FCV Business and Social Enterprises
David Williams (bio)
The FCV was established by the Forests Act 1918 to protect and manage Victoria’s public forests for the long term benefit of Victorians. The primary charter provided the framework for the FCV’s many and varied activities and works over almost seven decades. The Act also provided for the Commission to undertake secondary activities which were indirectly related to the primary purpose. These non-core activities included operating business and social enterprises and ‘war effort’ programs. They significantly contributed to the Commission’s work over it's life.
Business enterprises included timber seasoning, two sawmills, a Eucalyptus oil distillery, a steel tramway, harvesting and directly selling forest products, and a one-off opportunistic export sale of hardwood poles. The primary objectives were specific to each business but the general purpose was either to:
- Provide leadership in a new area of forest products to encourage private companies to follow, or;
- Supplement overall production because of limited private sector capacity.
Commercial performance was a secondary objective with these businesses. Some of the businesses performed well financially including harvesting and directly selling forest products, eucalyptus oil production and one-off sale of export hardwood poles. The Erica sawmill was profitable until the latter stages of its life. The timber seasoning business returned a minor profit overall but was not a commercial success. The Erica tramway and Nayook sawmill were unsuccessful commercially.
The ‘war effort’ programs and social enterprises were not commercial businesses, and were instigated at the direction of the Victorian government. The ‘war effort’ programs of emergency firewood production for Melbourne and Geelong, and charcoal production, were both very successful. The social enterprises included 11 separate unemployment schemes and training programs. The Commission became adept at operating the unemployment schemes and became dependent of the labour to carry out much of its forest works programs. The training programs were partly successful with significant numbers of trainees subsequently gaining employment as a result of skills acquired under the programs.
The FCV was established in 1918 under the Forests Act 1918. The principles for the new Department provided the framework for FCV core policies and practices. In addition there was provision for the FCV to enter into what could be considered non-core enterprises. This provided the basis for the FCV’s involvement in business enterprises, ‘war effort’ programs and social enterprises over the life of the Commission.
This paper reviews the nature, reasons for involvement, objectives and assessment of the success of the FCV’s non-core enterprises.
The principles laid out in the Forests Act 1918 included the following:
- The conservation, development and utilisation of the indigenous forests, based on sound forestry principles.
- The establishment of adequate plantations of exotic softwood species.
- The prosecution of essential research work concerning the natural products of the forests.
- The need for an effective fire prevention and fire suppression organisation.
A new Act was adopted in 1958 expanded the provisions of the earlier Act.
The Act also provided for the Commission to enter into other non-core activities. These represented significant part of the Commission’s work over it's life.
The non-core enterprises and activities can be divided into two classes, viz:
- Business Enterprises– these were initiated by the Commission with the support of the Victorian Government. Whilst they were established as commercial businesses, financial objectives were secondary. Primary objectives varied between businesses, but the objectives were to encourage and assist advancement of existing or new areas, or stepping in when private sector capacity was considered too limited. In the former situations the Commission’s approach was to ‘show the way’ as encouragement for private sector involvement by advancing knowledge and demonstrating the commercial viability of the businesses.
- Social Enterprises and ‘War Effort’ Programs– these activities resulted from government directions to deliver government policies and initiatives. Funding was provided by Commonwealth and Victorian governments and there were no commercial imperatives other than delivering the works in a financially efficient manner, and providing effective work or delivery of services and goods.
Table 1. Business and Social Enterprises and ‘War Effort’ Programs
The FCV operated five substantial businesses over almost seven decades. They included timber seasoning, sawmilling, eucalyptus oil production, operating a steel tramway for transporting licensees’ sawn timber, and harvesting and direct selling of forest products. The timber seasoning business was operated for the longest period, 47 years, and the business of harvesting and directly selling forest products operated for the shorter period of 20 years. All businesses were successful, to a greater or lesser extent, in achieving their primary non-commercial objectives. The businesses were of mixed success financially, with harvesting and directly selling forest products being quite profitable whereas operating the steel tramway resulted in significant accumulated losses.
As these enterprises were initiated by the FCV, it is interesting to consider the reasons for their involvement. There were two basic reasons:
- Taking a lead for private enterprise to follow in the case of the timber seasoning works and eucalyptus oil production.
- Supplement inadequate private industry capacity in the case of the sawmills, the tramway and harvesting and directly selling forest products.
Table 2. Summary of Business Enterprises & Level of Success
First reported separately in the 1963/64 FCV Annual Report
‘War Effort’ Programs.
The Commission was directed to assist with the Government’s ‘war effort’ with two programs, those being producing emergency firewood and charcoal for fuel oil.
