Paul Omodei

Paul Omodei

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    Hardwood royalty rates to rise by 10 per cent

    30/06/2000 12:46 PM
     
    30/6/00

    Native hardwood sawlog base royalties will rise 10.2 per cent on July 1.

    Forest Products Minister Paul Omodei today said the increase was independent of the introduction of the Goods and Services Tax which would apply on top of the new royalty rate.

    Mr Omodei said the price rise was in line with the annual movement in the Price Index of Western Australian Produced Hardwood - the mechanism used to adjust royalties on sawlogs.

    The increase also would apply to other forest produce except logs sold for chip or charcoal production. Base royalties for these two categories are adjusted each six months according to the consumer price index in the case of chiplogs and the world silicon price in the case of charcoal logs.

    He said the total income from base prices on native timber (excluding chiplogs and charcoal logs) would increase from $20.1 million to $22.6 million as a result of the increase.

    The base royalty for first grade jarrah sawlog increases from $36.11 a cubic metre to $39.79 a cubic metre. The karri first grade sawlog base royalty rises from $44.10 a cubic metre to $48.60 a cubic metre. Chiplog base royalty will increase 16 cents from $16.56 a tonne to $16.72 a tonne.

    The increase also was separate to a review of hardwood timber prices that began this week with the appointment of independent consultants Chandler Fraser Keating.

    The review was foreshadowed by the State Government last year when it announced it would be brought forward under its new directions in forest management policy. The review previously had been scheduled for 2003 as part of the lead up to the forest management plan to operate from 2004.

    Mr Omodei said Chandler Fraser Keating consultants would begin the review immediately.

    “The review will be carried out in two stages with the first phase due by the end of September this year,” he said.

    “This phase will focus on the methodology to be used in calculating native forest timber prices.

    “The second phase will be to recommend a new schedule of prices and timeframes for future reviews.”

    The terms of reference for the review are:

    Phase One -
    • examine the cost of growing methodology and the conclusions and recommendations of the 1996 royalty review carried out by Arthur Andersen and Co;
    • review other methodologies applicable to native forest price determination and their appropriateness in the context of the WA forest growing, harvesting and marketing situation;
    • examine the implications of commitments under the Regional Forest Agreement and statements of Government policy on forest management on the costs of growing and harvesting of logs from native forests in Western Australia;
    • consider the proposed legislative amendments and the movement away from a specific royalty to a broader log price arrangement;
    • give consideration to competitive neutrality and efficiency of resource allocation in relation to issues such as plantation timber and investment in value-adding of native forest timber;
    • consult with CALM/Forest Products Commission and representatives of the WA timber industry including the plantation timber industry and the Forest Industries Federation of WA and the Furnishing Industry Association of WA Inc to provide input to the review where necessary.
    • to note and have regard for hardwood royalty/price reviews conducted in the eastern states of Australia since 1996; and -
    • provide a written report outlining the appropriate methodology for the determination of prices for native hardwood logs and recommendations of the investigation.

    Phase Two
    • recommend to the Minister for Forest Products, if appropriate, price level adjustments; and -
    • recommend, if appropriate, a framework for future price reviews.

    Media contact: Hugh Ryan 9213 6700