THE logs - thousands of them - are piled neatly in an old sawmill yard at Neerim South, Gippsland. To the casual observer they may look unexceptional. But the truck drivers, paid by the government to cart the felled trees from the state's forests, know better. This place is a dumping ground, albeit temporary. And the wood - representing about 100 hectares of trees - symbolises long-term problems with the management of Victoria's native forests.
These quality-grade logs are normally delivered to a sawmill, but since Christmas up to 30 trucks a day have hauled them here from the forests of Gippsland, the central highlands and Yarra Ranges to what is known as the Crossover dump. It costs about $1500 a truckload. And, while logs are often stored in the summer cutting season, one truck driver with 30 years' experience told The Saturday Age he had never seen anything like this.
''Instead of telling the contractors up the bush: 'We haven't got a market for this wood, stop cutting trees', they are still cutting the bush at the same rate and stockpiling,'' says the driver, who has worked at Neerim South.
''Everyone knows it's wrong, but most [drivers] don't care because they're making a fortune. A kindergarten kid could run a business better than this.''
The government agency, VicForests, says it is stockpiling more than usual because of a contractual dispute - understood to be with the state's largest timber outfit, the Gunns-owned mill at Heyfield, which is for sale and in a six-week maintenance shut-down. Once this is resolved, VicForests says the logs will have a home, and the cost of storing, watering and transporting them to and from the Neerim South dump will be recouped. But until then the future of the 20,000 cubic metres of logs remains uncertain. As does - according to some with lifelong connections in the industry - the future of native forestry.
For decades, the fight over logging in Victoria had clear trenchlines: the environment movement arguing for biodiversity protection, versus the industry pushing regional growth, jobs and locally sourced wood products. But the battlelines are shifting.
While the Coalition government is confident about the timber industry's future, senior figures in the business say it is struggling. They blame a combination of environmental, economic and political forces for what some believe is a terminal decline. Despite a 2011 government plan aimed at bolstering the industry, others are asking whether the government should be locking in long-term support for an industry which, in many parts of the state, is on its knees.
Bob Humphreys owns a mill at Cann River, a town of 200 in East Gippsland. At 68, he is a 47-year veteran of the native forest industry and president of the Victorian Association of Forest Industries. But he is pessimistic about the future. A decade ago, Humphreys owned four mills, employed 75 people and processed 65,000 cubic metres of lower-grade sawlog. Today his business has dwindled to one mill, he processes just a sixth of what he did 10 years ago and employs only 17. ''All we can do is manage the decline,'' he says.
Humphreys says the industry has been hurt by cumulative cuts in the available native forest and the high Australian dollar, which has encouraged cheap imports.
Others in the industry point to a slump in the construction industry, a shift in building towards timber substitutes and a growing number of court cases brought by conservationists alleging environmental breaches.
Small mills have closed. Some were old and using out-dated technology, others could no longer compete. Alexandra, a central Victorian town of about 2000, once had three mills. The last shut in November 2010, putting 44 people out of work. And a weak woodchip market has hit hard. "(It's) been depressed for several years or more," says one pro-industry source who has watched the market closely. "But in the last 12 months it has got worse, not better. There's been a whole heap of stuff come on the market from Vietnam and South America." Stressing that he is speaking personally and not on behalf of the industry, Humphreys says every year has been worse than the year before. ''Most of that is down to resource [available timber], but also the market,'' he says.
Humphreys is backed by Scott Gentle, who started in the industry cleaning up after the 1983 Ash Wednesday fires and was head of the Victorian Forestry Contractors Association until June last year. He says concern about the industry's ability to keep supporting his family was a major reason for leaving. He is scathing of an auction system introduced under the previous Labor government that forced logging contractors to compete for a dwindling amount of business to survive. He has seen the human toll.
''We're [supposed to be] this tough, macho industry, but I've seen some of these people break down and cry. We're not a macho industry, I think we're a basketcase.''
The latest forestry report from the Australian Bureau of Agricultural and Resource Economics and Sciences shows that logs from Victorian native forests were worth $135 million in 2009-2010, compared with $139 million a decade ago. But what has changed over that decade is the industry's reliance on pulpwood - lesser quality timber often sent to woodchip mills and later used for paper - over higher quality logs destined for sawmills and value-adding.
Ten years ago, Victorian native forests produced 1123 million cubic metres of sawlogs, that has now dropped to 591,000 cubic metres. Meanwhile the amount of pulplogs has remained steady at almost 1300 million cubic metres in 2009-2010.
The 2010 state election brought to power an unapologetically pro-industry Coalition government, which late last year released a timber industry plan delivering on its promises: less biodiversity regulation, more guarantees of financial security from government, contracts locking in taxpayers for up to 20 years.
Yet Humphreys believes the industry has atrophied to such an extent that even if the amount of timber logged from native forests were to double overnight - a step the government categorically rules out - there would not be strong enough interest from mill owners for it all to be sold. ''The processing capacity is not there any more and the prices you would achieve wouldn't encourage you to build a greenfield processing facility.''
The economics of the native forest industry will be a key issue in what environmentalists claim could be a landmark Supreme Court trial starting next week.
My Environment, a green group based at Healesville, claims three logging coupes near Toolangi in the central highlands contain habitat for Victoria's endangered faunal emblem, Leadbeater's possum, and should be protected under state law. VicForests disputes the claim. But the case is expected to be a much broader test of the legitimacy of the forest industry, and will hear new analyses examining its economic basis.
