Oh, that oxymoron, the government business enterprise.
Here we have Forestry Tasmania, inaugurated with a write down of $520 million, or 7 1/2 years of the current health budget shortfall, the gift of a clean slate, performing at a rate of return below that of fixed term investments.
The government claims that it is all their fault. Premier Lennon, closely associated with the head of Gunns, and Minister Green are the ‘directors’ of the GBE, their chosen CEO a child of the former Forestry Commission. And so as Directors they have taken all responsibility for FT’s share value crushing performance, every Tasmanian a loser.
What has changed since the 1996 restructure and write down. The employees became contractors, their numbers reduced, their pay and conditions renegotiated. In that time FT has been directed so well that for 8 out of 9 years no performance bonus has been paid to those employees.
The stock standard response is trotted out every time the performance of this anachronism is brought into question. The community obligations that FT oversees are pulling down their return on investment.
Perhaps this is so. However, their tourist ventures return some 9%, lifting FT’s overall poor return to that share value crushing 2.9%. It’s below the government’s pension deeming rate. It’s below the at-call rate at Tasmanian Perpetual Trustees. It’s beyond belief.
And who is responsible for this performance. The Premier and his colleagues, and of course the Premier’s forestry business advisor, the lord of simony
A person not experienced in the economy and at the twighlight of their life may manage their affairs this way, a hangover from the fear of wealth affecting their pension. It is not acceptable for any business enterprise.
And who is responsible for this performance. The Premier and his colleagues, and of course the Premier’s forestry business advisor, the lord of simony.
As in the good old days of that other former union boss, electrique Eric, when Hydro Tasmania was the name of the state, now another GBE with a virtual monopoly on energy, the then investment decisions were driven by the big players thinking up a number and multiplying by one greater than 2 to determine the future demand for cheap power. The Tasmanian parliament then set about creating the huge HEC debt, $1,500,000.00.
Now we have limonene Lennon leading us on a similar course, except a price with a fair return is divided by a number greater then 2 and Hidding remains hiding in the wings waiting to guide us along exactly the same path.
The government’s total economic performance is not so blatant, GST, departmental restructuring and the brilliant performance of the tourist sector disguising the abject failure of the people’s forests to return on the investment in them, let alone on their standing value.
Another mask that is not so clear, disguises the cost to tourism of giving away Tasmania’s natural heritage, leaving a sea of burnt forest on the way to the Airwalk. Claims about %’s of the state locked up are irrelevant when at the front door we lay industrial forestry out for all to see, so proud of the slaughter. People react to such an experience. It is not the result of consuming a latte.
After all, FT has millions of tons of woodchips and hundreds of thousands of tonnes of sawlog and high quality veneer timber to sell, some still coming from our irreplaceable high conservation value forests. Much of this sold to the one buyer.
How come the directors allow this abysmal performance standard to govern this GBE. Would it be acceptable for Aurora.
And we have seen at the same time nature take body blow after body blow as the harvesting methods move from the pre industrial age toward the automated factory floor. All with concomitant impacts on that Lennon chestnut, the chant of a Labor man without a conscience, jobs, jobs, jobs.
Kept as the most powerful arm of government, representing one customer and determining the position of all other natural resource managing sections of the Tasmanian government
With management like this all but the lords of venality, benefiting from wood as cheap as chips, would have withdrawn all the funds they had invested and put them in other sectors. Why does tourism come to mind here, is FT telling itself something.
Back to those experienced business performers, the director of FT and his apprentice.
These are the 2 who could improve FT’s performance overnight. The reason they don’t lying squarely in the court of cosy relationships. Kept as the most powerful arm of government, representing one customer and determining the position of all other natural resource managing sections of the Tasmanian government.
FT is not serving the Tasmanian people, even indirectly. It’s return is too low, great natural assets have been sacrificed to the timber option. If it is to be kept put the price up. With the destruction of the world’s forests they will eventually have to pay, even if it is blood for wood.
