Tasmania’s forest industry has commissioned the most in depth study ever undertaken into the returns received by the community through industry assistance.
The study by IMC-Link and respected Tasmanian economist Dr Bruce Felmingham measured the relationship between assistance to specific industries and their contribution to the Tasmanian economy.
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IMC Link and Dr Felmingham spent around eight months analysing complex Commonwealth and state data to determine the level of subsidies provided to five key areas of the economy.
Once the level of assistance was established, the researchers then looked at the contribution of each industry sector and established a Subsidy Intensity Index to work out the “bang for buck” governments were getting for each dollar of assistance.
Releasing the report today, Forestry Tasmania’s Executive General Manager Hans Drielsma said it was clear industry assistance to all sectors delivered significant benefits to the community.
“Discussion of subsidies rarely considers the economic benefit generated. This report clearly shows subsidies benefit consumers as well as producers, and generate jobs and income for Tasmanians,” Dr Drielsma said.
IMC-Link and Dr Felmingham found that the least subsidised sectors were energy, and mining mineral processing followed by forestry and timber processing with agriculture and fishing and tourism the most heavily subsidised.
Dr Drielsma said the findings should dispel once and for all the myth that the forest industry was heavily subsidised.
The report notes that in absolute terms, the subsidies paid to tourism are more than twice the value of industry support for agriculture and fishing and three times greater than the support provided for the timber and forestry sector.
The report, undertaken for Forestry Tasmania and the Forest Industries Association of Tasmania (FIAT) by leading economist Dr Bruce Felmingham, also found that the forest industry generates $56 for every dollar it receives in direct government subsidies, compared to $15 for the tourism industry.
FIAT Chief Executive Terry Edwards said the report was commissioned in order to gain accurate information about the level of government subsidies to major Tasmanian industries.
“Forestry Tasmania and FIAT did not commission this report seeking a government handout. On the contrary, we sought accurate information about industry assistance.
We were surprised that this work has never been carried out before. To this extent, Dr Felmingham’s report is groundbreaking.”
“Forestry Tasmania and FIAT do not criticise government assistance to other key industries.
“For example, while tourism is heavily subsidised, it also generates great benefits for Tasmania’s brand values.
“These results show that there is good reason for industry assistance by government, particularly during the Global Financial Crisis.”
Dr Felmingham said the IMC-Link report was the most in depth study ever undertaken into industry assistance.
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Rank Order Tables (from less relatively subsidised to more relatively subsidised)
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Industry Sector
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Rank
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SIIi
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BB ($)
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Mining and minerals processing
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1
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0.006
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167
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Energy
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2
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0.007
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150
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Forestry and timber processing
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3
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0.018
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56
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Agriculture/fishing
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4
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0.042
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24
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Tourism (all visitors)
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5
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0.065
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15
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Tourism (holiday makers only)
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6
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0.090
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11
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The study showed the forestry sector received an average $25.24 million a year in direct government subsidies for the period 2004-2008 and generated $1.408 billion in the 2006/07 financial year, equating to a BB of $56 for every dollar invested.
Dr Felmingham said all five industries are subsidised and in each case they have benefited the growth and development of the island’s economy,” he said.
“Subsidisation has had a positive economic effect in the past and will do so in the future if well targeted. An example of this is the tourism subsidies, which have returned a spectacular growth in tourism activity.
"The policy implication is that 'subsidisation' is not a dirty word and has added greatly to Tasmania's lifestyle."
Download Report (459 k PDF)
ENDS
14 June 2009
More information:
Terry Edwards
Forest Industries Association of Tasmania
Ph: (03) 6224 1033
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