forest products commission annual report july 2002 – june … · for many years native timbers...

Forest Products Commission ▪ ▪ July 2002 – June 2003A N N U A L R E P O R T

The Commission

The Forest Products Commissionmanages the commercial productionof Western Australia’s public nativeforest and plantation timbers, andmanages a growing estate of treefarms for both public and privateinvestors.

The Commission’s plantations andtree farms are producing the bulkof Western Australia’s commoditytimbers and our native foresttimbers are being used increasinglyfor high value, end uses such asfurniture and flooring.

We work in close consultation withindustry, government and theWestern Australian community toensure the long-term sustainabilityof our State’s renewable timberresources.

Our activities

The Commission is committed toproviding a balance of social,economic and environmental returnsfor the people of Western Australia.

Our native forest managementassists with the development of thelocal furniture industry, providesregional employment opportunities,and aids the State’s export industry.

Our plantation operations providefarmers with alternative, long-termincome opportunities, and help toreverse land degradation. Ourrecently released commercial treefarming package, Infinitree™, aimsto increase the level of investmentin lower rainfall zones and in sawlogproduction in higher rainfall areas.

Our ongoing seed research andtesting enables us to continueproviding diverse and superior treespecies that can address salinity,water logging and wind erosion ina variety of geographical locationsacross Western Australia.

We are actively educating the localand international community aboutthe uniqueness of WesternAustralia’s timbers, our timberproducts and the value addingopportunities available.

Our partnerships

Our partnerships with resource andenergy businesses enable us todeliver effective carbonsequestration practices, whichoffset the greenhouse gas emissionsin other sectors of the economy.

We are pursuing commercialopportunities locally and offshore,which in turn provide employmentand income for our State.

Our ongoing liaison with othergovernment agencies and localcommunities helps to develop long-term sustainability strategies inregional areas.

Cover photos:Tending young seedlings at the Manjimup nursery.Preparing pine sawlogs for export from the port of Bunbury.Rocking chair by Jah Roc Furniture company.Image from Infinitree™ campaign. Securing a future for our grandchildren.

To the Minister . . . . . . . . . . . . . . . . . . . . . 2

Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Business Profile. . . . . . . . . . . . . . . . . . . . . 5

Our Timbers . . . . . . . . . . . . . . . . . . . . . . . . . 6

Our Customers . . . . . . . . . . . . . . . . . . . . . . 7

Our Links With Government . . . . . . . 7

Values and Objectives. . . . . . . . . . . . . . 8

Our Organisation . . . . . . . . . . . . . . . . . . 10

The Commissioners. . . . . . . . . . . . . . . . 10

The Executive . . . . . . . . . . . . . . . . . . . . . 12

Organisational Structure. . . . . . . . . . 13

2002/03 Highlights . . . . . . . . . . . . . . . 14

InfinitreeTM. . . . . . . . . . . . . . . . . . . . . . . . . 16

Environmental Management Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Plant Propagation Branch . . . . . . . . 21

Timber Industry Development. . . . 23

Promoting our Timbers and Products . . . . . . . . . . . . . . . . . . . . . . 27

Our People . . . . . . . . . . . . . . . . . . . . . . . . . 29

The Year Ahead. . . . . . . . . . . . . . . . . . . . 30

Financial Overview 2002/03 . . . . . 33

Business Development and Services . . . . . . . . . . . . . . . . . . . . . . . 34

Statement of Compliance with Written Law. . . . . . . . . . . . . . . . . . 37

Acts Administered. . . . . . . . . . . . . . . . . 37

Statement of Compliance with Public Sector Standards . . . . 39

Certification of Key PerformanceIndicators. . . . . . . . . . . . . . . . . . . . . . . . . . 40

Key Performance Indicators . . . . . . 41

Auditor General’s Report on the Key PerformanceIndicators. . . . . . . . . . . . . . . . . . . . . . . . . . 47

Certification of the Financial Statements . . . . . . . . . . . . . 48

Financial Statements . . . . . . . . . . . . . 49

Auditor General’s Report on the Financial Statements . . . . . . . . . 80

Appendices 2002/03. . . . . . . . . . . . . . 81

Contacting the Commission . . . . . . 89

For a copy of the full report visit www.fpc.wa.gov.au or contact theForest Products Commission on (08) 9475 8888.

Infinitree™ is a registered trademark of the Forest ProductsCommission Western Australia.

Certification No 8289Certified 11 July 2001

C o n t e n t s

WA sandalwood tree.

Widely spaced eucalypt sawlog species.

TO THE HON KIM CHANCE MLC

MINISTER FOR AGRICULTURE, FORESTRY AND FISHERIES

In accordance with Section 66 of the Financial Administration and Audit Act,I hereby submit for your information and presentation to Parliament, theAnnual Report of the Forest Products Commission Western Australia for theyear ended 30 June 2003.

Murray JorgensenChairman, Forest Products Commission Western Australia

A eucalypt sawlog alley designedfor agricultural integration.

R e v i e w

First export shipment of pine logs for PentarchForest Products is readied at the port of Bunbury.

During our first two years

the Forest Products

Commission has been

working hard to deliver on

major elements of

government policy.

Significant milestones were

achieved during 2002/03 in

the development of new

plantations for timber and

environmental services such

as salinity, erosion control

and carbon sequestration,

and in the establishment of

a new manufacturing

industry, particularly

furniture, using the

State’s wonderful

South-West timbers.

In the area of plantations and treefarming, the Commission unveiledits new brand, InfinitreeTM. Thebrand, launched by the Premier ofWestern Australia, Dr Geoff Gallop,on 6 June 2003, is the new publicface of the Commission’s treefarming program. Infinitree nowprovides the Commission with anidentifiable image to attractexternal investment and a focus forour interaction with farmingcommunities. Use of the Infinitreebrand will also help to promote thebenefits of tree farming amongstthe broader Western Australiancommunity. A full description ofInfinitree is contained on page 16.

The timing of Infinitree coincideswith the successful completion ofwhat was Australia’s first majorbluegum project for an overseasinvestor. In 1993, the StateGovernment successfully attractednew investment into bluegumplantations through AlbanyPlantation Forestry Limited (APFL),representing a consortium ofinvestors from Japan. The ShareFarming units of the Department ofConservation and Land Management(DCLM) were set the task ofplanting 20,000 hectares ofbluegum for APFL over ten years. Aspart of the Commission, those unitshave not only completed this task,but exceeded it, and by the timethe last planting transpires duringthe 2003 winter, a total of 23,724hectares will have been planted forAPFL in the Albany region. During

this time, the Share Farm units andthe Plant Propagation Branch havedemonstrated an ability to developnew ways of operating inpartnership with agricultural landowners, building methods forefficient mass production ofseedlings, and an ability to deliveron commitments to an externalinvestor. This winter, the last yearof work for APFL, will be a momentof sadness for some, but will alsobe recognised as the completion ofa great achievement.

The year 2002/03 also saw thestart-up of pine log exports fromCommission plantations. This alsosignalled an important milestone inthe development of WesternAustralia’s plantation industry. Amarket for log exports providesgrowers with an opportunity to selllog grades and quantities that aresurplus to the needs of localindustry. An agreement between theCommission and Pentarch ForestProducts has led to the building oflog export facilities at Bunbury, andit is hoped, shortly at Albany.

In the area of South-West timbers,the Commission continued to workclosely with other agencies toachieve government policy, thedevelopment of high-valuemanufacturing from the timbervolumes authorised under the nextForest Management Plan. This hasbeen a lengthy and stressful timefor communities and agencies, butwe have been extremely pleasedwith the level of interaction with

companies, industry bodies andcommunity groups to try and achievethe best possible outcome from theavailable timber volumes. During thistime, we have seen WesternAustralia’s furniture industry continueto grow in terms of its confidence inits ability and the quality of itsproduct. Western Australia dominatedthe national furniture awards inNovember 2002, an event that theCommission was proud to support.The 2003/04 financial year will seethe finalisation of new contracts andthe start of new investment by thesawmilling and furniture industry, andwe look forward to a close, ongoingrelationship during this time.

As the detail in the later section ofthis report highlights, theCommission has shown a solidfinancial result with an operatingprofit and dividend payment togovernment in line with budgetexpectations.

During a time of reducing revenuefrom native forests, and anexpansion phase for tree farming,this reflects on the quality offinancial management in alldivisions of the agency. Thebottom line profit and loss resultcontinues to be influenced by thesensitivity of standing timbervaluation, and this is explained indetail in the financial reports.

Other notable achievements include:

▪ a very good health and safetyperformance for the year

▪ increases in local sandalwoodprocessing for its oil, along withinnovations in sandalwoodharvesting and regenerationmethods; and

▪ continuing good results fromexternal audits of our ISO 14001Environmental ManagementSystem.

These achievements have beenaccomplished through the effortand dedication of staff throughoutthe Commission. Our staff continueto operate at the highest levels,running the finance and commercialsystems, managing operations onthe ground, and at the same time,contributing to the protection oflives, property and forest valuesduring another busy and dangerousfire season. The State of WesternAustralia has reason to be proud oftheir efforts.

Murray JorgensenCHAIRMAN

Paul BiggsGENERAL MANAGER

Loading harvested bluegum fortransport.

The Forest Products

Commission works in close

partnership with industry,

government and local

communities in an effort to

provide a balance of

environmental, economic and

social returns for all Western

Australians.

