Review of Forestry Corporation of NSW's native timber harvesting and haulage costs

This review presents our findings on FCNSW’s review of its native timber harvest and haulage costs over the period 1 July 2013 to 30 June 2016, and our recommendations on improvements FCNSW can make to reduce these costs.

After examining the benchmarking report and doing further analysis, IPART is satisfied that, given the way FCNSW currently allocates native timber to sawmills, the harvesting and haulage costs it incurs are reasonably efficient.

But we found the inflexibility of current native timber supply arrangements results in higher than necessary harvesting and haulage costs, which could be lowered through agreeing alternative arrangements between FCNSW and the sawmills. This inflexibility reduces profitability for native timber sawmills and FCNSW, and reduces the value of native forests for the people of NSW.

Section 91 of the NSW Forestry Act 2012 (the Act) requires FCNSW to review, benchmark and report on its native timber harvesting and haulage costs every three years. It also requires the Independent Pricing and Regulatory Tribunal of NSW (IPART) to review FCNSW’s report and make recommendations for reducing these costs.

This is IPART’s first report under Section 91 of the Act.