and PHA to identify the RD&E and biosecurity priorities that would add value to the forest estate through increased productivity, lower costs, increased resilience, and reduced productivity from drought, fire, pests and diseases. The costs of these activities and options to sustainably fund them have also been assessed.
- There is a wide range of priority RD&E projects that would have broad benefit, not only to the whole industry, but with direct and flow on benefits around the protection and enhancement of regional communities, such as:
- Understanding flammability pathways within softwood and hardwood plantations, and the impacts that climate change and management practices have on plantation flammability trajectories.
- Analysis of remote systems for the detection of wildfire ignitions and environmental inputs (e.g. soils and fuel moisture contents) for forest fire management predictive approaches.
- Industrial forest growers produce more than 90 per cent of Australia’s log volume and have taken the lead in developing a research strategy and associated investment plans (including investment costs), and have prioritised an initial five-year RD&E portfolio to boost the value of the sector and protect commercial forests.
- Utilising and complementing cutting-edge genomic tools to identify important germplasm to assist in the breeding of elite material suited to address climate variability, including new and untested plantation sites.
- Quantification of responses to fertiliser and the development of prediction systems and fertiliser recommendations.
- Biocontrol agents for key new and established pests, including Sirex, Gonipterus, Chrysomelids, Essigella and Giant Pine Scale.
- The portfolio has a modelled net present value (NPV) of almost $700M for Australia’s commercial forests, and benefit-cost ratios (BCR) of up to 20:1, including adoption costs, for individual projects within the portfolio.
- Additional to the new levy, a collective of AFPA grower members have separately agreed to voluntarily match the new RD&E levy with cash contributions to enable the required investment.
How would the RD&E levy be managed?
- The RD&E levy will be collected by DAWE and then passed onto FWPA.
- At FWPA, the levy will be “ring-fenced” to ensure it is only spent on RD&E. In order to ensure this, additional governance practices will be put in place within FWPA.
How would industry get a say on how the RD&E levy will be spent?
For the forest growers levy, FWPA has formed the Grower Research Advisory Committee (GRAC), which consists of forest growers members from around Australia who advise the FWPA board on how funds should be allocated.
When would the biosecurity levy be payable?
The biosecurity levy is payable when the log is harvested.
Who would pay the biosecurity levy?
The biosecurity levy will be payable on all private plantation-logs – exotic softwood (Pinus sp.) and all private plantation logs – other. It is not currently payable on all other (native forest) logs.
How would the proposed biosecurity levy increase benefit levy payers?
- It would raise money to establish a National Forest Pest Surveillance Program that would:
- Establish, support and maintain post-border forest health and biosecurity activities, capability and capacity.
- Maintain a National Forest Biosecurity Coordinator. This position has been funded for the past three years by a combination of large growers and DAWE and will expire at the end of the 2020-21 financial year.
- The program would provide benefits to all States and Territories, specifically:
- Annual forest health and biosecurity training provided to forest sector, government and community stakeholders.
- Forest pest surveillance that increases the rate of early exotic forest pest detection and, increases the rate of successful eradication responses (to world’s best standard or better).
- Avoidance of ongoing pest management costs
- Reduction in the risks to community social licence and certification through a reduced need for ongoing pesticide usage.
- Increase in social licence through community engagement focused on the health and biosecurity of forests
- How would the PHA levy be managed?
- The PHA levy will be collected by DAWE and then passed onto PHA.
- The levy will be used to fund industry membership of PHA and delivery of a forestry biosecurity program.
How would industry get a say on what the biosecurity levy will be spent on?
- To manage the funds received from these levies and ensure that industry has control of these funds, a Memorandum of Understanding (MoU) will be established between AFPA and PHA.
- This MoU will allow for the establishment of a program management committee, consisting of both AFPA and PHA representatives. This committee will meet regularly to review the levy budget and proposed expenditure, and ensure the funds are being spent according to the PHA Act, PHA Constitution and Levies Principles and Guidelines.
- This arrangement will allow for industry management and oversight through every step.
Who would pay and submit returns for these levies?
Currently the grower is liable for payment of the forest grower levy but in many instances the log processor is the levy collection agent. We are proposing the levy collection agent and process remains unchanged.
Why should everyone pay for RD&E and biosecurity rather than each individual organisation doing their own thing?
