The Government will provide up to $1.69 million through the One Billion Trees programme to Māori landowners.
VicForests was found in May to have had breached conservation laws related to threatened species by the Australian federal court.
Bunnings says it has a zero-tolerance approach to illegally logged timber and it is committed to only sourcing timber products from legal and well-managed forest operations.
As a result, the company ceased sourcing of VicForests timber from June 30.
Australian Forests Products Association CEO Ross Hampton has described the decision as a “knee-jerk reaction to pander to extremist activist groups”.
Hampton said it will only lead to more imported timber from less sustainably managed forests overseas.
“This decision puts at risk tens of thousands of Australian manufacturing jobs at a time when our country can least afford to lose them, especially in regional communities,” said Hampton.
“The truth is that Victoria has one of the most regulated, sustainably managed native forestry industries in the world, harvesting the equivalent of just four trees out of 10,000.”
Australia’s Assistant Minister for Forestry and Fisheries, Jonno Duniam, called the decision “disappointing and wrong” and said Australian jobs will be lost as a consequence.
“Bunnings shelves will be stacked with more imported timber, rather than Australian grown structural hardwood timber, Australian solid timber panels and Australian kitchen benchtops,” said Duniam.
“This decision will cost many hundreds of jobs across harvesting, sawmills and processing, particularly in our regional communities.
“Bunnings is kicking Australia’s timber industry while it’s down, and at a time when Australian companies and Australians should be backing Australian products and supporting Australian jobs.”