Tasmanian Times

Economy

Brucey hits back for Forestry

DAMIEN BROWN, Mercury

TAXPAYERS get little return from the state’s tourism industry subsidies, a study has found.
The analysis of five key industries found mining was one of the lowest subsidised industries but returned the most to the community. In contrast the study found that taxpayers got little “bang for their buck” from the state’s tourism industry, despite handing millions to the sector each year.

The study was commissioned by the forestry industry in response to criticism that logging survived on subsidies.

The study, by consultancy IMC-Link, would help shape spending, co-author Bruce Felmingham said.

The Assessing Direct Government Subsidies Paid to Tasmanian Industries report measured the link between assistance to industries and their economic contribution.

Dr Felmingham spent about eight months analysing Commonwealth and state data to determine the level of subsidies provided to five key areas.

Researchers looked at the contribution of each sector and established a Subsidy Intensity Index to work out the “bang for buck”.

The authors defined a subsidy as a direct payment to a company to make it cost-effective or cheaper. Dr Felmingham said it did not include marketing or promotional funding which was a standard business expense.

“Unlike the very right-wing rump of my profession who want to get rid of all subsidies in a Tasmanian context, we need them,” he said.

“None of our industries is scale-efficient, that is they do not operate on a large enough size to be competitive with huge industries around the world.

“I think this kind of study should now be advanced to a national level . . . because with Canberra looking at its distribution of GST, we need to be prepared for that and say ‘well, look, Tasmania is no more or less subsidised than anyone else’ and why we need that money.”

A report commissioned by the Wilderness Society and Environment Tasmania, released last week, said more than $630 million in subsidies went to the Tasmanian logging industry over the past decade.

Dr Felmingham’s report, however, shows a return of $56 for every dollar spent by government in subsidies.

Forest Industries of Tasmania chief executive Terry Edwards and Forestry Tasmania executive general manager Hans Drielsma thumbed their noses at critics.

“This report shows that subsidies should not be a dirty word and properly targeted funds will provide great benefit to the state,” Mr Edwards said.
Read more here

ALISON ANDREWS, Examiner

AN EIGHT-MONTH study released yesterday should dispel the myth once and for all that Tasmania’s forest industry is heavily subsidised, says forestry chief Hans Drielsma.

The Forestry Tasmania executive general manager said that the report showed that tourism and agriculture were way ahead of forestry and timber processing when it came to government assistance and returned less for the dollar investment.

Dr Drielsma was speaking at the release of the report prepared by Tasmanian economist Bruce Felmingham and IMC-Link.

“It is clear from the report that all sectors studied delivered significant benefits to the community,” Dr Drielsma said.

“Discussion of subsidies rarely considers the economic benefits generated – this report clearly shows that subsidies benefit consumers as well as producers and generate jobs and income for Tasmanians.”
Read more here

What John Lawrence thinks of another Felmingham analysis:

An opinion writer using the byline ‘Bruce Felmingham’ followed with a piece in the Sunday Tasmanian on 31st May 2009, by saying in part “ A brief analysis of Gunns Plantation Limited’s business plan reveals some notable differences between the Gunns plantation business and the Timbercorp and Great Southern operations. The main point is that….Gunns’ MIS represents only 10 to 15 per cent of the group’s total revenue.”

A brief analysis indeed.

A particularly fleeting one.

From the same hymn book.
Gunns after the Deluge: Read more HERE

Author Credits: [show_post_categories parent="no" parentcategory="writers" show = "category" hyperlink="yes"]
41 Comments

41 Comments

  1. Kelvin Markham

    June 18, 2009 at 12:15 am

    Felmingham seems to make a basic economic mistake in not considering the opportunity cost of the publicly owned inputs to the woodchip industry not counted as subsidies, ie: the forests themselves, lost, water quality, affected, air quality, rampantly disregarded by foresters, log trucks on public roads, an unfactored impost on every other road user etc etc. Woodchip forestry is destructive, something it does have in common with the gaming industry, while tourism makes a constructive contribution to our state and builds longer term assets. The Felmingham also neglects to take into account the contribution to greenhouse gas emissions of regeneration burns, suggested to be 20% of Australia’s total emissions. Why should householders cop the cost of carbon priced into power prices while woodchippers get away with a lie. The study is designed to please it’s proponents and doesn’t provide accurate enough information to allow anyone to make a proper assessment of the valuelessness of woodchip forestry. If it was part of a prospectus it would be misleading.

