Part 2 – The Gunns’ Long Reach Site for a Northern Regional Prison

Gunns’ Long Reach vacant land is for sale. 590 hectares in area with another 32 hectares on the east side of the East Tamar Highway. It’s been on the market since 2012. All permit conditions have expired, and all State and Federal reports, surveys and modelling are obsolete and will have to be redone. The local politicians are extremely compliant and desperate. They are hopelessly in debt due to corruption, cronyism and chronic mismanagement of the island state. Tasmanians Against a Pulp (TAP) Posted May 4th, 2015.

Introduction

This, the third article in the series, will suggest that a far more suitable location for the proposed Northern Prison is to be found at Bell Bay within the Industrial Zone at George Town. Long Reach, (the original name), is still vacant land, cleared without a permit and corruptly declared by the Environmental Protection Authority: a substantially commenced pulp mill without a brick having been laid to prevent the lapsing of the Gunns pulp mill permits.

Access to this site by freeway from Launceston was facilitated by compliant Lib/Lab politicians as part of their unspoken assistance to a public company then pushing a pulp mill. The Batman Bridge across the Tamar leads directly to the west via the Bass Highway, the route used by log truck drivers to access the Bell Bay woodchip plant.

George Town

In April 2019 Korda Mentha, the liquidators of the failed Gunns enterprise, appointed Knight Frank agents for the Gunns’ Long Reach land in two blocks, one of 892 hectares ( Parcel 1 containing an area of 622.49 Ha and Parcel 2 containing an area of 269.65 Ha) and the other a 13.85 hectare parcel off the East Tamar Highway in George Town.

KPMG rates George Town in the bottom 25% of areas in Tasmania as a place to live, with the same parameters applying to Risdon, which in turn is both a prison and a smelter town. By contrast, the Meander Valley is rated as one of Tasmania’s top 25% of places in which to live.

The rate of unemployment in George Town, as of 1 Jan 2018, is 9.5 %, from a declared labour force of 12,046. Analysis of the employment status in the Meander Valley Council area in 2016 showed that the labour force was 8,979, of whom 94.2% were employed, and 5.8% unemployed, compared with 92.5% and 7.5% respectively for Regional Tasmania.

As 5% of the population is either unemployable or between jobs, Meander Valley may be considered to have full employment and therefore is in no need of a prison. This cannot be said for George Town.

The Real Estate Institute of Tasmania releases suburb reports for suburbs within the municipalities summarising the status of the property market. In the George Town municipal area over the last two years median house prices have increased from $150,000 to $180,000, yet house prices in Tasmania have grown by 15%. The median house price in Westbury is $340,000, with the building of a prison this will decline. The Risdon Vale median house price is $261,000 with its cheap housing being bought by investors for rental accommodation.

photo – Laura Bevis, ABC

The Smelters

Historically low property prices in Risdon and George Town are caused by heavy industry. The electricity-guzzling smelters, two at Bell Bay and one at Lutana, are the culprits.

The first smelter to close will be the TEMCO smelter at Bell Bay employing about 300 people. It processes manganese used to improve the strength of steel and aluminium. South32 owners of TEMCO announced in May 2019 that it was reviewing the operation and that the company would provide an update in October; no further comment has since been made.

Brad Thompson reporting in the Financial Review 17 Oct 2019, noted that hundreds of jobs at South32’s manganese alloy smelter in Tasmania are in the balance as the company continues to weigh up its options for the underperforming and ageing asset. In a statement, TEMCO said the review was assessing three options, namely “divestment, care and maintenance, and closure…However no final decision on the path forward has been taken.”

The Shadow Minister for Energy, David O’Byrne, commented that “Labor was committed to working with the Government to ensure TEMCO remained open but Will Hodgman was so consumed by chaos and dysfunction that he has dropped the ball…Hodgman appears oblivious to the risk faced by 250 workers and many more indirect jobs if TEMCO at Bell Bay closes its gates, or enters care and maintenance.”

