Australia has been one of the fastest growing economies in the industrialized world in recent times. The economy grew strongly during the 1990s but the rate of growth slowed in late 2000. Despite global economic slowdown, Australia's economy expanded by 4.1 percent in 2001. Factors that contributed to this positive economic performance included:
• Low inflation. While the introduction of a goods and services tax affected prices in 2000, inflation was only 3.1 percent in the year ending 31 December 2001.
• Lower interest rates allowed consumption to increase. The short-term borrowing rate was around 5 percent at the start of July 2001 but fell back to 4.25 percent by January 2002. The corporate lending rate of 8.4 percent in July 2001 eased back to 7.7 percent by the start of 2002.
• Relatively steady growth in wages of around 3.5 percent per annum over the past two years.
• Currency exchange rates favoured exporters.
• The current account deficit improved.
• Stronger domestic demand compensated for falling growth in exports in the latter half of 2001.
Australia's recent economic growth was broadly based across household consumption, business investment (4.5 percent higher than 2000) and housing construction. While corporate sector profits grew strongly in the late 1990s, they fell in 2000. There was some rebound by the end of 2001, but less so than in other countries such as the United States. By the end of 2001 corporate profits as a share of GDP remained at levels around the average of the past decade. Surveys of business outlook in Australia suggest good prospects for growth in profitability.
Other key points were:
• Unemployment remained relatively stable at close to 6.6 percent.
• Australia's international debt-servicing ratios remained low by historical standards, with the ratio of net interest payments to exports remaining about 9 percent per annum (September quarter 2001).
• A major factor in Australia's economic performance has been strong and sustained growth in productivity.
• Australian labour productivity growth accelerated during the 1990s, to around 2.8 percent per annum.
• GDP per hour worked grew by 5 percent throughout 2001.
• An extensive programme of liberalization of the economy during the past couple of decades has been a major driving force behind the improvement in productivity growth in Australia.
The Australian financial year runs from 1 July to 30 June and the following charts are expressed on that basis.
Apparent Consumption of Paper and Paperboard in Australia: 1996/97-2000/01 (kt)
Source: APIC
• Apparent consumption of paper and paperboard in Australia has experienced an average growth rate of 3.9 percent per annum since 1996/97.
• The fall in the rate of increase (0.2 percent) in total apparent consumption experienced in 2000/01, was caused by the drop in consumption of printing and writing papers.
• For 2000/01, local production of paper and paperboard was 2.7 Mt (+0.3 percent compared to the previous year), exports 405 kt (-20.0 percent), imports 1.4 Mt (-6.7 percent) and apparent consumption 3.7 Mt (-1.4 percent).
By main grades: 1996/97-2000/01 (kt)
Source: APIC
By main grades: 2000/01 (kt)
Source: APIC
• Newsprint consumption between 1996/97 and 2000/01 has remained reasonably constant at approximately 680 ktpa.
• Production of newsprint is approximately 400 ktpa, with imports accounting for an additional 280 ktpa. Exports of newsprint are negligible.
• Printing and writing grade has experienced an average growth rate of 7 percent per annum since 1996/97.
• Production of printing and writing grades in 2000/01 was 586 kt (an increase of 30 kt from the previous year). Imports were down 9 percent to 760 kt and exports were down 14 percent.
• Tissue consumption, while starting from a lower base, has experienced an average growth of 7 percent per annum over the last four years.
• In 2000/01, local production of tissue was 202 kt (+3 percent compared to the previous year), imports 55 kt (+2 percent) and exports 3 kt (-86 percent).
• The apparent consumption of packaging and industrial papers was 1.5 Mt, up 2 percent from 1999/00, imports fell to 311 kt (-4 percent) and exports dropped to 319 kt
(-17 percent).
Exports of paper and paperboard by main grades: 1996/97-2000/01 (kt)
Source: ABARE
• Exports of newsprint remained insignificant.
• Exports of printing and writing paper fell slightly (-14 percent) in 2000/01, however since 1996/97, exports have grown at an average rate of 7 percent per annum.
• In 1999/00, exports of tissue reached a proportional peak of 4.5 percent of total paper and paperboard exports. However, in 2000/01, exports of tissue fell to 3 kt, and accounted for 0.75 percent of total paper and paperboard exports.
• In 2000/01 384 kt of packaging and industrial papers was exported 17 percent less than in 1999/00.
• Corrugating medium accounted for approximately 60 percent of exports of packaging and industrial grades. China and New Zealand were the major export destinations (66 percent).
Imports of paper and paperboard by main grades: 1996/97-2000/01 (kt)
Source: ABARE
• Since 1996/97, imports of paper and paperboard have increased at an average rate of 5.5 percent per annum.
• Newsprint imports have fluctuated slightly around 280 ktpa since 1997/98.