  2. Mike Bolan

    June 17, 2009 at 10:27 pm

    If $1 subsidy to forestry generates $56 – what happened when forestry Tas lost $55 million last year. Does that mean that we lost $3,025 million or did we gain that much?

    Sorry, it’s all a bit confusing really.

    #30 Check Andrew Bent’s work at http://oldtt.pixelkey.biz/index.php?/weblog/article/mill-doing-the-sums/ which was done as you suggest if I remember correctly

  3. john hayward

    June 16, 2009 at 6:39 pm

    Where do they find all the totally impartial and disinterested witnesses for the logging cause? Only on some other planet. And I thought part-time forestry jobber Bruce was the cleanest skin in the universe!

    John Hayward

  4. Neil Smith

    June 16, 2009 at 5:16 pm

    Priceless, John Walter. I reckon your own bang for buck is in the six figures, if not actually infinite.

    From the style I reckon you might be a nom de plume of my good friend Lester Barker, or perhaps you are his wife Rin Barker. Or at least a cousin?

    Neil Smith

  5. Alex Wadsley

    June 16, 2009 at 1:46 pm

    re# 25

    I was not involved in the preparation of Forestry Subsidies report in any capacity and do not propose to comment on it. I will read with interest Graeme’s analysis.

    I was involved in close detail in the preparation of the Tarkine Drive analysis which identified that, based on the forecasts of increased tourism visitation and spending, the net social benefit from the spending, predominantly in increased incomes to small businesses would exceed the net social cost of building the road. This is not to say that the Tarkine policies of other parties would not also generate a net social benefit in excess of cost, or that other considerations may or may not have a bearing on the appropriate policy.

  6. William Boeder

    June 16, 2009 at 10:17 am

    This move to a scientific orientated forestry operation seems to have been done for a particular purpsose, whether it be to put in place some other form of protective umbrella, who knows?

    This statement from F/T that it is now going all out into science, could turn out to be another form of ongoing Japanese Whaling Research and its need for thousands of whales for scientific purposes?

    With the 20 year wood supply agreement now shaping into a non-benefit, particularly as a useful bait to aid the selling of Gunns Ltd joint venture scheme, now suddenly this can only be to add to the whole thrust to aid F/Ts continuing existence.
    Surely this is but another smokescreen/cloud, or hat changing exercise to keep going full-steam ahead, maybe even the harpooning of trees may be the next scientific challenge they undertake?

    As for Evan Rowley, (I did refer to this gentleman in a recent prior post,) his sinecure as the mount of wisdom advisor to the Bartlett government, must have lost it’s ardor.

    The concept to lead this new government along the tricky forestry trail, simply by its having an on-board advisor to illustrate to them the greatness of forestry, (at $300,000-00 Per Annum,) ( that’s a lot of trees,) is to have seen this government being towed toward an ever increasing amount of adverse public opinion, far more confusion in the ranks, then finally to announcing some hare-brained scheme to try for legitimacy of funding as a science based organization.
    All this to keep the F/T dynasty alive and still ruthlessly destroying our Old Growth Forests, merely for those grinning hucksters on the exceptionally high salaries.
    Is this new scientific approach going to see more forests destroyed?

    How all this eradication of Ancient Forests and deliberate acts of arson in setting of annual burn-offs, along with filling our atmospheres with whatever toxic chemicals, is to be now labelled a scientifically based non-profit exercise in science, for Tasmania, has to be the greates con-job of all time?

  7. phill Parsons

    June 16, 2009 at 10:15 am

    #27 may be interested to note Felmingham is in the Advocate promoting the spending of part of the Tote sale proceeds on Tourism.

    Where pray tell. Why in the NW which has a fragile economy and lots of plantations. Is Felmingham bbosting his own report on thebenefits of destroying the Tarkine brand.

    #34 draws our attention to Rolley on a retainer and now there is Gadd [former head of DEPHA]. With the financial position perhaps Gordon cannot expect the golden crumpet of a government position and thus his retirement is not in the wings.

    Of course he may be the replacement for harkins on the Labor Senate ticket.

    I look forward to Well’s and Wadsley’s analysis.

  8. Gerry Mander

    June 16, 2009 at 12:59 am

    Well, Forestry did announce about eight months ago they were abandoning a profit oriented business in favour of science.
    Seems that their science ranks alongside their ability to make a profit.
    They also stated that Evan Rolley was being moved out of his highly paid ($300 000 p.a.) of unemployed government mascot to advise with this scientific change – on the same salary.