Despite two emails and two phone call, as of 6 Dec 2019 Premier Hodgman has yet to reply to the questions posed in my initial article suggesting that these observations by O’Byrne are accurate.

The other Bell Bay smelter is owned by Rio Tinto (RT). A company summary regarding their aluminium business covering the first six months of 2019 indicates a substantial price decline for smelted aluminium. Underlying EBITDA of $1.1 billion declined by 38% compared with 2018 first half.

The Financial Review 23 Oct 2019 carried the headline: Rio Tinto has started the ball rolling on possible closures of its loss-making aluminium smelters in Australia and New Zealand, which would cost thousands of jobs.

This poses a question. Can the Tasmaniangovernment negotiate a further reduction in energy prices in order to subsidise the smelting of aluminium for a public company at further cost to all Tasmanian households?

I suggest the answer is no and I draw attention to Rio Tinto’s comments regarding New Zealand:

Rio Tinto will conduct a strategic review of its interest in New Zealand’s Aluminium Smelter (NZAS) at Tiwai Point, to determine the operation’s ongoing viability and competitive position. Under current market conditions and with high energy costs, we expect the short to medium outlook for the aluminium industry to be challenging and this asset to continue to be unprofitable. Rio Tinto intends to hold discussions with the Government of New Zealand and energy providers to explore options and identify economically viable solutions to find a pathway to profitability for the asset. Rio Tinto Aluminium chief executive Alf Barrios said “The aluminium industry is currently facing significant headwinds with historically low prices due to an over-supplied market…The strategic review will consider all options, including curtailment and closure and will be complete in the first quarter in 2020. NZAS is a joint venture between Rio Tinto (79.36%) and Sumitomo Chemical Company Limited (20.64%) and employs around 1000 people. i

The eventual closure of both Bell Bay smelters will pose a problem over employment for the residents of George Town. This problem will not go away and has not been addressed by the Hodgman Liberal government. It could in part be alleviated by the building of the Northern Regional Prison at Long Reach.

Vacant Land

Two smelters are contained within the Bell Bay Advanced Manufacturing Zone of 2,500 hectares. Some 900 hectares of this on six separate titles were amalgamated for the proposed, but now defunct, Gunns’ Long Reach Pulp Mill.

The option to place the Northern Regional Prison on part of this land seems to have been declared a no-go area by the George Town Council and the Liberal government, both of whom have the power and the self interest to make this happen. The vacant land is, as I write, under option and subject to caveat but available for subdivision for use as the site for the Northern Regional Prison. It is in the best interests of the citizens of George Town that they ask their councillors and the Premier why they have been ditched in favour of Westbury in their possible hour of need.

The George Town Council and the Bell Bay Advanced Manufacturing Zone

A George Town Council Meeting 17th October 2018 indicates a lack of understanding by the council that the distress caused by the closure of the smelters could be alleviated in part by a Northern Regional Prison.

Minutes 165/18 12.6 NORTHERN PRISON SITING PROJECT – DECISION

Moved: Cr Harris Seconded: Cr Dawson

That the Council, in respect to the EOI application process proposed by the State Government on the Northern Prison, resolves to:

1. Not seek to lodge an EOI on any Council owned land.

2. Note that staff will treat the request by the State Government along similar lines as any other developer proposing a development within the municipal boundary.

VOTING – For: Cr Archer, Cr Harris, Cr Ashley, Cr Dawson, Cr Glisson, Cr Parish Against: Cr Barwick – CARRIED 6/1

The fact that the possible closure of the two smelters at Bell Bay is not on the George Town Councils radar is reflected in this extraordinary resolution by the George Town Council. The then Mayor Bridget Archer, now the Liberal member for Bass, must be aware that by this decision – which she voted for – three hundred prison jobs were thrown out of the window for no logical or known reason. I suggest that Bridget Archer should be forced to explain her stance over this matter.

