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Tasmania

Apr 11, 2013

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What started as government funding to compensate for native forest areas lost to the Tasmanian timber industry has become a gravy train without end.

The Helsham Agreement between the Tasmanian and Australian governments in 1989 ensured $50 million over five years from the Australian government in return for locking areas in reserves away from chainsaws. The emphasis was on industry restructure and more intensive forest management. In 1997 the Regional Forests Agreement, which had similar objectives, brought $110 million Commonwealth funding to Tasmania.

An extension of the RFA in 2005, the Tasmanian Community Forests Agreement, resulted in a further $250 million in assistance, mostly from the Australian government, and more land placed in reserves. Included was $115 million to help develop plantations to replace native timber, and $56 million to contractors, processors and sawmillers to upgrade and adapt to plantations. In 2007 additional amounts were given to the latter to compensate for tax payable on the grants.

Barely three years later in 2010-11 contractors received $22 million in Australian government assistance to exit the industry.

The inter-governmental agreement signed in August 2012 promised a further $277 million in assistance, since increased to $379 million to entice parliamentary passage of the necessary bill. Included are amounts for regional development, more compensation for exiting sawmillers and contractors and others affected by the industry downturn, and amounts for management of reserves, which will increase by 500,000 hectares.

In 2012 the Tasmanian government promised the state-owned Forestry Tasmania $110 million over f0ur years, as it was completely insolvent, unable to even meet annual employee costs of $25 million.

Since 1989 that’s $1 billion in direct cash assistance to the Tasmanian forest industry.

  • Almost all (85%) has or will come from the Australian government.
  • $345 million has or will be paid to Forestry Tasmania. The $235 million portion from the Australian government used mainly for plantations has added little value.
  • Contractors in receipt of amounts to stay in the industry have subsequently received exit packages.
  • Contractors accepted Australian government-funded exit packages yet continued to work in the industry in other states.
  • Contractors received grants to purchase equipment. Certain replaced pieces of equipment were subsequently purchased by other contractors, which also received a grant. Retooling the industry was the ostensible aim, but adding up purchases by each grantee overstates the new plant introduced into the industry.
  • The Australian National Audit Office found some grants were given without demonstrating eligibility.
  • About $50 million was paid to Australian Paper, Auspine, ITC Timber, FEA and Gunns shortly before the businesses folded.

The random waste, poor outcomes and lack of direction masquerading as public forest policy over the past five years has been occurring against a backdrop of the total failure of managed investment schemes, where $1 billion has been frittered away in Tasmania to plant 140,000 hectares with limited value hardwoods, now all pleading for new owners.

In addition, Forestry Tasmania, the dominant player, is yet to chart a way forward from its current insolvent model and its costly plantation strategy. Equity has completely disappeared from all balance sheets, making banks even more reluctant to make loans in such uncertain times. The industry is out for the count.

The IGA together with the Tasmanian Forest Agreement, an agreed “peace” deal between various interest groups, including representatives of industry, unions and environmental non-governmental organisations culminated in the Tasmanian Forest Agreement Bill, which may restore some certainty.

The bill, however, is stuck in the state’s upper house. Bogged down by a relentless stream of amendments, the members forgot where they were up to and the government was forced to postpone proceedings until mid-April. Since December the state Parliament has spent more than 40 days discussing an industry comprising less than 2% of the state’s economy and workforce — more time than it normally spends in full session for an entire year.  And yet there has hardly been a mention of how to improve profitability.

Many Tasmanians, while not completely happy, regard the bill as a way forward. Others from both sides of the debate are keen to return to the barricades to continue the war of attrition.

Native forests are increasingly remote, and the costs of extraction are increasing even faster. The volume of woodchips helped mask an otherwise unprofitable industry. Product mix and pricing needs to change. It’s not really about the industry, it’s about politics. A pious self-serving group of Liberal-leaning members are determined to thwart the bill and may succeed.

To date $130 million of IGA funds have already been received. In Tasmania it’s not uncommon to accept a tied grant then cry “blackmail” when there’s an insistence the preconditions, in this case the passing of the Bill, are met, so there’s an expectation the money will be paid regardless.