    At the rate of 1:56 subsidy to profits ratio, this move costs the taxpayer in annual subsidies $5 357.

    On the other hand, if we look at his salary as another Forestry subsidy, his presence should be yielding us a profit of $16.8 Million. That’s a ‘lot of bang for bucks’,or is there something wrong with my science?

    Maybe I should ask Dr Felmingham?

  9. Phil Lohrey

    June 16, 2009 at 12:35 am

    If writers here pooled their knowledge to quantify and qualify subsidies to forestry, they might even countersign their best estimates. Refinement could be an ongoing forum.

  10. Gerry Mander

    June 16, 2009 at 12:32 am

    I added this comment to another thread, but i think it is more apprpriate here.

    Dr Bruce Felmington in his report for Foresry Tasmania says that every dollar spent supporting Forestry yeilds $56 in profits. I think he is right. What he fails to say is that the one dollar is spent by Gunns on party donations!

  11. Phil Lohrey

    June 16, 2009 at 12:23 am

    I can’t tell you how much I am appreciating the thoughtful comments here.

    Wouldn’t it be revealing if some of these commentators got together to write a sort of dot point summary of subsidies to forestry?

    The costs could be itemised under headings, progressing from direct to least direct subsidy.

    With combined knowledge, refined figures towards the most direct end of the sprectrum would be fairly incontravertible.

  12. Phil Lohrey

    June 16, 2009 at 12:16 am

    I can’t tell you how much I am appreciating the thoughtful comments here.

    Wouldn’t it be revealing if some of these commentators got together to write a sort of dot point summary of subsidies to forestry?

    The costs could be itemised under headings, progressing from direct to least direct subsidy.

    With combined knowledge, refined figures would be fairly incontravertible.

  13. Lester Barker

    June 15, 2009 at 11:05 pm

    Woodchip Communities Australia wish to congratulate Professor Felmingham and Terry Edwards who was on the news the other night for the report about so-called subsidies to the forest industry. WCA is pleasantly surprised by Professor Fleminhams findings and he now confirmed what we at Woodchip Communities have long suspected. Tourism is bad, Forestry good.
    We at Woodchip Communities Australia are proud that woodchip production has, is, and will continue to be the backbone of the Forest industry for years into the future. Ecspecially if the pulp mil goes ahead.
    Professor Flemingham’s findings should dispel once and for all the myth that the forest industry is heavily subsidised.
    As is the case with the pulp mill, discussion of subsidies rarely considers the economic benefit generated.
    It is Tourism that is the burden on the Tasmanian taxpayer not the woodchip industry. As the member for windemere Ivan Dean remarked a few years back when being heckled by the Greens at a pulp mill talk – do you fly on planes? Said it all did it not? How much pollution does each Tourist cause when they fly into Tasmania and then hire a car and then drink dioxin producing wine for the Timor valley. Brucey Felmingham is old school and an old friend of the industry. Bruce Felmingham understands the importance of not talking down industry and you will never hear a bad word from Brucey about the woodchip industry. My wife Rin and I have worked in the industry for 30 years now and I can honestly say that Rin has never read to me a bad word that Professor Flemingham has written about the Woodchip industry. Cant say much for his taste in footy teams but I have to admit that they do have a good sponsor. You are welcome in Oatlands any day of the week Brucey.

  14. Richard Butler

    June 15, 2009 at 11:05 pm

    It wouldnt matter if Forestry practice cost the state nothing in terms of subsidies – and provided 50,000 jobs.

    Its just so wrong.

    Any debate on economic terms is to engage in a transaction where a commercial logic can prevail.

    And any argument or howls of protest ‘what about the jobs’ – well – the state education system has been in the main – on a downward slide for the past 3 decades. So whilst there are trees to harvest – there is a reduced imperative to life the quality of educational output.

    If the state fixed the schools and quality of education – other, more and non primary based industry could prevail.

  15. Claire and Charles Gilmour

    June 15, 2009 at 10:52 pm

    (8) Gillsy said “ The point behind it (the report) which a lot of people are missing is that slowly one by one the ‘green political machines’ argumenst/propaganda pieces against forestry are being dismantled by Forestry Tasmania. I can see the ads at the next election ….”

    Oh so it WAS just a piece of political point scoring spin/propoganda… paid for by FT…. thought so.