The Commission reports to theMinister for Agriculture, Forestryand Fisheries through a seven-member Commission.

As required under the ForestProducts Act 2000, the Commissionaims to ensure that a profitconsistent with planned targets ismade from the use of forestproducts while ensuring:

▪ the long-term viability of theforest products industry; and

▪ the principles of ecologicallysustainable forest management isin accordance with themanagement of indigenous forestslocated on public land.

Western Australia’s diverse range ofunique native timbers has providedthe foundation of the State’s timberindustry for over 130 years.

During the 1960s and 70scommercial plantation timbers suchas Maritime pine and radiata pinewere introduced to provide suppliesof softwood timbers in WesternAustralia.

For many years native timbers suchas jarrah and karri were used in awide variety of products, includingstructural and building applications.

The ever-increasing volume ofCommission plantation timbershowever, has meant our nativetimbers can now be used primarilyin value adding products such asfurniture and flooring, where theirnatural beauty can be appreciated.

As a result, a significant shift inthe production of native andplantation timbers has occurred inrecent years:

During the year, 987,190 hectares,or less than half of the State’snative forest in the South-West,was available for timber production.Native forest production aids exportearnings, creates employmentopportunities in regional areas andprovides unique materials for localfurniture industries andmanufacturers.

The Commission also managed 132,594 hectares of plantationtimbers during the year, which arelocated across government-ownedland, within the State forest and onprivate farms. Extensive planningis performed prior to plantationplanting to ensure successfulintegration with existingagricultural activities, and optimalreturns for farmers. As a part of theCommission’s Infinitree™ commercialfarming package, the Commissionaims to increase the rate ofplanting up to 20,000 hectares perannum during the next five years.

The Commission has almostcompleted the establishment of 40,599 hectares of Tasmanianbluegum projects for externalinvestors.

As a part of its industrydevelopment role, the Commissionsupports the operation ofMinisterial Advisory Committees forthe native forest industry and forthe plantation industry. Thesecommittees advise the Minister forAgriculture, Forestry and Fisheries,with a range of agencies present,and provide a single point ofcontact for industry to raise mattersacross the range of portfolios.

B u s i n e s s P r o f i l e

Year Native Forest sawlogs Plantation sawlogs harvested harvested

1997-98 602,765 cubic metres 262,348 cubic metres



Western Australian jarrah forest.

Western Australia produces

an array of unique timbers

from native forests as well

as sought-after timbers from

an increasing number of

plantations.

Native timber species

The Commission is responsible forharvesting and regeneratingpredominantly jarrah (Eucalyptusmarginata), marri (Corymbiacalophylla), karri (Eucalyptusdiversicolor), blackbutt (Eucalyptuspatens) and sheoak (Allocasuarinafraseriana) species from theavailable native forest area, andensuring their ongoing andsustainable use.

Karri and jarrah timbers, renownedfor their dark colour and consistentgrain pattern, have great appeal indecorative products such asfurniture and flooring. TheCommission strongly supports thedevelopment of these end uses.

Marri, a light coloured timber, isincreasingly valued for feature-grade indoor furniture.

Not all timber is suitable for millingdue to defects such as rot, gum orsplits within the log. This resourceis used for firewood or charcoal (inthe case of jarrah) or pulp andpaper making.

Blackbutt, a light coloured timber,is highly regarded for both furnitureand flooring.

Sheoak, a distinctively grainedtimber, is used in furniture, joinery,flooring and in shingles on heritagebuildings.

Goldfields eucalypts, renowned fortheir durability and strength, canpotentially be used in furniture,flooring, musical instruments andother specialist applications. Theseare currently being trialled asvineyard posts on South-Westwineries.

WA sandalwood

WA sandalwood (Santalumspicatum) timber, found in the drierareas of the State, has long been aviable industry in Western Australia.Traditional uses have includedincense and insect repellents. Morerecently, WA sandalwood is beingused in higher value commodities -the oil is being used in perfumesand there is some indication WAsandalwood could be used inpharmaceutical applications in thefuture. The Commission isdeveloping plantations of WAsandalwood as a part of itsInfinitree™ program.

Plantation timber species

The Commission’s plantationtimbers include largely radiata pine(Pinus radiata), Maritime pine(Pinus pinaster), WA sandalwoodand a variety of eucalypt species forsawlog production.

Pine is largely used in structuralapplications such as roofing, or inmedium density fibreboard andparticleboard panels. Pine productsare a key resource for the State’sbuilding and housing industries.Pine that is surplus to local demandis exported as logs through the portof Bunbury.

Extensive areas of privately-ownedTasmanian bluegum (Eucalyptusglobulus) plantations are alreadyproviding increasing amounts ofexport timber for pulp and papermanufacture in Japan.

O u r T i m b e r s

Western Australian sheoak vase.

WA Blackbutt is popular infurniture and flooring.

Feature-grade marri furniture.

Our customers encompass a diversegroup of local and overseasbusinesses, contractors, farmers,government agencies, regionalcommunities and the broaderpublic.

The Commission produced and sold1.5 million tonnes of timber to itscustomers during the year. It also established and managedplantations for a range of investors.

The plantation industry is now theCommission’s largest customer andincludes the Wespine sawmill, WesfiLimited’s particleboard and mediumdensity fibreboard plants andPinetec’s sawmill. Output from thisindustry now provides the bulk ofWestern Australia’s constructiontimber and panels for cabinet work.

Following the restructuring of thenative timber industry, theCommission supplies about fifteensmall to medium-sized sawmills anda number of craftwood-scalecustomers with sawlogs, which arenow used predominantly forfurniture timber. Mills supply avaluable local industry of indoorand outdoor furniture manufacturerswith a focus on production forinterstate and overseas export.

Low grade, or residue timbers,supply local industries withdomestic and industrial firewood(charcoal), and overseas buyerswith logs and woodchips for pulpand paper making. The Commissioncontinually seeks local markets forthese resources in preference toexport markets.

WA sandalwood is sold to acombination of local and overseasbuyers - the largest buyer beingMount Romance Australia, whichproduces oil at its facilities nearAlbany.

The Commission works in close partnership with a number of governmentagencies:

▪ Conservation Commission;

▪ Department of Conservation and Land Management;

▪ Department of Environment (Water and Rivers Commission);

▪ Water Corporation;

▪ Department of Industry and Resources;

▪ Austrade; and

▪ WA Government Trade Office

O u r L i n k s w i t h G o v e r n m e n t

O u r C u s t o m e r s

Page 7

Stacking medium density fibreboardat Wesfi Limited’s Welshpool plant.

Our mission

To contribute to Western Australia’seconomic and regional growth by:

▪ developing the sustainable use ofthe State’s plantation and nativetimber resources;

▪ promoting innovation and localvalue adding for these resources;and

▪ achieving appropriate returns tothe State for the use of publicly-owned and Forest ProductsCommission-managed plantationand native forest resources.

Values

AchievementWe will deliver best practice service.

InnovationWe will be creative and innovativein meeting our objectives.

LeadershipWe will provide leadership to assistin the development and restructureof the timber industry.

Customer focusWe will understand and meet ourcustomers’ needs.

Environmental responsibilityWe will adhere to ecologicallysustainable management.

AccountabilityWe will adhere to processes that areunderstood and measured.

IntegrityWe will act honestly and ethicallyin accordance with theCommission’s Code of Conduct.

Objectives

The Forest Products Act 2000establishes two objectives for theStatement of Corporate Intent:

1.the long-term viability of theforest products industry;

2.the application of the principlesof ecologically sustainable forestmanagement set out in section12(2) (of the Forest Products Act2000) in the management ofindigenous forest productslocated on public land;

and also defines the principle thatthe Commission must try to ensurethat a profit that is consistent withplanned targets is made from theexploitation of forest productswhilst ensuring that these twoobjectives are met.

V a l u e s a n d O b j e c t i v e s

Our vision

To be a leader in achieving an environmentally sustainable and commercially viableforest products industry providing economic and social benefits to the people ofWestern Australia.

The Forest Products

Commission is the State’s

trading enterprise

responsible for the allocation

and sale of forest products

from State-owned and State-

managed plantations, and

from the State’s native

forests and woodlands. The

Commission works with

industry and the community

to develop and promote the

use of Western Australia’s

renewable timber resources.

Western Australia jarrah vase.

These broad objectives, and theprinciple relating to profit, havebeen further developed to providemore detailed targets andmeasurable performance indicators.They have also been aligned to beconsistent with the government’sforest policy.

Objective (i) Production from IndigenousForests

Provide to Western Australia’s forestproducts industry a long-termsupply of forest products fromindigenous forests on public land ina manner, which is both profitableand consistent with relevantmanagement plans, which are basedon the principles of ecologicallysustainable forest management.

Objective (ii) Production from Plantations

Provide to Western Australia’s forestproducts industry a long-termsupply of forest products frompublicly owned and managedplantations in a manner which isboth profitable and consistent withenvironmentally sound managementpractices.

Objective (iii) Plantation Development

Increase the area of hardwood andsoftwood plantations throughprofitable means to meet regionaldevelopment opportunities andenvironmental objectives.

Objective (iv) Promotion and Development ofthe Forest Products Industry

Promote increased level ofeconomic return to WesternAustralia from the use of forestproducts.

Objective (v) Business Performance

Meet the financial targets agreedwith the Western AustralianGovernment.

Objective (vi) Pricing Arrangements

Optimise the price of forestproducts to satisfy the requirementfor the Commission to be profitablewhilst maintaining a viable forestproducts industry.

