Opposition Leader Peter Dutton is “on the button” taking a $5 billion pledge to fast-track building projects to next year’s federal election.
His Housing Infrastructure Program is designed to expedite the construction of up to half a million homes through a mixture of grants and concessional loans. If elected, the Coalition would temporarily fund water, power and sewerage to move the projects along as part of the commitment.
But Dutton will have to press a few more buttons to find the building products – especially timber – he needs to meet his housing commitment, particularly if he looks at the latest ABARES National Wood Processing Survey that shows a serious downturn trend in sawmill operations in most states.
ABARES, the research arm of the federal government’s Department of Forestry, Fisheries and Agriculture, reports 47 sawmills have closed in the last eight years, haemorrhaging the supply of construction timbers to home builders.
ABARES executive director Dr Jared Greenville estimated that of the 252 mills operating in 2021-22, 146 were hardwood sawmills, 48 were softwood sawmills, 13 were cypress sawmills, 20 were post and pole mills, and 25 were wood-based panel mills.
“The falling mill numbers have predominately been driven by consolidation, with a number of the remaining mills increasing their input capacity,” Dr Greenville said.
“Compared to 2016-17, sawn wood production fell by 8% to 4.3 million cubic metres, with softwood production down by 5%, hardwood production down by 21% and cypress pine down by 30%.
Dr Greenville said sawn wood revenue for the sector was estimated to be $3 billion in 2021-22, up 8% in real terms from 2016-17.
“Higher product prices have been outweighing falls in saw wood timber production, contributing to the real increase in production value for the sector,” he said.
Total input for the period fell by 7% to 9.9 million cubic metres of sawlogs (including post and pole logs) being processed in Australian sawmills. This comprised of 1.6 million cubic metres of hardwood (down 16%), 8.2 million cubic metres of softwood (down 5%) and 139,000 cubic metres of cypress (down 5%).
Sawn wood production fell by 8% to 4.3 million cubic metres, comprised of 561,000 cubic metres of hardwood (down 24%), 3.7 million cubic metres of softwood (down 5%), and 40,000 cubic metres of cypress pine (down 30%). An additional 317,000 of hard and softwood posts and poles were also produced.
A total of 4.4 million cubic metres of residues were also produced, comprising 616,000 cubic metres of hardwood residues and 3.9 million cubic metres of softwood residues.
This resulted in recovery rates of 39% for hardwood sawmills, 47% for softwood mills and 79% for post and pole mills.
Revenue from sawn wood sales increased by 20% to $3 billion. This comprised of more than $700 million in revenue from hardwood sales (down 24%) and $2.3 billion from softwood and cypress sawn wood sales (up 47%).
The number of workers employed by sawmills and post and pole mills fell by 7% to 7,506, 85% of whom are classified as full-time workers. In addition, in 2021-22 it was noted that, the largest cost for sawmills was revealed to be logs, followed by wages.
ABARES said respondents lacked a common view on the demand outlook for the next 12 months with 88% of hardwood mill respondents raised log supply as an issue, while softwood sawmills raised additional issues including product demand and access to skilled labour.
On a positive side, the surveys showed that sawmills and post and pole mills remain a strong employer in the forestry industry, with more than 7500 employees.
In Peter Dutton’s Housing Infrastructure Program, the Opposition also announced a freeze and a review of the National Construction Code, claiming changes to energy efficiency standards had added up to $60,000 to the price of a new home.
Pressure had been mounting on the Opposition to unveil more policies ahead of the federal election, with housing affordability and cost-of-living front of mind for voters.
Master Builder Australia CEO Denita Wawn backed the coalition’s policy, saying red tape needed to be cut.
“A pause on unnecessary code changes that increase cost and complexity without meaningful improvements in standards is a positive step,” Ms Wawn said. “Labour shortages, access to water, sewerage, power and roads, union disruption and red tape all significantly impact the final project cost and build time.”
The Business Council of Australia and the Urban Development Institute of Australia also backed the policy.
“This is smart policy that goes right to the heart of addressing the housing crisis and ensuring there are poles, pipes, wires and roads so houses can be built,” the institute’s president, Col. Dutton, said.
But Australia’s builders are still struggling to find timber, waiting up to nine months for laminated veneer lumber, frames, and trusses.
Fears these shortages could send builders bust have been exaggerated, but the pain of delays and escalating price is real enough for tradies and clients.
There’s no easy fix to this crisis. It has been caused by the confluence of four factors: government stimulus for the building industry, increasing reliance on imported lumber, the pressure placed on global shipping by the pandemic, and the effect of Russia’s invasion of Ukraine on the world market.
Higher housing starts mean higher demand for wood.
But on both sides, politicians are dreaming if they believe they can successfully provide the Australian Dream of home ownership unless they can provide renewable Aussie timber building products and secure Aussie jobs.
- To learn more about the opportunities to build more low-carbon houses out of timber, click here for Wood Central’s special feature last week.
