Mr ANDREW FRASER (Coffs Harbour—The Assistant-Speaker) [5.13 p.m.]: I draw the attention of the House to an issue that is having an impact not only on the electorate of Coffs Harbour but also throughout the North Coast. I refer to the harvesting of timber in State forests. In 1995 the Carr Government came to office having promised to enter into long-term wood supply agreements. Those agreements operated in a haphazard manner until 2003 because of pressure from and preference deals done with The Greens. As a result, the vast majority of New South Wales forests became national parks and a large number of millers left the industry, some with payouts and some not. Other mills were upgraded with government assistance to handle guaranteed wood supplies.

We are now witnessing the collapse of the timber industry on the North Coast. That is happening for a number of reasons. First, the downturn in the housing market is causing problems across Australia, let alone the North Coast. Second, we have had a very wet year on the North Coast and forests are virtually inaccessible and logging cannot take place; and, third, Boral Timber, which has been taking mill waste from the mills, has now advised the industry that the majority of the chip it was taking is no longer required. I understand that only one small mill in my electorate will be supplying Boral with chips. That decision has been made because of the high value of the Australian dollar and the subsidies paid by foreign companies to their milling operations to provide chips to those who need it. Boral's decision will result in huge job losses on the North Coast.

Mills such as Hurfords Hardwood at Lismore, Notaras and Sons Pty Limited, Big River Timbers and Solar Timbers at Kempsey rely on supplying chips to subsidise their milling operations. In fact, one miller told me that he is making $75,000 net each year from chips—which is mill waste—and that money assists him to pay his power bill. With the predicted increase in the cost of electricity that will result from the introduction of the carbon tax by the Federal Government that miller will be unable to operate profitability. He told me that he keeps milling because of his love of the industry and because he wants to provide employment in Grafton. The return on his investment in his mill is miniscule compared to what he would get in bank interest if he were to sell it and invest the money. We as a government and a community must examine ways in which we can assist the industry through this crisis. It has been suggested to me that we should redirect supply from Forests NSW and consider the type of timber we take and its use.

We must also examine government contracts and ensure that Australian hardwoods are utilised to the greatest possible extent. For example, some years ago we moved away from using timber railway sleepers and used concrete sleepers instead. Those sleepers are now failing and must be replaced. I suggest that we replace them with hardwood sleepers, which were used successfully for many years throughout the country. If we were to do that we would save some jobs. Logging contractors have already walked away from the industry because they cannot harvest timber and they have not been able to access the volumes that were promised by Forests NSW in the past. This industry is in a mess. Although a committee is investigating the situation, we must take a more proactive approach and buy timber from the mills that are in danger of failing. If we do not, regional economies on the North Coast will suffer the consequences.