BBAMZ

Bell Bay Manufacturing Precinct Project Officer and member of the Bell Bay Advanced Manufacturing Zone (BBAMZ) Committee Susie Bower, an unsuccessful Mayoral candidate for Meander Valley, has stated:

One of BBAMZ aims is to prepare local businesses and their employees to weather any changes at TEMCO and Bell Bay Aluminium. She continues The whole reason it was set up is for the smaller businesses in the Bell Bay area to have less reliance on the two major players, and not to have 80 or 90 per cent of their business model relying on those two particular businesses…Everything we’ve been doing in the last two years is looking at diversification and how they can look at new customer bases…The BBAMZ committee has set about attracting new companies to the area and developing training and recruitment initiatives…It’s also helped existing businesses to reduce costs through joint tendering for training and other services.

Ms Bower, former Meander Mayor Perkins and Leigh Darcy, the Chair of the BBAMZ Committee to whom Bower flicked my as yet unanswered letter, appear in an important video regarding the activities of this Committee ii

The BBAMZ was established in 2015 to grow the region’s capabilities by supporting existing businesses, encouraging investment and promoting the benefits of the region as a place to live and work. BBAMZ evolved out of Bell Bay Aluminium’s existing community consultative committee which had identified the need for an industry-based group to support economic growth and diversification in the George Town region.

Rio Tinto, the owner of the aluminium smelter, has the right of veto over any new proposed purchaser of the land sold by them to Gunns for a pulp mill in 2007. This caveat prevents another enterprise from setting up in competition using the ever-cheaper electricity priced at a loss by our state government to keep the smelters in business. This caveat must have been known to Darcy and the manager of the George Town Council, another committee member.

Smelter Electricity

In 1916 there was a robust debate over the price at which the Hydro-Electric Department had contracted the supply of electricity to the new zinc smelter being constructed by the Electrolytic Zinc Company of Australasia at Risdon now Lutana. Ever since, the Tasmanian public has held a keen interest in the relative price of electricity paid by small and large users in Tasmania.

The debate about ‘the zinc bargain’, as it was known at the time, was arguably the beginning of the ongoing speculation that significant cross-subsidisation exists between different classes of customers. This idea has been fuelled over the intervening years with pricing for large users of electricity lacking all transparency.

This long-term intergenerational subsidy, at a giveaway price, is provided at great cost to all Tasmanians as it results in higher electricity prices for the man in the street. Tasmania is slated by the Federal government as the Battery of the Nation. This slogan suggests we could sell our clean and green, water-powered electricity to the mainland and Hydro Tasmania would once again reap a fortune. Hydro did well out of the carbon tax posting a record $242 million profit before they cooked the cable. The scrapping of the carbon tax by Abbott, Abetz and friends saw this instantly vanish.

We are currently gifting our water and the resultant power to three (unprofitable) smelters at below cost.

The actual amount of power delivered, and the real cost, is a very, very, closely-guarded government secret. Due to climate change, the generating lakes remain at extremely low levels. It is these levels that saw the smelters close during the Bass Link crisis, having been run down to virtually empty in order to generate cash for Hydro Tasmania. Note the government has used Hydro profits to prop up other floundering Government Business Enterprises like the mendicant Forestry Tasmania.

It is known that Norske Skog, Nystar, Rio Tinto Alcan and BHP TEMCO collectively consume around 5800 GWh per annum. This is more than half of the energy supplied by the Tasmanian power system; best estimates therefore are that 45% of Tasmania’s generated electricity is used for the purposes of smelting.iii

This is a significantly more concentrated demand profile than elsewhere in Australia. It is an uneconomic use of a major state asset by complicit politicians to protect industries in decline.

The Long Reach Land Sale

This Rio Tinto veto clause therefore holds the key to the future employment of many of those who work at the TEMCO Bell Bay manganese smelter and the Rio Tinto aluminium smelter. It is up to this corporate giant to use its power in the interests of its local community.

