The state is also running short on jobs in regional areas, especially in the Latrobe Valley.

In attempting to juggle these competing imperatives, the Andrews government has landed in the muck in a painfully contorted position with its plan for the mill looking worse for wear.

The furious owners now say the mill will close permanently in 18 months, with the company looking at moving its high-value manufacturing operations to Tasmania, where the state government looks set to open up more forests for logging.

It says the premier's plan to operate the mill using just 60,000 cubic metres of wood would save just 60 out of 260 jobs, while costing up to $30 million in new investment required to modernise the mill.

If correct, that works out at up to $500,000 per job. To put it mildly, this would be an extraordinary amount of money considering Victoria's native timber industry is only marginally viable, before even considering intangible costs, or the alternative employment that this amount of money could generate.

Paying the remaining workers an annual salary to do nothing would arguable be a cheaper, if less palatable, solution.

But there are bigger concerns at play.

The timber hasn't already been chopped down, damaged by fire or locked up in parks and reserves is becoming harder to access - either because it is on steeper terrain, or because of the existence of 200-metre buffer zones around confirmed sightings of endangered Leadbeater's possums.

The mill, which wanted the possum buffer zones reduced, says it needs at least 130,000 cubic metres a year to be viable. The state was only prepared to give it 80,000 this year, and even less in the years after.

That's the real point of friction in this debate. The result is a clash of economic, environmental and industry policy concerns - and all of this against a backdrop of economic gloom in Gippsland more broadly.

Behind the Heyfield saga is the future of the bigger timber business in Victoria: the Japanese owned Australian Paper which employs more than 1000 people. Its access to timber is protected until 2030 by legislation created by the Kennett government.

If Australian Paper fails, then the government has an even bigger jobs crisis on its hands. The Premier is acutely aware of this and has been holding talks to ensure that the company sticks around.

Politically the plan to intervene has been aimed at showing that Labor sees government having a role in protecting jobs - something working class voters are increasingly demanding due to the protectionist fervour both at home and abroad.

But by not caving into industry demands for more trees to be felled, Andrews has not undermined Labor's pitch to green voters in the inner city.

The problem was that the plan has been poorly executed. The Premier did not know how much taxpayers were going to have to fork out and how the business would operate on a smaller supply - moreover, the company was never told of Andrews' plan.

Timber is a tough game. Thankfully this summer fire has not razed much of the state's timber resource. But one day it could, and then things will get much much worse for the timber industry, its workers and the state government.