Timber undersupply could cost $1m

FORESTS NSW is unable to meet its timber supply agreements with Boral and could pay up to a $1 million in compensation, the North Coast Environment Council said on Friday.

NCEC president Susie Russell said Forests NSW in 2006 was forced to pay Boral half a million dollars for undersupply of timber - and nothing has changed.

"Every year since, they have failed to meet their commitments under Woods Supply Agreements and Forests NSW now owes Boral almost twice as much again," she said.

As Boral and NSW Forests are having the matter dealt with by an independent commercial arbitrator, a Forests NSW spokesman declined to comment.

The issue was also raised at the annual general meeting of Boral held earlier this week. "The company said it was disappointed with the situation and it would not be making any new investments in the NSW timber industry," Ms Russell said.

She said it was no surprise Forests NSW could not meet its agreements, as a report by the Auditor General in 2009 revealed they were cutting down trees faster than they were growing them, which was a clearly unsustainable practice.

"The industry has been in decline for a long time," Ms Russell said.

She said with the parties now in arbitration, it was a good time to tear up the contracts and start again. "There is no point patching up these agreements to have them fold again in a few years. This will also give smaller millers access to timber for longer," she said.

"It is time to re-examine the forest industry and examine the crisis of supply with the crisis in biodiversity and weigh this up against the benefits of the timber industry."

Despite undersupplying Boral, Forests NSW was also accused of supplying timber to buyers they did not have contracts with in legal documents from 2010.

"We also want answers to this issue," Ms Russell said. "Who are they supplying, why, with how much wood and how come?"

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