So far, the forestry component of government climate change policy has focused on avoiding deforestation, with pre-1990 forests being brought into the Emissions Trading Scheme and therefore subject to a carbon liability if they are cut down and not replanted. There has been some support for afforestation - planting trees - via a Permanent Forest Sink Initiative, which allows forest owners to gain credits if they plant trees and promise to never cut them down. But there's a lot of space there for encouraging tree-planting, which the government has finally moved to fill with its Afforestation Grant Scheme.
Reading the project guidelines [PDF], this is basically the Projects Mechanism for planting trees. People who want to plant trees will effectively bid for government support. Bids will be weighted for environmental co-benefits (erosion, water quality, and biodiversity), ranked from cheapest to most expensive, and the cheapest projects chosen until the annual budget is full. This process will be repeated for two different funding pools - one for "high sequestration" (pine, eucalyptus, etc), and one for "low-sequestration" (natives). Regional councils will have access to a separate pool (50% of the total) to promote afforestation which meets their specific targets. Successful applicants will receive cash when the forest is established, and must agree to keep the trees there for at least ten years; the government will retain all carbon credits and liabilities (on the basis that that's what they're paying for, and people who want them can voluntarily enter the ETS or sign up for the PFSI).
One oddity is that bids seem to be ranked by discounted overall cost, rather than cost per hectare or expected ton of carbon sequestered. Either would require a trivial amount of maths, but produce a policy more clearly targeted at storing carbon. But overall, it looks like a good, solid policy, and one which has the advantage of being able to be implemented now, without legislation.
