Image for Broken Forestry model. Christine Milne’s Senate serve

AUDITOR GENERALS REPORT POINTS TO A BROKEN FORESTRY MODEL

Transparency on Triabunna woodchip deal needed

The Auditor Generals report into Forestry Tasmanias poor financial performance highlights the urgent need for industry restructure, including reform of the Government Business Agency that currently has responsibility for managing Tasmanias public forests.

The report, plus Forestry Tasmanias anticipated $6m loss, adds to the already compelling call for disclosure about the wood supply promises made to the prospective purchasers of the Triabunna woodchip mill.

On creation, Forestry Tasmania had $272 million worth of debts written off and since then many more tens of millions of dollars have been injected into the Government Agency, said Vica Bayley, spokesperson for The Wilderness Society.

Tasmanians are sick of throwing good money after bad and propping up failing models of Government business. No amount of cash injection will fix this broken model.

Industry restructure and reform of Forestry Tasmania is needed to address these problems at their core, said Mr Bayley. Implementing these overdue reforms will save the taxpayer in the long term.

The need for transparency around the wood supply deal with Triabunna purchaser Aprin is now even more compelling, given the poor financial performance of Forestry Tasmania and the low paying markets Aprin plan to export to.

As the shareholder in Forestry Tasmania and the owners of the forests, Tasmanians deserve transparency and accountability on the deal Forestry Tasmania has done with Aprin.

What volumes of native forest woodchips and what price have been promised to Aprin over what period of time? These are key questions that need to be answered so Tasmanians can fully understand the further hit this woodchip deal will have on Forestry Tasmanias failing bottom line, concluded Mr Bayley.

Download, read for yourself: AG_FT_report.doc

• ABC Online:

Forestry Tasmania needs cash injection, warns Auditor-General:

Tasmania’s Auditor-General has warned that Forestry Tasmania may need a $250 million cash injection.

Mike Blake’s report into Forestry Tasmania has found the state-owned company’s previously strong operating profits have declined significantly in recent years.

The report tabled in Parliament says the nature of Forestry Tasmania’s business has changed since it began operating in 1994, but the business model has not kept pace with the changes.

Mr Blake says if Forestry wishes to continue with its current level of investment in plantation development, up to $250 million government, or other funding, will be needed.

… more online

Forestry run over by Gunns:

Tension between Forestry Tasmania and timber company Gunns has again been played out in public.

Gunns has previously accused the state-owned company of deliberately undercutting it in China.

Now, Forestry Tasmania’s Managing Director Bob Gordon has told a Legislative Council committee hearing into its finances that it has suffered because of Gunns’ damaged reputation.

“Our largest customer Gunns was driving down the road in their car and some of the more extreme environmental groups blew out their tyres and they run over the rest of our customers, and then us,” he said.

FT is predicting an operating loss of about $6 million for the past financial year.

The company told the hearing it was having trouble recouping $40 million in debts.

… more online

• APRIN LOAN YET TO BE FINALISED
Board Meets this Afternoon

Tim Morris MP
Greens Economic Development spokesperson
Tuesday, 5 July 2011

The Tasmanian Greens today said that the Economic Development Minister’s confirmation that the controversial Aprin loan process is not yet completed with the Tasmanian Development Board (TDB) still to finalise its determination, means that it is still possible that common-sense will prevail and taxpayer funds will not be provided.

Greens Economic Development spokesperson Tim Morris MP pursued the matter with the Minister, David O’Byrne, and said that he would hold Minister O’Byrne to his commitment to provide a public update on the Board’s determination as soon as possible, reiterating that the Greens do not support public monies going into this loan.

“The Minister for Economic Development, David O’Byrne, revealed in response to my question in Parliament that the application for a loan to the Tasmanian Development Board from Aprin had not yet been decided, but that a Board meeting had been called for today for further evaluation of the application,” Mr Morris said.

“The Greens do not support this loan being granted, we have been clearly on the public record stating this, and we have placed the Minister on notice that we expect the public to be updated on the Board’s determination as soon as possible.”

“There is great public interest in the fate of public monies in relation to this controversial loan application.”

“The Tasmanian Development Board will be meeting this afternoon to further evaluate the loan application from Aprin (Fibre Plus), to part fund the purchase of the mothballed Triabunna woodchip mill, to determine if the undisclosed ‘conditions precedent’ they imposed previously, had yet been met.”

“The Greens are really clear that neither the government, nor the TDB, should be providing one business with a competitive edge against another company through a ‘commercial in confidence’ special arrangement only available to them and not their competitor.”