The crucial test is not whether the less than perfect bill passes and provides the beginnings of a framework to help face an uncertain future, but rather whether Tasmania can make and implement workable public policy. The once-warring signatories to the Tasmanian Forests Agreement have displayed a level of civility rare in public policy discussions. To lose that will be a setback as there are far greater budgetary challenges ahead.

The gravy train might not always deliver.

Environment

Dec 5, 2012

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Of small comfort in the crazy world of Tasmanian forest politics is that Lewis Carroll would have felt right at home.

“But I don’t want to go among mad people,” Alice remarked. “Oh, you can’t help that,” said the Cat, “we’re all mad here. I’m mad. You’re mad.” “How do you know I’m mad?” said Alice. “You must be,” said the Cat, “or you wouldn’t have come here.”

Finally we have a Tasmanian forest peace deal and a bill to go before state Parliament next week. The treaty of Versailles didn’t take 30 months, unlike this forests agreement. So what’s in it — and what will it mean for the flailing industry?

First there was a statement of principles by parties involved, then an intergovernmental agreement in August 2011 (including $276 million of government money). Then came a “heads of agreement” deal between the parties. It’s not an exhaustive document to be used in a court of law, rather an indication of agreement on areas and quantities to be logged and/or reserved, plus a consensus view of the future. Then a parliamentary bill emerged — which is where we’re at now.

The final hurdle will be a debate in Tasmania’s upper house on December 11, which essentially provides the framework for matters in the first agreement.

The only figure agreed by the parties which is included in the bill is the minimum quantity of 137,000 cubic metres of high-quality hardwood sawlogs needed annually from public native forests, a reduction from the current statutory minimum of 300,000. The latter figure has long been recognised as unsustainably high; a plan prepared a few years ago by the Forests and Forest Industry Council assumed a future figure of 150,000 pa even before the forest agreement was mooted.

Forestry Tasmania, the custodian of public native forests, regards the need to supply the 300,000 cubic metres as an unfunded “community service obligation”, estimated at $10 million each year. Hence it was neither unreasonable nor surprising to see the agreed minimum reduced to 137,000 annually.

The bill doesn’t specify quantities of speciality craft or other timber types. These will be determined by regulations.

The bill itself is quite innocuous in that it merely establishes the framework for protecting land and creating reserves that will subsequently occur pursuant to the agreement. It doesn’t formally do so. Nor does it agree to forgo carbon credits or mandate methods of native forest residue disposal as has been alleged (nor does the agreement for that matter).

If all goes to plan, the formal protection of 504,000 hectares of high conservation value forests will occur in three stages, supervised by a special council comprising the parties involved.

It comes at a time when most major players in the forest industry have either folded or suffered severe balance sheet losses. The cash cows of managed investment schemes and woodchipping that contributed 90% of profits and cash flow have disappeared.

Furthermore, growers who outlaid $1 billion to plant trees under managed investment schemes in Tasmania will suffer losses of 80%.

Forestry Tasmania is a cadaver, completely and utterly insolvent. It is now selling timber below the cost of harvesting, cartage, roading and other direct costs. Payment of overheads such as wages will require cash injections from the government. It needs a new model that secures higher prices. Cash deficits and accounting losses are projected to last at least another five years.

The amount of money on the table tends to sway opinions; $276 million implies $12 billion for Australia as a whole if the gross-up is on a per capita basis, or $17 billion on a GDP basis.

Relatively speaking, $276 million for Tasmania is a lot of money. Tasmania is sometimes labelled a mendicant state, but anyone who thinks beggars can’t be choosers obviously never met former independent senator Brian Harradine. Uncle Brian obtained riches beyond his wildest dreams when the sale of the first tranche of Telstra was manoeuvred through federal Parliament. His achievement provided a template for future carpetbaggers. Demands for more money, or compensation to be polite, are not uncommon.

But how much? Forestry Tasmania in its recent annual report estimated a $97 million fall in the value of its forest estate if further areas are removed from production as contemplated by the agreement. Why is more required?

The IGA funds are already being dispersed. Head of the queue was Gunns, given $23 million as a belated ex gratia payment after it had already decided to relinquish its sawlog entitlements. Next was $11.5 million to Forestry Tasmania as payment for monies owed by an insolvent Gunns. Hardly in keeping with the spirit of the IGA?

