Image for Integrity Commission could probe The Auspine – Scottsdale Saga. And, Kim Booth’s new call

The signing of the Forest Principles provides a unique opportunity for restructure and reform of forest management in Tasmania.

There is no area in more need of reform than the way in which major industry decisions are made.

An important and little known example of this are the decisions that led to the weakening and eventual takeover of the once healthy Scottsdale business, AusPine.

The recent announcement by Gunns to close AusPine’s second mill in Scottsdale marks the final chapter in a story that started with a business that dared voice an alternative to the woodchip-dominated native forestry paradigm.

Geoff Law researched AusPine’s recent history and completed this report for Environment Tasmania in June this year.

Synopsis

In September 2004, the softwood sawmilling company Auspine said that forestry workers displaced if oldgrowth forests were protected could be employed in the softwood sawmilling industry.

This statement was at odds with the views of Gunns, the Tasmanian Government and the Forest Industries Association of Tasmania at the time, all of which supported further logging of oldgrowth forests. Within four years, Auspine had lost its bid for a long-term contract to plantations necessary for its operations; it had been 100% taken over by Gunns; one of its two Scottsdale sawmills had been shut down with the loss of 120 jobs; and Auspine’s court case against Forestry Tasmania over the allocation of the pine resource had been discontinued by the new owner, Gunns.

The company which had been awarded the long-term contract for the pine resource in dispute was Forest Enterprises Australia (FEA). When the contract was announced, FEA did not have a sawmill capable of processing the pine logs in question, but was said to have a more competitive long-term business plan than that of Auspine. Little more than two years after commencing operations at its new pine sawmill, FEA entered voluntary administration. In April 2010, its CEO was sacked and in May its sawmill was put up for sale.

The Auspine saga raises questions over decisions by government and the accountability of Forestry Tasmania and its joint ventures.

The Federal and State Governments appear to have discriminated in favour of FEA and against Auspine in the allocation of industry-development grants. FEA received $7 million for development of a sawmill and over $200,000 for treating pine products. Auspine received $585,000 for subsidised transport of pine logs – but only after the controversial resource allocation was made. This was part of a one-year ‘rescue package’ in which logs from remote, dispersed plantations were allocated to Auspine. This contrasts with the much more generous grant to FEA for the purposes of establishing long-term infrastructure.

The disputed resource – pine plantations on State Forest in north-east Tasmania – are owned by a joint venture with 50% Forestry Tasmania ownership. Forestry Tasmania’s Managing Director, Bob Gordon, was part of the board of directors that allocated the long-term contract on the resource to FEA instead of Auspine. Under the Forestry Act, Forestry Tasmania is obliged to consider local employment when allocating resources. However, Mr Gordon told a Parliamentary inquiry that his responsibility as a director on the board of the joint venture was to the joint venture, and that, despite his involvement, Forestry Tasmania played no part in the controversial Auspine/FEA decision. Auspine’s attempt to test this in the courts was scuttled when Gunns took over Auspine.

This has left a cloud over Forestry Tasmania’s accountability regarding decisions covering large tracts of public land and the resources on that land. 42% of Forestry Tasmania’s plantations are under joint ventures or lease arrangements. If Mr Gordon’s testimony to the inquiry is correct, Forestry Tasmania officers need not be constrained by the Forestry Act when allocating resources from this land. This is an erosion of the ability of Tasmanians to hold to account those who manage public resources.

Meanwhile, the Auspine/FEA decision has caused significant adverse impacts in Scottsdale. The details of and reasons for the decision are concealed behind commercial-in-confidence barriers. Approximately 120 direct jobs have been lost, and local-government representatives have told a parliamentary inquiry of a legacy of uncertainty, suspicion and distrust in the town, with concern about whether the decision was fair, legal or objective.

The details of the Auspine Saga appear to justify an investigation by Tasmania’s new Integrity Commission. The Commission should assess the commercial reasons for the decision; determine whether decisions about resources managed under Forestry Tasmania joint ventures are made in a transparent, accountable and effective manner; whether there was discrimination against Auspine because of its statements about oldgrowth forests in 2004; whether there was discrimination in favour of FEA by decision makers and, if so, whether that discrimination was legitimate; and how to ensure that future decisions about public resources are made in a fashion that does not invite suspicion of hidden agendas and ulterior motives.

