The Forest Industries Association of Tasmania’s Chief Executive, Terry Edwards, told the ABC’s Country Hour this week (amongst other matters) that the new Parliament cannot afford to change the pulp mill’s assessment:
“If that Tasmanian Parliament however it may end up being configured, were to intervene now in such a way as to prevent the mill proceeding, Gunns would be quite entitled to significant compensation for all the money they’ve spent to date because it would be a breach of commitment by the State Government,” he said. Source: HERE
Constitutional law expert Michael Stokes, and I, consider Mr Edwards’ claim wrong in law, for reasons summarised below.
It is important that Mr Edwards’ claim be clarified since decisions of the new Parliament, and MPs therein, should not be based on a false premise.
Mr Edwards should therefore explain what “commitment by the State Government” he meant. Or was he making an ambit claim without legal foundation?
Absent explanation of what “commitment by the State Government” Mr Edwards meant, the reasons why we consider he is wrong can be summarised as follows:
Firstly, there is nothing in the Pulp Mill Assessment Act 2007 requiring that compensation be paid to Gunns Limited. In any event, such legislation cannot bind successive Parliaments so as to prevent them amending the Act.
Secondly, we are not aware of any current “commitment by the State Government” breach of which would legally entitle Gunns to “significant compensation for all the money they’ve spent to date”, as claimed by Mr Edwards.
Predating Gunns’ commitment that the mill will use 100% plantation feedstock, there was a Sovereign Risk Agreement (SRA) dated 11 January 2008 regarding the Long Term Pulpwood Supply Agreement between Gunns and Forestry Tasmania: see HERE. However, “Pulp Mill Construction” (defined in the SRA clause 1) did not commence by the SRA’s initial or extended 2008 deadline (see the initial construction deadline of 30 June 2008 in SRA clause 14, which was then extended to 30 November 2008). In November 2008 Gunns announced it would not seek to have the SRA extended further: see HERE
Even the SRA would not have compensated Gunns “for all the money they’ve spent to date”. Clause 6(g) of the SRA restricted compensation payable by the State under clause 4, making it only payable upon various cumulative conditions, and then only:
“to a maximum aggregate total amount, in relation to all claims and all Project Specific State Changes in Law, of $15,000,000, and if compensation to that maximum aggregate total amount is paid by the State, no further compensation is payable by the State despite any further costs, loss or damage which Gunns may incur in connection with any Project Specific State Changes in Law.”
In any event, compensation under the SRA arose only if changes to law prevented Forestry Tasmania from supplying Gunns in accordance with the Long Term Pulpwood Supply Agreement. Gunns has since committed to the mill being 100% plantation based. Thus, any changes to Tasmania’s native forest logging regime or laws will not now impact the mill’s wood supply.
If Mr Edwards explains what “commitment by the State Government” he meant, then we would be pleased to consider that.