Objective (vii) Recruitment and HumanResources

Employ suitably qualified,experienced staff who are supportedto deliver the objectives of thisplan. High levels of performance bystaff, aligned with the Commission’svision and mission.

Objective (viii) Community Support

Improve community and industryknowledge and support of theCommission’s activities.

Commercial plantations of Tasmanian bluegum.

Our seven Commissioners

have been appointed for

their expertise in commercial

activities, the plantation

timber industry, or in the

labour relations field, as is

relevant to the functions of

the Commission.

Murray Jorgensen - Chairman

Mr Jorgensen is the principal of amanagement and businessconsultancy for a wide range ofLocal Government and commercialclients. He has extensiveexperience in Local Government,including five years as the ShireClerk at the Shire of Manjimup and10 years as the Chief ExecutiveOfficer of the Town of Albany. Hewas a Commissioner at the City ofCockburn between April 1999 andDecember 2000. Mr Jorgensen isalso Chairman of the PlantationIndustry Ministerial AdvisoryCommittee (PIMAC). He is amember of the Forest ManagementPlan Steering Committee withmembers of the ConservationCommission and staff of theDepartment of Conservation andLand Management (DCLM).

Dr Per Christensen - Deputy Chairman

Dr Christensen is a forester and aconsultant ecologist with broad andauthoritative experience in forestryand fauna ecology in WesternAustralia. He has extensiveexperience at senior managementlevel within State Government andcurrently sits on a number ofcommittees, including the SharkBay World Heritage PropertyScientific Advisory Committee. Dr Christensen is the scientificadviser and member of themanagement committee of Project Eden, which aims to ridShark Bay’s Peron Peninsula of feralcats and foxes.

Sandy Breeze

Ms Breeze has been a businessproprietor and manager in thefurnishing industry since 1982.National Director of the FurnishingIndustry Association of Australia(FIAA), she has been a councillor ofthe FIAA (WA) since 1990 and VicePresident since 1999. She has alsobeen Chairperson of the AustralianFurniture of the Year Awards since1995.

John Castrilli

Mr Castrilli has been Mayor of theCity of Bunbury since May 1997.He has extensive experience inaccounting, financial managementand commerce and is a boardmember on a wide range ofgovernment, business, educationaland community groups.

Dr Marilyn Clark-Murphy

Dr Clark-Murphy is a senior lecturerin finance at Edith CowanUniversity. Prior to joining ECU shehad a long career in industry andhas broad experience in financialmanagement and stock broking. DrClark-Murphy has served as a boardmember of several governmentinstrumentalities/agencies. Shewas a Commissioner to the City ofWanneroo from November 1997 toDecember 1999, overseeing thecreation of two separate LocalGovernment authorities, andmember of the MetropolitanCemeteries Board from 1994 to2002.

T h e C o m m i s s i o n e r s

O u r O r g a n i s a t i o n

C o m m i t t e e s

The Commissioners sit on a

number of committees to

evaluate and make

recommendations on specific

aspects of the business.

Risk Management and AuditCommittee

Dr Marilyn Clark-Murphy - ChairpersonMr John CastrilliMr Ray Curo

Resource Utilisation Committee

Mr Ray Curo - ChairpersonMr Nick Oaks

Finance Committee

Dr Marilyn Clark-Murphy - ChairpersonMr John CastrilliMr Ray Curo

Forest Management PlanSteering Committee

Mr Murray JorgensenDr Per Christensen

Communications Committee

Ms Sandy Breeze - ChairpersonMr Murray JorgensenDr Per Christensen

Forest Products Commissioners.Pictured from left to right (back row)John Castrilli, Sandy Breeze, Ray Curo, Dr Per Christensen (Deputy Chairman), Nick Oaks, and(front) Murray Jorgensen (Chairman)and Dr Marilyn Clark-Murphy.

Ray Curo

Mr Curo is self-employed as acabinetmaker. He has extensiveknowledge of the Western Australianhardwood timber industry through25 years of bush work, roading,contract management, training andmanagement of harvestingoperations. He has extensiveexperience in land use conflictresolution and continues to work asa consultant to industry. Mr Curowas Chairman of the ForestIndustries Training Services between1995 and 1997 and has been aManjimup Shire Councillor since1997.

Nick Oaks

Mr Oaks is currently employed as aWorkers Employment Advisersupporting the implementation ofWorkers Assistance Program, a partof the government’s ‘Protecting OurOld Growth Forests’ policy. He waspreviously the South-West organiserof the Australian Workers’ Union for11 years. Mr Oaks is a boardmember of the Forest HeritageCentre, Chair of the Timber TrainingGroup, Chair of the WA PrimaryIndustries Training Council andDeputy Chair of the WarrenBlackwood Economic Alliance.

The Board of Commissioners met 12 times during the year with allCommissioners attending 10 or more meetings.

Murray Jorgensen 12

Dr Per Christensen 10

Sandy Breeze 12

John Castrilli 10

Dr Marilyn Clark-Murphy 10

Ray Curo 12

Nick Oaks 12

The Commission Executive,

headed by Dr Paul Biggs,

takes responsibility for the

Native Forest Operations,

Plantation Operations and

Business Development and

Services divisions.

Dr Paul Biggs,General Manager

Paul Biggs holds aBachelor of Science(Hons) in Forestry

and a PhD in Forestry fromMelbourne University. He has astrong technical background inforest measurement and has beenrecognised for scientific writingwith awards from the AmericanSociety of Photogrammetry and theInstitute of Foresters of Australia.He worked in a range of seniorpositions with the Department ofConservation and Land Management(DCLM) and has been a PolicyAdviser to previous ministers forthe Environment and ForestProducts.

Gary Downes,Executive ManagerBusinessDevelopment andServices

Gary Downes has occupied theposition of Chief Financial Officerfor a number of boards ofmanagement and has extensiveexecutive experience in businessanalysis, information technology,legal issues, strategic positioningand company secretarial matters.He holds a Bachelor of Businessdegree, is a Fellow of CPA Australiaand is a member of the AustralianInstitute of Company Directors. Hewas Deputy Chair of Uniting ChurchHomes and Chair of the Board’sFinance and Audit Committee.

Jon Murch,ExecutiveManager NativeForestOperations

Jon Murch has been involved in themanagement of forest resources inWestern Australia for nearly 30years and has specialist experiencein managing native forest andplantation contracts and the sellingof timber products. Before beingappointed to his current position,he was the Manager for ForestResources with DCLM. He holds aBachelor of Science (Hons) inForestry, specialising in harvestmanagement and the selection ofharvesting systems.

Gavin Butcher,ExecutiveManagerPlantationOperations

Gavin Butcher has a careerspanning more than 20 years inplantation and native forestmanagement and has particularstrengths in the strategic, analyticaland financial fields of forestrymanagement. He holds a Bachelorof Science in Forestry and has alsolectured part-time at Edith CowanUniversity. His previous positionwas Plantations Group Manager withDCLM.

John Kime,ExecutiveOfficer

John Kime hasover 30 years

experience in senior governmentpositions. He has worked in theWater Corporation and as a PolicyAdvisor and Chief of Staff for aperiod of eight years.

T h e E x e c u t i v e

During 2002, the Commission’sexecutive team implemented aprocess of development that reduced the focus on divisionalmanagement and increased theinteraction of all members of the executive across the business ofthe agency.

This change was also reflected inthe retitling of the positions toExecutive Managers.

The former Corporate Services area,now titled Business Developmentand Services, is responsible forleading the development of newbusiness and investment. Thisdivision has a lead role ininvestment for the new Infinitree™program and has been boosted withresources in investment analysis andmarketing.

The operational divisions known asNative Forest Operations andPlantation Operations, continuewith their key operationalresponsibilities.

The Plantation Operations area hasbeen restructured to ensure theInfinitree program is supportedeffectively. Within this area theInfinitree Brand Management Groupis being introduced and the ShareFarming Branch is being examinedto ensure that it is best placed todeliver on the objectives of newtree farming projects underInfinitree.

O r g a n i s a t i o n a l S t r u c t u r e

Minister for Agriculture, Forestry and Fisheries

Chairman / Commissioners

Executive Branch General Manager

Customers include:

Local and overseas businesses, contractors, farmers, government agencies,

regional communities, broader public,investors, plantation industry, sawmills

and downstream manufacturers.

Business Development and Services

Native Forest Operations Division

Plantation Operations Division

Page 13

The following summaries

outline the highlights for the

2002/03 period. Further

details are provided later in

this document.

Infinitree™ commercial packagelaunched

Infinitree - the Commission’scomplete commercial farm forestrybrand - was launched by WAPremier, Dr Geoff Gallop, atTenterden in the Great Southernregion, in June 2003. Building onapproved government borrowings,Infinitree is providing acommercial, long-term alternativefor farmers, and providing solutionsfor environmental problems such assalinity, erosion and water logging.With successful investmentstrategies it is expected Infinitreecould increase plantings on clearedfarmland up to 20,000 hectares peryear, during the next five years...

Laminated Veneer Lumber Plantprogresses

The Agreement between the StateGovernment and Western Australiancompany Wesbeam was ratified byparliament in September 2002.Wesbeam owns the LaminatedVeneer Lumber processing plant atNeerabup. The Commission willsupply the plant with 4.12 millioncubic metres of softwood logs overthe next 26 years, which will beused locally, on the east coast ofAustralia and overseas...