• The major import grade is printing and writing paper, accounting for approximately 54 percent of total imports of paper and paperboard grades.
• Tissue imports, while small compared to other grades, have grown at an average rate of 23 percent per annum since 1996/97, to reach 55 kt in 2000/01.
• Imports of packaging and industrial grade were 311 kt for 2000/01. New Zealand accounted for 30 percent of the import market share.
Sales turnover for paper and paperboard: 2000/01 (AUDM)
Source: APIC
• While the volume of paper and paperboard remained stable in 2000/01, the value of goods consumed rose to AUD 3 457M.
• As an indication of the extent of the value that paper production makes to raw materials, in 2000/01, the value of the raw materials, pulp and wastepaper, remained less than 2.5 percent of the total value of trade.
• In 2000/01, sales of packaging and industrial grades accounted for the largest share of the market followed by printing and writing and tissue.
• On a proportional basis packaging and industrial grades accounted for 35 percent of total sales in 2000/01.
• While tissue accounted for only a small proportion of the market by volume, in 2000/01, it represented 25 percent of the total value, or approximately AUD 50M behind printing and writing paper.
Paper and paperboard trade by main grades: 1996/97-2000/01 (AUDM)
Exports (AUDM)
1997 1998 1999 2000 2001
Imports (AUDM)
Source: ABARE
• Since 1996/97, the average growth of exports has been 15 percent per annum, while the average growth of imports has been at a slower rate of 12 percent per annum.
• For both imports and exports the major commodity traded (by value) remains paper and paperboard. In 2000/01, it accounted for 80 percent of exports and 75 percent of imports.
• In 2000/01, the value of imports was more than four times the value of exports.
Forecast growth of apparent consumption for the main grades of paper and paperboard 2001/02-2005/06 (kt)
Source: URS Forestry/Ausnewz research
• The forecasts are based on the relationship, since 1996/97, between GDP and apparent consumption (income elasticity of demand) and projections of GDP through to 2005/06.
• The correlation coefficient between GDP and the consumption of tissue is 0.89 and the indicated income elasticity is 1.54. That is to say, for every 1 percent increase in GDP it could be expected that the demand for tissue would grow by 1.54 percent. As GDP is expected to grow by 2.5 percent in 2001/02, for example, tissue consumption is forecast to grow by 9.8 kt (254 x 0.025 x 1.54). In total the industry is expected to expand by 83.9 kt over the next five years.
• The correlation coefficient between GDP and the consumption of printing and writing papers is 0.91 and the indicated income elasticity is 2.2. That is to say, for every 1 percent increase in GDP it could be expected that the demand for printing and writing papers would grow by 2.2 percent. As GDP is expected to grow by 2.5 percent in 2001/02, for example, printing and writing paper consumption is forecast to grow by 69.5 kt (1263 x 0.025 x 2.2). In total the industry is expected to expand by 627.0 kt over the next five years.
• The correlation coefficient between GDP and the consumption of packaging paper and board is 0.96 and the indicated income elasticity is 0.59. That is to say, for every 1 percent increase in GDP it could be expected that the demand for packaging paper and board would grow by 0.59 percent. As GDP is expected to grow by 2.5 percent in 2001/02, for example, packaging paper and board consumption is forecast to grow by 21.8 kt (1263 x 0.025 x 0.59). In total the industry is expected to grow by 173.8 kt over the next five years.
• Assuming that the consumption of newsprint remains static, it could be expected that the demand for paper and board would grow 884.7 kt to 4 545.7 kt by 2005/06.
The Australian financial year runs from 1 July to 30 June and the following charts are expressed on that basis.
Apparent Consumption of Hardwood Sawnwood in Australia: 2000/01 (km3)
Source: ABARE
• Apparent consumption of hardwood sawnwood decreased by 174 km3 (13 percent) against the previous year, to 1. 2 Mm3.
• Production of hardwood sawnwood was lower in 2000/01, falling below 1.2 Mm3, with reduction of native forest areas available for timber production.
• Legislation passed by the Federal government (Regional Forest Agreements) providing twenty-year security for sustainable harvesting.
• Imports were primarily tropical hardwoods with shipments from Malaysia 46 km3 (down 26.5 percent from 1999/00) and Indonesia 25.6 km3 (down 5.5 percent).
• Exports for 2000/01 were 34 km3, down 24 percent on the previous year. Major destinations were Japan with 8.6 km3 (24 percent), New Zealand 4.3 km3 (13 percent) and China 3.2 km3 (9.4 percent).
• Long-term future domestic supply of hardwood to be increasingly sourced from plantations.
Apparent consumption of softwood sawnwood in Australia: 2000/01 (km3)
Source: ABARE
• Apparent consumption of softwood sawnwood decreased by 528 km3 (15 percent) compared to the previous year, to 2.9 Mm3.