Following earlier Regional Forest Agreements, FT has received compensation of $223 million to invest in income-earning assets including plantations. If the latest changes go ahead, its forest estate will have a value of only $90 million and that includes native forests. Compensation well spent?

All states have fiscal problems. Tasmania’s are different but little worse than others. It is however more vulnerable to future shocks because of its size, and also because it has been tardy in facing reality.

Tasmania’s share of national GDP has now fallen below that of the ACT, just marginally ahead of NT. It is in danger of relegation.

The current bill is like a preliminary final, a knockout event. Next season awaits the loser. A no vote in the Legislative Council would be an endorsement of paternalism. Notwithstanding that most industry players agree and the majority of the remainder just want to move on, does Parliament really know best?

The chamber is conservative but unpredictable. The numbers could replicate the no vote on the recent same-s-x marriage proposal. Who’d have thought the two issues had anything in common?

The bill is not perfect. It is only a framework, and what may follow is not absolutely certain. But the alternative is a return to boundless uncertainty, a capital-deprived industry, a government business that requires life support regardless and no plan B except for the undiminished optimism the feds will deliver. It would be brave to say no.

Comments & corrections

Aug 22, 2012

5 comments

Renewable energy and government:

John Hunwick writes: Re. “Abandoning an economically-pure approach to climate change” (yesterday, item 1). Bernard Keane wrote:

“The example from the rest of the world appears to be not a simple choice between an economically-pure carbon price and government intervention, but a mix of both.”

The solution to climate change will have to involve more or less everyone. As individuals we are happy, perhaps sensitive, to economic pressures and will respond to them in any way we can. The element individuals cannot enact is government intervention! If only we could!

The majority of people in Australia want to see the phasing out of coal, starting yesterday, much more investment in solar and wind and a commitment to targets in line with the best scientific advice to minimise the effects of climate change. But how can we get government intervention. Speaking to politicians who have made up their minds and are now closed to further argument doesn’t do it; voting once every four years does not bring the urgent action required.

Perhaps Bernard Keane could write at length on what people can actually do to bring about the required ? Or will it be a case of democracy in action: too little too late?

Bernard Murphy appointment deserves scrutiny:

Stephen Mayne writes: “By all means run the piece,” wrote Bernard Keane in his opening emailed response after reading a proposed 1000 word item I’d written on the Gillard-AWU-Slaters saga on Sunday.

Alas, a group editorial decision was then made not to run the piece and Crikey instead published this Bernard Keane piece on Monday linking me with Right wing nutters pushing conspiracy theories and quoting past coverage on issues as Paul Keating’s piggery and the Mark Latham bucks night video.

As Keane and Crikey‘s editorial leadership well know, the most important point of Monday’s spiked story went to the appropriateness of Gillard appointing her controversial Slater & Gordon mentor, Bernard Murphy, as a Federal Court judge last year when they both left the firm in acrimonious circumstances.

Having read today’s front page story in The AFR about Bernard Murphy, along with the various new disclosures in The Australian since Saturday, especially the edited transcript of Julia Gillard’s 3 hour taped interview with Peter Gordon in 1995, surely Crikey now accepts that this is a legitimate story worthy of discussion.

Crikey should be dealing with all political and media issues on their merits and operate on the basis that it is possible, indeed desirable, to air criticism of News Ltd and Julia Gillard at the same time.  Suppressing legitimate views and then attacking this website’s founder is hardly fostering a range of independent viewpoints in our highly concentrated media market.

Tasmania:

Rob Musk, Senior Forest Biometrician at Forestry Tasmania, writes: Re. “Tasmania’s forestry sector akin to ‘work for the dole’” (yesterday, item 10). Andrew Macintosh and Richard Denniss provide an economic analysis of timber production in Australian native forests devoid of any consideration of the complexities involved in forest management. The article is riddled with errors and yet again, Crikey has missed an opportunity to inform their readers about an important topic.

Macintosh and Denniss hold up Forestry Tasmania as an exemplar of how badly things are going in our forests. In critiquing the financial performance of this agency they seek to perpetuate a number of myths that normally only get an airing in journals less august than Crikey.