Log exports commence inBunbury

The Commission finalised itscontractual arrangements withMelbourne company Pentarch ForestProducts. Pentarch Forest Productssupplies predominantly radiata pinepulpwood logs from Australia andNew Zealand, to South East Asiancountries. The first exportshipment departed in June 2003.Pentarch Forest Products will export120,000 cubic metres of logs peryear from Bunbury...

WA leads in plantationdevelopment

The National Plantation Inventory’s2003 update advised that WesternAustralian plantation growers areleading the nation in thedevelopment of new hardwood andsoftwood plantations. Over the lastnine years, WA’s plantations estatehas grown from 148,000 hectares in1994, to in excess of 351,000hectares. Western Australia now hasthe second largest plantationsestate in Australia...

2 0 0 2 / 0 3 H i g h l i g h t s

WA Premier Dr Geoff Galloplaunches Infinitree on the Gillam’sTenterden property.

New Tasmanian bluegum seedlings aredelivered and readied for planting. The official signing ceremony for

Wesbeam’s Laminated VeneerLumber processing plant.

WA manufacturer wins industryaward

Western Australian furnituremanufacturer Jah Roc Furniture wasawarded the ‘Best of the Best’award for its ‘Chaise Lounge’ at the2002 Furnishing IndustryAssociation of Australia awards. Amulti-award winning company withgalleries in Margaret River and York,it designs, manufactures and retailshigh end timber furniture bycombining native hardwoods withforged iron, stainless steel, stoneand leather. The Commission wasproud to be ‘Platinum’ sponsor ofthe awards...

Goldfields vineyard posts inSouth-West

Small diameter Goldfields eucalyptshave been successfully introducedinto a number of South-Westwineries as vineyard posts. Thespecies is renowned for its strengthand natural durability and is valuedfor its chemical free certification...

Action Plan for Tree Farming

The Commission’s ‘Action Plan forTree Farming in WA’ was launched inSeptember 2002 as an integral part ofthe government’s commitment tosustainability and the environment.The plan outlines future plantingstrategies with a focus on lower andmedium rainfall zones in WA, andseeks to identify the bestopportunities for processingindustries and investors. Central tothis strategy is the newly releasedInfinitree commercial tree farmingprogram.

Action Plan for Tree Farming in WA.

Jah Roc Furniture’s Chaise Lounge,winner of the 2002 FIAA awards.

I n f i n i t r e e T M

In June 2003, the Forest ProductsCommission’s new commercial treefarming brand, Infinitree, waslaunched by WA Premier, Dr GeoffGallop.

Designed to boost WesternAustralia’s farming and timberindustries, Infinitree will aim toincrease planting rates up to 20,000 hectares per annum, overthe next five years.

Infinitree offers revenue-earningopportunities for farmers, addressessalinity and is likely to createemployment in regional areasthrough the injection of investmentdollars and the development ofcommercial infrastructure.

Why Infinitree?

The farmer, the land, and the localcommunity are benefactors ofInfinitree investment. It provideslong-term solutions and encouragesagricultural integration. The mostsuitable tree species are matchedwith the soil and rainfall conditionsof a particular area prior toplanting. The program focuses onlow to medium rainfall areas.

What species are planted?

Maritime pine, radiata pine, severaleucalypt species and WAsandalwood are planted in cellsdefined by the ‘Action Plan for TreeFarming in WA’. The largest targetareas - Mid West, Esperance andSouth Coast - have strong driversrelated to salinity and water tablecontrol. In the South-West, thedrivers are the development of anew sawlog resource to replace oldgrowth timbers and theimprovement of water quality inpriority catchments.

What is the process?

Farmers provide land in exchangefor upfront cash payments and ashare of the timber crops at harvesttime, inclusive of an optional shareof carbon revenue.

The partnership between the farmerand Infinitree is formalised througha legal contract. Theestablishment, management,harvesting and marketing of thecrop are carried out by theCommission in close consultationwith the farmer. The Commission’sInfinitree staff will assess a site forsuitability, prepare the contract andregister it on the land title.

The farmer constructs and maintainsfirebreaks within and around thetree crop according to localauthority requirements and providesfencing to protect the crop fromstock. A farmer can choose toperform some of the establishmentand tending operations in return forcurrent contractor rate payments.

The future

An extensive television and printcampaign will progress into2003/04 with a focus on landacquisition and investmentattraction. Further information isavailable at www.infinitree.com.auor on FREECALL number1800 241 688

The WA Premier, Commission’s GeneralManager and Chairman, and the HonMinister for Agriculture, Forestry andFisheries plant the first Infinitreeseedlings as a part of the official launch.

The Commission’s Chairmanand Henry Gillam at thelaunch of Infinitree.

More than 70%of Australia’ssalt affected landis in WesternAustralia.

The Commission operates

under an Environmental

Management System certified

under IS0 14001. It is

committed to the

development of a long-term

viable timber industry that

provides positive

environmental outcomes for

the State. To this end, it

works in close cooperation

with other government

agencies and has been an

active contributor to the

Forest Management Plan

during the past year.

The Commission’s activities play anessential role in protecting WesternAustralia’s land, water andbiodiversity assets. Our range ofenvironmental services include:

▪ reducing rising groundwater andsalinity

▪ improving water quality

▪ providing corridors to linkremnant vegetation

▪ providing buffers to protectsensitive ecosystems such aswetlands and rivers

▪ providing renewable energysources

▪ providing carbon sinks to offsetgreenhouse emissions

The Commission’s focus is to ensureproducts are grown, extracted anddeveloped in an environmentallysustainable manner.

Certification

During 2002/03 a full certificationaudit was successfully completed onthe Commission’s nursery atManjimup.

Implementation of the RegionalForest Agreement

The Commission is responsible forthe implementation of four of thecommitments made under theRegional Forest Agreement (RFA)between the Western Australian and Federal Governments signed inMay 1999.

The following have been completed:

▪ development of a Memorandum ofUnderstanding for a ForestIndustry Structural AdjustmentProgram; and

▪ review of timber harvestingdocuments with a view toimprove understanding by fieldoperators and field staff.

Substantial progress has been madein relation to:

▪ legislative review and competitiveneutrality review regarding wood-based businesses; and

▪ pre-logging fauna assessment.

Australian Forestry StandardCertification

During 2003, the Commission beganactively working towards certificationof its forest operations in line withthe Australian Forestry Standard (AFS).

The AFS was approved by theStandard Development Board in2002 and was published as anapproved Final Standard byStandards Australia as AS4708 (Int).The standard was developed byCommonwealth, State and TerritoryGovernments in partnership withthe National Association of ForestIndustries, Plantations Australia andAustralian Forest Growers.

The AFS joins a number of globalforest certification schemes thatprovide the basis to certify forestmanagement practices againstagreed criteria, and to determinewhether the forests are beingmanaged in a sustainable fashion.The AFS takes into accountAustralian conditions.

Once achieved, the certification willcompliment the EnvironmentalManagement System and provideeven greater assurance to potentialcustomers that forest operationsmanaged by the Commission aresustainable.

E n v i r o n m e n t a l M a n a g e m e n t S e r v i c e s

Auditing a first grade karri sawlog.

Page 17

Commission staff audit in progress.

Certification No 8289Certified 11 July 2001

Auditing

Internal and external quarterly audits are conducted to ensure theCommission monitors environmental impact, has objectives to manage this,is effective in implementing its environmental systems, and monitors andreviews its performance.

The following incidents were identified during auditing:

Five of the ‘Level 3’ incidents aboverelated to procedures at theCommission’s Manjimup nursery.These were identified and addressedduring the certification process.They included an EnvironmentalManagement Plan for chlorine gas,procedures for hydrocarbon spills,licences for diesel, LPG anddangerous goods, records forEnvironmental Management Systemmeetings and containment around adiesel storage area.

Two of the ‘Level 3’ incidents inShare Farms were plantationwildfires and responses involvedsite cleaning and replanting.

Meeting the silviculturechallenge

Silviculture - the regeneration,growing and tending of trees - isone of the Commission’s keyfunctions. Natural regeneration,supplemented by an appropriateplanting regime, is the primaryoutcome of the Commission’ssilvicultural program in allpreviously harvested forest areas.

In 2002/03, the Commission:

▪ Completed regeneration on 1,237hectares of harvested karri forestand prepared 1,350 hectares ofharvested karri forest forregeneration.

▪ Treated 1,966 hectares ofpreviously harvested jarrah forestfor regeneration and non-commercially thinned 747hectares of forest.

National Action Plan for Salinityand Water

The National Action Plan forSalinity and Water Quality (NAP)has indicated the CommonwealthGovernment will inject funds intothe fight against salinity and thedecline in water quality in WA.The Commission is currently seekingover $30 million from the NAP andis continuing to work closely withcommunity organisations, Stateagencies and the CommonwealthGovernment to secure funding forstrategic tree farming initiatives.Central to the fight against salinityis the Commission’s newly releasedInfinitree™ tree farming program,

which will reverse the affects ofsalinity, water logging and winderosion.

Salinity mitigation

Much of the low to medium rainfallzones within WA’s agricultural areaare threatened by salinity, which iscaused by rising saline groundwatertables. Strategically located treeswill assist by drawing groundwaterdown and reducing the risk ofsaline waters reaching the surface.This will help prevent furthersalinisation of remnant nativevegetation, water supplies andproductive agricultural land.