Logging of Victorian native forests last financial year yielded 1.75 million tonnes of timber, and VicForests reported an operating profit of $2.3 million. But industry experts say the agency's profitability is clouded by changes to its accounting practices, and the government having paid it extra for a large operation salvaging timber burned in the Black Saturday bushfires.
The previous Labor government fundamentally reformed the way wood was sold from the public estate by setting up VicForests, which paid for the harvesting and haulage of logs delivered to the mill gate.
In an auction system, sawmills offer a price for the logs, but it was often unclear whether the cost to taxpayers was being covered.
A 2010 Treasury report commissioned by Labor found several major timber companies had refused to pay the full costs of harvesting and hauling the wood - making it clear taxpayers were subsidising their businesses. By the time the state election came around, Labor had decided to dump the VicForests model in favour of a system that recognised the economic benefits of not just harvesting native timber, but also protecting native forest to boost water yields and carbon stores.
The Saturday Age can also reveal that some within the Labor government secretly began modelling the possibility of an industry-wide shutdown in 2009. The Department of Sustainability and Environment, at the direction of former environment minister Gavin Jennings, commissioned a report on ending native forestry in the central highlands, the most commercially viable part of the industry. "It was glaringly obvious there were hardly any jobs in it," says one senior figure from the former government. "And the industry in East Gippsland was not viable at all, in any way, shape or form." The report was never released. Instead Labor went into the 2010 election promising a review of the industry and ''peace talks'' between the unions, the industry and the environment movement modelled on the negotiations in Tasmania. Had John Brumby won the election, a senior Labor figure believes, the review, and the state of the industry, would have combined to "kill off" native logging.
The Coalition, however, was moving in the opposite direction - promising to keep VicForests but restructure the board with more industry stakeholders. Oversight of VicForests also moved from the Treasurer's office to that of Agriculture Minister and Nationals politician Peter Walsh - a shift that opposition spokesman John Lenders says put the minister responsible for forestry ''in charge of the environment''.
But the man widely understood as driving the rewrite of timber industry policy in Victoria is not Walsh, but the parliamentary secretary for forestry and fisheries, Liberal MP Gary Blackwood. The member for Narracan's family has been in the logging business for five generations, and Blackwood himself was a logging contractor for 30 years before taking a Bracks government exit compensation package in 2002. Blackwood still holds shares in two former logging contracting companies, although they have been commercially inactive for years.
In December, Walsh released a Timber Industry Action Plan that it said would deliver the long-term certainty for the industry it had promised. It would offer native timber contracts lasting two decades, up from five years. It introduced a guarantee that it would foot the bill if a future Victorian government decided to reduce the industry and create more national parks, indemnifying VicForests against a potentially huge legal bill.
The government is reviewing VicForests' operations and has promised to spend nearly $2 million surveying the off-limits forest areas to see if the plight of some endangered species is as bad as scientists have warned, and whether some areas carved from logging coupes as special protection zones could in fact be felled. At the same time, the government has proposed a change to the Timber Production Code of Practice that would give the head of the Department of Sustainability and Environment the power to exempt a logging project from laws protecting endangered and threatened species. Conservation groups believe it is designed to give the flexibility to allow the industry to sidestep any future legal action. Walsh denies this.
''There are a lot of conspiracy theories being put forward by some of the environmental groups and I just don't accept that this is about lessening any sort of environmental standards at all,'' he says.
Walsh says the industry has been under intense pressure, and its message to government has been that it needs the security of guaranteed long-term timber access. He emphatically denies the industry is subsidised. He expects the industry action plan will trigger upgrades to existing mills, leading to production of higher-value products that can better compete with the import industry.
The government's stance is backed by the state's industry association. ''Although our local industry has been doing it tough in recent years, I believe we have a bright future,'' says its chief executive, Lisa Marty. ''Wood is the environmental choice and we have the ability to supply the sustainable building sector, provide quality furniture and other products for the homes and offices of Victorians, while storing carbon in our forests and using our waste for energy.''
The Coalition's pro-industry policy is yet to have an on-ground impact, but a massive tender it released late last month could have far reaching consequences. The ''request for proposal'', issued by VicForests, offers up to 20-year contracts for 837,000 tonnes a year of what is described as ''residual'' wood. This is mostly pulp logs that become woodchips, but also lower-quality timber and other waste currently left on the forest floor and burned after clearfelling. The government believes it could be burned for power - a new, native forest-driven biomass industry - or used to create cheap products such as particle boards.
Some industry sources are concerned such long-term contracts will only create a windfall for timber businesses. Conservationists, not surprisingly, are also displeased. ''Locking in 20-year woodchipping contracts not only guarantees the path to extinction for Victoria's threatened species, but is the Baillieu government's equivalent of the desalination fiscal misadventure,'' says Luke Chamberlain from The Wilderness Society.
Amid all this concern, it is expected that the industry will next week be able to tout some good news. After months of uncertainty, an announcement is expected on Tuesday that Gunns has sold the Heyfield mill to a Melbourne-based consortium, potentially wiping out the Tasmanian company's multi-million dollar debt to VicForests and leading to a gradual clearing of some of the logs held at Neerim South.
There will be talk of a new future, but some with long histories in the industry who spoke to The Saturday Age remain unconvinced. Michael McKinnell, a contractor in the central highlands, is one who believes a gradual, if not complete, shift away from native forestry and towards greater plantations is inevitable.
''There are zealots on both sides who think we should cut down everything or cut down nothing, and the moderates get caught in the middle,'' he says. ''The timber industry will morph and change, there is nothing more certain than that, but the pace of change may not please some of the more agitated people.''