March 6, 2014
You would think that the majority of Tasmanians are sick of the conflict over native forestry and would support an agreement to end it and to shift to becoming less dependent on their extractive industries over time given that forestry is a minor industry in the state. It generates just over 1,200 jobs – or less than 0.5 per cent of total employment in the state.
Not so for the conservatives. For example, speaking at a timber industry dinner in Canberra Tony Abbott said too much forest is currently locked up in Tasmania. He also recommitted to repealing part of the state’s Wilderness World Heritage Area made under the forest peace deal. Under the deal, 170,000 hectares of forest was added to the area, and the Government has formally asked the World Heritage Committee to delist 74,000 hectares.
This tear-up is supported by the state Liberal Party, which is likely to gain government in late March. The political cycle in Tasmania has swung back in favour of the forestry industry, even though it is an industry in structural decline:
The World Heritage areas were part of the peace deal negotiated by representatives of the forestry industry, unions and mainstream green groups and implemented by the Labor-Greens minority government last year.
In dumping it, the state and federal Liberal Party is advocating the further clearfelling and logging of natural forests in order to keep a failing native forest industry struggling against the tide. That would mean more public subsidies for the logging industry since the the entire public native forest industry itself is on indefinite life support courtesy of the Tasmanian taxpayer through numerous assistance packages.
Forestry Tasmania, which is responsible for public native forests in Tasmania, recorded a net loss before tax of $64 million over the period 2009-2012, according to The Australia Institute.
Tasmania iand Western Australia are examples of the “resource curse” which refers to countries rich in non-renewable natural resources are more prone to government mismanagement, corrupt institutions and weak economic growth. The rhetoric of the mining and forestry companies advocate laissez-faire capitalism, are reflexively hostile to any form of government intervention, hold that resource industries (especially mining) are the future for Australia and climate change is a left-wing/green conspiracy.
The resource industries close to politicians, fund their parties, employ lobbyists and acquire media outlets and they require approvals in their favour with respect to infrastructure, environmental protection and native title. The consequences are familar:
Positive wealth shocks from the natural resource sector (along with consumer preferences that translate this into higher demand for non-traded goods) creates excess demand for non-traded products and drives up non-traded prices, including particularly non-traded input costs and wages. This in turn squeezes pro"ts in traded activities such as manufacturing that use those non-traded products as inputs yet sell their products on international markets at relatively fixed international prices. The decline in manufacturing then has ramifications that grind the growth process to a halt.
Resource-abundant countries tended to be high-price economies and that, partly as a consequence, these countries tend to miss-out on export-led growth in other sectors.There is a decline in the competitiveness of other economic sectors (caused by appreciation of the real exchange rate as resource revenues enter an economy. There is also a lack of economic diversification and a lack of long-term investment in infrastructure which would support a more diverse economy.