    We note that Mr Felmingham reports on occasion in his, basically Forestry Tasmania supported report, quotes a number of times, specifically from ‘Bob Gordon’s’ spin. Why is that… is Bob Gordon going to retire shortly … maybe hands dribble or Paul Smith may take that Forestry Tasmania role eh? Hasn’t it become standard practice for some to retire just prior to the proverbial hitting the fan? So they cannot be questioned? And basically the rest of the report is protective industry spin …. NOT impartial information. (the illusion never changed to reality). We don’t trust FT’s accountancy methods, how can that be truthfully or independently used? It’s all too easy to make a preferred figure look good. But hey that’s just from an ex bankers perspective.

    In true accounting terms, one must consider the cost of goods sold, before gloating on the profit. And in every government spin such as occupancy rates in hotels and value added timber, no one ever considers or publishes the actual cost. In other words, if a hotelier charges $200 per night for a room it may well cost him $120 to service that room to make it ready for the next occupant. In the case of forestry, if we claim a thousand dollars worth of value added, it may well have cost $1100. Don’t use the gross figure use the net figure. The Hawthorn football club sponsorship is reputed as having a $15 million benefit but take out the ‘cost of goods sold’ less tax etc and then you will realise the net benefit to the supplier.

    Was it not Felmingham who helped in doing the govt. figures for the Tarkine Forestry Road? With apparently the tourism industry in the far N/W – one suspects from a Forestry Tasmania only perspective – being the great white hope? Funny why it wasn’t welcomed with open arms … maybe too many knew the truth by then!

    http://www.theadvocate.com.au/news/local/news/general/spend-funds-on-nw/1541246.aspx

    In some respects (without forestry) this is true, but only to a degree. But it seems its more …Oh please let us direct all your water to the failure of the midlands, instead of actually seeing the benefits of generations of good farming on the N/W coast and all the good benefits that could arise from that also. But apparently we need a white hope, or is that … some need a white washed hope? we’d suggest get your facts, laws and political smudge right … first!

    Where is farming/food in the equation? Well we can tell you … they are getting a conglomerate together to rip out the MIS plantations on good farming land so the area can go back to being the land of milk and honey; and high rainfall; and good native forest management that sold out the good saw millers and what they produced;… and we don’t need Forestry Tasmania to buy out and sell out our tourism industry … that is if the locals, those with a true Tasmanian heart can actually access their land again – you know that crown land that belonged to all of us but was deemed state forest and basically handed for free to greedy forest company’s…. to ruin.

    Tell us … hiding in the shadows gutless Gillsy … just how your preferred government is going to advertise themselves politically … for good longterm outcomes? …. or short term turncoat outcomes? …. Or has it already be written?? …. What’s it like being on the back …. burner!!

    Ask your Forestry minders Gillsy just when are they going to produce the ‘most in depth’ report for ever and ever …. (didn’t we have one of those forever and ever specialty timber reports recently!)… on the communities and people they have forsaken – for some company that uses its government; the states people; the states land – native and farming; destroys our environment and biodiversity; and can see no money in saving our legacy of old growth/native forests for carbon capture; – because they are too bloody old, too out of touch , too out of time to even want to think about having a new age forest industry and consider it as a positive way forward. … and who said the world was round and we would never fly! Never never never apparently … you will be proven again and again and again … people like you were always wrong. You never learnt to dance in tune. And no matter how many candles you try and blow out, this report ain’t no happy birthday to Forestry Tasmania, that’s for sure.

  16. Mike Adams

    June 15, 2009 at 10:05 pm

    Thank you, Graeme, Andrew and Neil
    I, too, look forward to your report, Graeme. I note that, unlike Dr Felmingham’s it would not have been commissioned by those standing to benefit from it. I also look forward to the media reporting your, and other comments with the same publicity they gave to the original.
    The Ex particularly specialises in giving greater col. inches to refutation than to the original complaint. I wonder if that tradition will obtain this time?

  17. alan barnett

    June 15, 2009 at 8:23 pm

    Some more info on Bruce Felmingham’s co-authors: IMC-Link http://www.imc-link.com.au/?page_id=3

    Not sure if IMC-Link consultant Alex Wadsley (as opposed to Dr Andrew Wadsley) would have some comments regarding Bruce’s conclusions on Forestry subsidies.

  18. Mike Bolan

    June 15, 2009 at 8:10 pm

    One hidden issue is that the forestry industry has been promoting itself as ‘sustainable’ for several years now.

    If they are sustainable, how can they continue to need subsidies?

    If they are not sustainable, why are they claiming to be so?

