Australia’s native forest sector has experienced a significant contraction over the past five years. This is reflected in log production from native forests: roundwood removals over the period 2009-2011 were 30 per cent below the average from the previous 18 years. Similarly, woodchip exports, a mainstay of the hardwood sector, fell by 33 per cent between 2008 and 2012. The fall in production and exports has bankrupted the native hardwood industry’s largest producer, Gunns Limited, and led to the closure of numerous processing facilities around the country.

State forest agencies have also recorded substantial losses. For example, Forestry Tasmania (the agency responsible for public native forests in Tasmania) recorded a net loss before tax and other items of AU$64 million over the period 2009-2012 (or AU$16 million per annum). Over the same period, Forests NSW’s (now the Forests Corporation of NSW) total net loss before tax (excluding net fair value adjustment, asset revaluation and impairment of assets) was AU$85 million (AU$21 million per annum). The response of federal and state governments to the downturn has been to look for ways of assisting the sector to enable it to adjust to the new market conditions. The most high profile example of this is the Tasmanian Forests Intergovernmental Agreement (IGA), which was signed by the Commonwealth and Tasmanian Government in August 2011.