Sawmill Opt-out Scheme

In December 2021 the Victorian Government announced an early Opt-out Scheme for sawmills to run at the same time as VicForests’ Timber Sales Process for supply from 2024 to 2030.

The scheme aims to provide support for sawmills that choose to stop purchasing timber from Victorian State Forests ahead of the first step down in timber harvest volumes in 2024, as well as staggering the transition period for businesses, communities and workers.

Eligible sawmills can apply for an opt-out payment to:

  • stop purchasing logs sourced from Victorian State Forests on or before 30 June 2023
  • surrender any Timber Sale Agreement(s) with VicForests and any Forest Produce Licences they may hold
  • not enter into a contract, licence or agreement for the supply of timber from Victorian State Forests after 30 June 2023.

There are two stages to the Scheme:

  1. An Expression of Interest stage from 30 September 2022 to identify sawmills interested in the Scheme, their future support needs and assess eligibility
  2. An application stage from 26 October 2022 when eligible businesses will be invited to submit an application.

Successful applicants will receive a payment from the Victorian Government for the surrender of their Timber Sale Agreement(s).

The Opt-out Scheme runs at the same time as the 2024-2030 VicForests’ Timber Sales Process. Businesses can participate in the Timber Sales Process and the Opt-out Scheme at the same time. If a business is successful in the Opt-out Scheme and the Timber Sales Process they can only access one or the other, not both.

Who is eligible?

The scheme is open to Victorian-based hardwood sawmills that:

  • have a current Timber Sale Agreement with VicForests
  • hold a current registered Australian Business Number (ABN)
  • conduct sawmill business operations within Victoria.

How to submit an Expression of Interest

Expressions of Interest for the Opt-out Scheme opened on 30 September 2022 and closed on 19 October 2022.

Businesses who are successful in the Expression of Interest process will be invited to submit an application from 26 October 2022.

Application guidelines

  • Expressions of Interest open: Friday 30 September 2022
  • Opt-out Scheme briefing: Friday 7 October 2022
  • Expressions of Interest close: Wednesday 19 October 2022
  • Applications open: Wednesday 26 October 2022
  • Applications close: Friday 2 December 2022

All dates are subject to the conditions set out in the Opt-out Scheme Guidelines.

If a business is eligible for the scheme after submitting an Expression of Interest (EOI), the Department will contact them and invite them to submit an application that provides:

  • Demographic information relating to employees and full-time contractors directly involved in the operation of the mill and who are employed by the business which is party to the relevant Timber Sale Agreement. Demographics are to include the number of employees, by age group, employment status (full time, part-time, casual) and years of service, as at the time the application is lodged.
  • Future plans for the business:
    • If planning to close:
      • when the sawmill will cease processing timber from Victorian State Forests
      • the number of employees to be made redundant and timing of when those redundancies will occur – for example immediately, within 6 months, within 12 months or later
      • evidence of how employee statutory entitlements will be met
      • a description of the impact of the sawmill’s closure on other businesses that are substantially dependent on the sawmill’s operation
      • any other information the business wishes to provide.
    • If planning to remain open:
      • the activities the business will undertake
      • the number of employees to be made redundant and timing of when those redundancies will occur – for example immediately, within 6 months, within 12 months or later
      • if any employees are to be made redundant, a description of how employee statutory entitlements will be met
      • other grant funding the business has received and/or will apply for to support the business to transition
      • any other information the business wishes to provide.
  • An Opt-out Price to surrender their Timber Sale Agreement(s).
  • A rationale for and a detailed description of how the Opt-out Price was determined, including all of the factors that were included in the price calculation.
  • Australian Taxation Office compliance reports (balance sheet and profit and loss statements) for the past three years.
  • The business is required to reaffirm the declarations given in the Expression of Interest regarding success in the Opt-out Scheme.
  • Any other information the business wishes to provide the Department in relation to its application for the Opt-out Scheme.

Yes.

The Expression of Interest for the Opt-out Scheme was released on Friday 30 September 2022. Registrations for VicForests’ Timber Sales Process 2024 will be release on 10 October 2022.

Sawmill businesses may apply for both the Opt-out Scheme and VicForests’ Timber Sales Process 2024.

If a business is successful in the Timber Sales Process and receives an Opt-out Scheme offer they can choose to take up or decline the Opt-out Scheme offer.

