The $276 million federal rescue package to buy peace in Tasmania’s forests came barely three weeks after the state’s Auditor-General indicated that Forestry Tasmania was staggering towards insolvency and would need an equity injection of $200 million to $250 million to survive.
Tasmanians’ collective amnesia has meant the Auditor-General’s warnings have been relegated. The public discussion is whether the promise of federal handouts will bring peace in our time, whether the warring parties will finally call a halt to hostilities. No mention of the enormous funds needed to prop up the state government’s forestry arm. Or the private funds required to transition the industry to a new era.
Banks are remaining on the sidelines. The recent Forest Enterprises (FEA) restructure deal, a pragmatic solution to part of the MIS mess — where the interests of growers, shareholders and creditors were to merge in one entity — looks to have fallen over, so it’s back to the drawing board for FEA’s voluntary administrator.
The forest industry couldn’t even organise themselves to buy the Triabunna woodchip mill from Gunns as the latter struggles to survive. The mill is an integral part, apparently, of the entire forest industry in the south of the state, but Gunns needed cash in such a hurry to pay redundancies and loan commitments it wasn’t a surprise when a cash offer from Jan Cameron and Graeme Wood trumped a couple of bumbling bushies who were attempting to gain finance from the state’s Development Board.
Part of the federal package, $120 million, will be directed to spending in regional areas, an approach that recently the Grattan Institute has doubted produces adequate returns.
The state’s Economic Development Plan, which Premier Lara Giddings keeps threatening to release but never does, doesn’t even include forestry as one of the state’s key sectors. All participants in the debate don’t seem to understand that Forestry Tasmania will not survive in its current form without a bucketful of government money.
Forestry Tasmania has also become dependent on federal grants from the Tasmanian Community Forest Agreement to fund ordinary operations. The state’s Auditor-General has been trying to compile a report into Forestry Tasmania’s performance for more than three years and has just reported to Parliament, including his first two drafts, which have been sitting in state government in-trays for two years.
Had the earlier drafts been released the conclusions would have been that the “investment in roads and plantations over the past 15 years will not lead future benefits … that dividends paid (to the state government) had been entirely funded from abnormal receipts such as Commonwealth compensation money”.
At that time reform of Forestry Tasmania may have been possible. But the period since has seen its situation worsen to such an extent that it’s only a matter of time before the life-support machine is switched off.
The state government will have to sort out the mess without the help of the feds, but trying to win an extra $250 million as suggested by the Auditor-General is an impossible task for the state government.
The peace offering from Julia Gillard is at best a partial political solution. Under no circumstances will it be sufficient. The problems are far wider.
No amount of soothing words from the premier can hide the fact that she is hopelessly out of her depth, badly advised, fending off the lynch mobs and desperately trying to search for scapegoats. Public policy makers have failed badly.
*John Lawrence was employed as an economist for five years before returning to Tasmania as an accountant in public practice and an observer and researcher on finance and economic matters at the state level. Read the full version of this article at Tasmanian Times.
No “collective amnesia” from this Tasmanian. The management and business model of FT has been a disgrace for as long as i can remember. That (formerly giant) timber (i.e. pulp) company Gunns can hold successive Governments to ransom, sack their loyal workers/contractors, & ask for Government handouts is a bigger disgrace. Then they have the cheek to blame the “greens” for everything – as if they haven’t received more that what they deserve already in both cash and state assets. I still remember the timber workers cheering their great “friend” JW Howard as their saviour when Latham had offered them a huge incentive to remodel their industry. Ironic.
Something in the original TT article but omitted here, and worth reading:
[Then there’s the downstream investment required. The last FFIC report, for instance, put the cost of an engineered strand lumber plant at $225 million, generating annual direct income of $290 million and using 550,000 tonnes of plantation hardwood each year.]
Isn’t this the Australian way? Spend a fortune on ineffective inefficient band-aids but neglect capital investment for the future. The mentality suffuses eveyone, from the industry (like Gunns but all over Australia), governments and the voters.
I am reminded of what Malaysia has done and the fruits of which sit in my house. We all love those beautiful SE Asian hardwoods but no one believes any of the mantra about “carefully managed sustainable timber” blah, blah. But I came across some furniture that appealed to me (book cupboards with glass doors and that did were affordable). They were made from Malaysian rubber-wood and claimed the usual managed plantations blah. After some research it turns out to be true as far as I can tell. Malaysia has had a large natural rubber (latex) industry for centuries and normally at the end of their approx. 30 year lifespan the trees are rooted–for replanting new ones–out and usually end up as firewood. That is because the trees are not tall and straight as usually required by the timber industry. But modern techniques–the “engineered timber”–now creates useful lengths of timber (note, this is not pulp particle board or veneer, it is short-length timber spliced together almost invisibly by precision finger jointing). The timber itself is not as beautiful as many of those gorgeous Indonesian hardwoods, but it is rather handsome, a little bit like European oak (maybe not, I just refreshed my memory and it is marketed as “Malaysian Oak” which some feel is too much hype).
Anyway the significant thing in this story is that you cannot buy the timber outside Malaysia. Indeed it is illegal to export the timber. It must be made into products inside Malaysia, a strategic decision by the government to maximize the resource and employment etc. (the story is here: (metla.fi/iufro/iufro95abs/rsp19.htm) L.T. Hong, Rubberwood Utilization: A Success Story).
We need to get away from the shocking mentality in our country that we can only dig stuff out of the ground or exploit in an unsustainable manner what natural resources we have thru no effort or cleverness of our own.
Ah its all so familiar. Forestry Tasmania & Vic Forests. Two brothers in arms. Two incompetent state bureacracies, set up to destroy a public asset at a financial loss to the taxpayer, for the benefit of a ever reducing handful of jobs and for the benefit of private interests.
Gunns in Tasmania who used to bully opponents into submission. Logged forests are replanted in non indigenous species (often Eucalyptus nitens), so their value for biodiversity is forever lost. Wildlife is baited so they don’t browse the regrowth.
In Victoria, logging in the bushfire devistated central highlands is destroying the few areas to escape the fires, thereby putting another nail in the coffin of leadbeaters possum which is on its way to extinction.
What selfish halfwit thinks this is acceptible?
All the actions of a corrupt third world country. We should be ashamed.
You would almost think that the 10-10-5 result in the last Tasmanian election would almost tell LibLab that the locals are really over FT and Gunns. But, in Australian politics, you can often back a vested interest ahead of science or even majority opinion.
Forestry seems to take about 90% of government and opposition think time here in Tasmania. What a shame that the Labor-Green plan is just a scheme cooked up by industry insiders; while the Libs just want close their eyes and pretend it’s 1980.
Everything lately seems to be about protecting “forestry industry jobs”, but the industry as it exists at the moment in Tasmania is over. No one wants their products. Did government’s scramble like to protect buggy and carriage makers in the early 1900s ? Let ’em die!