The Tasmanian Audit Office notes that in the 16 years to 2011 Forestry Tasmania made $200 million in profit, averaging $12.56 million per annum, returning $139 million in taxes and dividends. It also noted that Tasmania was $111 million per year better off with FT than without it. The report further explains in excruciating detail how the subsidies paid to Forestry Tasmania in compensation for a 27% drop in productive forest area due to increases in reservation have been used to develop plantation resources. In doing so it casts doubt on whether the amounts paid have been sufficient to cover the profit loss or for the costs of plantation management.

So much for the four summarising “facts”.

Forestry Tasmania manages 694 000 hectares for wood production and a further 807 000 hectares for conservation. The royalty payments from the timber produced in the former pay for the conservation in the latter. How much would this reserve system cost taxpayers without timber royalties? According to the DPIWE Annual report 2010, the Parks and Wildlife Service in Tasmania manages a far less accessible land base at an annual cost of $18.60 per hectare.

So if we chose to halt timber production and provide less roads and public amenities our state forests would cost Tasmanians $12.9 million a year up front. Actually the State forest contains many roads and is interspersed with many other tenures. It is more similar to the NSW reserve estate which costs $37 per hectare to manage. So the upfront cost might be closer to $25.7 million per annum.

Andrew and Richard also seem to think that the alternative conservation-only forest is inherently more sustainable. How exactly? Should we look to National Parks as a possible service model? Forestry Tasmania has 360 staff available for fire fighting duties. The Parks and Wildlife Service in Tasmania has 12. Consider what that means on a hot summers day.

China:

Joe Boswell writes: Re. “Richard Farmer’s chunky bits” (Monday, item 11). In response to Richard Farmer’s comment, “There’s nothing like a bit of nationalistic fervour with which an undemocratic regime can divert the attention of its people from economic troubles at home,” Niall Clugston (yesterday, comments) argued “but tensions over maritime boundaries have been bubbling along across East Asia for many years, including between South Korea and Japan. I don’t think “news of a decline in economic growth” in China has much to do with it.”

The fact these tensions have been around for years only strengthens the argument that something — such as the state of the Chinese economy — must have changed now to persuade the Chinese government that it suddenly wants to elevate these tensions to a big issue in the state-controlled media.

Environment

Aug 21, 2012

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Late last week, the details of an interim agreement between the forestry industry and green groups on the future of Tasmania’s native forests was released, showing the distance between the two parties has narrowed considerably. Both sides now support the creation of additional reserves and a permanent native forest timber production area, and want governments to help the industry through a process of reform.

So close are the parties to a lasting truce that, upon seeing the agreement, the Deputy Premier of Tasmania, Bryan Green, declared Tasmania’s forest wars over.

Throughout the Tasmanian forest agreement process, the media and others have painted the picture of a polarised debate: greenies on one side fighting for the environment, industry on the other side fighting for economic growth and jobs. But there is another side to the tale; those asking why the native forest sector is treated differently to other industries and not subject to the market principles that apply in most other areas.

In the 1990s, the Council of Australian Governments established the National Competition Policy reform process as a way of weaning out inefficient government practices and promoting improved resource allocation outcomes. The process was remarkably successful, helping to improve productivity, increase choice and reduce prices. Somehow these reforms largely eluded the forest sector, which is still run by outmoded state forest agencies.

These agencies pay no rent for the land on which the forests are located, pay no charge for the trees that are cut down, don’t pay for the environmental harm they cause, receive direct monetary subsidies from the federal and state governments, and yet most still manage to lose money.

Forestry Tasmania, which is at the centre of the negotiations in Tasmania, is a case in point. Its financial performance can be summarised with four facts:

  • In the last six years it has received $100 million in subsidies from the federal government
  • In the last four years it has lost an average of $100 million per year
  • It has an unfunded superannuation liability of well over $100 million
  • The Tasmanian government has recently promised to prop it up with an additional $100 million subsidy.

By any measure, this entity is not economically viable. Yet the tap of government subsidies continues to run in order to keep Forestry Tasmania and Tasmania’s native forest sector alive.

Typically, these subsidies are justified on the basis of jobs. Roughly 2000 people are employed in growing, managing, harvesting and processing native forest logs in Tasmania and, with the Tasmanian economy in the doldrums, taxpayers are effectively being asked to look upon the handouts as the equivalent of a work for the dole program.

