Analysis of DNRE (Forestry
Trees from public land
(State Forests) are sold to receive royalty payments. Forestry Victoria
uses the Royalty Equation System (RES) to set royalty rates. RES system
takes into consideration the location and haulage costs to the sawmills.
Sawmills in a remote area are charged lower royalty rates than mills closer
to a major sawn timber markets. The RES is designed to create equity among
Residual log and
sawlog licence holders are both required to pay a licence fee that is
indexed to change with increases in royalty rates.
For every cubic metre of
hardwood taken from State Forest, Forestry Victoria imposes a roading
charge to the holders of sawlog and Residual log licences. The roading
charge is a legislated payment to cover expenditure on logging road maintenance
and construction. Under Section 25 of the Conservation Forests and Lands
Act 1987, the roading charge is put into a special account and cannot
be spent on anything other than State Forest road infrastructure.
Companies are contracted
by the DNRE (Forestry Victoria) to log forest and haul logs to mills.
The Subcontractors who work in the forest own their own logging equipment.
There have been between seven and nine subcontracted logging crews working
in the Otways at any one time over the past four years. The Department
charges the sawmill and Residual log licence holders to recover the cost
of the harvesting/logging contract.