- Individual organisations will still conduct RD&E activities specific to their own needs, but experience shows collective efforts are far more effective and efficient in achieving results. Maintaining capacity, experience and capability is crucial for the long-term viability of the industry.
- Targeted industry funding can support a broader range of research activities than can be achieved by an individual company, and builds research capability and capacity for the industry.
- Everyone will benefit from the results of investment in RD&E and biosecurity programs. Additional RD&E will go a long way towards helping solve some of the challenges that face Australia’s forestry industry.
The need for change
- AFPA is very positive about the continued future market demand for renewable forest and wood products globally, regionally and in Australia; in traditional markets, emerging markets, and new bio- fibre-based products and services. Wood fibre is a natural, renewable, recyclable and sustainable resource. This is now well recognised in many countries, and supported by communities and governments that recognise the triple bottom-line benefits of forests: environmental, social and economic.
- The forest products industry is one of Australia’s largest manufacturing industries with an annual turnover of around $24 billion. It contributes around 0.5 per cent to Australia’s gross domestic product and 6.6 per cent of manufacturing output. Around 80,000 people are directly employed along the industry value chain, with a further 100,000 jobs supported through flow-on economic activity.
- Forest products consumption in Australia far exceeds domestic production with about $2 billion annual trade deficit. There is a real opportunity to reduce Australia’s reliance on imports, but this requires investment in growing the area, productivity, resilience and protection of our forests. Investment in RD&E and biosecurity are fundamental to to this.
- The RD&E effort in Australia has declined significantly over the past two decades. In 2007-08 around $100 million was committed by governments and industry to RD&E, including research into wood processing, wood product quality and developments, tree genetics and forest management. By 2018- 19 this had contracted to less than $20 million.
- This decline in RD&E investment is partly due to the privatisation of State-managed forestry assets, downsizing of researchers at the CSIRO and a sharp decline in public funding resulting in a significant loss of research capacity from the industry.
- The decline in research capacity has seen the number of full-time forest industry researchers reduce from more than 730 to approximately 30 over the same period.
- AFPA recommends a new forest grower RD&E levy to boost investment in research that will prepare our industry for the future.
- A focus on biosecurity to reduce the risk of pests and disease is also needed.
- Increased biosecurity investment will deliver improved biosecurity surveillance measures to protect forest assets in an environment of increasing threat. Continuing at current low levels of investment in biosecurity puts the industry at increasing risk of exotic pest incursions, as global trade and passenger movements continue to increase at record rates.
- Australia’s success rate in eradicating exotic pests represents just half of the success rate achieved globally. There is currently no annual national forest health or biosecurity reporting process; post-border forest pest biosecurity surveillance is undertaken only in some States, and there is variously limited forest health and biosecurity capacity nationally.
- There is limited capacity and capability for surveillance in high risk urban and peri-urban areas, as well as to respond to incursions in remote regional and rural environments.
- Our forests are vulnerable to foreign pests. In 2015, the discovery of Giant Pine Scale (GPS) in Victoria and South Australia highlighted how exotic pests can circumvent our current border biosecurity arrangements. The subsequent declaration of GPS as un-eradicable is a blow for exotic softwood (Pinus sp.) growers across Australia who must now manage this new pest over the long term.
- Similarly, myrtle rust arrived in Australia in 2010, is now endemic and has required impacted breeding programs to undertake costly screening to uncover resistant germplasm.
The case for levies to have a minimum threshold cut-off point for RD&E and biosecurity
- A review of previous years’ data has revealed the forest grower levy payer population has a very long ‘tail’ of low volume and one-off producers, resulting in inefficiencies in levy collection.
- For example, in 2019, 688 growers contributed to the total levy. However, 546 (79 per cent) paid less than $100; 271 (39 per cent) paid less than $10, and 39 (6 per cent) paid less than $1. Furthermore, in 2018 and 2019, only 20 per cent of growers paid the levy in both years.
- In 2019, DAWE charged forest growers $45,000 to collect the levy from payers, and to distribute collected funds to FWPA and PHA. This equates to a collection cost of $60 to $70 per levy payer annually.
- In 2019, collection charges meant for the 546 growers that paid $100 or less, at best $30 to $40 was distributed for RD&E, and at worst collection costs were higher than funds raised.
The chart below shows the portion of growers who paid the forest grower levy in 2019, highlighting that 96 per cent of funds raised from the levy was generated by a small number of the largest growers.