There is nothing wrong with welfare for the needy but the amounts given to the native forest sector are exorbitant. For every worker in the sector, Forestry Tasmania loses around $50,000 a year. And, conservatively, handouts from the federal government alone in the last four years amount to roughly $50,000 per worker. Very few other industries or workers receive this sort of treatment.

The simplest explanation for the mollycoddling of the native forest sector is electoral maths. Under the Australian constitution, Tasmania is guaranteed five seats in the House of Representatives and 12 in the Senate, which gives Tasmanians a disproportionate influence on the outcome of elections. And Tasmanians have been gravely misled about the contribution that the native forest sector makes to the state economy.

In a recent poll conducted by The Australia Institute, Tasmanians were asked to estimate what proportion of the Tasmanian workforce they thought was employed in forestry and logging (growing and harvesting forests) and in the forestry and forest products industry more generally (growing, harvesting, transporting and processing forest products). The average estimates were 19% and 24% respectively. In reality, forestry and logging accounts for roughly 0.5% of employment in Tasmania (around 1000 people), while employment across the entire forestry and forest products industry adds up to a mere 2% of the state total (around 4,500 people out of almost 240,000).

The same distortions were evident in responses to questioning about the contribution of the forestry and forest products industry to economic activity (gross state product). The average estimate was 28%; the reality is around 3%.

These results relate to the entire forest sector: native forest and plantation. Native forests only account for about half of total employment and output in the industry, making it little more than a footnote in the state economic accounts.

Yet the perception is that Tasmania relies on native forestry for its existence, and that without it, the state would collapse. The public has been fooled into believing this by the industry, which relies on public support to back the subsidies it needs to stay afloat.

With the native forest sector haemorrhaging money at record rates due to the high Australian dollar, increased competition and diminished demand, it is time for the federal and state governments to cut the cord on subsidies and allow market forces to restructure the industry. Such cuts will cause temporary unemployment and the government has a role to play in helping those who are adversely affected. But surely the forest industry should now be treated on the same basis as all others?

*Andrew Macintosh is an associate professor at the ANU’s Australian Centre for Environmental Law and Richard Denniss is the executive director of The Australia Institute

Environment

Mar 6, 2012

5 comments

Tasmanian Premier Lara Giddings seeks to offer some insights today into the island’s future in her annual State of the State address.

She gets to her feet amid an increasing air of despondency about the state economy. There is low business confidence, the high Australian dollar and low demand threaten an already struggling tourism industry and two major power users, BHP’s Temco and Rio Tinto’s Alcan. As significantly, there is Tasmania’s structural dysfunction — too many public sector jobs, too few sustainable private enterprise jobs and too many of the population on welfare, as much as one-third.

All this confronts Giddings, a committed and competent politician who leads a minority government that includes two Green ministers who march to the beat of their own drum and not the government’s. One of them, Nick McKim, undermines international confidence in Tasmania’s ability to provide sustainably produced forest products at the same time as his Labor colleagues seek to save those markets; his colleague and life partner, Cassy O’Connor, the Tasmanian Aboriginal Affairs Minister, deeply offended local Aborigines by referring to them as “a vulnerable community” after it appeared they might get their hands on some of the forests she and McKim want locked up in national parks.

Veteran activist Michael Mansell bagged O’Connor’s ill-thought commentary as “patronising” and “condescending”, which bodes ill for future relations between that minister and her indigenous constituency.

As a former correspondent for The Australian here, I know how incomprehensible and therefore tiresome Tasmanian forest politics can be for the rest of the nation. We argue incessantly about forest policy and environmental outcomes; one villainous forest company disappears off the hit list to be replaced by another; stunts aimed at the media become more risible yet still the cameras turn up; meanwhile, Tasmania falls further and further behind other states economically.

Those states are again asking why, through GST revenue distribution, they should be made to subsidise a mendicant poor cousin whose major growth industry seems to be left-of-centre pressure groups who want not only to stop the clock but to wind it back to deliver a form of Tasmanian prehistory; this at a time when Western Australians get back 70 cents of each GST dollar they pay to the Australian Taxation Office while Tasmanians get back $1.60.