  19. Sven Wiener

    June 15, 2009 at 7:56 pm

    For completeness I should add that Prof Andrew Wadsley also spoke at the Nov2007 Hobart Pulp Mill Forum and is also featured in the YouTube video clips indexed at http://adam.com.au/scandia/forum.html

  20. Sven Wiener

    June 15, 2009 at 7:47 pm

    Assoc Prof Graeme Wells spoke at the Nov 2007 Pulp Mill Forum at Hobart campus of Tas Uni. Film of his speech is on YouTube at http://www.youtube.com/watch?v=8lRVCdI5pqo

    Other video clips of speakers at that event (e.g. Bob Brown can be viewed at http://adam.com.au/scandia/forum.html

  21. frankly speaking

    June 15, 2009 at 6:21 pm

    ”Robert, Terry, Hans and Bruce have peaked !
    One day their “far too clever” grin will change to cringe.
    All 4 had teir glories time and rewards coming in! And just like Bruces economics report… Mr Eastment thinks ‘it wouldn’t be a party stopper’, hahaha…

    Frankly speaking, the big party will go on without Felmingham,Edwards, Drielsma, Eastment, Gordon & Gay. The way they go on,
    they soon will make Tassie “99.99%” TCA-free.
    To cork or not to cork: that is the question; Robert’s statements have the aroma of old sneakers or wet newspaper
    that signals the presence of TCA drives wine lovers to dump grand crus of all stripes down the drain.
    A few Tamar Valley winemakers aren’t waiting for Gunns and FIAT to pop their corks.
    But what will they call the celebration? Ridgeview Fest?

    Be aware: TCA (2,4,6-trichloroanisole), the molecule that when present in cork is responsible for wine taint.
    “TCA is the great scourge of wine,” http://www.time.com/time/business/article/0,8599,1899068,00.html
    What a strange time we are during this 09 winter period!
    Or was that 8 month long economics report just aimed to be a party joke?
    The grin on the faces was an indication of that being possible. Wonder how much they charged for it!

  22. valleywatcher

    June 15, 2009 at 5:16 pm

    Thanks Graeme – many people will look forward to your report on the report.

  23. Graeme Wells

    June 15, 2009 at 4:43 pm

    A number of the TT comments have asked for my reaction to the Felmingham/Forestry Tasmania report on subsidies. I will provide a report to TT readers detailing the errors, miswconceptions and inconsistencies in the Felmingham/Forestry Tasmania report in the next few days.

  24. Dr Andrew Wadsley

    June 15, 2009 at 2:53 pm

    Not being an economist, I can only conclude that Felmingham, Poate and McMahon use a different logic to me — their report mixes apples, oranges, pears and lemons. Benefits to gross state product (GSP) are calculated by outgoings (excluding capex) for Forestry (Table 2.3), outgoings (excluding capex) for Hydro, Transend and Aurora (Tables 2.4, 2.5 and 2.6), outgoings (including capex) for the mining sector (Table 2.8), total turnover for agriculture and fishing (Table 2.9), and gross income for tourism (Table 2.10). These are not the same things, and require careful untangling to arrive at appropriate measures of value added to GSP. This mish-mash is inexcusable given that Dr Felmingham built the Tasmanian Input/Output model (TIRO) which is designed, in part, to resolve just such issues. The report appears to be scientific in its assessment, when in reality it is merely misleading. As Paul A. Samuelson said, “Economics has never been a science — and it is even less now than a few years ago.” Quod Erat Demonstrandum.

  25. Neil Smith

    June 15, 2009 at 2:42 pm

    My quick layman’s scan of the Felmingham document didn’t compel me to dig deeper. No need to be an economist to see that it’s distinctly fishy.

    The table of comparative “bang-for-buck” figures has to imply one of two things:

    (a) Since the clear winner in terms of bang-for-buck is mining and minerals processing, at 167 as compared with forestry’s 56, the State would be much better off increasing the subsidy to the mineral sector (cheaper power for Comalco, anyone?). If all of forestry’s subsidies were to be transferred to minerals there’s an instant windfall of $111 to the State for every dollar now going to forestry. Without spending a cent more. Simple isn’t it? – OR

    (b) There is something seriously wrong with the econometric methods. I’d say Squirrell has it right when he says “Working on the average rather than the margin generates a rather useless figure. It doesn’t allow for the fact that if there were no subsidy there would still be economic activity.”

