Australasia's home for timber news and information

Forward-selling plan puts industry offside

THERE’S A major row brewing over the South Australian Government’s about face to forward sell ForestrySA pine plantations.
Grant District Council Mayor Richard Sage says the move to grab money is city-centric and gives no thought of the people in the south-east of the State.
Opposition Forest spokesman Adrian Pederick has accused the Government of double-speak and overall short-sightedness.
And the CFMEU says it’s an obvious cash grab from regional areas to prop up metropolitan spending.
Now, the matter will be the subject of an “emergency forum” scheduled to be held on 20 October.
Adrian Pederick said the recent budget showed the 2009-10 return to the State coffers by the State-owned ForestrySA was $44.7 million, with an estimated return for 2010-11 of $43.2 million.
“Dividends paid have been substantial and the idea of selling an asset that provides a good return seems short-sighted.
“The big risk in this is the sale’s potential to devastate the secondary processing industry in the Green Triangle.
“If the base asset is owned by an overseas company, the value adding industry, which represents about 30% of the South East economy, will be at risk as there is no guarantee the new owners will have their timber processed here,” Pederick said.
Government double-speak on the matter was also of great concern. Treasurer Foley was reported as having said last week that the Government was “still deliberating” on the sale and yet on radio soon after, Forests Minister Michael O’Brien said “the Government had made a decision we will be putting on the market either one, two or three forward rotations”.
Mayor Sage said the lack of fore-sight was staggering and said the move had the potential to decimate the region. In a worst case scenario he said the domino effect would be massive and something had to be done about it.

In a scathing letter to the editor, the Mayor said (in part) …

Let’s bring Mr Foley, State Treasurer, to Mount Gambier to explain to our community why is he selling our souls and two lifetimes of Government-owned pines. In 18 months you haven’t said a word; consulted anyone except your staff at ForestrySA to number crunch the asset value and predict how much you can suck out of the South East to fill your black hole.
What stakeholders have you consulted? Remember, the community own these assets. Those you have spoken to are sworn to secrecy and for fear of losing their jobs can’t speak out.
You mention global financial crisis and the need to keep our debt under control, nothing has changed. This government continues to throw money into Adelaide based projects that keep your voter base happy to the detriment of the regions. One only has to read in the papers the blow outs that are continuing to happen with these projects.
By forward selling our pines will our Australian-based factories be able to compete for the timber and be able to pay the prices asked? Remember, Carter Hold Harvey, Green Triangle Forests and other companies take the majority of ForestrySA’s current timber extracted each year. Any reduction could see job losses and increased timber prices and lost confidence to continue to grow our industry.
What will the increased cost of logs do to our timber industry in SA and our housing industry and other markets that rely on this timber?
How can anyone predict what the commodity price of pine logs will be worth next year, let alone over the next century. Will we see more Nangwarry & Tarpeena events happen in Mount Gambier. Our mills close as we no longer have the right to the timber grown at our back door.
We haven’t even as an industry recovered from Ash Wednesday with regard to pine rotations and timber growth. We lost the majority of our large trees and the need to sell pines and produce profits (for the Government) meant that rotations for clear fall fell from 40+ years back to 30 years (smaller logs, quicker turn around) thus we lost our logs used to produce plywood and other timber products and the loss of several mills and jobs.
We need answers to these and many other questions before anyone can move forward. The crystal ball looks pretty cloudy to me!

And the Mayor didn’t mince his words when it came to others in the political sphere …

Now for the Opposition — If we have known for 18 months re the selling of our future pine rotations why haven’t you stepped up and taken on the Government?
My challenge to the opposition and independents alike is let’s see what you are made of and if you are worth the money you are costing taxpayers (I see from the Sunday Mail both parties seem to agree on one thing, a big increase to your Superannuation up to 15.4% from 9%).
SA Forests Minister Michael O’Brien said the Government remained committed to the forward sale of ForestrySA plantations.
He said the government was revisiting previous commitments of the forward sale of one or more rotations of Forestry SA’s plantations as a revenue opportunity. “If rotations are sold, it’s likely to be business as usual in terms of industry employment, harvesting and processing of timber resources,” The Minister said.
And that’s where even more confusion comes into the equation. The quoted “likely to be business as usual” and even Treasurer Foley’s “it’s basically a text book entry” have been met with derision.
CFMEU South East representative Brad Coates said it was a dangerous process the Government was engaging in … “we are against this public-owned resource being sold — basically it is a dangerous way of raising finance. Many of the local companies who currently held a contract with ForestrySA were concerned about what impact the sale would have on log prices.
“If they do sell the three rotations as previously announced then that is 75 years of forests — it is very hard to quantify the value and prices of logs 75 years from now.”