In the meantime tourists will flow to nature’s playground, growing business and jobs far beyond whatever the timber industry could ever offer, even if each tree returned $110,000.00, the full art return. And a substantial part of that money would flow into the Tasmanian economy, not to offshore banks.
This destruction of Tasmania’s forests for little return is historic. Learning nothing, we have failed to elaborately transform wood into high value products. Even now the proposal is to turn that wood into paper pulp, to gobble up water, to pump out pollutants onto the land, into the sea and the air.
144 to 1 on the pressure will be on to reduce the price of pulpwood from FT from before the day the dumb pulp mill opens
Not even a world’s best practice mill, the cry of business when they wanted government and economic reform, but from them comes a great silence when it comes to investing in a sustainable future. 144 to 1 on the pressure will be on to reduce the price of pulpwood from FT from before the day the dumb pulp mill opens.
Taking several of the community service obligations out of FT, the management of forest reserves and the creation of tourist attractions, so that it can focus on its core business, a return to the Tasmanian people from the native forests and any previously cleared land dedicated to timber production, is an essential.
Tensions between land managers within government may arise, the resolution of those is what the tea drinkers of the towers of babble and the narcissists of the parliament are paid to deal with.
If another model does not exist, then design one, oh experts at income and expenditure, whose revenueing position lies outside the competition of the market, with a monopoly on dipping into the private purse so they can play with the public.
phill Parsons has been angered, bemused, and saddened since the Woodchip Campaign was commenced at a kitchen table where he sat, some 33 years ago. Then, the dollar loss to Tasmania from woodchips was $29.00 per ton. Besides the value of a dollar falling from that time what, in the economic performance of the forest managers appointed on behalf of the Tasmanian people, has changed.
Brenda Rosser
May 7, 2005 at 10:43
Preventing a market value for conservation and other forest uses in Tasmania:
“…55. Logging licences generally require certain areas of forest to be logged or they restrict access to the ‘timber reserves’ for other uses. A consortium of say apiarists, environmentalists and tourism operators could not bid for a timber licence, pay the required royalties and then not cut the forest. Furthermore, they could not preserve the forests through, say, purchasing the land, since the forests are on Crown land..”
Reference: p.23 AUSTRALIAN CONSERVATION FOUNDATION. FORESTRY AND NATIONAL COMPETITION POLICY
12 April, 2001
M arsden Jacob A s s o c i a t e s
Consulting Economists
Level 3, 683 Burke Road, Camberwell, Victoria 3124
Tel: (03) 9882 1600 Fax: (03) 9882 1300
Email : [email protected]
pat synge
May 7, 2005 at 13:39
………..and to cap all that we have Evan Rolley bleating about how they can’t sell the timber for a higher price because native forest logs are of such poor quality for chipping!
In the meantime the really valuable timber is being felled (often while immature) and either sold off at derisory prices or burnt in a mad rush to establish plantations.
pat synge
http://www.buyselltrade.com.au
tasmania’s free online classified advertising
Dave Groves
May 8, 2005 at 00:57
phill, you write so well and with such a firm grasp on our current pathetic situation regarding the massive waste of timber resources in our glorious state and the tragic mismanagement of forestry.
I was at Tahune recently, tourists in droves, the place was packed. As we drove in I took a couple of photos of the aftermath of the “regeneration†(?) mismanaged burn that had my visitors asking all kinds of questions.
It was great to finally get to the river and the facilities there.
I was impressed with the lateral thinking of the air-walk and coming from many years in the construction industry I was amazed at the way the structure was set up.
To be at the end of the air-walk, focus on the river below, the magnificent celery top and leatherwood jungle was a memory to treasure. It would not be hard to imagine a dinosaur breaking through the foliage to quench its thirst in the fresh water. My latte sippin’ (mainland) guests were amazed by what they saw.
My eyes lifted and spied some bare land and a strip of monoculture in this place of awe.
These people just can’t help themselves. After my short time in this state, I now believe that most forestry workers feel that they are doing the “right thingâ€.