“Greater transparency around the consideration of the provision of industry support funded by the tax-payer, especially where that support is contentious, would enhance community confidence that any such support is appropriate and the best use of public funds, however in this particular instance any tax-payer money going into supporting the Aprin bid to entrench native forest wood-chipping at Triabunna will not be supported by the Greens,” Mr Morris said.

• Christine Milne’s Senate serve:

QUESTIONS WITHOUT NOTICE
Forestry

Senator MILNE (Tasmania—Deputy Leader of the Australian Greens) (14:28): My question without notice is to the Minister for Agriculture, Fisheries and Forestry, Senator Ludwig. Is the minister aware that in its recent report, The critical decade, the Climate Commission identified:
… eliminating harvesting of old-growth forests as perhaps the most important policy measure that can be taken to reduce emissions from land ecosystems.

If so, does the minister agree and what is he doing about it?

Senator LUDWIG (Queensland—Minister for Agriculture, Fisheries and Forestry, Manager of Government Business in the Senate and Minister Assisting the Attorney-General on Queensland Floods Recovery) (14:28): In the area of agriculture, what we have been doing as a government is, firstly, putting together a price on carbon; and, secondly, in this portfolio, working with the minister for climate change on the Carbon Farming Initiative.

The coalition is divided on this issue. Until recently, the opposition was describing the Gillard government’s CFI as the ‘fastest and cheapest way for Australia to reduce its emissions’. The critical issue here is how we then progress the Carbon Farming Initiative. It will allow farmers to generate carbon credits and new earning opportunities through a range of activities, such as manure management, fertiliser management, reduced livestock emissions, soil carbon and reafforestation. This initiative will provide us with the opportunity to lead the world in the development of land based sector offsets.

The carbon market will be supported through a number of initiatives, including the development of offset methodologies, because it is important to put those methodologies in place, on-farm demonstrations for biochar and the provision of $4 million for Landcare facilitators to educate farmers on the opportunities presented by the carbon market. So within this portfolio and with the minister for climate change we are pursuing a way to ensure that the land based sector—that is, the farmers and the producers across this area—can utilise the Carbon Farming Initiative to develop outcomes for farmers to ensure we can have long-term security around reafforestation, if that is additionally supported. Of course, Mr Garnaut argued that allowing offsets for carbon— (Time expired)

Senator MILNE (Tasmania—Deputy Leader of the Australian Greens) (14:30): Mr President, I ask a supplementary question. Given the minister’s answer, does he think there needs to be more done to stop the logging of old-growth forests? Particularly, can he inform the Senate whether he is aware of, or has been part of, any discussions with the Tasmanian government pertaining to an offer of a loan from the Tasmanian government to Aprin logging to purchase the Triabunna woodchip mill in order to keep it operating to woodchip native forests?

Senator LUDWIG (Queensland—Minister for Agriculture, Fisheries and Forestry, Manager of Government Business in the Senate and Minister Assisting the Attorney-General on Queensland Floods Recovery) (14:31): I indicate that it is best that I take the second part of that question on notice. I have not spoken recently to the Tasmanian government specifically about the matter that you raise. It does seem to be part of the Tasmanian forestry principles agreement process; however, in the detail you have indicated, I am not aware whether the specific loan you speak of exists or not. In terms of the two matters, the government has consistently stated that the statement of principles is a community led process. The signatories to the statement of principles include the environment NGOs. It is up to these signatories to come to an agreement. The government will consider its response in conjunction with the Tasmanian government. (Time expired)

Senator MILNE (Tasmania—Deputy Leader of the Australian Greens) (14:32): Mr President, I ask a further supplementary question. I look forward to the minister coming back to me in relation to that woodchip mill. I want a particular undertaking that the Commonwealth government will not give any funding to Tasmania under any negotiated forest outcome until the full details of the involvement of Forestry Tasmania, the Tasmanian government and Aprin logging in this woodchip mill deal are made public.

Senator LUDWIG (Queensland—Minister for Agriculture, Fisheries and Forestry, Manager of Government Business in the Senate and Minister Assisting the Attorney-General on Queensland Floods Recovery) (14:32): I think it is worth while putting on the record that on 14 June 2011 Gunns announced on the Australian Stock Exchange the sale of its Triabunna export woodchip facility. I understand that sale is to be to an entity established by the family owned logging and haulage company Aprin Pty Ltd. Gunns further announced that the sale was conditional on satisfactory progress in the implementation of the Tasmanian forest statement of principles. The Australian government has not been approached regarding the sale or operation of the Triabunna mill.