It is believed that a party negotiating a purchase of the Long Reach site from the Gunns’ liquidators, Korda Mentha, wishes to generate electricity using solar panels and/or wind. This will feed into the adjoining grid without the requirement of visually polluting power lines.

This admirable solution over the potential use of the large 2,500 acre site would be made more admirable by the hiving off of some 100 acres for a prison, as per the area proposed for Westbury. Gunns reputedly spent $25 million in site preparation at Long Reach by levelling the land, providing links to a water treatment plant, and putting in roads.

Korda Mentha has granted an option to purchase on the Longreach land, as renamed and spelt by Gunns, at approximately $5,000 a hectare subject to the veto approval by Rio Tinto. So time is running out!

Rio Tinto hold all the cards and can act in the best interests of the soon-to-be-redundant smelter workers and the people of George Town even if the tiers of government have stepped away. This will force the Tasmanian government to do the right thing by their Liberal-voting electorate rather than allowing the money to be used to bailout of the Meander Valley Council.

This heady mix of conflicting interests provides for a serious disaster as the Bell Bay Advanced Manufacturing Zone Committee support Westbury as the site for the Northern Prison against the employment prospects of their constituents. This possible betrayal of the people of George Town by the Liberals may yet cost them all their jobs.

The Federal Liberal MHR Bridget Archer served on George Town Council from 2009 and was the Mayor before her election to the seat of Bass in the last Federal election. Elected after preferences by a margin of 563 votes, it would be in her interest to campaign for a prison at Long Reach. Without her winning the seat Australia would have had a hung parliament, yet the Liberals cannot see the peril they are now in or the obvious solution posed by a Northern Regional Prison located in her electorate.

Michael Ferguson has been elected to the Tasmanian Parliament to represent Bass. Why is he not the principal champion of a prison in his electorate?

Land Costs

The prison site land at Westbury is priced at $35,000, yes $35,000, a hectare. This expensive and uncompetitive price provides considerable potential for corruption. The price has resulted in the sale of only one block for the owner over a period of ten years. We can see this compares poorly with the $5,000 per hectare land available at Long Reach.

It would be far more practical and proper for the state government to write the guidelines for a correctional facility rather than a local council planner. Further, state guidelines are a critical prerequisite for consideration before any site is chosen. Then George Town Council can make an application for a prison at Long Reach supported by Rio Tinto and the playing field between the two councils will be level.

Mandatory jail time over corrupt or discriminatory behaviour is far more deserving of time in the slammer than hounding workplace protestors who dare to protest over divisive legislation used by pollies as a political wedge. If it can be shown that a representative of the people at council, state or federal level has gamed the system to the detriment of those they are supposed to represent, they also should be subject to legislated mandatory sentencing.

A public meeting in Westbury on 16 December will see Minister Archer holding court one-on-one at another venue, the Fitzpatrick’s Inn, in a carefully controlled environment with consultations limited to 10 minutes per person.

Archer said that she would come back and address a public meeting. Thinking she will avoid the flak with a series of private meetings, this retreat and about face resulting from growing public opposition can be used to public advantage if WRAP film and tape record each of her individual sessions for public release.


ii Notice to ASX/LSE Rio Tinto to review future of New Zealand’s Aluminium Smelter 23 October 2019

iv www.dpac.tas.gov.au/__data/assets/pdf_file/0017/141803/Tasmania_s_Energy_Sector_-_an_Overview.PDF


 

John Hawkins has lived in Tasmania for 17 years. He has recreated with his wife Robyn a 19th century landscape over the Bentley Estate at Chudleigh. He is interested in the Tasmanian way of doing business. John was commissioned into the Diehards from Sandhurst in 1962.


Postscript: statements by Minister Archer and WRAP are here. See also the WRAP protest action in Hobart.

See also the IntroductionPart 1 and Part 3 of this series about the Westbury Prison proposal.