On 7 September 2025, NSW set the proposed 476,000-hectare boundary for the Great Koala National Park and halted native-forest logging within it (plantation harvesting continues), with formal gazettal slated for 2026.

The national conversation on productivity has rightly focused on incentives for investment, innovation and skills. But an equally important lever is to stop pouring public money into activities that destroy value. A hard-nosed productivity agenda means winding back subsidies to sectors that chronically lose money – especially when they also impose large environmental and fiscal risks borne by taxpayers.

Australia’s native forest logging industry is a textbook case of capital misallocation. Over decades, taxpayers have bankrolled losses and bailouts: more than $1.3 billion in accumulated losses in Tasmania, with handouts exceeding $1.5 billion in Victoria and about $1 billion in New South Wales. The uncomfortable reality is that without substantial budget support, the industry would not persist. That is the opposite of productivity.

The indirect costs are even larger. Logged and regenerated forests burn at significantly greater severity than intact forests – a difference that matters when megafires strike. The 2019-20 Black Summer fires carried an estimated economic cost of about $100 billion. Meanwhile, emissions from native forest logging are material; in Tasmania alone, logging operations each year generate the equivalent of emissions from about 1.1 million motor vehicles. Those are real balance-sheet risks for governments and communities.

On commercial fundamentals, native forest logging is a poor investment. It cannot compete with the plantation sector on cost, scale or yield; it relies on large public subsidies; it mostly produces high-volume, low-value products (woodchips and paper pulp); and it employs a very small and dwindling workforce. Add the increased fire risk, substantial emissions and biodiversity damage, and there is no credible risk-adjusted economic case for continuing public support.

Some argue that subsidies are justified to protect jobs. But the employment numbers in native forest logging are small. Analysis of the November 2023 Jobs and Trees report by The Australia Institute suggests very few workers are employed in native forest logging in Tasmania – between 0.1% and 0.3% of the workforce in that state. A recent conservative assessment for southern NSW indicates fewer than 300 people in the native forest sector – a fraction of plantation employment. Crucially, the skill set is transferable and the Australian Forest Products Association itself has highlighted significant labour shortages in plantations. This is exactly the kind of “just transition” where redeployment is feasible, timely and geographically practical. In NSW, for instance, towns such as Tumut, Bombala and Coffs Harbour host both native forest and plantation operations, reducing relocation and disruption costs.

The transition is already underway: NSW’s Great Koala National Park decision pauses native-forest logging inside the proposed boundary while plantation harvesting continues, with estimated impacts on about six of roughly 25 local mills and around 300 workers, alongside compensation and redeployment pathways (including NSW National Parks and Wildlife Service roles) and a projected $160-plus million visitor-economy surplus over 20 years (~85,000 extra visitor nights annually).

If Australia wants a more productive, lower-risk forestry industry, plantations are the engine room. They already supply about 90% of Australia’s sawn timber, grow wood faster for higher-value uses, and are around four times less likely to burn than logged and regenerated native forests. Ending native forest logging would unlock more private investment in plantations and reduce sovereign-risk perceptions, while also catalysing investment in national parks and conservation – precisely what New Zealand experienced after exiting native forest logging in 2002.

For treasuries and the Productivity Commission, this is low-hanging fruit. Every dollar not spent propping up a structurally unviable, risk-intensive activity is a dollar that can be reallocated to high-return public priorities: modernising the plantation estate, regional skills programs to redeploy workers, hardening communities against fire, or crowding-in private capital for higher-value wood products and natural-capital restoration.

Productivity is about doing more with less. Persistently subsidising a loss-making, low-value industry that heightens fiscal and climatic risks is the definition of doing less with more. If governments want a quick, credible win on productivity — and a cleaner set of forward estimates — they should start by ending budget support for native forest logging and backing the parts of the sector that actually generate value.

The views expressed in this article may or may not reflect those of Pearls and Irritations.