    In the case of minerals, possibly almost the same amount of activity. But the very existence of this report seems to imply that the same cannot be said about the forestry sector, since it was commissioned by Forestry Tasmania and FIAT and designed specifically to defend subsidisation. The clear implication is that Forestry themselves know exactly the extent to which they depend on it. And are willing to jump through extraordinary theoretical hoops in order to deflect the quite justified public criticism. But with a report of this standard I reckon they have shot themselves in the foot.

    I’d have more respect for them if they simply claimed that the jobs that forestry provides for Tasmanians are important enough that it doesn’t matter if it remains a largely subsidised industry. There’s at least some honesty in that. But of course it’s high time they looked at ways of bringing the industry into the 21st century with vastly better economic as well as environmental outcomes. None of that is rocket science.

    Perhaps it’s more sinister that Dr Felmingham’s part in this looks like another example of the growing tendency of the academic establishment to operate according to the principle “he who pays the piper calls the tune”. Yet another nail in the coffin of civilisation.

  26. Leonard Colquhoun

    June 15, 2009 at 1:56 pm

    Comment 2’s opening remark “This article is entirely incomplete . . . . and uses scientific terms like ‘bang for buck’” is an intriguing observation for at least two reasons:

    (i) what would be the existential status of an article (or, for that matter, anything) described as “entirely incomplete”?

    (ii) searched my Dictionary of Science, and several related websites, but couldn’t find that “scientific term ‘bang for buck'”.

  27. Jeff Barnard

    June 15, 2009 at 1:32 pm

    Squirrell (#12), I would love to find out you are right and I am wrong. Is there anyone who can translate that quoted section in Squirrell’s comment taken from Felmingham’s report. I’m told that it suggests I’m wrong about Felmingham having essentially estimated a marginal benefit coefficient.

    But I am not able to decipher the terminology into everyday language that I’m conversant with. My best effort at interpreting Squirrell’s quoted text is that Felmingham’s saying there are interactions between the effects of subsidies to mining and forestry in that existing mining subsidy might bring less return to the state if forestry is subsidised a little more i.e. perhaps he means that in our small state the two fight for similar resources, e.g. road transport availability or wharf access or labour availability. Alternatively if the two are subsided at the same time perhaps economies of scale assist both to do better if a few more diesel mechanics come to the state and mainland heavy equipment manufacturers drop prices to Tasmanian industry.

    He also seems to be saying that one shouldn’t interpret every $1 given to forestry as bringing $56 back but rather that his coefficients are relative only, showing in what proportion the benefits to the state from subsidising forestry compare with those from subsidising mining.

    I had always regarded average as a better measure of overall return than quoting a marginal coefficient. However average doesn’t always accurately reflect what further subsidy can provide.

  28. Pete Godfrey

    June 15, 2009 at 12:57 pm

    At a quick glance Felmingham’s report seems to be based on pretty low figures. He quotes the Forest industries subsidies for a representative year as $25.4 million.
    That would mean that over an 11 year period the industry only recieved $279.4 million.
    What is a representative year?
    As the ongoing subsidies from the Helsham enquiry, the RFA and the TCFA are $54 million per annum, his figures are pretty low indeed. A bit less than half of what they really get.
    Like Mike said he doesn’t seem to have taken into account,
    cheap wood
    road and bridge repairs ( Deutche bank use the figures of 160,000 cars worth of road damage from a 40 tonne truck so that is pretty easy to apportion costs)
    Water
    Pollution of rivers and air
    Health damage to residents from smoke and chemicals.
    Subsidies for pulp mill studies,roads, rail.
    Sorry Bruce the study said it took 8 months I would guess the figure was wrong and it was actually 8 minutes

  29. phill Parsons

    June 15, 2009 at 12:20 pm

    Its all very nice comparing apples with cheese and rocks and trees but what does it really tell us?

    Is there a choice about keeping one industry and not another, like departments of the State government.

    And what happens if we take ot the fish from Ag and Fish or woodprocessing from forestry.

    It is interesting that Wells and Felmingham disagree, but then again Wells consdiered more factors.

    if you are looking at ‘bang for buck’ then the flow on into the community must be considered and as Tourism is a larger employer through many small to medium scale businesses one would expect more of the spend to stick in Tasmania rather than go to Gunns creditors shareholders and Gunns shareholders and later to their JVP.

    Further do we have a plan to get a better bang as time elapses.

    Nope, this bang is good enough.

    Lets not ask those questions they are too thoughtful.