During the Commission’s 2002 ShareFarming activities, 1,399 hectaresof tree farms* were established insalinity-affected regions.

*As trees are established during the winterand the planting season straddles twofinancial years, the establishment figures arequoted on a calendar year rather than afinancial year basis.

Work area Level 1 Level 2 Level 3 Number of(low impact) (medium impact) (high impact) audits

Share Farms 26 5 2 3

Plantation Propagation 6 3 5 3

Arid Forests 3 2 1

Commission Plantations 23 2

Corporate Executive 16 1 3

Native Forests 18 8 2

Total 92 19 7

Marking a jarrah tree as a‘habitat tree’ for preservation.

Salinity ravaged land.

Carbon investors

International agreements,particularly the ‘Kyoto Protocol’,establish targets to reduce globalgreenhouse gas emissions. Asgrowing trees can reduce theamount of carbon dioxide (CO2) inthe atmosphere by storing it intheir cells, many large emitters ofcarbon dioxide are now seekingopportunities to invest in treefarms that will help ‘offset’emissions. The BP Refinery inKwinana has been investing in theCommission’s program since 1999.Additional investment is still beingsought from the corporate sector(both nationally andinternationally) and from theCommonwealth Government viagrants under the Greenhouse GasAbatement Program.

Carbon sequestration

The Commission’s plantations estatehas already locked up (orsequestered) considerable amountsof carbon dioxide and thesequantities will continue to increaseas the plantations estate expands.Protocols for the measurement ofsequestered CO2 continue to evolve,but the Commission has estimatedthe following volumes (based oncurrent procedures) of sequestrationin plantations planted on previouslycleared land, since 1990:

Twelve months to 31 December 2002= 259,000 tonnes CO2

1 January 1990 to 31 December 2002= 1 146 000 tonnes CO2

*As trees are established during the winterand the planting season straddles twofinancial years, the establishment figures arequoted on a calendar year rather than afinancial year basis.

Yanchep limestone caves

Unique stygofauna inhabitingYanchep’s limestone caves are underthreat from a drying climate andhuman impact. The Commissionclearfelled the 200 hectares ofplantations closest to the caves toenhance groundwater recharge. Thesurrounding 6,000 hectares ofplantations have also been heavilythinned since 1999 to help increasewater levels. The Commissioncontinues to work in closepartnership with other governmentagencies to define strategies thatwill re-establish the water levels.Other measures such as burning andcontrolling water abstraction arealso being considered by otheragencies.

Clearfelling at Pinjar plantationto help recharge groundwater atYanchep caves.

Calculating the carbon sequestrationlevels of a young Maritime pine tree.

WA sandalwood sustainability

Research has shown the nearextinction of the woylie (Bettongiapencillata) and other small tomedium weight range marsupialsand rodents may be the mostsignificant factor in the reductionof WA sandalwood recruitment in its natural distribution.

Predation by foxes and feral catshas seen the collapse of arelationship between native seeddispersing animals and WAsandalwood.

Through the Commission’s ongoing‘WA Sandalwood Enrichment’program, an increased number ofseeds reach germination every year.For every tree that is harvested, 12new WA Sandalwood seeds areburied in the same area, to mimicthe function of the woylies.

The Commission has also adoptedan improved mechanical harvestingtechnique to vertically extract thetrees so that everything from theroots to the small branches of thecrown can be processed. Thistechnique ensures the maximumutilisation of the trees.

Introducing treejacking

Best practice environmentalmanagement in native forestsrequires that rivers, streams andsensitive reserve areas remainunaffected by the felling of trees.The process of treejacking wasintroduced in 2002 and allows thesafe felling of trees at 180 degreesto their lean. The process aids inthe removal of trees that wouldotherwise risk disturbance of thesereserve areas.

Treejacking also permits increasedresource utilisation and reducedoperating costs, as well as improvedlong-term silviculture, fire andsafety management. The trialling oftreejacks in the Manjimup areaenabled the retrieval ofapproximately 1,500 tonne of karrisawlogs (worth approximately $90,000). It is expected thetreejacking process will greatlyincrease the utilisation of availablekarri resources.

Fire management strategies

Severe fire conditions wereexperienced during the 2002/03season, leading to the loss of someforest assets. A six-fold increase inlightning fires was recorded, inwhat was the fourth successive yearof drought conditions.

Commission staff performed fireemergency duties in closepartnership with DCLM staff andwere involved in the suppression ofapproximately 300 wildfires.Commission staff also assisted withprotection and regeneration burningoperations in jarrah and karriforests.

A total of 519 hectares ofplantations were affected bywildfire. This comprised 285hectares of pine plantations in theSouth-West, and 153 hectares ofpine and 81 hectares of Tasmanianbluegum in agricultural regions.

A northern jarrah forest suffers alightning-induced wildfire - theworst in 30 years. In theforeground - the Cooke plantationof Maritime pine, east ofArmadale.

Commission staff auditing atruck load of karri sawlogs.

Manjimup Nursery...

▪ The Commission’s 226 hectarenursery produced 18 millionseedlings for sale and planting.Species grown included Maritimepine, radiata pine, Tasmanianbluegum, karri, Sydney bluegum,sugar gum, and jarrah.

Seed Technologies...

▪ Genetic gain trials of Sydneybluegum have been established inCranbrook and Frankland.

▪ Clones of radiata pine have beenplanted through somaticembryogenesis, which allows largenumbers of like-embryos to beproduced. This allows the highestlevel of genetic selection to beused to produce the fastestgrowing trees with the woodattributes favoured by localindustry.

▪ Field and tank trials of varioussalt tolerant species includingEucalyptus occidentalis, Eucalyptuscamaldulensis, Eucalyptuscladocalyx and various melaleucashave been conducted.

▪ Indian sandalwood (Santalumalbum) seedlings have beenestablished in the SeedTechnologies Research Nursery totest pot host relationships, seedgermination and growthperformance.

The Commission’s Plant

Propagation Branch

comprises the Manjimup

Nursery, Seed Technologies,

and the Tree Breeding

Centre. The following

research and development

projects have commenced:

P l a n t P r o p a g a t i o n B r a n c h

Hardened-off radiata emblings.Measuring salinity with the EM38.

Establishing the radiata pine clonal trial at Ferguson Valley.

Grafting Sydney bluegum.

Tree Breeding Centre...

▪ A total of 12 hectares of radiatapine have been planted todemonstrate the growth potentialof this species on sites wherewater is not limited. Over 13,000seedlings were planted usingsuperior genetics and optimal sitelocation.

▪ In partnership with the NewZealand Radiata Pine BreedingCooperative, a series ofinternational trials wereconducted to evaluate thegrowth, wood quality and diseaseresistance of Western Australianradiata pine. Trials were plantedin South Africa (two sites), Spain(four sites), France (two sites),Chile (two sites) and in NewZealand (three sites).

▪ Four hectares of the drought-tolerant species brutian pine wereplanted in new trials atMarchagee, Brookton andEsperance.

▪ As a partner of the JVAPAustralian Low Rainfall TreeImprovement Group (ALRTIG), theCommission participated in aseries of genetic trials acrossAustralia. Spotted gum, river redgum, and ALRTIG brutian pinewere planted.

▪ Intensive malformationassessments have been conductedon 19,000 Maritime pine pedigreetrees. Ongoing studies willidentify the causes of stemmalformation and its associationwith certain site types.

▪ A review of mature Westernblugeums from 20 hectares ofgenetic trials identified elite treesfor vigour and wood density. Over1,000 grafts were made at theManjimup Propagation Branch and43% of these were successful.The elite trees have been plantedin orchards and genetic archives.

Establishing an Indian sandalwoodseed orchard with hosts.

(top) Salt and water log trial site at Cranbrook.(middle) Radiata tissue culture plants.(bottom) The Hon Minister for Agriculture, Forestry andFisheries inspects a young Maritime pine with theCommission’s Tree Breeding Manager.

Native forests consultation andextension

The Commission consulted a rangeof stakeholders on the followingtopics during the year:

▪ 2003 Harvest Plan for South-Westforests

▪ Forest Management Plan

▪ Harvest coupes adjacent toprivate properties

▪ Forest management/awareness

▪ Indigenous values near andwithin harvest coupes

Stakeholder groups included thepublic, property owners, indigenousrepresentatives, shires,parliamentary members,corporations, conservation groups,students and government agencies.

The Commission ensured priornotification was provided via medianotices and direct mail whenrequired. Detailed coupe maps,educational tours and follow upcontact was also provided byCommission staff upon request.

Committee communication

The Minister for Agriculture, Forestryand Fisheries established thePlantation Industry MinisterialAdvisory Committee (PIMAC) in July2003, to encourage communicationbetween the government and theprivate plantation sector. TheCommittee’s membership includesgrowers, harvesters, processors,users and key stakeholders from thecommunity.

The Commission participated inRegional Plantation Committees inthe South-West (Trees Southwest)and Great Southern (Timber 2002) aswell as the TIRES (transportplanning) group. Senior Commissionstaff also gave presentations atvarious strategic planning forumsand were regular contributors to thelocal branch of Australian ForestGrowers (the national privateforestry body) and the WAAgroforestry Working Group.

Consultation and

communication with

stakeholders is a central

component of all

Commission activities.

The creation of employment

in regional areas, promotion

of value adding

opportunities and the long-

term sustainable

management of our timbers

are key priorities.