- Introducing a new levy threshold would reduce the number of smaller levy payers at the lower end of the scale, would improve cost efficiencies relating to levy collection, and would help simplify the levy collection process.
- It is proposed that the forest grower levy may apply only to growers who produce 20,000 m3 or more per financial year.
- Small growers who produce less than 20,000 m3 annually would be exempt from paying the levy. If you are unsure about whether you would meet the threshold you will need to keep track of how much you are producing to ensure you pay the levy correctly at the end of the financial year.
- Other industries also have levy exemptions that remove small producers from paying for commercial R&D activities.
Examples of other industries levy exemptions:
Current exemptions from the forest grower levy:
A producer of logs is not liable to pay the forest growers levy if the producer uses the logs for their own domestic purposes (for household or home-related purposes), viewable here.
A processor of logs is not liable to pay the forest growers levy if, the:
- Producers of the logs uses the logs for domestic purposes
- Products and by-products from processing the logs is used by the operator of the mill for domestic purposes
- Logs produced are from trees that were grown on a farm that is operated by the operator of the mill and the products and by-products from processing the logs are for use on that farm
- Logs are processed for producing fuel wood
- Logs are produced either as a result of landscaping or after removing trees that were a safety hazard and which were processed at the site of production
- Logs are processed at a mobile mill that is not permanently sited and they are processed for the purposes of producing timber products that are not chip or pulp and for which the amount of levy payable by the processor in a levy year would be $100 or less
- Logs are owned by a state or territory government body.
Proposed exemptions for the current and potential new levies
A processor of logs is not liable to pay the forest growers levy if, the:
- producer of the logs uses the logs for domestic purposes
- products and by-products from processing the logs are used by the operator of the mill for domestic purposes
- logs produced are from trees that were grown on a farm that is operated by the operator of the mill and the products and by-products from processing the logs are for use on that farm
- logs are processed for producing fuel wood
- logs are produced either as a result of landscaping, or after removing trees that represented a safety hazard, and that were processed at the site of production
- grower of the logs harvests less than 20,000m3 of logs in a financial year
- logs are owned by a State or Territory Government body.
Frequently Asked Questions
How does changing the forest grower levy process work?
Changing a levy requires engagement with the broader industry, followed by a vote of support, generally through a process run by a third-party service provider. Support from at least 50 percent of growers is required. It can take six to-twelve months for the entire process to take place, from the early discussions to the implementation of new levy arrangements.
Once support is demonstrated, the Government undertakes a Regulatory Impact Assessment to determine budgetary implications, followed by a decision from the Minister. The new regulations will then need to be signed off by the Governor-General.
Who is eligible to vote?
Growers of all “plantation-logs – exotic softwood (Pinus sp.)” and “all plantation logs – other” are eligible to vote for the new RD&E levy, and increased biosecurity contribution, if they meet the 20,000m3 threshold. All other (native forest) log producers are eligible to vote for the new RD&E levy if they have or will meet the 20,000m3 threshold.
Why should I vote yes?
We need to:
- ensure the future of our industry and its viability, sustainability, resilience and profitability
- demonstrate to Government a commitment to supporting and progressing our industry
- increase the capacity of industry to supply Australia’s future timber requirements through sustainably managed
What happens if I vote no?
If adequate support is not demonstrated, the RD&E levy will not be collected from growers and the industry will not be able to receive any matched funding from the Australian Government. That will mean critical, long-term and strategic RD&E will not be conducted to benefit the whole forestry industry.
If the biosecurity levy increase is voted against there will not be funding for a National Forest Biosecurity Coordinator, nor funding for the National Forest Pest Surveillance Program. Similarly, the levy exemption will not be changed and smaller growers will to pay current levies.
If the levies are agreed to, what happens? Do they continue indefinitely?
If the changes to the levies are successful there will be a review conducted by GRAC during the third year to ascertain the success of the program, to assess the effectiveness of the investment models and decisions, and to develop improved recommendations.
If required in the future, levy rates can be reduced or increased through the same process outlined in this document.
Is it not the Government’s role to fund research and biosecurity?
Australia’s RD&E framework is based on government support for those industries that invest in themselves. Under this framework governments will match RD&E investment made by industries through matching cash administered through their statutory RD&E corporations (i.e. FWPA). Furthermore, industries that actively engage with government through RD&E can also leverage significant government in-kind in the form of capital assets (e.g. laboratories, institutes) and/or personnel.