    Further, if Felmingham is correct and Tasmania cannot ever be world scale and therfore needs a prop bigger than the props that hold up those who are world scale what actions are we taking to ensure that when we enter the market we are not vcompeting at the dumbest end where world scale rules.

    Pap for mugs from FT and Felmingham.

  30. Squirrell

    June 15, 2009 at 4:59 am

    Dr Felmingham’s report doesn’t actually estimate a marginal benefit coefficient as suggested above. He spells this out himself on page 54:

    ————————————————
    “These calculations of SIIi and BB do not have any causal property. We cannot argue
    that by subsidising one of the five core industries the economy benefits by X dollars.
    The appropriate way to view each ratio is as a measure of association between
    subsidisation and value added, although these indices provide some clear guidance for
    policy making pertaining to industry support.”
    ————————————————

    Working on the average rather than the margin generates a rather useless figure. It doesn’t allow for the fact that if there were no subsidy there would still be economic activity.

    Whilst Dr Felmingham has qualified this, using the term ‘Bang for buck’ implies that each $1 of subsidy directed towards forestry returns (or provides ‘bang’) of $56. Clearly, this is false.

    If you were to use ‘bang for buck’ logic, if forestry subsides were to be cut back to $10M a year, we’d be able to attribute $140.80 of bang for our buck.

  31. William Boeder

    June 15, 2009 at 2:01 am

    With a view to the report from Dr. Bruce Felmingham.
    I can only wonder why this report was commissioned in the first instance?
    Was it found to be needed by Forestry Tasmania, in regard to all the negative haunting headlines appearing in papers around the State?

    Was it to answer the charges of their receiving huge annual government grants, forgetting here of course the facts that there are also a great many subsidies given to this same GBE that were not included in their total funding package?

    Whoever that smug looking little character in the cowboy shirt may have been, his comments were of little importance to the many negatives emitting from this forestry entity.
    Strange it was to note the absence of Evan Rowley amongst the other avid forest-destroying spokes-persons?
    Perhaps there could be an altogether different purpose in F/T finally disclosing that they receive direct government funding, ‘maybe the cat was soon to be let out of the bag’ on this and their other secret boys-club taxpayer fondlings?

    Given the history of both Gunns Ltd and F/T, again there can be no trust or credibility given to this specifically purchased report!

  32. Jeff Barnard

    June 14, 2009 at 9:44 pm

    If Dr Felmingham can be convinced to acknowledge that his assessment did not include hidden costs of forestry (e.g. from each fully laden log truck causing road wear equivalent to 30,000 cars), that would be very valuable. The weaknesses of his analysis need to be widely publicised especially in the leadup to the March 2010 state election.

    Bruce Felmingham seems to have concentrated on estimating a marginal benefit coefficient, i.e. if the state government provided Forestry Tasmania one extra dollar of subsidy on top of what it already enjoys, then what would be the overall flow-on benefit to the state — forget about Forestry Tasmania’s profit increase as that’s not what Felmingham was aiming to estimate.

    The overheads resulting from hidden costs such as road wear, bad PR from plantation spraying that discourages mainlanders from bringing their money down here to retire, and opportunity costs of water/land used by plantations, appear to have been left out.

    What has Assoc Prof Graeme Wells’ response been to Dr Bruce Felmingham’s report?

  33. Gerry Mander

    June 14, 2009 at 9:32 pm

    A nicety.

    Does Dr F. include in his figures things like the Tarkine road, or is that cost/subsidy added to the Tourism sheet?

    As Forestry is also into tourism and their operations also appear to make a profit, is this counted as a subsidy for Forestry’s other operations or a contribution to the Tourist industries profits?

    As Forestry has made a consistent loss for the past decade, and their debts have been either ‘forgiven’ or passed on to other departments, there appears to be quite a large BANG for the buck. It is just unfortunate that both the bang and the buck appear to affect the taxpayer’s pocket more than Forestry.

    Black is only a very dark shade of grey, and as everybody knows, grey contains a large amount of white, so it could almost be said, and probably will, that B = W.

    It’s the basis for sponsored financial reports!

  34. Gillsy

    June 14, 2009 at 8:43 pm

    Read the report, it is quite comprehensive and covers what is measurable as a subsidy and what is not. When you speak of infrastructure how do you measure who uses what percentage of that infrastructure. The point behind it which a lot of people are missing is that slowly one by one the “green political machines” argumenst/propaganda pieces against forestry are being dismantled by Forestry Tasmania. I can see the ads at the next election…..

