Matthew Denholm The Australian

SENIOR economists have accused the Tasmanian Government of failing to adequately assess the economic impact of the $2billion pulp mill that timber company Gunns wants to build in the state’s north.

In defending his decision to fast-track the controversial project, Premier Paul Lennon has repeatedly warned that, if it falls over, the state will return to the economic “dark days” of the mid-1990s. Mr Lennon has warned of a repeat of the collapse in jobs and investment that followed the failure of the Wesley Vale pulp mill proposal after a community backlash in 1989.

Several senior economists — including Saul Eslake, chief economist with ANZ, Gunns’s banker — have told The Weekend Australian they disagree with the Premier’s claim.

“It is not sound, economic logic,” Mr Eslake said. “The dark days into which Tasmania sank in the 1990s were not primarily a response to Wesley Vale (pulp mill proposal) falling over, but were instead a consequence of the fiscal ineptitude of the Gray government.”

Mr Lennon has also claimed that by adding $6.7billion to economic output over 25 years, the mill would mean “each household is likely to have $870 extra every year to spend”.

University of Tasmania associate professor of economic policy Graeme Wells said this was “palpable nonsense” and “misleading at best”.

The Lennon Government’s fast-tracking was a response to Gunns’s decision to withdraw the project from the state’s independent planning body. The new process allows government-appointed consultants to recommend that parliament approve the mill even if it fails to meet pulp mill emission guidelines.

Mr Eslake said that rather than one or two “mega-projects”, Tasmania’s prosperity depended on its ability to produce and market premium goods and services, such as top-quality food and wine. Many such producers in the Tamar Valley fear the mill will destroy their businesses by undermining their “clean, green” image. They are seeking government guarantees for compensation.

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Matthew Denholm’s extensive report, Trouble at Mill: How the chef, the farmer and the fisherman are fighting to save their valley is published today in The Weekend Australian Magazine, but not posted online.