Jon Drohan Victorian Association of Forest Industries Sustainable forest management, which is the aim of the RFA process, requires the effective integration of all forest uses and values, not just one set to the exclusion of all others. A range of environmental, social and economic factors must be considered and integrated at various levels (local, regional, State, national and international). While the RFA process is science based and guided by quantitative targets, value judgements are sometimes required. This is where the political process comes into play. What I will do this evening is highlight some of the social and economic aspects of the hardwood timber industry within the Otway region(to be confirmed by forthcoming CRA reports). The Otways themselves have been used for timber production since the1850's. There have been about 245 sawmills recorded in the area since that time. In 1961, there were 27 sawmills extracting 119,000 m3. Industry took a 40% cut in 1962 and a further cut of 25% in 1974. This should illustrate that, even in the past, supply of wood to industry has been actively regulated to ensure sustainability. Harvesting is now constrained to the sustainable yield rate of 44,000 m3,which comes off about a third (31%) of public land in the area. This means that nearly seven tenths of public land is not used for hardwood timber production, comparing favorably with the JANIS target of reserving 15% of pre-European distribution. Note that the OECD advocates reservation of 10% of each 'biome'. Public forest provides the feed stock for a number of hardwood sawlog mills, plus residual log sales. On average, only about 300 Hectares (or 0.2 %) of public land in the Otways is logged each year. For every cubic metre of high quality sawlog produced, 2 cubic metres of residual roundwood can be thrown up (eg. about 80,000 tonnes per annum).The ratio could be higher in poorer forest types. To what extent this material is utilised depends on markets. Minimising waste is one of the tenets of good environmental practice. This also applies in the forestry context, where residual roundwood is the waste by-product of sustainable sawlog harvesting. Sawmill wastes are also converted to woodchips (rather than being burnt). This is an additional source of income for mills. Compare the hardwood residual wood outcome with that of plantation sources in Australia. Roughly the same amount ends up as chip (67% vs. 71%). This reflects the fact that not all of a tree is sawlog, and that trees are round, not square. In Victoria, about31% of the hardwood harvest is sawlog and 69% woodchip (20% of which is exported). Employees & dependents: 210 direct jobs plus 400 indirect, plus probably about 1800 dependents. 4% of regional work force. Especially important to towns such as Colac, Birregurra, Forrest and Gellibrand. Includes 36 contractors with $10M worth of gear. Economic turnover: $21M pa (compare to forest based tourism of $1 to$2M). Tourism in the region has increased 143% between 1995 and 1998alongside logging. ie. the two are not mutually exclusive. Industry in the region spent $39M between 1990 and 1995 on value-adding technology. There have been further investments of $11M up to today. This reflects market changes. Plantations and imports are competing instructural markets, with native forest increasingly going into high value-added appearance grades. It also reflects the community expectation of maximum return from the utilisation of native forest. Ash and Mixed Species out of the Otways is well suited to value-adding. There has been upward movement in log grades in recent years(D down from 42% to 12%, C up from 48%to 68% and B+ up from 9% to 19%). Need to remember that Australia imports $2Bn more in forest products than we produce. This presents a moral issue. We should be aiming to use our own forests in an environmentally sustainable manner, rather than someone else's, where sustainability can't be guaranteed. In Victoria, there are already extensive processes to ensure this is the case. Eg. LCC outcomes, FM Plans, Code of Forest Practices, FOLS etc. These are further solidified by the RFA process. Eg. FM Plan and old growth. All true old growth in the Otways is reserved. 60% of ìs urrogateî old growth is also reserved. Only 13%of the remainder will be used over the next 100 years. Water production: Need to alter 20% of catchment for detectable change in water yield. Rules under the Plan limit the proportion of catchments logged annually (0.2%) and over a 10 year period (2%). Seasonal and slope restrictions as well. Buffers under Code to protect water quality (CSIRO reviewed in 1996). Note 16% of the catchments are cleared land. On the basis of the above, we believe that the hardwood timber industry in the Otways is sustainable, that it provides a commodity which is essential for everyday life and that it is a significant part of the regional economy. It can happily co-exist with tourism and water production and, in our view, there is no valid reason why it should not be allowed.