A number of commercial

projects have been

progressed in the last year

and new opportunities for

Western Australian timbers

and timber products are

being established nationally

and overseas.

Ongoing information sharing

with other scientific

institutes has enabled the

Commission to progress in

the area of technological

innovation.

T i m b e r I n d u s t r y D e v e l o p m e n t

Community consultation and educationis a key component of Commissionactivities.

Timber industry restructure

The Commission worked closely withthe Department of Industry andResources (DoIR) in assessing the29 new Business Exit Assistance(BEA) applications during the year.

Forest Enhancement Program

During 2003, the Forest EnhancementProgram (FEP) provided employmentfor up to 11 forest workers and firefighters in the Conservation and LandManagement district workforcesbased in the Perth Hills, Wellingtonand Donnelly districts. Some ofthese staff carried out silviculturalenhancement treatments in theforests.

A further four indigenous workerswere employed by the Commissionto complete jarrah forest thinningtreatments. All four staff wereemployed through the NoongarEmployment and EnterpriseDevelopment Aboriginal Corporation(NEEDAC).

Integrating trees and agriculture

Considerable progress was madeduring the year to develop plantingdesigns and systems that will fitmore effectively with currentfarming operations and enablebetter watertable management andcontrol.

The broadscale planting of northand south orientated tree belts, hasbeen successfully integrated intoexisting farming activities. Thisenables a contoured agriculturalproduction emphasis and addressesland management issues moreeffectively.

Wood products research

The Commission’s TimberTechnology division conductedinvaluable collaborative researchduring the year, on woodmanufacturing processes inpartnership with a number ofnational science and technology-based organisations.

Projects included research into therevolutionary potential ofmicrowave technology, bending,drying and gluing processes; andthe coating durability of certainwoods. Assessment of the solidwood potential of pruned, 25 year-old Tasmanian bluegums and nativespecies in semi arid areas, was alsoprogressed.

Jarrah sawlog proposals

Together with the Department ofIndustry and Resources (DoIR), theCommission assessed detailedbusiness plans for the short-listedproponents bidding for jarrahsawlog allocations. Finalisation ofallocations was delayed pendingdecisions on the Forest ManagementPlan.

Indian sandalwood researchcontinues

Research trials on Indiansandalwood continued atKununurra, with a focus ondeveloping high quality geneticmaterial from existing stock. Areview of existing trials and theidentification, collection andstorage of sandalwood seed hasbeen performed. The University ofWestern Australia is conductingresearch on behalf of theCommission to quantify the oilyields and oil quality of existingstands of Indian sandalwood.

Integrating commercial treeplantations with livestock.

Researching wood manufacturingprocesses.

Page 24

Goldfields eucalypts in South-West vineyards

Small diameter eucalypt posts,renowned for their strength anddurability, have been sourced fromregrowth woodlands in theGoldfields and incorporated in anumber of South-West vineyards.

The posts provide a durablealternative to traditional timbersand offer competitive prices. Theutilisation of these posts enablesthe thinning of dense regrowth arideucalypt woodlands, which willincrease the growth of the retainedtrees. This new product may provideanother option for tree farms withinthe mid to low rainfall areas.

Seeking new markets for marri

Marri timber is increasinglyimportant in Western Australia’sfurniture industry and during 2002,the Commission implemented newprocedures to identify and supplymarri sawlogs. At the same time,spot markets for the reducedquantities of marri residue orwoodchips, were pursued to ensurethat marri removed to assistsilvicultural regeneration, was notwasted.

Pentarch Forest Products exports commence

Negotiations with Melbourne-basedcompany Pentarch Forest Products,regarding the export of radiata pinelogs from Bunbury and Albany, haveconcluded. Harvesting for exportcommenced in March with the firstshipment departing in June 2003.Export products included logs ofpulpwood quality beyond localprocessor needs and sawlogs from species not desired by localsawmillers. This has enabled theremoval of more log residues fromclearfell areas and the thinning ofyoung stands to promote sawloggrowth. Pentarch Forest Products isalso taking deliveries from privateplantation owners who havepreviously had difficulty findingmarkets.

Wespine sawmill extended

The Commission sold 291,758 cubicmetres of radiata pine and Maritimepine to the Wespine sawmill during2002/03, for distribution within WAand in the eastern states. WAPremier Dr Geoff Gallop, opened anew extension at the Wespinesawmill during the year which willsee it increase its productioncapacity to 340,000 cubic metres.The extension has included theinstallation of a new optimisingcurved gang saw, mechanical stressgrader and bin stacking and sortingequipment. These investments areanticipated to improve the recoveryof high value products from sawlogs.

LVL plant progress

Negotiations regarding theLaminated Veneer Lumber plant atNeerabup have concluded. AnAgreement has been entered into byWA Premier Dr Geoff Gallop, and theChairman of Wesbeam, Mr DennisCullity. The plant will producestructural timbers suitable forbuilding and construction, whichwill reduce the need for largevolumes of native timbers. TheCommission will supplypredominantly Maritime pine logs,which will initially come from theGnangara watermound and laterfrom Infinitree™ plantations. Theventure will help alleviate Perth’swater supply problems. It isanticipated construction of theplant will be completed mid 2004.

(top) Wesbeam LVL - to be used in structuralapplications.(middle) Wespine’s drymill stacker at Dardanup.(bottom) Goldfields eucalypts are put to use on avineyard in Margaret River.

Hansol Australia chipmill

The Commission has continued toplant and manage over 15,000hectares of Tasmanian bluegums onSouth-West farmlands in preparationof the construction of the HansolAustralia chipmill. The mill isexpected to process up to 500,000cubic metres of wood for export topaper mills in Korea, whenconstruction is completed next year.

Pinetec sawmill to relocate

The government announced theproposed move of the Pinetecsawmill from its Bassendean site tothe South-West. The Commissionoffered Pinetec a contract of 80,000cubic metres of small pine sawlogs,on the basis it will relocate to theSouth-West. The Bassendeanoperation will remain as atreatment and distribution centre.Pinetec will use the resource for themanufacture of pallets andpackaging materials, and timbersfor outdoor use.

Pemberton sawmill

In July 2002, the governmentannounced a $2.5 million assistancepackage for the Pemberton sawmill.The key components of the packageincluded a karri sawlog commitmentof 45,000 cubic metres a year for2002 and 2003, and a minimum of40,000 cubic metres per year from2004 to 2013 (subject to thesustained yield delivered in theForest Management Plan).

The Commission assisted thegovernment in its discussions withbuyer AusWest Timbers with a viewto maintaining an ongoing businessat the sawmill and futureemployment. AusWest Timbers,agreed to retain the existing staff of52 people and employ a further 21,by 2007. The sale of the sawmillwas concluded in April 2003.

Specialty timber auctions

During the year, the Commissioncontinued to conduct auctions as apart of its commitment to providethe broader public with access tothe State’s unique timbers.

Three auctions were held, two ofwhich were at the TimberTechnology Centre in Harvey, duringAugust and December 2002. Morerecently an auction was held inKalgoorlie in June 2003.

The auctions included a range ofGoldfields and South-West timbersin both log and rough sawn form.Approximately 570 tonnes of timberwas offered for sale.

Various timber species aremade available throughCommission auctions.

As part of the Commission’s

role to ensure the sustainable

management of the State’s

timbers, it promotes and

educates industry and the

community about the

uniqueness and value adding

opportunities available with

Western Australia’s timbers

and end products.

Furnishing Industry Association

Ongoing assistance was provided tothe Furnishing Industry Associationof Australia’s Western Australianbranch (FIAA (WA)) and itsfurniture manufacturers to enablethem to become more progressive indesign manufacturing andexporting.

The Commission was the ‘Platinum’sponsor of the FIAA WesternAustralian and Australian Furnitureof the Year Awards, in November2002. Western Australianmanufacturers won six of the 11national award categories.

Design Research Centre

The Design Research Centre (DRC)was established as a centre ofexcellence in furniture design, inthe Faculty of Architecture,Landscape and Visual Arts, at theUniversity of Western Australia(UWA).

A joint furniture design workshoptitled the ‘Furniture EnterpriseWorkshop’ was established throughthe collaborative efforts of UWA,FIAA (WA), the Department ofIndustry and Resources, and theCommission.

The workshop brought four teams ofdesigners and manufacturerstogether. The Commission providedtechnical advice and marketassistance to the teams whocreated proto type products, whichwere launched in WA in May 2003.

Craftwood licences

The government’s ‘Protecting OurOld Growth Forests’ policy includeda commitment to create acraftwood licensing system for localcraftspeople and artisans. Licenceswere only to be granted to WesternAustralian artisans and craftspeoplewho produce their work locally.

The Commission has undertaken anindustry consultation survey andinterviewed 40 prominentcraftspeople, gallery owners andsuppliers throughout the South-West and metropolitan area. Furtherconsultation is expected before afinal strategy is approved forimplementation.

Australian School of Fine Wood

The Commission continued itscontribution to the Forest HeritageCentre in Dwellingup, now referredto as the Australian School of FineWood, during 2002/03.

A provider of quality workshops andcourses, the school held a world-class exhibition titled the‘Seduction of Wood’, in 2002.

During the financial year, 48individual courses were run and 381participants were taught about theconstruction of exquisite furnitureand giftware using predominantlyWestern Australian timbers.

The Commission contributes to thesalary and vehicle running expensesof the school’s General Manager.

