Victorian forestry businesses have welcomed an offer of five-year government contracts but say they are still waiting for adequate compensation as the axe falls on the industry.
The Victorian government announced it would offer VicForests harvest contractors secure five-year contracts with Forest Fire Management Victoria to carry out bushfire risk reduction works.
An expression of interest was set to be circulated among VicForests contractors on Friday for the contracts beginning on July 1 next year.
The government has also offered seasonal forest and fire management works packages to harvest and haulage contractors to take them up to June 30, when existing contracts expire.
The government is yet to decide the fate of VicForests and offer alternative work to its staff ahead of logging winding up in the state on January 1 next year.
"We have listened to the timber industry, and this support provides certainty of work for harvest contractors, their families, communities and local businesses for the next five years," Environment Minister Steve Dimopoulos said in a statement on Friday.
"Our new contracts for forest contractors will help to reduce Victoria bushfire risk and ensure our communities and landscapes are better protected."
Australian Forest Contractors Association general manager Tim Lester said the offer of a five-year contract in forest and fire management works was very attractive and a number of businesses were keen to take it up.
But contractors were unhappy with the government's harvest and haulage support package, which was incorrectly touted as compensation, Mr Lester said.
The government has offered harvest contractors who decide against taking up a fire and forest management deal about 30 cents on the dollar for the remainder of their contract, or for about six months, Mr Lester said.
Haulage contractors were effectively offered 50 cents in the dollar by virtue of the government also only honouring the remainder of their contracts.
"That is not compensation," Mr Lester told AAP.
"It actually doesn't pay for the insurance fees, the finance that people have had on their equipment. It doesn't bring them back to zero."
The government said the harvest and haulage package covered loss of equipment and income, and would reimburse businesses in full for redundancy payments.
Mr Lester said the government's community forestry package was inadequate because it relied on a depreciated value for equipment.
"We need actual proper loss of income recognition, which includes compensation," he said.
"That compensation needs to cover off the recognition of the investment that people have put in, and recognise the pain, suffering, stress and anxiety of this whole process.
"We've now got towns that have big questions around what their future is."
The government said its community forestry support package would compensate forest produce licensees and firewood operators for undersupply dating to November 2022.
It would also compensate operators for plant and equipment that was no longer required, and reimburse them in full for worker redundancy payments.
The Allan government has invested $1.2 billion in the forestry transition.