If they take up the Opt-out Scheme offer they become ineligible to continue to participate in the Timber Sales Process.  If they decline the Opt-out offer they will remain eligible for the Timber Sales Process.

The Opt-out Scheme and the Timber Sales Process will be run as completely separate processes until the time when applicants accept the Opt-out offer. At this point, the Department will advise VicForests of the successful Opt-out applicant. VicForests will then withdraw the successful Opt-out applicant from the Timber Sales Process.

If successful in the Opt-out Scheme, you will need to surrender your Timber Sale Agreement(s) and, if applicable, Forest Produce Licence(s) on or soon after 30 June 2023.

Timber supply to 30 June 2023 will be in accordance with your current Timber Sale Agreement(s) and, if relevant, Forest Produce Licence(s).

VicForests will manage any log supply obligations not met by VicForests to 30 June 2023 in accordance with the relevant contract.

Yes.

You may withdraw your Expression of Interest until close-of-business 21 October 2022 and withdraw your application at any time.

However, if you are successful in the Opt-out Scheme and accept the Opt-out offer, the Department will advise VicForests and your business will be withdrawn from the Timber Sales Process 2024.

No, but you will not be able to purchase native logs from Victorian State Forests after 30 June 2023.

If you decide to keep your sawmill open, you will need to find another supplier of logs or transition and diversify your business. The Victorian Forestry Plan has grants to assist your transition.

If you are successful in the Opt-out Scheme, the timing of your Opt-out Payment will be in accordance with the grant agreement, which may specify one or more milestones before any payment is made – generally concerning any redundancy payments to your workers.

It is expected that Opt-out Payments will commence soon after the surrender of your Timber Sale Agreement(s) and, if applicable, any Forest Produce Licence(s) in mid-2023.

Yes, if you meet the requirements for those support packages. For those support packages that require a Timber Sale Agreement to be eligible, you would need to apply for that support package before surrendering your Timber Sale Agreement as part of the Opt-out Scheme.

The Victorian Forestry Plan includes a range of support packages to help businesses through the transition:

  • Forestry Business Transition Voucher program
  • Victorian Timber Innovation Grants
  • Mill Site Rehabilitation
  • Plant and Equipment Redundancy Payment
  • Worker Support program
  • Victorian Forestry Plan Transition Fund

The Victorian Forestry Plan includes assistance for affected timber businesses, workers and communities.

Victorian Forestry Plan support includes:

  • Forestry Business Transition Voucher program – this program offers access to tailored support through business service providers to equip affected forestry businesses with a better understanding of their business capabilities, options and strategies for transition.
  • Victorian Timber Innovation Grants – this program supports businesses to transition from native timber to plantation or other fibres and transformative industry investment.
  • Mill Site Rehabilitation – this program will be available to support rehabilitation works associated with the closure of an operational sawmill site up to $150,000. This program is yet to be released.
  • Plant and Equipment Redundancy Payment – this payment of up to $250,000 per business is for items that have not been fully depreciated and are unable to be sold. This program is yet to be released.
  • Worker Support – this program will support affected sawmill workers and those working in harvest and haulage businesses. The transition package includes:
    • Training and re-training programs
    • Case management, specialist employment and career assistance
    • Additional support through the Back to Work program
    • Relocation support
    • Top-ups to worker redundancy payments
    • Tailored mental health and wellbeing support.
  • Victorian Forestry Plan Transition Fund – this fund will support actions from the local development strategies to grow businesses and create jobs in affected communities. This fund is yet to be released.

Details of these programs can be found at the Victorian Forestry Plan page or by phoning 1800 318 812.

No, section 12 of the Opt-out Scheme guidelines outlines this and states that ‘Applicants will be required to determine the tax implications of any payment under the Opt-out Scheme from their own taxation advisors and at their own risk. Tax liabilities (if any) payable or paid as a consequence of the Opt-out Scheme is entirely the responsibility of the applicant and will not be reimbursed.

If successful in the Opt-out Scheme, your Timber Sale Agreement must be surrendered in full.

If you intend to include worker statutory redundancy payments in your submission you should outline this and tell us why. This will be evaluated as part of the cost of your overall submission.

Redundancy top-ups provided by the Victorian Government under the Worker Support Program should not be included in the submission.

Contact information

For more information or any questions about the Opt-out Scheme, email optoutscheme@ecodev.vic.gov.au

Page last updated: 19 October 2022