Forestry Business Support Package

Overview

In May 2023, the Victorian Government announced the ending of commercial native timber harvesting in State forests by 1 January 2024.

The Forestry Business Support Package provides:

• compensation for the loss of value of plant and equipment (Component 1)
• reimbursement of any statutory redundancy payments made to employees made redundant due to the end of native timber harvesting (Component 2)
• compensation for loss of income in 2023-24 (Component 3).

The Forestry Business Support package is part of a suite of programs on offer to support sawmill businesses, harvest and/or haulage contractors, community forestry operators and other forest-based businesses impacted by the native transition.

Eligibility

Components 1 and 2

To be eligible to apply for Component 1 (compensation for the loss of value of plant and equipment) and Component 2 (reimbursement of statutory redundancy payments), an applicant business must:

1. be one of the following:
   1. a haulage sub-contractor who:
      1. has contracted since 1 July 2020 to a business with a current VicForests harvest and/or haulage contract and
      2. has at least 50% of annual revenue derived from the business with the VicForests contract, based on an average of the last 3 financial years
   2. a wood chip truck operator who:
      1. has transported hardwood woodchips from sawmills that had a Timber Sale Agreement or a Forest Product Licence issued by VicForests since 1 July 2020 and
      2. has at least 50% of annual revenue derived from transporting hardwood woodchips from those mills based on an average of the last 3 financial years
   3. a road contractor who:
      1. has had a contract with VicForests or DEECA since 1 July 2020 and
      2. has at least 50% of annual revenue derived from the contract based on an average of the last 3 financial years
   4. a seed-collector who has at least 50% of annual revenue derived from the VicForests contract based on an average of the last 3 financial years
   5. a business undertaking forest-based activities which has had at least 50% of annual revenue derived from a VicForests contract based on an average of the last 3 financial years.
2. hold a current registered Australian Business Number (ABN)
3. be conducting business operations within Victoria
4. provide a statutory declaration that they will meet all industrial relations obligations as an employer in accordance with the National Employment Standards under the Fair Work Act 2009 (Cth) and the applicable Award, such as the Timber Industry Award.

Component 3

To be eligible to apply for Component 3 (loss of income compensation), an applicant business must:

1. have had a contract with VicForests to provide forest-based services (see below for types of businesses) or with DEECA for the management of the native timber road network for at least two years between 2019-20 to 2023-24, including a contract in 2022-23 or 2023-24
2. have derived an average of at least $30,000 annual revenue from the contract
3. have derived at least 50% of its total annual revenue from the contract based on an average of the years the services were provided
4. hold a current registered Australian Business Number (ABN)
5. be conducting business operations within Victoria.

All revenue conditions are exclusive of GST.

If an applicant business cannot demonstrate the 50% revenue condition of their eligibility criterion due to the structure of their business, they can submit a statutory declaration. The declaration must state that the relevant portion of the business has at least 50% of its annual revenue derived from the contract with VicForests, DEECA or the harvest and/or haulage business or sawmill that has a contract or agreement with VicForests.

How to apply

Applications can be made through an online form.

Applicants seeking assistance are encouraged to contact the Forestry Transition Business Support Team:

Email: forestrytransition@deeca.vic.gov.au

Phone: 1800 381 182

Apply online

Start a new application

Resume an application

Key dates

Application closing date: 5pm on Friday, 28 March 2025.

Component 1 – Plant and equipment compensation

The department will compensate the business on the loss of value of plant and equipment previously used to harvest and/or haul of logs or timber residues up to a cap of $1 million.

The department will engage the Valuer-General Victoria to assess each eligible piece of plant and equipment under two valuation scenarios:

• Valuation scenario 1 – 2020 assumed market sentiment – that is, the assessed value of the asset based on its current condition (wear and tear) and assuming the market conditions if the decision to cease timber harvesting by 1 January 2024 had not been made (i.e, assuming a 2030 industry closure).
• Valuation scenario 2 – 2023 market – that is, the value of the asset in today’s market.

Subject to this valuation process, for each piece of eligible plant and equipment, the department will pay the difference between the Valuation Scenario 1 value and the Valuation Scenario 2 value. If the Valuation Scenario 2 value is greater than the Valuation Scenario 1 value for a piece of plant or equipment, the department will not make a payment.

For example:

To be eligible for the package, plant and equipment must:

1. be listed on the business’s current ATO-compliant asset depreciation schedule; and
2. have previously been used to support the commercial harvest or haulage of native timber from Victorian State forests; and
3. have had a current replacement cost of >$20,000; and
4. not be a motor vehicle, IT and office equipment, or infrastructure.

Eligible plant and equipment can be sold or donated after a payment has been made by the department.

The completed valuation by the Valuer-General of Victoria is final and non-negotiable.

The final sum to be included in the Letter of Offer from the Minister for Agriculture is subject to the complete asset valuation process having been completed.

Component 2 – Reimbursement of employee statutory redundancy payments

The department will reimburse the business for employee statutory redundancy payments made by the business, with the rate and years of service capped at the maximum specified in the applicable Award or National Employment Standards.

The reimbursement amount will be capped and based on the evidence of the actual redundancy payment being made to an employee as shown on their final payslip.

The department will not reimburse the payment of leave entitlements.

Note that reimbursement of employee redundancy payments will be made on the basis of a genuine redundancy. A genuine redundancy relates to:

• a worker’s position that is not required by the employer, in this case due to the consequence of the transition away from harvesting native timber from State forests
• the position will be superfluous to each employer's needs and not to be occupied by anyone. Accordingly, the dismissal is because of the redundancy of the position (and not for any other reason)
• there must be no contrived arrangement (such as promise of another job) or other circumstances which indicate the redundancy is not genuine.

Some workers may be categorised as ‘dual capacity’ employees, in that they are engaged by an employing entity, and are also a directing mind or officeholder of that entity. The department will seek to understand the nature of the termination in these circumstances to determine if there is a genuine redundancy prior to any payment being made.

Component 3 – 2023-24 loss of income compensation

The department will provide a 2023-24 loss of income payment to eligible businesses that have regularly provided forest-based services to VicForests or undertaken roadworks for DEECA on the native timber road network from 2019-20 to 2023-24.

Eligible forest-based services include:

• seed surveys
• seed picking and sowing
• tree planting, fencing
• regeneration site preparation
• road construction and maintenance of in-coupe roads and DEECA roads used for native timber cartage
• rock blasting, wildlife surveying and safety auditing.

The payment will be calculated using records held by DEECA, including previous VicForests records.

It will be calculated by:

1. determining the average of the:
   1. four highest annual revenue amounts from the VicForests and/or DEECA contract between 2019-20 to 2023-24 if the business provided services for five years or
   2. three highest annual revenue amounts between 2019-20 to 2023-24 if the business provided services for four years or
   3. two highest annual revenue amounts between 2019-20 to 2023-24 if the business provided services for three years or
   4. two annual revenue amounts between 2019-20 to 2023-24 if the business provided services for two years then
2. subtracting any revenue received from VicForests and/or DEECA for those services in 2023-24 then
3. deducting 50% of the calculated compensation amount to reflect costs the business would not be paying in 2023-24, such as wages, fuel and maintenance.

For example:

Note: These figures are for illustrative purposes only and are not intended to reflect the true financial position of a business.

Page last updated: 03/11/24