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The Auspine – Scottsdale Saga
A report on the closure of Auspine’s Scottsdale Mill
By Geoff Law, June 2010

Auspine_Saga_-_Geoff_Law_Oct_2010.doc

First published: 2010-11-01 10:51 AM

GREENS CALL FOR INVESTIGATION INTO LOSS OF SCOTTSDALE LOG SUPPLY
Time to Investigate Circumstances Behind Loss, as well as any Resulting Social and Economic Harm
Kim Booth MP
Greens Forests spokesperson and Member for Bass

The Tasmanian Greens today called for the establishment of a Parliamentary Select Committee to investigate the circumstances surrounding the withdrawal of the joint venture softwood log supply from two Scottsdale sawmills, and its transfer to Forest Enterprises Australia’s proposed sawmill at Bell Bay, a sawmill that did not exist at the time of the transfer.

Greens Forests spokesperson and Member for Bass, Kim Booth MP, said the Committee will also investigate the effect of the log supply transfer on the economy of Scottsdale and the surrounding district, as well as any measures that may be applicable to mitigate social and economic harm that has occurred due to the loss of the log supply.

Mr Booth also said that the Committee would be made up of two Labor nominees, two Liberal nominees, and one from the Tasmanian Greens, and should report back to the Parliament by 30 June 2011.

“It is well past time that the circumstances surrounding the withdrawal of the softwood log supply for Scottsdale’s sawmills was investigated, as well as quantifying the social and economic harm that has occurred in and around Scottsdale as a result of the loss of this log supply.”

“It is envisaged that the Committee also be in a position to recommend any mitigation strategies to counteract the damage that has been done,” said Mr Booth.

And,

FOREST CONTRACTORS STILL GOING BROKE, AND IN NEED OF BUY-OUTS
Despite Forestry Tasmania Ramping Up Woodchipping
Kim Booth MP
Greens Forests spokesperson

The Tasmanian Greens today continued calling for buy-outs rather than bail-outs for struggling forest contractors after revealing that, despite Forestry Tasmania ramping up woodchipping operations and offering forest contractors up to 140 percent of their contracted volumes, the Tasmanian Forest Contractors Association reports that its members are still going out of business.

Greens Forests spokesperson Kim Booth MP noted Minister Bryan Green’s acknowledgement that the industry in its current form is unsustainable, and that previous bail-outs have simply driven contractors into further hardship, as well as the Minister’s pledge that a “considerable amount” of the $20 million industry assistance package will be used to buy-out struggling contractors.

Mr Booth also noted the Minister’s revelation that the current contracted volume of sawlogs being taken from Tasmania’s forests will be halved from 300,000 tonnes per annum to 150,000 tonnes per annum.

“Despite Forestry Tasmania continuing to ramp up woodchipping, and offering contractors up to 140 percent of their contracted volumes, these businesses are still going broke which is final proof that the industry is completely unsustainable in its current form,” said Mr Booth.

“It was refreshing to hear that Minister Green has finally recognised that the industry is currently unsustainable, that previous bail-outs have simply driven forest contractors into further financial hardship, and that a ‘considerable amount’ of the $20 million assistance package will be used to buy-out contractors.”

“Due to the intransigence of Forestry Tasmania we now have more log trucks on the road than ever before, yet contractors are still going broke. It is time that the management of Forestry Tasmania faced some serious scrutiny over their wilful ignorance about the actual situation facing these contractors.”

“The public money already wasted on providing free wood to China, or cheap chips to Gunns, has simply driven contractors into further debt and further devaluation of their gear.”

“With forest contractors still going out of business despite working day and night to service up to 140 per cent of their contracted volumes it is obvious that the industry is unsustainable, and that contractors desperately require buy-outs not bail-outs in order to exit their industry with dignity,” said Mr Booth.