Forestry industry in structural decline like car industry, economists say

Australia's forestry industry is in ''structural decline'' and is comparable in ways to the stricken car industry, according to economists.

Prime Minister Tony Abbott on Wednesday said he would like the forestry industry to be a ''vital'' part of the economy, announcing the Forestry Industry Advisory Council to help the industry.

But economists say the industry is too small and beset by problems to be a vital part of the economy, despite years of subsidies.

''It has historically been an important industry for Tasmania, but it's not especially important for Australia at all,'' Bank of America Merrill Lynch chief economist Saul Eslake said. ''It would be true to say it's in structural decline … even more so in Tasmania.''

The high exchange rate, changing consumer tastes, poor product image and global competition have contributed to its decline in recent decades, economists say.

And figures from the rural forecaster Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) show its employment has been declining in the sector.

In forestry and logging, as well as wood product manufacturing industries, employment fell last year from roughly 66,700 in 2011-12 to 64,000 in 2012-13.

Since the late 1980s, federal and state governments have been trying to support the industry and boost conservation with numerous assistance packages.

Last year, Tasmania's forestry industry was promised another $300 million after the Tasmanian Forestry Agreement was finalised.

The Australia Institute in December reported that in the past three years more than $180 million has been spent on buyouts and structural adjustment assistance, equating to roughly $140,000-$280,000 per worker ''removed'' from the industry.

''It makes the car industry look like it is swimming along nicely,'' director Richard Dennis said.

''When thinking about the economic of it, every element is working against it,'' he said.

The story Forestry industry in structural decline like car industry, economists say first appeared on The Sydney Morning Herald.

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