The Land Swap between Forestry Tasmania and the State Government


The Tasmanian Government Gazette of 30 June 1997 lists the proclamation of statutory rule 81 under s.97 of the Government Business Enterprises Act 1995. This proclamation provides for an exchange of land of equal value between Forestry Tasmania (FT) and the Crown. There is no mention of area, value, or estate (i.e. freehold, Crown land, etc.

The ostensible purpose of the exchange was set out in a response from DPIWE minister David Llewellyn in a 27 Oct 2000 response to queries from Federal Labor Senator Shayne Murphy: “The intent was to enable FT to obtain consolidated titles to its major plantations.” . Nowhere does Llewellyn mention “freehold”, which would acknowledge a major alienation of public property.

The transaction seemingly attracted no interest from the Tas media or the political opposition despite some a number of anomalies. FT’s forest estate is principally State Forest, a form of Crown land. There seems little point in consolidating Crown land, as it is not subject to rates and taxes on a title basis. What freehold FT already owned would be largely that relatively small area acquired for its private investor plantations and encumbered by those interests, hence not available for exchange. There also appears to be no logic in giving FT freehold, as it is subject to local government rates and land tax. Unless it is intended to be on-sold

The transaction attracted outside attention in 2000, when a Land Services employee confided to a member of the public his concern about seeming irregularities in procedures. He claimed to have been given a large number of titles of Crown land being transferred as freehold to FT with a highly unusual verbal instruction from the Valuer General that they be withheld from the Valuation Roll. He also claimed that his request for an explanation was met with a response that it was the sort of matter best left unquestioned. He forwarded copies of some 55 of the title plans to the citizen, which contained some duplicates, leaving some 48. News of the leak apparently got back the government, as the informant reported the arrival of outside security consultants and the imposition of stringent monitoring of access to LTO and FT data. The informant subsequently indicated that he was fearful of providing further information.

Some of the properties on the leaked plans could be readily located, such as a nearby 3300 ha block at Beulah, and have proven to be almost solely plantation. Seven more parcels identified in the Burnie area were also plantation, primarily pine.

Sen Murphy was persuaded to query the land exchange, copies of which are in the file, along with Mr Llewellyn’s replies. There are further anomalies in these replies. The Llewellyn letter of 20/10/00 refers to 50 properties transferred to FT. The First Schedule of the GBE proclamation, lists these properties as comprising 77,809 ha. These are almost surely the same as the leaked properties , which on an initial count comprised some 77,458 ha. There is a general correspondence between the areas of specific properties on the maps and those listed on the Proclamation schedule.

If so, Llewellyn’s cited land/capital valuation of $27,792,000 is an impossibly low $357 per ha, with a land value of $159 per ha, or $64.50 per acre. This contrasts with the $3000 per ha establishment costs charged by FT’s Trees Trust investor plantation prospectus (2000) ( land not included), the $5,000-10,000 establishment fees charged in some other plantation. schemes, and the $10k and $68k forecast as the commercial yield per ha of pulpwood and softwood plantation respectively by FT in the above prospectus.

The valuation raises questions as to how the land was valued, and the legality thereof. This exchange involved the alienation of Crown land to freehold. The sale of Crown land, whether for cash or some other form of exchange, should take place under the Crown Lands Act. This act specifically (s.13(3)(c)) requires the potential commercial value of any trees on the land to be factored into the sale price. This was obviously not done here.

The Valuation of Land Act, relating to freehold land, features one the grotesque concessions to logging interests which abound in Tasmanian legislation. S.11(7)(a),(b) prohibits the valuation of any forest or plantation designated for industrial or commercial use ( firewood lots excepted). This means that a plantation on private land is subject to council rates on the same basis as waste, or unimproved land, and on which stamp duty could be easily avoided. If this legislation was applied, which appears arguably illegal, the Tas Govt has disposed of public property at a write-down of over 90%.

The transaction is further muddied by another extravagant perk to private logging interests. In Tasmania. It is FT policy to replace state native forest with plantation wherever conditions are suitable. Where this is done by private interests, namely Gunns, the resulting plantation trees are owned by them, with the public land underneath being rent-free. This may be contrasted with Victoria, which even in its open slather days did not permit the replacement of state forest with plantation.

It is estimated that some 70% of FT’s plantation trees are actually owned by private interests. The 2001-02 FT annual report shows FT owning only 24,000 ha of the forest estate’s 83,000 ha of plantation. According to FT’s annual reports for 2000-01, the 77,809/ 77,458 ha would have represented virtually their entire plantation resource, with most of it encumbered by private interests in the bulk of its value. This would suggest that the intended purchaser could hardly be other than Gunns or their successors.