The challenge of painting a long-term economic vision for Tasmania eludes MPs. Far easier, it seems, to engage in tragic-comic sideshows, such as the doomed intergovernmental forest agreement with the Gillard government. The Upper House, the Legislative Council, will scupper it or an incoming Liberal government will shred it. It has no future.

Then there is the extravaganza spun by Forestry Tasmania, the Forest Industries Association of Tasmania and Michael Mansell’s Tasmanian Aboriginal Centre (TAC). The TAC is courting the forest industry to give Aborigines the forests that the environmental groups covet for national parks under the IGA, the attraction being that Forestry Tasmania would manage the forests for the TAC for conservation (and a suggestion of some logging access) while the rest of us can engage in hunting, shooting and fishing the local fauna. It is a deliberate “up yours” to the Greens but it has no future.

There is a flaw in the IGA concept and the land hand-back to the Aboriginal community. The use of Tasmanian public forests is not for environmental groups or the forest industry to determine. That environmental groups have been able to nominate another half a million hectares or so of public forest to investigate for lock-up is fundamentally undemocratic. That the forest industry can barter public forests with the Aboriginal community is delusional.

The industry does not own the forests. Forest use is rightly the preserve of Parliament and, in the end, the Legislative Council is where the action will be.

But the fiddlers at the sideshows play on, as the economy burns.

Environment

Jul 28, 2011

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The $276 million federal rescue package to buy peace in Tasmania’s forests came barely three weeks after the state’s Auditor-General indicated that Forestry Tasmania was staggering towards insolvency and would need an equity injection of $200 million to $250 million to survive.

Tasmanians’ collective amnesia has meant the Auditor-General’s warnings have been relegated. The public discussion is whether the promise of federal handouts will bring peace in our time, whether the warring parties will finally call a halt to hostilities. No mention of the enormous funds needed to prop up the state government’s forestry arm. Or the private funds required to transition the industry to a new era.

Banks are remaining on the sidelines. The recent Forest Enterprises (FEA) restructure deal, a pragmatic solution to part of the MIS mess — where the interests of growers, shareholders and creditors were to merge in one entity  — looks to have fallen over, so it’s back to the drawing board for FEA’s voluntary administrator.

The forest industry couldn’t even organise themselves to buy the Triabunna woodchip mill from Gunns as the latter struggles to survive. The mill is an integral part, apparently, of the entire forest industry in the south of the state, but Gunns needed cash in such a hurry to pay redundancies and loan commitments it wasn’t a surprise when a cash offer from Jan Cameron and Graeme Wood trumped a couple of bumbling bushies who were attempting to gain finance from the state’s Development Board.

Part of the federal package, $120 million, will be directed to spending in regional areas, an approach that recently the Grattan Institute has doubted produces adequate returns.

The state’s Economic Development Plan, which Premier Lara Giddings keeps threatening to release but never does, doesn’t even include forestry as one of the state’s key sectors. All participants in the debate don’t seem to understand that Forestry Tasmania will not survive in its current form without a bucketful of government money.

Forestry Tasmania has also become dependent on federal grants from the Tasmanian Community Forest Agreement to fund ordinary operations. The state’s Auditor-General has been trying to compile a report into Forestry Tasmania’s performance for more than three years and has just reported to Parliament, including his first two drafts, which have been sitting in state government in-trays for two years.

Had the earlier drafts been released the conclusions would have been that the “investment in roads and plantations over the past 15 years will not lead future benefits … that dividends paid (to the state government) had been entirely funded from abnormal receipts such as Commonwealth compensation money”.

At that time reform of Forestry Tasmania may have been possible. But the period since has seen its situation worsen to such an extent that it’s only a matter of time before the life-support machine is switched off.

The state government will have to sort out the mess without the help of the feds, but trying to win an extra $250 million as suggested by the Auditor-General is an impossible task for the state government.

The peace offering from Julia Gillard is at best a partial political solution. Under no circumstances will it be sufficient. The problems are far wider.

No amount of soothing words from the premier can hide the fact that she is hopelessly out of her depth, badly advised, fending off the lynch mobs and desperately trying to search for scapegoats. Public policy makers have failed badly.

*John Lawrence was employed as an economist for five years before returning to Tasmania as an accountant in public practice and an observer and researcher on finance and economic matters at the state level. Read the full version of this article at Tasmanian Times.