• Consumption of softwood sawnwood in Australia was approximately 2.5 times greater than the level of consumption of hardwood.
• The decrease in the level of consumption of softwood sawnwood in 2000/01 was a result of high building activity in 1999/00, due to the impending introduction of the GST from 1 July 2001 and construction for the hosting of the Olympic games in September 2001.
• Production of softwood sawnwood was 2.4 Mm3 in 2000/01, falling 286 km3, even though available resources from softwood plantations continue to increase.
• Imports for 2000/01 were down 28 percent to 611 km3. Shipments from New Zealand reached 489 km3, accounting for 80 percent of total imports.
• In 2000/01 softwood sawnwood exports fell to 53 km3, down 24 percent on the previous year. Major destinations were Japan with 11.8 km3 (22 percent), New Zealand 3.1 km3 (6 percent) and China 2.6 km3 (5 percent).
Apparent consumption of medium density fibreboard in Australia: 2000/01 (km3)
Source: ABARE
• Apparent consumption of MDF in 2000/01 decreased to 411 km3, falling by 60 km3 (12.7 percent) compared to the previous year.
• Responding to similar market forces as sawnwood, MDF consumption decreased in 2000/01 as a result of high building activity in 1999/00.
• Production of MDF reached 712 km3 in 2000/01, rising 91 km3 (15 percent), driven by higher exports supported by a weaker Australian dollar.
• Production of MDF in Australia still remains approximately 75 percent of capacity.
• Imports for 2000/01 fell 36 percent to 88 km3. Shipments from New Zealand were 75 km3, accounting for 85 percent of total imports.
• Exports continued to rise, reaching 389 km3, up 35 percent compared to the previous year. Major destinations being Korea with 113 km3 (29 percent), China 71 km3 (18 percent), Japan 60 km3 (15 percent) and Chinese Taipei 59 km3 (15 percent).
Apparent consumption of particle board in Australia: 2000/01 (km3)
Source: ABARE
• Apparent consumption of particle board in 2000/01 decreased to 850 km3, falling by 91 km3 (9.7 percent) compared to the previous year.
• Responding to similar market forces as sawnwood, particle board consumption decreased in 2000/01.
• In Australia, particle board is not being substituted by MDF at the same rate as in some other developed countries due to the greater weight and higher proportion of resins in MDF.
• Production of particleboard fell to 904 km3 in 2000/01, down 74 km3 (7.6 percent).
• Imports for 2000/01 rose 12 km3 (37 percent) to 44 km3. Shipments from New Zealand were 32 km3, accounting for 73 percent of total imports.
• Exports recovered to reach 98 km3, up 42 percent compared to the previous year.
Apparent consumption of plywood in Australia: 2000/01 (km3)
Source: ABARE
• Statistics collected for plywood are inclusive of veneer production used in the manufacturing of plywood, but exclude veneer production for the manufacturing of other commodities.
• Apparent consumption of plywood in 2000/01 decreased to 247 km3, falling by 49 km3 (16.6 percent) compared to the previous year.
• Responding to similar market forces as other forest products, plywood consumption decreased in 2000/01 as a result of high building activity in 1999/00.
• Production of plywood fell to 157 km3 in 2000/01, down 74 km3 (7.6 percent).
• Imports for 2000/01 fell 17 km3 (15 percent) to 97 km3. Shipments from New Zealand were 31 km3 (32 percent of the total) and from Indonesia 26 km3 (27 percent).
• Exports remained relatively small, falling 3 km3 to 7 km3.
Trade in woodchip and logs: 2000/01 (kbdt)
Source: ABARE
• Imports of woodchips and logs remain insignificant.
• Exports of woodchips continue to climb at around 5 M bone dry tonnes (Mbdt).
• Major destination for woodchip exports continues to be Japan.
• Exports of logs (roundwood) fell by 56 km3 in 2000/01, to 1.094 (Mbdt)
Debate between community groups, industry and the Australian Government over greenhouse gas emissions, climate change and ratification of the Kyoto Protocol continues unabated. While the issues are complex, three broad positions can be identified:
Australian Action on Greenhouse
The Australian Government's position is that it will contribute to global action to reduce greenhouse gas emissions by working to meet the net 108% reduction target, ascribed at CoP3, by 2012.
The government has not committed to ratification of the Kyoto Protocol. Further analysis is expected to be undertaken to clearly identify the benefits and costs of ratification for Australia, and particularly for Australian industry.
