Surrealism in Tasmania’s Forestry Debate

One hundred days has passed since the signing of the Intergovernmental Agreement (IGA) by the Commonwealth and State governments.  Question: Has the IGA stood up to its promise to end the conflict in our forests?  Consider the following matters.

Under the IGA, the two governments agreed to remove UP TO 572,000 hectares of native forest, purported to be high conservation value forest, from active forest management. This is subject to two separate and independent verification reports.

The first report involved the immediate setting aside of 430,000 ha of native forest into informal reserves.   Under the IGA, this is an interim matter only, and is designed to ensure immediate cessation of forest works in 41 coupes UNLESS it can be proven necessary to continue harvesting in these coupes to satisfy existing contractual commitments.  This report was delivered to the government in early October, but has not yet been released.  It should be!  It concludes that FT must have continuing access to at least 25 of these coupes, to ensure that its contractual commitments for sawlog and peeler log supply to domestic timber businesses can be met.

The second report is required by 31 December, and will detail the boundaries of high conservation value forest UP TO 572,000 ha.  This independent committee (chaired by Jonathan West) has been appointed, but it already seems unlikely that this committee will report on time.  This begs the question of what will happen to the timetable set out in the IGA.   Concern has also been raised regarding the impartiality of appointments to the process followed by the committee.

Every talking head chants the mantra of “high conservation value”.  Yet this phrase is meaningless.  Like beauty, it is in the eye of the beholder, and like beauty, it is equally ephemeral. It is without definition, and yet it is held up to be the definitive determinant for the setting up of the boundaries of UP TO 572,000 ha.

Forestry Tasmania has advised both governments that, if such an area is set aside, then it will not be able to meet its continuing, legally contracted supply commitments.  Governments seem incapable of absorbing and responding to this fact.

Gunns announced last year it was getting out of native forest for commercial reasons.  The government has since paid an amount of $23 million to Gunns AND wiped off their $24M debt to FT, whilst paying $11.5 million to FT as compensation.  I am surprised the Federal Minister did not seek has own legal advice regarding these payments..   Compensation should only be paid if the company was adversely affected by a government decision.  This was patently not the case, and in fact there remains an argument that Gunns should have been sued by FT for breach of its take-or-pay contracts.  If Government has that sort of money to throw around, then perhaps they should have considered allocating it to health and human services, where the need is truly great.

A $700 million dollar per year sector of a vital industry is being forced out of business by government, which will then pay an amount of $7 million per year to manage the extra reserves for a period of five years - a pale shadow of the industry’s worth - plus an amount of $120 million over fifteen years for Regional Development projects.  Is this money sufficient recompense? I doubt it!

Under the IGA, $45m has now been released for contractors to exit the industry.  An intriguing scenario to be sure, for Labor governments to be closing workplaces and putting people out of work! 

Money is being paid in compensation before agreement has been reached on the areas to be reserved.  What if no Agreement is reached?  The Legislative Council has already indicated it will oppose details contained within the IGA, including the payment to Gunns and the creation of further reserves.  So it is likely that the agreement will not be ratified anyway. A political imbroglio for sure! 

Is this compensation package a true reflection of the value of the industry to the economy?   A recent paper by Steven Davis of the University of Chicago and Till von Wachter of Columbia University estimates that being laid off costs a typical male worker 11% of his future earnings, in present-value dollars. During a recession, when longer spells of unemployment lead to more loss of human capital, that rises to 19% (as cited in The Economist 29/10/11).

Do the sums! As an example, take 3,500 forestry workers, for half of their 40 year working life, at a wage of $50,000 pa.  The loss of earnings alone is enormous.  

Many people, including the Premier and Prime Minister, have chanted the mantra that changed market conditions have caused the industry to falter.  This is simply not true.  The market is still buying wood product, the sawmillers are selling all they can produce, veneer products continue to find markets, and the overseas markets are still buying product, including woodchips, from Australia.  It is true that Gunns management had difficulties in the offshore market for woodchips, but Gunns is not the industry, and I suspect the market difficulties were more a Gunns issue, as that of industry.

And there are buyers for Gunns’ sawmills.  If the market is as bad as some would have us believe, then what has possessed these people to buy into the business?

Plantations have been mooted as being the answer to the industry’s woes.  If so, what was the question, because all parties know that neither the softwood plantation resource nor the present eucalypt plantation resource can substitute for high value sawn timber from native forests.

And then there is the Triabunna mill site.  Let us not delude ourselves over this matter.  The new owners of the Triabunna mill site did not purchase that site to continue operating a chipmill. After all, the owners boasted at the time of the purchase they were going to close the mill in order to start a tourism venture.

The company has stated it will only allow a certain type of wood to be processed at the site.  So it is obvious the company is playing games.  My bet is that not another woodchip will cross that wharf, and that a new wharf facility will need to be built.  More capital outlay, and an unnecessary one, but industry and government should not be held to ransom by the conditions imposed by the new owners.

The IGA is the culmination of the roundtable process, which was meant to bring all interested parties together, to resolve the forest conflict.  Yet many interest groups have complained that their interests were not represented at the table, and have disowned the process.  Forest conflict continues unabated.

 To emphasise the point, Peg Putt has just returned from a trip to Japan where she has endeavoured to destroy the reputation and the market for Ta Ann, the subject of which was endorsed within the IGA.

To summarise, the IGA has not delivered what it promised.  So many of our fellow Tasmanians have been put out of work.  Our economy has suffered.  Fact continues to play second fiddle to a mantra of emotion and eco-vanity.  The signatories to the IGA have been duped by interests that have been constant in their opposition to the industry.    Such a result is unforgivable, and an indictment on those responsible.

The IGA is perilously close to collapse, no question about it.  So perhaps it is now pertinent to ask “What then?”