Senator Bob Brown: Mr President, I rise on a point of order. The question from Senator Milne was whether the government would guarantee that no public moneys would flow to that purchase by Aprin logging until it is aware of the details. That was the question.

The PRESIDENT: There is no point of order. Senator Ludwig, continue with your answer. You have 23 seconds remaining.

Senator LUDWIG: Industry and government want to see an operating mill which will provide the best results for jobs in Tasmania. The issue of course is whether there is Commonwealth support. The government is committed to this process, as outlined in the Prime Minister’s statement of 7 December last year. We continue to support discussions— (Time expired)
QUESTIONS WITHOUT NOTICE: TAKE NOTE OF ANSWERS
Answers to Questions
Senator MILNE (Tasmania—Deputy Leader of the Australian Greens) (15:32): I rise to take note of an answer from Minister Ludwig in relation to the logging of forests and, in particular, what is going on in Tasmania. I asked the minister what he knew about the Tasmanian government’s involvement in maintaining the ongoing operation of the woodchip mill at Triabunna. The minister said that he would have to take that on notice. I do not know why, because I went around to his office last week, briefed his office on what is actually going on and asked the minister to investigate the matter.

The reason is this. Here we have the Commonwealth negotiating with the Tasmanian government to develop a package which will protect high-conservation-value forests in Tasmania and assist the exit of logging of native forests. Tasmania is cap in hand to the Commonwealth, asking for a cheque yet again—more Commonwealth money. It is supposed to be exiting native forests, not entrenching logging in native forests. We knew Gunns was selling the woodchip mill at Triabunna, but what we were horrified to learn was that suddenly a company, Aprin Logging, took a couple of holding companies off the shelf—one company, Fibre Plus, had 24 shareholders and a valuation of $24—and bought a multimillion-dollar woodchip mill. Then we found out after the event that it depended on a loan from the Tasmanian government in order to clinch that sale.

Furthermore, we have Forestry Tasmania supposed to be supporting the Commonwealth in exiting native forests, but they must have provided a guarantee to that company that it will provide a supply of logs in order for Triabunna to have a source of timber. So what is going on? One government is negotiating with another government to get out of logging, and the Tasmanian government is facilitating logging through Forestry Tasmania. Now we discover that the Department of Economic Development, Tourism and the Arts actually approached Aprin Logging and said, ‘If you were to apply for a loan from the Tasmanian government, it is likely to be looked on favourably.’ What sort of dodgy behaviour is going on in Tasmania in the logging industry at exactly the same time that the Commonwealth is working with the Tasmanian government in order to get through a package which is supposed to be about a 100 per cent solution to the ongoing conflict in Tasmania’s forests?

We have known for a very long time that there are very suspect dealings in the Tasmanian logging industry. We have known that Forestry Tasmania, while the rest of the public service has taken cuts and lost a number of employees, has continued to build its empire at the same time as it is in debt to the people of Australia for at least $130 million. It has only returned a matter of $7.2 million in tax returns or in dividend in all that time, and yet it got a huge amount of money—more than $145 million—from the Commonwealth. So it is living on borrowed time and borrowed money, and now we discover it is up to its neck with the Tasmanian government, with Aprin Logging and with Fibre Plus, and we do not even know who the operatives in Fibre Plus are. We do not even know who the principals are. Who are they covering for? Who actually has put up the rest of the money for Aprin Logging?

I urge Minister Ludwig to stand in here and say the Commonwealth will not give Tasmania one cent in a forest deal outcome until Aprin Logging, Fibre Plus, Forestry Tasmania, the Department of Economic Development, Tourism and the Arts and the Premier of Tasmania come clean on their dealings and what is going on. I want to know from the minister exactly what he knows about it. Has he been discussing this with the Tasmanian government? What sort of duplicity is it to say you are trying to stop logging at the same time as you are trying to maintain a woodchip mill? There was another buyer for the woodchip mill. They had the money to pay in cash, and yet they were rejected in favour of this deal dependent on a government loan.

I would further like to know what ASIC is doing about this, because Gunns has an obligation to maximise its return to its shareholders. How can it say to its shareholders it is doing that if it does not take a cash offer for the woodchip mill and, instead, relies on an offer from a company which does not have the money and which needs a government loan? I would like to know what dealings have gone on, because this merely cements the image of Tasmania as being rotten at the core when it comes to logging and when it comes to the relationship of government with the logging industry in Tasmania.