Among the other ambiguities arising from the Llewellyn responses is the discrepancy between the $27.8 m valuation of the 50 properties, and the $32 m cited in his letter of 27/10/00 as being the value of the land vested in FT as well as the properties surrendered by them. The use of “vested”, which means only having a legal interest, is also confusing, as the Crown land managed as State Forest by FT has been vested in them, but not owned. by them.

Also confusing is the 19,199 ha of the First and Second Schedules accompanying Llewellyns response to Murphy’s request for volume and folio numbers of 2/10/00. These were identified by land district, parish, lpr numbers, and volume and folio numbers. The Surrender Deed of 30/9/00 seems to refer to these schedules as having been retained. by and vested in FT as part of the exchange, but not otherwise described by Llewellyn in his reference to the number of properties.. I initially presumed these were the properties surrendered, since they do not correspond with the properties of the First Schedule of the GBE proclamation. They are far more numerous at 228 to 97, cover just less than one quarter the area, and average 84.2 ha to 802 ha. for the latter. But it is not impossible, in view of the crudity of government PR, that it was presumed that the opacity of the documents would discourage further investigation. It may well be that these properties are ones purchased by Forestry Ministers for forestry purposes under s 12B of the Forestry Act and which, under s.16, may be sold by the corporation, albeit for a price determined by the same criteria as Crown land.

It has proven difficult to match the properties from the various documents. Attempts at property searches through Service Tasmania from a selection of identifiers on the leaked property plans came up with no matches. If the First and Second Schedules with volume and folio are in addition to those of the proclamation schedule, the valuation drops still further, to around $329 per ha.

We still have no record of the land supposedly surrendered by FT. Queries to the Minister on these properties, and on the 121,409 ha which were shown as disappearing from FT’s forest estate through “reclassification” in its 2000-01 annual report, were sent on 1/12 03 and 16/12 /03 with an FOI request on 23/01. (that year also featured an exponential rise in revenue from land and equipment sales, to $74 m). To date, 5/1/04, there has been no response or acknowledgement to any of these.

The basic question is why conduct a seemingly illusory land exchange in the first place.? The state government is at liberty to sell its plantation estate, as it did 30,000 acres of pine plantation to RMO several years ago, at approximately $3,200 per ha. It is also free to provide more Crown land to FT as State Forest.

The plausible hypotheses are not reassuring. The swap format, for which we still have no quid pro quo, would provide FT with all its plantations in a saleable form which does not appear in its assets valuation. While the withholding of the freehold titles from the Valuation Roll may by now have been by necessity corrected, the nature of that manoeuvre seems designed for a subsequent purchaser. That plantation asset, moreover, appears to be undervalued by, at very least, $100,000,000., and in a tenure which it does not seem logical to hold in the long term.

This situation, complemented by another lavish lurk, FT’s exemption from FOI legislation, could provide FT with a hidden cash supply to disguise its ongoing debt problems and chronically woeful economic performance.

But the extreme undervaluation of the plantations together with the Bacon/Lennon government’s scarcely disguised devotion to the economic interests of Gunns, suggests that the intended beneficiary is not FT. The economic analyses of FT actuary Naomi Edwards and Graham Green of Timberworkers for Forests, clearly reveal the government’s intent to operate FT as a milch cow for the private sector. Edwards compared FT’s 1% return on equity (0.7% according to the Auditor-General) to the 35% ROE of its main customer, Gunns.

While the scenario postulated above may seem brazen, it is not out of keeping with a state being logged at something like 40-60 times the intensity of forests on the mainland for by far the lowest rate of return in the nation.

John Hayward


Update


After receiving no acknowledgement to the three information requests sent to PIWE Minister Bryan Green, I sent a request for written reasons for their apparent decision to ignore the requests, with copies to two Tasmanian Greens MHAs. An acknowledgement arrived by return post.

On 27/1/04 I received some of the information requested, namely that supplied to Sen Murphy in 2000. this clarified that the 19,199 ha also went to FT, making the total 97,108 ha, which was valued at $32 million dollars. This lowers the average valuation to $329 per ha, with the 19,199 ha having an apparent valuation of $218 per ha.

The Bryan Green response, which was signed by A-G Judy Jackson over his name, referred me to FT in regard to my request for details of the land supposedly surrendered by FT. I have responded that this surrendered land should now be in the government domain, and that FT is expressly exempted from Tasmania’s FOI Act. I am awaiting a response.

My query as to the fate of the 121,409 ha which was removed from the FT forest estate in 2000-01, was ignored. It should be noted that FT’s reported plantation area was not affected by the conversion to freehold.

To summarise, FT has been given in freehold 97,108 ha of public land, mostly plantation, at an extremely low valuation, vastly more freehold land than it possessed at the time of the exchange. To date, the public still has no evidence of anything being offered in compensation.

John Hayward

 

 

 

 

 

 

 

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Peter Fray

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