The pulp and paper (P&P) sector is thoroughly familiar with the many pressures on Australian manufacturing generally. Those calling for a parliamentary inquiry would benefit from the experiences of the Pulp and Paper Industry Strategy Group (PPISG), which included industry, unions, special advisory bodies and the Federal Government contributing their expertise. The PPISG released a detailed report early last year, and the process demonstrates that identifying the problems is inadequate unless action is taken.
The Australian P&P manufacturing industry comprises around 440 enterprises and employs almost 20,000 people. It has impressive track record of technological progress and innovation and as an important driver for sustainable forest management. It is part of a sophisticated, high-tech and green supply chain. However, the PPISG report identified numerous competitive pressures facing most manufacturing sectors in Australia.
Many of the pressures have been raised in recent media reports – including the high dollar, high input costs (labour, energy etc) and the alleged dumping of imported goods, which has escalated since the Global Financial Crisis. Added to these common enemies of manufacturing in Australia, the carbon price mechanism is looming at a time when our major competitors are unlikely to face a similar cost increase.
A carbon price could hold some opportunities for the P&P industry. As production requires wood fibre from sustainably managed forests, the P&P industry differs from aluminium, steel and concrete by being part of a carbon positive industry. Australian forests are managed in a manner which sees the overall carbon pool increase with new plantings and regeneration. The amount of carbon emitted in production is far less than that absorbed from the atmosphere growing trees.
Forestry carbon offsets can be further enhanced through the production of renewable bioenergy by utilising of residues left over from forestry and pulping processes, such as woody biomass and 'black liquor' which is leftover from the pulping process.
These carbon positive benefits are coupled with unique challenges in ensuring adequate investment in, and access to, forest fibre for the feedstock of pulp and paper. For a country with such excellent forest management credentials, this is quite extraordinary.
Commercial forestry in Australia is geared to maximise the production of high-value sawlogs for products such as house framing, timber flooring and fine furniture. A viable forest management model also requires a market for low-grade pulp logs, much of which is used in paper making. In turn forestry revenue employs regional communities and plays a broader role in managing bushfire fuel loads, weeds, pest and diseases. The importance of P&P manufacturing lies in its support of the broader land management sector and regional employment.
These opportunities and challenges were documented through the detailed PPISG process. The group's final report was released in March 2010 by Senator Kim Carr, Minister for Innovation, Industry, Science and Research. Encouragingly, it demonstrated how Australia's GDP could be boosted by up to $38.7 billion and jobs increased by over 3,500 by 2020 as a result of enhancement of the industry in various ways.
Since the PPISG report was published, the Federal Government has addressed some of the group's concerns. These included a range of proposed changes to the anti-dumping framework. AFPA welcomes many of the new measures such as the provision of additional resources and expertise to Customs including time limits on key decisions and encourages the Government to strive for a robust anti-dumping framework that supports Australia's international competitiveness.
However, industry will look for further active measures to support local P&P manufacturers, and manufacturing in Australia more broadly. The flow-on effect of a healthy P&P sector includes more vibrant regional communities – often in areas not blessed with mining dollars. The review and strategy process are instructive for the industries calling for an inquiry into manufacturing – it is not enough to only identify challenges. The essential next step is for those changes to be enacted.
The P&P industry has been dealing with difficult domestic and international competitive pressures for many years, but has survived through innovation and technology improvements. The desire for a review of the manufacturing industry overall is valid but identifying a problem and devising a plan is one thing. The real challenge lies in implementation.
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