Environment

Oct 6, 2009

5 comments

How Forestry Tasmania lost the plot

Forestry Tasmania's treatment of protesters in the Upper Florentine has failed to stand up in court, reports Andrew Darby. But after a generation of fighting, the bitter battles over trees in Tasmania continues to grow -- even if the forests don't.

Richard Farmer’s chunky bits

Jun 17, 2009

5 comments

A victory not a defeat. The glib description as the Rudd Bank of the proposed financial aid for commercial property developers that the Senate defeated last night will have done the Labor Government no harm and nor will the defeat of the legislation. Property companies are traditionally the largest financiers of election campaign costs for the political parties and Labor will be rewarded for trying when the hat gets passed around next year. Collectors for Malcolm Turnbull on the other hand will find the going very tough indeed. Not that this is an issue Labor will be keen to elevate in to great prominence by reintroducing it in three months time to provide a double dissolution trigger. The money of property developers is handy but campaigning for them too openly is not a vote winner.

Brown wins from defeat too. The Liberal Party is trying to suggest that there is something improper in Bob Brown getting public donations to pay the legal bills of some court room challenges to the activities of Forestry Tasmania. The party would be better served by being quiet. Reminding people that it is the Greens, and Greens alone, who are prepared to go into battle to preserve the trees simply gives the good Senator more support. Whenever the environmental question under public discussion is to do with trees the Greens pick up support. When they are off on one of their wacky social justice campaigns the support is more likely to drop.

A tentative interest rate indicator. No change is the firm early prediction of the Crikey July Reserve Bank Interest Rate Indicator. Trading in the prediction markets used to derive our Indicator has so far been relatively light but the probability of no change at the July meeting of the Reserve Bank Board being put at 73%. A fall of a quarter of a point is rated as more likely than an increase.

The benefit is yet to come. The wonderful way of economic leads and lags is illustrated in this morning’s Australian Bureau of Statistics figures for dwelling units commencements in the March quarter. The total number of new private sector house dwelling units commenced fell 4.0% in the quuarter which followed a revised fall of 11.5% in the December quarter. The seasonally adjusted estimate for new private sector other residential building fell 6.6% in the March quarter following a revised fall of 21.8% in the December quarter.

Yet an upturn in home building activity should soon be on the way. Both the number and value of financial commitments for owner occupied housing have been on the rise since back in September.

Preparing his escape hatch? Offering a job to Peter Costello! Fair dinkum — if Kevin Rudd is that desperate to show what a bipartisan conservative he is then maybe it is true that he is seeking the job as Secretary General of the United Nations.

In case you watch by mistake. With the Seven Network taking off its Sunday night current affairs offering to make way for Dancing With the Stars I thought an extension of our Crikey Election Indicators was called for. So here it is: the opening probabilities for the show we pretend we only watch because of the kids.

Back to being serious. Economic problems are not being seen as an impediment to the-re-election chances of the German Chancellor Angela Merkel. With a couple of months to go she is a firm favourite on our Crikey Indicator:

Jun 10, 2009

5 comments

Bob Brown is using his office as a senator to get his legal bills paid, and the media are willing accomplices in this cynical exercise in power. Yet the very same media couldn’t give a fig about the thousands of Australians who each day are sent bankrupt, have their lives torn apart and in some cases commit suicide, because they too have to pay a legal bill when they lose a case.

Senator Brown is entitled to use the court system to pursue his case, just like every other person in this country. And if he loses his case, which he did in this instance, then the general rule is that as the losing party he pays the winning party’s costs. There is nothing sinister about Forestry Tasmania, the successful party, pursuing Senator Brown for what was an expensive case. In fact, it was revealed yesterday that they offered to shave off a fair slice of their legal costs, but Brown wouldn’t be in the deal. So to suggest, as Brown and his disciples are doing, that the Tasmanian government is in some sort of corrupt conspiracy to hound Brown from office is absolute bollocks.

But there is a bigger picture being missed by the media here and those dear well heeled souls, including Brown’s mate Dick Smith, who are rushing to empty their bank accounts to help the high income earner Brown pay his legal bill. And it is that what Brown is doing is something the average Australian could never achieve — use their title, office or position to milk public sympathy to have their legal bill paid.