  35. john hayward

    June 14, 2009 at 7:32 pm

    Having jettisoned logic, Bruce has escaped the gravitational pull of credibility and is lunar bound. With the MIS crash adjustments, he may well escape the galaxy, too.

    Even the government’s own figures reveal that interstate tourism pulls in something like $1.3 billion with at minimum 4 times the number of jobs as forestry. And the resource they use is still there the following year. Even forestry’s perennial and unsubstantiated claim is that they generate $1.1 m pa despite dwindling harvests and employees.

    Their case is not aided by the fact that all these wonderful figures come from inside the forestry tent, where Bruce resides, and which has become renowned for its Munchausen veracity about everything: greenhouse emissions, value recovery rates, threatened species, old-growth loss, pulp mill, spray contamination, etc. They generate smoke from almost everything.

    While its disturbing to see one’s government involved in such naked fiction, it’s also a bit encouraging to see how desperate they presently feel.

    John Hayward

  36. Mike Bolan

    June 14, 2009 at 4:37 pm

    Any analysis, including Dr Fs, must include a list of the items subsidised.

    According to Andrew Bent’s article on TT and the community of users, forestry subsidies include:

    * free water for plantations (over 1,000 Gl/yr)
    * road and bridge building (via FT)
    * road and bridge maintenance (via Councils)
    * below market prices for trees ($15/t vs $95/t firewood)
    * cash payments (over $60 m/yr average)
    * exemptions from laws (Clean Air, FOI, LUPA etc)
    forestry research (via FT)

    1) What list did Dr F use?
    2) How was each of the items on the list valued?

    Without that information we’re nowhere.

  37. kate

    June 14, 2009 at 4:21 pm

    It all comes down to how one defines “subsidy” in the end. According to the Murkury article Felmingham defines them as “direct payment[s] to a company”.
    Pretty narrow definition – what about all the indirect subsidies provided by taxpayers, such as infrastructure etc. etc.?

  38. Stuart

    June 14, 2009 at 2:27 pm

    Not a member of any political party, actually a pragmatist. Would like to know how many jobs have been lost in the forestry industry since the FT and Gunns duopoly have taken the industry from selective logging for saw logs and specialty timbers to clear felling for bulk wood chips. You will probably find that it has been more lost then the white knight pulp mill will ever create. And how does this relate to the amount of subsidies the industry receives. What is the amount of subsidy per job for each industry. I would guess that each job in forestry costs a whole lot more in subsidies than in any other industry. Not sure but would love to know? I think most people argue that the problem is that the forestry industry get a very high portion of the government subsidies for little return from Forestry Tas, infact a $50+ million debt. Only Gunns shareholders make any profit from Forestry in Tasmania.

  39. Christopher Purcell

    June 14, 2009 at 2:07 pm

    If forestry is ‘returning’ money, where is it? Why has Forestry Tasmania lost $56 Million each year? Does this mean that Gunns are making a return from taxpayer funded subsidies while Forestry Tasmania makes a huge loss? Please explain.

  40. Richard Butler

    June 14, 2009 at 2:02 pm

    This article is entirely incomplete – it doesnt in any way provide any empirical data and uses scientific terms like ‘bang for buck’.

    Nor does it properly address the issue of subsidies to Forestry and rather – seeks to deflect by indicating mining is comparatively under sponsored yet alleges greatest returns from that allocation.

    And tourism – that awful blight on the industrial landscape – where people come and enjoy themselves and spend money – and leave talking about the smoke, the crappy water and the rows of plantation timber – returns little ‘bang for buck’ (one wonders if that is a little bang, or a little buck – but I guess thats industry specific. (some would say the Tasmanian Government is where you get both a little bang for a big buck and mostly end up with a whimper.)

    So perhaps what should be done is scrap tourism sponsorship, pour it into mining and add just a tweak to Forestry.

    That just about does it.

  41. Peter Johnson

    June 14, 2009 at 1:58 pm

    From what I heard while studying at Tas Uni Hobart Campus, this guy Dr Felmingham has quite a good reputation for competence. But then I’m not in his field of work. What does anybody else know about him? In the past he seems to have stayed away from endorsing the Tamar pulp mill proposal though not criticising it either. What are the weaknesses in his analysis of state subsidies to the Forestry Industry and what are the weaknesses of Assoc Prof Graeme Wells’ analysis? This contradiction between their conclusions impacts on the reputation of one of them unless their analyses can be suitably qualified.

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