P r o m o t i n g O u r T i m b e r s a n d P r o d u c t s

The award-winning Wave diningsuite made of WA jarrah, attractedenormous interest at the SanFrancisco Mart, January 2003.

Timber Advisory Centre

More than 3,000 people per weekventure into the Timber AdvisoryCentre in Wembley to view WesternAustralian timber products. TheCommission contributes $20 000 ayear towards the Centre’smanagement and is represented onthe council.

The State’s focus on the use of pineas the main roof and wall-framingtimber has meant new instruction isrequired for architects, designers,builders and the trades. Seminarsare run within the Centre andtimber advisors are available toprovide information on the use andapplication of various timberproducts.

Furniture manufacturing and exports

The Commission’s TimberTechnology and IndustryDevelopment branches providetechnical information to thefurniture industry on thecharacteristics and qualities of local timbers and their use in newly designed and manufacturedtimber furniture.

Knowledge and understanding about timber movement, stabilityand finishing are readily providedto aid international marketing andpromotion.

The Furnishing Industry Associationof Australia’s WA branch (FIAA(WA)) has continued its marketingefforts in North America, attendingthe San Francisco Market in July2002 and January 2003. Jarrah has become more widely knownthroughout the region for its use inboth indoor and outdoor furniture.

Informing the community

The Commission has participated inthe following events in an effort tofurther inform the broadercommunity about its objectives, theState’s timbers and the many valueadding uses of our timber products:

▪ Dowerin Field Days

▪ Manjimup Horticultural andForestry Expo

▪ WA Farmers Federation annualconference

▪ Wagin Woolarama

▪ Working with Wood Show

▪ Mount Barker Agricultural Show

▪ Australian Forest Growers NationalConference

▪ School of Wood exhibition

▪ numerous field days

▪ Swanbourne Primary Schoolplanting

Swanbourne Primary School children plantseedlings in partnership with the Commission.

The Timber Displayhome at the Advisory

Centre in Wembley.

Award-winning staffperformances

Senior Forester Bill Towie receivedthe ‘Excellence in ForestManagement’ award at the WATimber Industry Awards forintroducing treejacking into theWestern Australian native forestsharvesting sector.

Sean Lawson works at theCommission’s Timber Technology

Centre in Harvey where he assistswith the preparation of timbers forsale. Sean was awarded the‘Executive Director’s Scholarship’,which will assist him to continuestudying at the South-WestRegional College of TAFE.

National Ambassadors

A number of Commission staffparticipated in national workinggroups and standing committees to

develop and promote coordinatedaction for industry development,consistent policy and managementstandards across Australia.Commission managers visited SouthAustralia, NSW, Queensland and NewZealand in 2002 to observeharvesting and processingoperations.

The Commission has 42 employeesworking in its corporate headquartersat Rivervale, and 142 employees in14 regional offices across the State.

The Commission has a total of 225positions within its organisationalstructure.

As at 30 June 2003, staff numbersand their locations were:

O u r P e o p l e

Kununurra

Kalgoorlie

Esperance

Albany

ManjimupNannup

KatanningCollie

HarveyBunbury

GuildfordKensingtonRivervale

PERTH

Moora

0 400kms

Albany 15 0 0 15 13 2 0 0 15

Bunbury 18 0 0 18 9 8 8 0 11

Collie 9 0 3 12 8 4 0 0 12

Esperance 2 0 0 2 1 2 0 0 2

Guildford 12 1 0 13 9 4 0 0 13

Harvey 20 3 1 24 17 7 0 24 0

Kalgoorlie 4 0 0 4 4 0 0 4 0

Katanning 2 0 0 2 2 0 0 0 2

Kensington 6 0 0 6 3 3 0 0 6

Kununurra 1 0 0 1 1 0 0 1 0

Manjimup 14 0 0 14 11 3 0 13 1

West Manjimup Nursery 8 0 13 21 13 8 0 21

Moora 0 0 0 0 0 0 0 0 0

Nannup 9 0 1 10 8 2 0 8 2

Rivervale 39 3 0 42 17 25 34 5 2

Totals 159 7 18 184 116 68 42 55 87

Full-

tim

e sa

larie

d st

aff

Part

-tim

e sa

larie

d st

aff

Wag

es e

mpl

oyee

s

Tota

l

Men

Wom

en

Exec

/ BD

&S

Nati

ve F

ores

t

Plan

tati

ons

Sean Lawson, winner of the ExecutiveDirector’s Scholarship.

Bill Towie, winner ofthe Excellence inForest ManagementAward.

T h e Y e a r A h e a d

In the year ahead, the

Commission expects to

maintain very close

partnerships with the

community, industry and

government agencies,

consistent with the balanced

approach to economic,

environmental and social

values required for

sustainable forest

management.

Power from trees

The Commission has beenencouraging the establishment ofthree bio-mass energy plants forplantation residues in Perth,Bunbury and Albany, in an effort toincrease the production ofrenewable energy. Detailedfeasibility assessments are beingconducted by two firms - Babcock &Brown and WA Green Power. Theassessment process is due to becompleted by January 2004.

Future regional planning

Research has commenced into theland management potential of anumber of regional areas. Extensiveconsultation with regionalcommunities and agencies will beconducted to ensure targetedplanting provides regionally-preferred outcomes such as theprotection of conservation areasand water resources. Theconsultation process will ensure agreater understanding of a range ofissues including local infrastructure,industries, power and transportsources and soil types. The NaturalResource Management Council andthe four catchment councils willparticipate to ensure theCommission’s plans will becompatible with the plans thatqualify for Commonwealth NationalAction Plan funding.

Laminated Veneer Lumber plant

Construction of the LVL plant atNeerabup is expected to becompleted in mid 2004 with logproduction to commence soon after.Initial production is expected to berestricted while the plant iscommissioned.

Log exports from Albany

Pentarch Forest Products exports areexpected to commence at a rate ofapproximately 100,000 cubic metresa year, from the Albany port.

Wesfi Limited agreement

The commercial terms associatedwith the proposed Laminex projectare expected to be finalised. WesfiLimited, now owned by Laminex,has agreed to invest $1 million ayear in the planting of radiata pineas a part of the terms of the WoodProcessing (Wesfi) Agreement Act2000. This will contribute to thefuture supply of timber to itsDardanup factory. The Commissionhas continued the harvesting anddelivery of the agreed 330,000cubic metres of radiata andMaritime pine per year to Laminex,until 2025. The timber is used inparticleboard and medium densityfibreboard.

Consulting with stakeholders.

Pinetec sawmill

Construction of the new Pinetecsawmill in the South-West isexpected to commence. Thesawmill will have a total productioncapacity of 100,000 to 120,000cubic metres per year and will besupplied by Commission and privateplantations. Pinetec usespredominantly small softwoodsawlogs that do not have sufficientstrength or size for structuralpurposes. The sawlogs are usedlargely in packaging and pallets.

Hansol Australia chipmill

Construction of the Hansol Australiachipmill is expected to becompleted in early 2004. The millwill have the capacity to process500,000 cubic metres of Tasmanianbluegum logs per year.

Forest Management Plan

The requirements of the new ForestManagement Plan 2004-2015, willbe implemented. This will involvethe continued restructuring of thenative forest timber industry basedupon the final determination ofsustainable timber yield.

Indian sandalwood research

Ongoing research will be conductedon the development of high qualitygenetic Indian sandalwood materialand consideration will be given tothe establishment of a treebreeding program.

Marri furniture

Further expansion of potential marrifurniture markets will be sought.More permanent arrangements willbe pursued to access marri furnituregrade timber through negotiationand the establishment of marriresidue contracts of sale.

Jarrah and karri sawlogcontracts

Contracts will be developed forsome or all of the 10 industryproposals for the future use ofjarrah sawlogs and other priorcommitments for jarrah and karri atthe Nannup, Greenbushes andPemberton mills. This will lead tonew processing industries in theSouth-West, with a view tomaximising regional benefits.

Craftwood strategy

The Commission will develop andimplement a craftwood strategy forSouth-West native forests.

Export marketing

Assistance for the furniture industryin its export and marketing effortswill be ongoing as will the progressof the Design Research Centre. Thenext export events will be thefurniture show at High Point, NorthCarolina in October 2003 and theMilan International Furniture Fair inApril 2004.

Harvesting pine fromcommercial plantationsat Gnangara

Jarrah and marri forest

Wesfi Limited staff monitor theMDF production line.

Hardwood sawlogs.

Building a Sustainable Future...

2003 2002 2001(33 weeks)

($’000) ($’000) ($’000)

Summary of Financial Performance:

Revenue from ordinary activities(excluding revaluations and fundamental errors) 101,659 114,439 84,461

Calculated as follows:Revenue from ordinary activities as reported: 126,988 146,983 90,148Less the following items included in revenue from ordinary activities:Revenue from natural resource assets and in-forestinfrastructure revaluations 25,329 22,339 5,687Correction of prior year fundamental errors - 10,205 -

Expenses from ordinary activities(excluding natural resource asset & infrastructure devaluations) 99,390 107,951 74,518

Calculated as follows:Expenses from ordinary activities as reported: 106,866 131,515 90,500Less:Expenses from natural resource asset and in-forest infrastructure devaluations 7,476 23,564 15,982

Profit from ordinary activities (profit before, tax, natural resource asset revaluations and fundamental errors) 8,600 12,893 14,741

Financial performance including natural resource revaluations and fundamental errors:Profit before interest and tax 26,453 21,873 4,446Profit/(loss) before tax 20,122 15,468 (352)Profit/(loss) after tax 14,500 13,310 (2,415)

Summary of financial position:Assets:Current assets 28,095 31,462 25,531Non-current assets 332,274 308,460 302,529Total assets 360,369 339,922 328,060

LiabilitiesCurent liabilities 22,935 17,941 24,355Non-current liabilities 83,287 82,196 78,958Total liabilities 106,222 100,137 103,313

Net asset/total equity 254,147 239,785 224,747

F i n a n c i a l O v e r v i e w 2 0 0 2 / 0 3

Financial performance:

The 2002/03 financial year was thesecond full year of operations for theCommission.

