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Forestry Tasmania’s $43m loss nothing to do with ‘peace deal’, say experts

Environmentalists and the forestry industry have rejected the Tasmanian government’s claim that a disastrous deficit posted by the state’s taxpayer-owned forest corporation was the result of a “peace deal” between loggers and green groups. Source: The Guardian.

Forestry Tasmania, which is responsible for logging the state’s forests, posted a $43m loss last Thursaday, more than triple the $14m deficit it recorded last year.

This was despite $37m compensation given to the company by the previous Labor-Greens government as part of the Tasmanian Forestry Agreement (TFA), a historic truce between the forestry industry and environment groups following 30 years of bitter conflict.

The state’s resources minister, Paul Harriss, said the huge loss was a “direct result of the 400,000 hectares of land locked up under the job-destroying Labor-Green forest deal”.

The Hodgman government tore up the TFA in September, allowing formerly protected areas of high conservation-value forest to be logged in six years’ time.

Harriss said the peace deal had wiped $18.9m off Forestry Tasmania’s balance sheet.

The company has also blamed a high Australian Dollar and “restricted access to critical processing and export sites” for the loss.

But the leader of Tasmanian Greens, Kim Booth, said the company’s financial statements showed that timber production had increased in the past year.

“The figures are there. The more trees they cut down, the more money they lose,” Booth said.

“They’ve nearly doubled the volume of pulpwood exports, and the other products like sawlogs and special species have stayed relatively unchanged.

“But you’ve still seen a triple of losses for the company. It’s got nothing to do with the TFA.”

Booth blamed the losses on fundamental changes in the timber market, including “insurmountable” competition from cheaper plantation wood grown in South America and south-east Asia.

He said Forestry Tasmania was delivering its product below cost in order to compete, and relying on government support to make up the shortfall.

“The dead hand of government hanging over the industry has stopped it from being able to develop a diversified product mix that’s profitable,” he added.

“The Tasmanian government should basically get out of the market and stop interfering.”

The chief of the Tasmanian Forestry Industry Association, Terry Edwards, said the 400,000 ha protected by the TFA had included “the best quality forests” that would have fetched a higher price.

Edwards, who helped to negotiate the peace deal, disagreed that it was responsible for Forestry Tasmania’s financial troubles.

“It would have ameliorated the losses, but it wouldn’t have negated them.”

He said the company needed a long-term guarantee that no more forest would be put in reserve.

A lower Australian Dollar and independent certification of Tasmania’s forest management practices would also help stem losses.

Harriss is reviewing Forestry Tasmania’s business model, aiming to reduce or end government subsidies.

But Edwards said it would be “difficult” for the company to survive without government help, as it was also required to carry out expensive community service functions, such as assisting with firefighting and carrying out road maintenance.

“They need to make some fairly hard-nosed decisions within the business about their cost structures,” he said.

“They need to be optimising the value they can get for every stick they harvest.”

Peg Putt, from the activist group Markets for Change, said fundamental flaws with the industry’s business model had been the original impetus for loggers and green groups to carve out the 2013 peace deal.

“If you look back at the losses incurred by Forestry Tasmania over the last five years, they’ve been huge well before the TFA,” she said.

“So to make out that the problems have been caused on the supply side by the withdrawal of high-conservation value forests from logging is in direct contradiction of the facts.”