Each year thousands of Australians are dragged through the indignity of legal proceedings to ensure they pay the costs of the other party, when they lose a case. Bankruptcy, garnishee orders, instalment arrangements, sale of the family home, these are all tools of costs enforcement. For many people, it is a humiliating, degrading and heart wrenching experience. I have personally known of cases where people have contemplated suicide because they face having to pay hundreds of thousands in legal bills.

I am also personally aware of cases where the sheriff has turned up at the homes of families on a Friday evening to execute a warrant to seize assets, and to give notice that the family will have to quit the home so it can be sold. And our jails are full of people who, when released from prison and are trying to get back on their feet, will be immediately hit with unpaid legal bills.

In none of these cases does the person hit by the legal bill have the clout, the media profile or the resources of a taxpayer funded office to run a well orchestrated sympathy campaign which also serves as a neat fundraiser.

One trusts that Brown’s wealthy benefactors and the media now turn their attention to prisoners, the homeless and broken families who face a much worse predicament than Senator Brown. Wouldn’t it be nice, but of course it won’t happen.

Bob Brown has taken politics to a new low this week.

Australia

Jun 9, 2009

5 comments

The possible bankruptcy of Greens Senator Bob Brown as a consequence of Forestry Tasmania’s demand for legal fees would be a victory from beyond the political grave for Paul Lennon and John Howard and a big win for the Tasmanian Government’s efforts to stymie scrutiny of its forestry practices.

Brown needs to find over $239,000 by 29 June or face bankruptcy proceedings initiated by Forestry Tasmania’s lawyers Page Seager. Under the Constitution, Brown would be forced to give up his Senate seat if declared bankrupt, leaving the choice of a replacement in the hands of the Tasmanian Government.

The legal saga surrounding logging in the Wielangta Forest is lengthy and complicated (the Senate Environment committee has an excellent summary) but revolves around a simple fact: John Howard and Paul Lennon changed the rules after Brown won in court to nullify his Federal Court win over Forestry Tasmania.

Brown took Federal Court action in 2005 to prevent logging in the Wielangta Forest north-east of Hobart. Brown’s case centred on the interaction of the Environment Protection and Biodiversity Conservation Act 1999 and Regional Forestry Agreements which allowed states and logging companies to avoid the impact of the EPBC if the Agreement provided for protection for significant species.

Brown argued that logging in the Wielangta Forest was not in accordance with the protection measures described in the relevant RFA and therefore the protections of the EPBC — in essence, that logging needed Commonwealth approval — applied. In December 2006, Federal Court Justice Marshall awarded a comprehensive victory to Brown, declaring that there was evidence the logging was harming three major protected species (the Tasmanian wedge-tailed eagle, the broad-toothed stag beetle and the swift parrot) and that the relevant protective measures, based around a reserve system, did not comply with the RFA clause.

Forestry Tasmania immediately appealed and nearly a year later, three Federal Court justices rules that the mere existence of a reserve system was sufficient to meet the requirements of the RFA, regardless of whether the reserve system actually protected any species or not. Marshall’s findings that the logging had damaged the three protected species still stood (and stand).

Brown appealed to the High Court, but by then John Howard and Paul Lennon had conspired to remove the basis for the legal action. On 23 February 2007, Howard and Lennon had agreed to amend the relevant RFA so that the clause.

The State agrees to protect the Priority Species listed in Attachment 2 (Part A) through the CAR Reserve System or by applying relevant management prescriptions was removed and replaced with a simple statement that the reserve system protected threatened species. In effect, Lennon and Howard were agreeing that black was white. There was no Parliamentary scrutiny in either the Commonwealth or Tasmania of the amendment.

The High Court refused to grant Brown special leave to appeal because the new clause meant he had little chance of success. It refused to award costs against him, but Brown was still left the bill from the Federal Court appeal hearing.

Forestry Tasmania is owned by the Tasmanian Government and has close links with logging company Gunns. Gunns unsuccessfully tried to litigate Brown and other environmentalists out of the forestry debate with a punitive lawsuit that has progressively collapsed, although the company is still pursuing seven individuals.

The Forestry Tasmania action, however, is a different matter. This is the Tasmania Government pursuing Brown for daring to beat it in court to such an extent that it changed the rules to ensure victory.

Brown has launched an appeal for donations.