Deloitte Access Economics: Economic Assessment of the native timber industry in the Central Highlands RFA Area
Economic and Financial Impact
In 2015, Deloitte Access Economics conducted a study of the amount of economic activity generated in 2013/14 a result of timber harvesting operations in the Central Highlands Regional Forest Agreement Area (RFA) on the less than 0.3% of public land that was harvested for timber.
The results found that this activity generated $573 million dollars of economic activity and directly employed 2,117 full time equivalent workers, including 281 full time equivalent workers directly employed by VicForests and its contractors.
This study is the first fact-based analysis of the economic benefits provided by any part of the native timber industry in Victoria and focused specifically on the Central Highlands Regional Forest Agreement RFA Area.
Background and Scope
The study focused on the Central Highlands RFA Area Community which has a population of approximately 97,000 (1.8% of the total Victorian population) and has a total of 23,642 jobs located within the area itself.
The agriculture, forestry and fishing industry (9.9%) and the accommodation and food services (11.7%) industries comprise a larger proportion of the Central Highlands RFA Area economy, as measured by percentage of total employment, than Victoria overall (2.2% and 6.1% respectively), suggesting a high reliance on primary industries and tourism.
The Central Highlands RFA Area was selected as the focus of the study because it is one of five key areas in which VicForests operates, and includes a diverse range of forest values, including water catchments, flora and fauna, tourism, recreation and other non-timber product industries.
There is 623,000 hectares of public land in this RFA Area, 125,000 hectares (20%) of which is suitable for timber harvesting. VicForests harvests around 1,580 hectares (less than 0.3%) of this area annually.
Direct Economic Benefits and Costs
$573 million in revenue was generated by VicForests and its contractors ($76 million) and its direct customers ($497 million) in the Central Highlands RFA Area in 2013-14.
The analysis estimates that in 2023-24, VicForests revenue from the Central Highlands RFA Area will be $148.9 million in nominal terms, based on projected volumes (see Chart 4.1).
This activity resulted in the direct employment of 2,117 full time equivalent workers within the Impacted Community, including 281 full time equivalent workers directly employed by VicForests and its contractors.
Native timber harvesting in the Central Highlands RFA Area supports employment both within and outside the Central Highlands RFA Area.
The total number of direct full-time equivalent (FTE) jobs linked to the industry within the Central Highlands RFA Area Community and the Impacted Community including VicForests’ staff, contractors and customers is 2,117 (see Table 4.2).
Total Regional Economic Benefits and Costs
Deloitte Access Economics modelled the impact of the native timber industry in the Central Highlands RFA Area on Victoria’s economy using its Regional General Equilibrium Model (DAE-RGEM) which predicts changes in measures such as GDP, employment, export volumes and investment.
This modelling found the State’s Gross Regional Product (GRP) is $357 million higher and there are an additional 2036 FTE jobs as a result of native timber harvesting across this region.
The study used conservation assumptions in order to ensure the findings are robust and able to be widely used.
The study looked only at jobs associated with forest employment through to the primary processing sector. Other studies suggest there are many thousands of jobs in secondary processing and further downstream manufacturing that rely on timber from this region with these jobs outside the scope of this analysis.