The forestry sector in Tasmania has been in crisis for several years, due to falling woodchip prices, the high Australian dollar, and a decline in the quality of wood sourced from native forests. This has led to the loss of approximately 3,600 jobs in forestry and wood products since 2008. In August 2011, the Tasmanian and Commonwealth Governments signed the TFIGA.3 The first goal of the agreement is to remove additional native forest lands from forestry use, which could further reduce forestry employment. The second goal is to guarantee supply of a defined volume of wood to ensure the future viability of parts of the forestry sector, while the third goal is to support economic diversification in Tasmania in order to mitigate the effects of a decline in the forestry sector.
The purpose of this report is to identify alternatives for economic diversification in Tasmania that could create new opportunities for employment. With competitive advantages in a range of primary resources, many of the potential growth sectors are likely to create employment in rural Tasmania, where the economic impacts of the decline in Forestry are most severe. The report identifies Tasmanian communities that are most at risk from the TFIGA and potential growth sectors for these communities. In addition, many of the identified growth sectors also provide opportunities for areas of Tasmania that are unlikely to strongly influenced by changes in forestry.
To put the problem in perspective, total employment in Tasmania, as shown in Table 2.1 was 235,900 in November 2011, with the Southern region accounting for slightly over half of both full-time and part-time employment. The entire forestry sector in Tasmania, including plantations and native forestry, accounted for 3.3 per cent of Gross State Product (GSP) in 2006/07, declining to between 2.3 per cent and 2.8 per cent of GSP in 2009/10. The number of direct forestry jobs is estimated to have declined from approximately 6,500 in 2006/07 to 4,500 in 2009/10 and then to 3,300 in 2011,4 with the latter number of jobs equal to approximately 1.4 per cent of total employment in Tasmania in 2011. Although a small share of GSP and employment, the sector plays a larger role in exports, with wood chips and wood waste accounting for 9.9 per cent of Tasmanian exports in 2006/07 and 8.7 per cent in 2009/10.
Source: ABS Labour Force, Australia, Detailed, Quarterly, Nov 2011. Note: totals do not equal due to rounding.
The economic and social impacts of a decline in forestry employment are not evenly distributed across Tasmania, as forestry employment is concentrated in specific communities. In 2010, forestry accounted for over five per cent of employment in the Local Government Areas (LGA's) of the Central Highlands, Dorset, and Circular Head. Furthermore, not all forestry employment is linked to native forests. Job losses have been much greater in percentage terms in plantation management than in native forestry. The economic impacts of a decline in native forestry will therefore vary among forest-dependent Tasmanian communities.
The development of economically viable alternatives to native forestry will also be affected by the economic structure of affected regions. Table 2.2 provides the distribution of employment in November 2011 by major industry groupings.
|Manufacturing and Industry||18.4||25.5||30.7||22.9|
|Wholesale and retail trade||13.6||15.3||18.0||15.0|
|Accommodation and Food Services||9.4||7.7||8.2||8.7|
|KIBS (knowledge intensive business services)||14.8||10.2||7.5||12.0|
Source: ABS Labour Force, Australia, Detailed, Quarterly, Nov 2011
- Primary Resources: Agriculture, Forestry and Fishing
- Manufacturing and Industry: Mining, Manufacturing, Electricity, Gas, Water and Waste Services, Construction, Transport, Postal and Warehousing
- Trade (wholesale and retail)
- Accommodation & Food Services
- KIBS: Information Media and Telecommunications, Financial and Insurance Services, Rental, Hiring and Real Estate, Professional, Scientific and Technical Services and Administrative and Support Services
- Public services: Public Administration and Safety, Education and Training, Health Care and Social Assistance
- Other services: Art and Recreation Services, Other Services
The Mersey-Lyell and Northern regions, with some of the most forestry-dependent communities in the state, have the largest share of employment in primary resources (agriculture, forestry, and fishing), manufacturing and industry, while the Southern region has the highest share of employment in sectors such as knowledge intensive business services and public services. Primary resources and manufacturing are strongly exposed to international competition, whereas public services and some business services are either unaffected or lightly affected by international competition. The result is that the high Australian dollar presents a much greater challenge to the trade-exposed economies of the Northern and Mersey-Lyell regions than in the Southern region.
Due to differences in both the distribution across the state in the economic effects of a decline in native forestry and the viability of alternatives to forestry, data in this report is provided, wherever possible, for all of Tasmania, for each of the three regions, and for LGAs that are most affected by the decline in native forestry. The regions and LGAs in each region are listed in Table 2.3.
|Main region||LGAs in region|
|Southern Tasmania (including Hobart)||Brighton
Sorell & Tasman
|Northern Tasmania||Break O'Day
Notes: The LGAs for King Island and Flinders are excluded from this study.
A map of Tasmania displaying the LGAs is provided in Appendix 2.1.
Chapter 3 provides a brief history and examples of regional development from Tasmania and comparable regions. This section also contains a general introduction to clusters and agglomeration affects.
Chapter 4 identifies the LGAs that will be most affected by the decline in native forestry. Regardless of the TFIGA, this decline has been underway since 2008 and it is questionable if it could be reversed, even without the removal of native forests from logging. Chapter 5 assesses the growth potential of sectors that are prevalent in rural regions of Tasmania. The most promising sectors display an above average capacity for growth and for innovation. Both are essential characteristics as growth is unlikely to be sustainable unless the sector can innovate in response to external factors such as a high Australian dollar or increasing competition from other producers of agricultural resources. For example, many of the natural advantages held by the Tasmanian horticulture sector, such as favourable climatic conditions, good soils, and counter-seasonal production, are also shared by competitors in New Zealand and Chile. Global demand for high quality dairy products, meat, vegetables, fruit, nuts and fish is expected to continue to grow, but nominal prices will remain stable in response to increasing production. This means that Tasmanian producers will only succeed if they can innovate rapidly enough to keep production costs below the global price.
Chapters 6 and 7 examine the assets, liabilities, demographic and skill factors that will have a substantial influence on the future growth of the Tasmanian economy in general and of potential high growth sectors. Demographics and skills are of particular concern and include the low educational attainment level (compared to the mainland) of the Tasmanian population and the increasing dependency ratio in Tasmania. Improving rural access to education could be an essential factor for supporting growth. Another liability is the lattice of land use regulations in Tasmania. Whether and how economic diversification alternatives are adopted in a particular geographical area depends in part on the willingness and capability of communities to transition. Chapters 6 and 7 identify the key spatial assets and liabilities of Tasmanian communities and Appendix 2.2 provides analysis and observations on the consultation with communities. This includes (1) selected community stakeholder responses to the main findings of the Report around economic diversification options and (2) key data sets and other evidence around community capability to transition in Tasmania and (3) identifies good practice developments around regional development and community transition processes.
A comparison of Tasmanian innovation indicators against like regions based on OECD, national and international standards is contained in Appendix 2.3.
The remaining chapters examine specific sectors and provide extensive data on sector-specific conditions and data on world prices, trade, and competitors for Tasmanian products. Some of these sectors are not identified as major growth sectors, but they are included because of their importance to rural Tasmania.