The Australian Government is continuing funding, currently around AUD1 billion, managed by a specialized government agency - the Australian Greenhouse Office - for a range of initiatives to deal with the climate change issue. These initiatives include:
• The Greenhouse Challenge Programme, a voluntary government/industry programme to implement abatement action and monitor and report on greenhouse gas emissions and abatement actions (over 700 industry groups and companies participating);
• mandate energy efficiency in the power and residential;
• research into and pursuing greater efficiency;
• greenhouse gas abatement project financial assistance ($400 million);
• greenhouse gas research and monitoring, including a National Greenhouse Gas Inventory and research into commercial development of renewable energy;
• development of a National Carbon Accounting System;
• extensive preparatory work on emissions trading models;
• emissions forecasting and modelling studies;
• greenhouse friendly endorsement based on emissions offsets; and
• legislation that mandates a target for energy produced from renewable sources by 2010.
The Australian paper industry is keen to ensure that the government fully understands the economic sectoral and regional impact of ratification and that appropriate policy responses can be developed through domestic policy objectives.
The paper industry takes its environmental responsibilities seriously. It has made an early, effective and sustained effort to contribute to the national goal of reducing greenhouse gas emissions. Since 1997, it has reduced its CO2 emissions by 13 percent per tonne of product and an estimated 24 percent since 1990.
• APIC was one of the foundation signatories to Greenhouse Challenge.
• It has invested heavily in energy efficient technology and renewable and alternative energy.
• In 2000-01, approximately 28 percent of its energy was derived from renewable sources, significantly more than the national target the government is seeking to achieve by 2010.
• The industry has substantially increased the utilization rate of recycled fibre (up 6.15 percent from 45 percent in 1991-92).
• reducing the amount of energy consumed in the paper production process; and
• reducing the amount of paper going to landfill and the associated greenhouse gases (methane is 21 times more concentrated than CO2).
• Natural gas accounts for approximately 40 percent of the industry's energy consumption.
• Energy contributes up to 20 percent of the cost of producing paper products in Australia. Australia is a fossil-fuel dependent economy.
• The government has recently announced a number of initiatives to address national energy market reforms.
• The Australian paper manufacturing industry will be heavily involved in working with government on these initiatives with the objective of ensuring that these reforms are progressed in a way that guarantees the industry ongoing reliability of supply of energy at prices that maintains the industry's international competitiveness.
Forest management certification has progressed on a number of fronts including process and performance management systems
• ISO 14000 environmental management system (EMS) standards have become an industry standard in Australia.
• Many major forest managers, wood processors and pulp and paper producers have or are moving towards certification of compliance with this standard.
• Some major companies have developed their own in-house policies and standards for managing their environmental responsibility, or `stewardship'.
• Other forms of corporate demonstration of environmental responsibility:
• National Packaging Covenant - covers the paper packaging supply chain in an effort to reduce the environmental impact of packaging products and develop economically viable kerbside recycling. The Commonwealth Government has also given legislative support to the Covenant by developing a National Environmental Protection Measure for used packaging materials with the States and Territories. All Australian packaging paper manufacturers support the Covenant;
• Currently there are no substantive standards for third party certification of forest management established in Australia.
• However, through global developments and export opportunities, Australian industry players have been making progress towards an internationally credible performance management system.
• The Australian forest and wood products industry is developing AFS to provide a national forest management certification system, for both natural forests and plantations.
• Progress to date on AFS is discussed below.
• At least one private owner of softwood plantations in Australia is progressing towards an FSC certification assessment in mid-2002.
• A diverse group of representatives in the wood and paper sector have initiated the process of forming an Australian FSC working group, which is expected to begin work soon on regional guidelines for Australia.
• AFS will become available to industry players, and their initial response will set the scene for further development of certification over the next few years.
• Advent of FSC in this region will also have a significant impact on further development in Australia.
• An Australian Forestry Standard (AFS) is being developed for forest management certification - designed to provide for all forests managed for wood production, regardless of type and scale of ownership, or whether they are native forests or plantations.
• The Ministerial Council on Forestry, Fisheries and Aquaculture, the National Association of Forest Industries, Australian Forest Growers and the Plantation Timber Association of Australia are sponsoring its development.
• The AFS is managed by a Steering Committee and supported by a Technical Reference Committee representing a wide range of interests and expertise at a national level.
• Development is progressing towards a release of the final standard in mid-2002.
• Use of the standard will be voluntary - owners and growers who use it can apply for the certification of any forest they manage for wood production.
• The AFS will only assess the performance of forest management up to the forest gate, the point where wood passes out of the forest. It will not make any assessment of the appropriateness of wood products manufacturing or transport outside the forest boundary. However, many wood products companies will have an ISO14001 certified EMS in place to ensure sound management of the environmental aspects of their wood processing operations.
• Once a forest manager has been certified for the AFS by an independent third party certification body it will be able to state publicly that its management of a particular forest meets the AFS requirements.
• To make claims about timber products it will be necessary to establish a chain-of-custody, which substantiates that the products were made out of wood from a certified forest. It will also be necessary to have third party auditing of the chain-of-custody.