Similarly, Australia’s biosecurity framework is based on the idea that ‘Biosecurity is a shared responsibility between governments, industry, producers and the general public’. Governments have invested heavily in pre-border and border activities, capacity and capability to prevent exotic pests that could threaten Australia’s primary production systems, environment and public health. Factors such as climate change and the growing volumes of trade and movement of people have meant that exotic pest risks that threaten forests are increasing at a rate greater than current biosecurity arrangements can manage. There is an identified need to establish a post-border surveillance program focused on exotic forest pests as an additional layer in Australia’s biosecurity system. Funding the establishment of such a program in partnership with governments will enable the forest sector to ensure exotic forest pest risks remain high on the biosecurity agenda while leveraging significant government co-investment.
Many other agricultural industries have research and biosecurity levies in place to contribute to industry-driven needs, national programs, education and training for growers, as well as assist with on-farm biosecurity preparedness and implementation. Industries that have these levies in place are not only able to steer the direction of their research and biosecurity capacity but are also able leverage more support from governments both in-kind and cash.
I manage a private native forest. Do I need to pay either of these levies?
When you harvest timber, you are considered a forest grower levy payer under the category – other logs. You are required to pay the FWPA RD&E/Marketing levy, and you would also pay the new RD&E levy under the category – other logs. You are currently not required to pay the PHA levy, and this would continue to be the case.
I’m a small grower. If I agree to the levy increase, will I have to pay the same amount as a large grower?
No. A large grower will produce a higher volume than a small or medium grower, and will therefore pay a larger overall amount in levies. Furthermore, a group of large growers has separately agreed to contribute funds to FWPA, to directly enable the required investment.
I am a small grower in far removed from any biosecurity threat, why should I pay for an increased biosecurity levy?
Remoteness from major ports or centres of trade are no guarantee for avoidance of pests and diseases. For example, despite its geographic isolation, Sirex wood wasp in Australia was first detected in Tasmania. Similarly, while Myrtle rust has not significantly affected the forest sector, its rapid spread from NSW to the entire eastern half of Australia, including Tasmania, serves to emphasize that pests can and will spread far and wide, irrespective of remoteness. Recent research has highlighted that most exotic pests found in any region in Australia were introduced from another part of Australia, emphasizing the need for coordinated national approach.
An increased biosecurity levy enables coordinated national surveillance for exotic forest pests that is based on risk. Early detection of exotic forest pests through surveillance in those areas of highest risk of unwanted introductions increases the chances of their eradication or containment to restricted regions. In turn, successful eradications or containment in the high risk areas minimises the chances of those pest reaching other, more remote, forest growing regions.
What are the benefits of an increased biosecurity levy for my State/Territory?
There is currently no nationally funded post-border forest pests biosecurity program. An increase in the levy would deliver such a program. The program would enable early detection of exotic pests, which in turn, will maximise the chances of successful eradication while minimising the costs of eradication responses and avoiding long-term management costs.
The program would benefit individual States and Territories by:
- Identifying high risk sites and areas for exotic forest pest introduction in their state
- Providing equipment, material and methods and support for high risk site surveillance
- Providing tools, methods and training for stakeholder surveillance in high-risk urban areas
- Providing diagnostic support for all exotic forest pest surveillance activity
Aside from the benefits such a program could deliver within individual states, the program would enable improved coordination with pre-border and border biosecurity arrangements run by the Commonwealth. Additionally, national forest surveillance program could also leverage some of its funds in off-shore projects aimed at identifying and monitoring potential pest species of insects and diseases in neighbouring countries. This research provides an early alert and warning capacity to increase our chances of detecting pests at our borders before they become incursions.
Are there any other forest industry levies?
Yes, there is the forest industries products levy which is levied on logs that are produced in Australia and delivered to a mill in Australia for processing or that are exported from Australia. This levy is paid by the log processors. Forest and Wood Products Australia is responsible for the expenditure of the forest industries products levy and charge. It is up to these levy payers to indicate if they would like to increase their levy.
Does the government match the levy?
Yes, if the government agrees to the RD&E levy increase, it is expected to be matched dollar for dollar, as with other agricultural industries. The biosecurity componet is not eligible for matched funding.