Calls for Albo to Back Aussie Timber to Avoid Supply Cliff!

Australia's demand for structural timbers has fallen as interest rates and slowing housing starts have ravaged the timber supply chain.

Mon 29 Jan 24


Australia’s largest construction unions are among a growing cohort pushing the federal and state governments to double down and invest in social and affordable housing as the construction industry grapples with ballooning interest rates and slow housing starts.

At stake are thousands of jobs in the supply chain of building products – with so-called “timber communities” now turning to “employment freezes” and “overtime bans” to weather the storm.

It comes as the country’s timber industry, coming off a pandemic spike, suffers from “dried-up demand” following a boom period that has lasted several years.

As reported in the Australian this morning, Australia’s largest softwood producer, AKD Softwoods, is running at just 50%, with thousands of cubic metres of timber now sitting idle on shelves.

“This (AKD Softwood’s Tumit’s mill) was processing 500,000 cubic metres of logs (per annum, during the peak), today we process 250,000,” according to AKD Softwood’s CEO Shane Vicary.

AKD Softwoods is Australia’s largest softwood producer. In 2020, Wood Solutions visited one of AKD’s mills to understand how softwood is produced and where it is used – footage courtesy of @WoodSolutionsAustralia.

AKD Softwoods has mills in Queensland, New South Wales (Tumit), and Victoria. At its peak, it produces over 1 million cubic metres of softwoods annually – about 25% of Australia’s peak demand.

“This mill (Tumit) is doing half the volume that it used to do, and it’ll do half for the next 20-plus years, based on the fact that those logs got burnt,” Mr Vicary said – referencing the long-term damage caused by the Black Summer fires of 2019-20.

Adding to that, “We can’t get enough people to buy the timber,” he said, “At the moment, most of our employees are earning less because there’s less activity: we’ve got overtime bans, we’ve got employment freezes.”

For long-term Tumit workers and CFMEU NSW manufacturing president Sharon Musson, the industry was vital not only to Tumit but to timber communities right across the nation.

“It’s a trickle-down effect,” she said. “The whole structure of fam­ilies relies on the timber com­ing through.”

“We’ve got one family,” she said, adding, “There are eight people all related to each other working together – you know, uncles, brothers, sons.”

“For them to lose their jobs, it wouldn’t just be the impact of one person losing their pay.”

Speaking to the Australian, Mr Vicary said reduced supply and demand weaken the industry in the long term – reducing its resilience to adapt to a low-carbon economy.

 “You become more fragile,” before adding, “You become a smaller oper­ation. You become more suscep­tible to cold winds.”

“The irony of our situation at a time when we need to be building more houses … we need the state governments to invest in more infrastructure to enable more suburbs.”

Last year, Wood Central reported that the Albanese government was at risk of missing ambitious housing targets without substantial reinvestment in public housing stock and expanding the country’s dwindling softwood plantation estate.

According to James Jooste, CEO of the NSW division of the Australian Forest Products Association, the conditions for the industry had to stabilise amid the headwinds, especially if the nation was to meet its housing targets.

“There is no other solution to meeting our housing needs other than making sure we have a stable supply of timber, and the demand needs to (first) stabilise.”

“It’s so important that we make sure that when we have these am­bitious targets, we also have a plan and a road map to get there, but under pining that all is making sure over the next 20, 30, 40 years, we have a consistent supply of domestic Australian timber to meet those needs because timber goes into 90 per cent of the new detached houses built annually.”

The federal government has planned to build 1.2 million new homes in the next five years; however, NSW Premier Chris Minns has admitted the state would not meet its target this year.

“Targets are just targets without action, so we need to ensure that we’re not seeing this boom-­and-bust cycle continue in our housing construction industry,” Mr Jooste said. “We need an even pathway and investment in our most important material in that housing construction cycle, timber.”

The Australian government’s ambitious plan to lift housing supply

In September, the Australian government’s signature housing bill passed parliament after the federal government agreed to an additional $1 billion towards public and community housing.

The Commonwealth will invest up to AU $11 billion into social and affordable housing projects, resulting in 30,000 new dwellings.

However, the path has not been smooth for the Albanese Government. 

Wood Central reported in July that the Coalition labelled the policy “an accounting trick,” whilst the Greens warned that it is “a $10 billion gamble on the stock market where the volatile returns are invested in housing”.

But months of negotiations over the Housing Australia Future Fund (HAFF) concluded with the government agreeing to an additional $1 billion towards public and community housing this year.

What will the Housing Australia Future Fund do?

The HAFF will see $10 billion in an investment fund, pushing the proceeds into social and affordable housing. 

Housing Minister Julie Collins described the bill as an important day for thousands of Australians seeking housing security and hoped to have the fund functional within “a couple of months.”

The federal government’s key policy to address the housing crisis looks set to finally pass parliament this week, following a deal between Labor and The Greens. The bill to establish a ten billion dollar fund had stalled in the Senate, but extra money for public housing was enough to win over the Greens even though they didn’t get a freeze on rents – footage courtesy of @abcnews.

“We’ll move as quickly as possible to get the fund up and established and get returns,” she said. “But obviously, this will take some time, which is why we’re putting some funding straight into more social and affordable housing.”

In Question Time, Prime Minister Anthony Albanese said he was “very pleased” with the development.

“This is the last of the commitments I made in budget replies to put into legislation. We spent our time in opposition developing good policy that will become good programs in government … And I thank the leader of the Greens for the constructive discussions that we have had,” he said.


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