They have been brainwashed by the greed driven powers that be and they feel that industrial logging is the way to go no matter where that may be. As you say the “jobs, jobs, jobs†mantra is peddled out despite the facts to the contrary.
We headed to Dover where we were to camp the night, but smoke that obscured the Hartz Mountains and filled the Huon Valley drove us north.
Our accommodation cancelled, the owners telling us that their business is “cactus†around this time every year, not for lack of tourists, but for volume of smoke.
I was at Scottsdale last Friday (6th May) and looking from the hospital out west somewhere was a “nuclear plume†that was heading south.
I was at Reedy Marsh state forest yesterday to check out Brushy Lagoon for the first time and drove by massive carnage and an unmonitored fire that was burning merrily away taking all and sundry with it. Fresh air in Tasmania-“you’re jokingâ€.
Some one had written “SNAFU†on the forestry sign. I wonder why??
Then go out to Narawntapu national park. As you turn off the main drag there are two signs. One points towards the park, the other much larger advertises the use of 1080. Way to go!!!
As you drive to the park there are swathes of clear fell and monoculture.
Erosion control doesn’t even enter the picture. My guests are surprised. “Where is the siltation fencing? We have to have them around a 350 square metre house block in Sydney to prevent discharge into waterways, but here they can expose a whole mountain and walk away!â€
I explain that we have no Environmental Protection Agency (EPA) in Tasmania and we rely on the government’s toothless paper tiger (DPIWE).
A motion put to the parliament a few weeks ago to set up an EPA was blown out of the water by both sides of the house.
My guests decide it is time to head home. They had seen enough of the “clean and green†Tasmania.
Mark
May 8, 2005 at 02:11
Speaking of bemusement, I heard Evan Rolley attempting to explain the commercial rationale behind the reality of Forestry Tasmania where everyone else (other than those engaged by the forest industries) was either misinterpreting, ill-informing or just plain wrong.
His logic was simple. Oldgrowth forests produce poorer quality woodchips than plantation timbers and the return on investment was therefore less.
One could equate this to any industry where the cost of manufacture is either equal or less than the wholesale or retail price. That is, it is uneconomic to produce.
Perhaps, Evan could tattoo a mirror image of this basic commercial advice onto his forehead so as to receive a daily reminder, “Where the unit cost of production is less than the market will pay the enterprise is uncommercial.”
On a more sobering note, I have noticed the various state forestry commissions (sorry independent business enterprises) all seem to operate at near or actual break-even point. It does make one wonder about the decisions in our darkened halls of democratic government. These decisions are, of course, to the benefit of the general Australian public.
editor
May 9, 2005 at 15:29
“The financial outcome of Forestry Tasmania has come to the attention of those who monitor the Commonwealth Competition Policy because it is the worst result of any Government owned forestry agency in the nation.
Meanwhile, as I read the figures, the main customer of Forestry Tasmania is making a return that is 5 or 6 times greater than Forestry Tasmania plus a greater profit than any customer of any Government owned forestry enterprise. Surely Tasmanians, whose forests are being cut down for these odd returns, have the right to a thorough explanation.
Can someone tell us in plain English, how come our forests are so worthless to us and to those who work in them but are so valuable to Gunns Ltd and those who invest in it?”
Best Wishes
Tony Richardson
[email protected]
Dr Kevin Bonham
May 15, 2005 at 12:04
Phill, in some respects your suggestion to remove forest reserve management from FT’s responsibilities is an interesting one – at least that would make it easier to see the real bottom line and compare it to other resource-based industries.
However, who are you suggesting as an alternative manager? Forest reserves are typically surrounded by state forest and are areas formerly managed by forestry so what about the loss of integration of management?
I would also be a little concerned that if forest reserves were transferred to Parks and Wildlife control we would see more of the same tourist-oriented, over-sanitised, over-interpreted and most disconcertingly overcharged, management style that is sometimes seen within the National Park system.