The Commission’s financial resultsfor the year and financial position asat 30th June 2003 are summarisedbelow. The 2002/03 financial results

include net revenue of $17.9 millionrelating to the revaluation ofstanding timber and in-forestinfrastructure.

Excluding the effect of naturalresource and in-forest infrastructurerevaluations, revenue from ordinaryactivities decreased 11% ($12.8million) and expenses from ordinary

activities decreased 8% ($8.6million) over the 2001/02 financialyear due mainly to the continuedimplementation of the government’s‘Protecting Our Old Growth Forests’policy. As a result, profit fromordinary activities decreased by 33%($4.3 million) over the 2001/02financial year.

Natural resource assetvaluations:

The Commission values its naturalresource assets using discountedcash flow models to calculate thenet present value of future benefitsassociated with their harvest andsale. These models are sensitive tomovements in market conditions,revenue, cost and product mixchanges. Accounting standardsdictate that these movements berecorded as part of the Commission’soperating revenue and expenses. Dueto the inclusion of these figuresoperating profit is subject tomaterial fluctuations.

Debt to equity:

The Commission continues to makegood progress on the reduction of itslong-term debt. The ratio of debt toequity has decreased to 29.7% from36.7% on the Commission’sformation. The debt to equity ratiocontinues to be adversely affectedby interest-bearing liabilitiestransferred to the Commission fromthe Department of Conservation andLand Management on theCommission’s inception in 2000, forwhich the Commission received nocompensating land assets. Showingan increase in assets to compensatefor these liabilities would improvethe Commission’s debt to equityratio. Negotiations are continuingwith the Department of Conservationand Land Management for thetransfer of these assets.

The creation of the Business

Development and Services

division in 2002/03 reflects

the strategic focus of the

Commission in the areas of

investment attraction,

marketing and organisational

transformation.

Forestry has been identified

as a growth industry within

Australia and as the

Commission moves forward

in an expanding market, it

will be liaising with national

and international investors.

Corporate marketing strategies areunder development. Specific productmanagers throughout theorganization will work within thisframework to maximise impactthroughout Australia and overseas.

Revitalisation of work in the areasof business development,investment and industrydevelopment have occurred withoutincreasing the Executive.

Corporate services andcompliance

Corporate services are provided tothe Commission on a bureau basisunder a service contract with theDepartment of Conservation andLand Management (DCLM). Thisservice arrangement is consistentwith the current thinking initiatedunder the functional reviewinitiative of government.

The Commission has just completedthe first year of operation underthese detailed service levelagreement arrangements and is wellpositioned with this experience toprovide a specific example of thesuccess of appropriately managedand documented outsourcing ofcorporate services.

Freedom of Information Act

The Commission complies with therequirements of the Freedom ofInformation Act and has its ownInformation Statement available onrequest from the public, via itsRivervale office. Documents andpublications are available onrequest through the Public Affairsarea.

B u s i n e s s D e v e l o p m e n t a n d S e r v i c e s

Contracts

The Commission manages more than350 contracts (including StateAgreements) for works and servicescontracts and the sale of forestproducts. These contracts have anapproximate life value in thevicinity of $2.5 billion.

Occupational health and safety

The Commission is committed toproviding and maintaining a healthyand safe work environment. Acomprehensive review of the currentsystems of occupational health andsafety management was performedusing the Australian standard as acomparative basis. Current systemsare acceptable and provide cleardirection for the Commission in itspursuit of best practice.

The Commission has continued toundertake a benchmarking exercisewith similar government agencies inother States, with a view toestablishing clear comparisonsbetween agencies within theforestry arena. It is hoped thatdata and trend analyses arisingfrom this exercise will enablefurther improvements to be made inthe management of occupationalhealth and safety.

There were 13 claims (three losttime incidents) for workers’compensation during the year2002/03. All 13 claims have beenfinalised. This represents a markedimprovement on the previous yearduring which 21 claims were lodged(seven lost time incidents).

Risk Management and AuditCommittee

The Risk Management and AuditCommittee met on a quarterly basisduring the year and has overseenthe continued development of afive-year strategic plan for internalaudit. The annual program, whichis derived from this plan, containssome 30 risk-based audits coveringfinancial, operational andenvironmental activities with nosignificant issues of non-compliancebeing identified in 2002/03.

The Commission continues tomaintain certification in accordancewith standard ISO 14001 forenvironmental management.

A Risk Management Review hasbeen initiated and is beingconducted in conjunction withRiskCover. The review has beeninitiated by the Executive, and theresults will be the basis for thedevelopment of risk managementstrategies across the organisation.The program is also a keycomponent of the agenda for theCommission’s Risk Management andAudit Committee.

Debtor’s policy and proceduresreview

A new debtors management policywas implemented during thefinancial year and delivered goodresults.

Codes of ethics and conduct

The Commission complies with thePublic Sector Code of Ethics andhas its own Code of Conduct foremployees, which was approved andcompleted in July 2001.

The Code of Conduct addressesissues including conflicts ofinterest, corruption, discipline,confidentiality, freedom ofinformation, security of records,equal employment opportunitiesand diversity, disability services andgrievance resolution.

Feedback opportunities areavailable through internal andexternal mechanisms and staff areregularly surveyed. Planningcommenced on an Office of thePublic Sector StandardsCommissioner (OPSSC) survey ofhuman resources, standards, ethicsand equal employmentopportunities, during the year. Nocomplaints were lodged under eitherCode during 2002/03.

Equal employment opportunities

The Commission’s yearly EqualEmployment OpportunityManagement Plan (EEOMP) reflectedthe following outcomes for theperiod ending 30 June 2003:

▪ Representation of women in theworkforce increased from 40.7%to 41.2%.

▪ The distribution of womenthroughout the Commission alsoimproved with the equity indexincreasing from 26 to 35.

▪ The number of employees fromculturally diverse backgroundsincreased from 0.4% to 7.5%.

▪ The number of IndigenousAustralians employed at theCommission remained unchangedat 0.4% of the workforce.

▪ The number of Commissionemployees possessing a disabilitydeclined from 1.6% to 0.9%.

The EEOMP will be reviewed duringthe 2003/04 financial year.

Disability Service Plan

In accordance with its existing(interim) Disability Services Plan,the Commission actioned issuesarising from a review of premisesaccess. This action included the re-surveying of the existing premisesand the leasing of a significantamount of disabled-friendly officeaccommodation.

Waste paper recycling

The Commission recycled 2 520kilograms (2.5 tonnes) of wastepaper under the State government’swaste paper recycling program.

Community service obligations

The Commission’s ForestEnhancement Program is a work andemployment strategy under theRegional Forest Agreement thataddresses a range of social,silvicultural and fire protectionobjectives.

In 2002/03 the Commission spent$0.317 million against a budget of$0.740 million employing displacedtimber workers on a short-termbasis on forest silvicultural worksprograms, to thin overstocked jarrahregrowth stands and as seasonalfire fighters for DCLM. The surplusfunds will be carried over to fundfuture expenditure.

Publications

▪ Action Plan for Tree Farming inWestern Australia *

▪ Adding Value to Forest Productsin WA *

▪ Code of Practice for TimberHarvesting in Western Australia

▪ Commercial Tree Farming Packagesfor Farmers

▪ Farming Maritime Pine *

▪ Farming Western AustralianSandalwood *

▪ Forest Products Commission: Our Objectives

▪ Growing WA Sandalwood fromSeed

▪ InfinitreeTM - Growing aSustainable Future

▪ Introducing the Forest ProductsCommission *

▪ Manual of Management Guidelinesfor Timber Harvesting in WesternAustralia

▪ New Eucalypt Sawlog Industry(NESI) *

▪ Plant Propagation CentreManjimup Nursery

▪ Sandalwood Information Sheets

▪ Specialty Timber in the Goldfields

▪ The Tree Grower’s Information Kit

▪ Timber Technology Newsletter

▪ Trees to Fight Salinity on Farms

▪ WA Forest Products

▪ WA Forest Today

▪ WA Plantations

▪ WA Timber Designed by Nature

The above publications are availablefrom the Forest ProductsCommission at 117 Great EasternHighway, Rivervale or through theCommission’s regional offices.

*Available at www.fpc.wa.gov.au

Energy smart activities

In support of the Energy Smart Government policy objective, theCommission achieved the following during 2002/03:

Govt program Baseline 2002/03 Variation %

Energy consumption (MJ) 6,467,031 MJ 6,025,416 MJ -7%

Energy cost ($) $173,032 $171,084

Greenhouse Gas Emissions(tonnes of CO2) 1,236 1,540

Performance indicatorsMJ/sqm 2,155 (3000m2) 2,008 (3000m2)MJ/FTE 37,382 (173) 32,747 (184)(The actual PI varies depending on Agency functions)