Originally published in Crikey on May 15, 2013

The Australian native forest sector has been in decline for the past two decades and all but fallen off a cliff since the onset of the global financial crisis in late 2008. The forestry lobby has tried to lay the lion’s share of the blame for its predicament at the feet of the environmental movement, claiming that increases in forest reserves and campaigning in Japan have restricted its access to logs and stifled demand. But the problem with the tale spun by the industry is that it requires the suspension of reality. Basic economic principles suggest that when the supply of a product is restricted, its price will rise. This was vividly illustrated in the aftermath of Cyclone Larry and Cyclone Yasi in 2006 and 2011. Both cyclones caused extensive damage to banana plantations in Queensland, triggering sharp increases in banana prices. In contrast to this standard market response, the restrictions imposed on the Australian native forestry sector since the mid-1990s have not resulted in an increase in the price of native hardwood products.

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