Emergency Firewood Program
This program required the FCV to rapidly organise infrastructure and operations to produce and distribute large quantities of firewood in Melbourne and Geelong in war time because there was a sudden shortage of coal and increased demand for power for heavy industry for the war effort. The program was a large scale complex task involving a number of external government and private parties with in-forest operations, establishment of wood depots in metropolitan areas, rail and road transport of long length wood from forests, sawing into short lengths at depots and distribution to users. The nature and scale of the task was well beyond anything previously experienced by the Commission. It involved engaging various sources of labour including direct employees, piece meal workers, contractors, aliens and European migrants and liaising with other Victorian and Commonwealth government departments, local municipal councils and government established emergency war time agencies as well as private businesses and contractors.
The program was very successful at producing and distributing firewood and overcoming many challenges in the process. Almost two million tons of firewood was produced at an expenditure of almost £3.5 million. The program was never meant to incorporate commercial objectives and accumulated losses amounted to £1.1 million. Some of the losses were recompensed from the Commonwealth government.
"The land on the eastern side of Kyle Road, which is no longer part of the North Altona site (in 2021 this facility was still being used by DELWP), was originally used for the purpose of a FCV firewood storage depot and workshop. It was called the Brookwood rail-siding, and was one of several firewood storage depots close to and in Melbourne, the others being in Toorak, Fitzroy and Kew. These firewood depots were a part of the FCV's post-WW2 involvement in supplying firewood to meet community needs. In December 1950 a large fire at this depot destroyed more than 3300 tonnes of firewood."
The six year involvement in charcoal production was to provide a substitute fuel for motor vehicles caused by war time with the restrictions of supplies of imported petrol. It stemmed from direction from the Substitute Fuels of State Emergency Council for Civic Defence. Private enterprise was unable and/or didn’t initially respond to the need to increase charcoal production. The Commission formed the State Charcoal Branch to organise increased production, build up reserves to meet emergencies and regulate the cost to consumers.
The task was successfully achieved such that by 1943 there was sufficient volume to satisfy essential transport requirements. Production and distribution were steady by that time and private enterprise was able to cope with normal demands. The program incurred total costs of £275,000 and accumulated losses of almost £50,000.
FCV Annual Report Extracts
“... the Commission in March last formed the State Charcoal Branch to organize increased production of charcoal, to build up reserves to meet emergencies and to regulate the cost to consumers.”
“Producers were circularized and asked to step up production to the limit, with any assistance which the Branch could extend.”
“Practical instructions and advice regarding the most economical methods of production were incorporated in a leaflet published and distributed to prospective new burners.”
“As a result of the publicity, information and assistance distributed by the Branch, and by personal contact of Commission officers with both existing and prospective producers, rapid improvement in the supply position soon became apparent. At the close of the financial year, not only were current demands being met but also it was possible to make a commencement with the creation of reserve stocks.”
“Installation of departmental kilns and grading plants was continued, and at the date of this Report 221 kilns and 12 pits were in operation, the maximum fortnightly production being just short of 600 tons.” Source: All above from FCV Annual Report, 1942/43
“Charcoal production and distribution are on a reasonably stable basis, and private enterprise is now able to cope with all ordinary demands. This state of affairs should continue provided that adequate manpower is left available to the industry, particularly in those country districts from which charcoal supplies are drawn.” Source: FCV Annual Report, 1943/44
1940/41 - 1650
1942/43 - 38922
1944/45 - 14358
1946/47 - 687
Source: FCV Annual Reports
There were 11 separate schemes for unemployment relief and training stretching over more than 5 decades from 1927. The unemployment relief schemes were aimed at providing relief for unemployed men during depressed economic periods. The training programs targeted younger people with the aim of improving work and life skills to increase the opportunities to secure worthwhile employment.
The FCV was particularly well placed to operate the schemes. The advantages enjoyed by the Commission included ability to quickly devise effective work programs, effectively direct and supervise such work, the tasks were overwhelmingly labour intensive, the work locations were spread across Victoria, forest camps were quickly established to provide accommodation for the earlier schemes and workers generally found the working and living conditions agreeable. The schemes were funded predominantly by the Commonwealth government with funding for some schemes from the Victorian government and from private benefactors in the case of one of the youth training programs.
The Commission became quite adept at establishing and successfully delivering the schemes. All the unemployment relief schemes were successful in meeting the objectives of providing relief for unemployed men. Many thousands of unemployed men were provided relief under the schemes over the years. More than $17 million were spent on the schemes most of which was paid as wages. The training programs were successful to varying extents in providing improved work and life skills and a good proportion of participants subsequently secured worthwhile employment as a result of the training.
The tasks involved silvicultural works, establishment and maintenance of plantations, fire protection, road and track maintenance, nursery works and work on recreational facilities in the latter period. There was limited activity in construction and maintenance of buildings and facilities. The work was of lasting value and was generally of a reasonable or high quality. The Commission came to rely on this source of labour for its forest works program over a period of years.