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Tasmania

Feb 4, 2016

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Nelson Bay after the fires. (Source: Tasmanian Fire Service Facebook)

We were in a hut in the Tasmanian Wilderness World Heritage Area when the lightning started flashing behind the moorland and the mountains, in the distance.

Two days later I had climbed to the top of Mount Oakleigh when I saw a billow of smoke rising from a forested hillside above the Mersey River. I made a few phone calls, and half an hour later, a helicopter from the Parks and Wildlife Service was making a reconnaissance trip over the area. Seeing the helicopter’s size in comparison to the smoke made me suddenly realise that it was a bigger burn that I’d realised — the chopper looked like a speck.

The next day, another helicopter was filling up from Parangana Dam to waterbomb in the Walls of Jerusalem National Park. Coming back into town, I discovered that there were scores of fires, all across the west of Tasmania.

There were also several others, including a deliberately lit blaze in the foothills of Mount Barrow, which I can see from my bedroom window. For days the north was covered in an eerie haze; our record number of Chinese tourists found clean and green Launceston had the air quality of Beijing.

It’s not surprising that we’re having fires. It was a dry winter, and it’s been an unbelievably dry summer. The west of Tasmania is used to being bucketed down upon throughout the year, but now we’re going for bushwalks and not pulling out our jackets once (almost unprecedented). Working as a guide on the Overland Track, I hear our punters saying how lucky they’ve been with the weather. I couldn’t agree less.

Some of the fires have threatened shacks and homes in places like Mole Creek, Temma, and Mawbanna; others are burning in unpopulated areas. Bushwalkers have been removed from dangerous areas in the national parks, including my office — the Overland Track has been closed for a week and will continue to be so if the fires remain a threat.

As always in Tasmania, the issue has become political. Responding to a call from Tasmanian Greens Senator Nick McKim to allocate more funds to World Heritage Area fires, the Examiner, Launceston’s local rag, responded with an appallingly ill-informed editorial. “Fire has ravaged these areas in the past and will again,” it ranted.

However, the forests currently burning haven’t seen fire for up to a millennium, and native conifers and alpine vegetation are not adapted to a fire-driven ecology (unlike, for example, eucalyptus species, which in fact thrive on fire, a fact exploited by Aboriginal populations in Tasmania as elsewhere). And if we can trust ecologists in Tasmania — and might I suggest that we can — it’s just the beginning. “This is what climate change looks like,” said fire ecologist David Bowman. “This is system collapse.”

About 11,000 hectares of the Tasmanian Wilderness World Heritage Area has been razed. This is not much, the Tassie tourist lobby reminded us today. But it’s still significant.

About 200mm of precipitation fell one night last week in the north-east, but the rain band failed to reach most of the bushfires. Finally, it seems, most of the fires have been subdued; soon, we will be able to head up to the highlands and see the damage.

Throughout the years I have come to realise that my attachment to places — to landscapes and weather and walking paths and types of vegetation (even the spiky bastards) — is not something shared by everyone, so I know that when I say that the slow unfolding of the news of fires in the World Heritage Area here has at times made me physically unwell, not everyone will understand. But I know that there are plenty who do.

Wilderness photographers Dan Broun and Rob Blakers have recently published several pictures of the utter destruction caused by fires across the Central Plateau. From an ecological perspective, it will be interesting to see how the landscape changes. But much of what is lost are forests of rare endemic species that take centuries to mature. They are not coming back in my lifetime.

And these places may be threatened like this every summer now. If lightning strikes continue to increase in occurrence with the change of climate, cold-climate rainforest and alpine environments may go the way of the dodo.

For some of us, losing these unique places is about more than simply having beautiful things taken from us. These are the landscapes in which I first acquainted myself with the incredible collages of unique vegetation that belong only to the island of my birth. In these places I have strolled down narrow paths into and seen things I never knew existed: gnarled conifers doubling over against the westerly winds; countless multifarious lichens and fungi clinging to the thick, warped bark of myrtle beeches; mosaics of cushion plant communities between the dolerite boulders dumped by melting glaciers 10,000 years ago; shaggy buttongrass raising a long stem and bursting into cream-coloured flowers. I heard the chortle of the wattlebird high in the flowering gums and the snarl of the devil deep in the darkness and distance, and discovered that there was a whole other Tasmania — almost exactly half of it, in fact — that I had not been taught about throughout my Tasmanian education.

That’s why there have been extreme reactions from scientists, photographers and bushwalkers. It’s “like losing the thylacine,” said Bowman. This is more than doom and gloom; this is a dark awareness of the likely continuation of the loss we have already wreaked on this island.

Under the current rate of warming I think this ecosystem will be gone in 50 years,” Bowman continues. If I’m alive then, I’ll wear the guilt for that heavily.

Our wild places have thanklessly given us an international reputation that is currently reaping rewards (including the employment of the otherwise unemployable, such as myself). What’s more, we are still learning from them. “Cold, silence and solitude are conditions that tomorrow will become more valuable than gold … on an overpopulated, overheated and noisy planet,” writes French author Sylvain Tesson.

But maybe tomorrow those conditions will be gone here too.

Environment

Apr 14, 2015

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Two years ago Tasmanian headlines were burdened with doom and gloom, but now they are positively buoyant, even self-congratulatory. On the back of MONA and its festivals, as well as the footy, wine and whisky, culinary tours and eco-tourism, visitor numbers have skyrocketed.

Last year, the Liberals won government in Tasmania for the first time in 16 years, and they didn’t take too long to signal their plans to confront issues over what is called “the wilderness” in Tasmania. The Liberal government’s proposal is simply to capitalise on the sudden exoticism of Tasmania by encouraging more businesses to operate in these places that are so appealing to tourists.

Wrangles over the forests are not new and not exclusive to the Liberal Party. As former Labor premier Paul Lennon once stated about Tasmania: “There are lot of fucking trees.”

There is a well-publicised, long-standing disagreement between different camps in Tasmania about how to best manage those resources. The disputes have reached such a level of vitriol that we borrow terms from warfare to describe them: it’s a “battle” that requires a “peace agreement” (promptly scrapped by Premier Will Hodgman upon election last year). Loggers and greenies have irreconcilable differences, and around the country, most people perceive Tasmania as being rent in twain, divided between two camps with a ditch — perhaps a leech-ridden one — in between.

It’s little surprise that the government’s proposal to expand tourism in the reserves, including the World Heritage Area, was greeted with emotional responses, both from those who support and those who oppose the motion.

There are, of course, a number of issues that have been raised with the government’s efforts to increase business in national parks and the World Heritage Area. An obvious one is that many of Tasmania’s ecosystems are fragile — from the hypersensitive cushion plant colonies to incredibly slow-growing conifers like Huon, pencil and King Billy pine. But concerns around the social impact of bringing more people into these remote areas (not to mention helicopters and jet skis) also trouble a number of Tasmanians.

Minister for the Environment Matthew Groom suggested that the term “wilderness” in connection with Tasmania’s World Heritage Area was offensive to Aboriginal Tasmanians, who have managed the land for some thousands of years. Groom hoped for a rebranding: “the Tasmanian Remote Recreation World Heritage Area” appeals to him.

The prospect of mining and logging may be permitted through the current draft management plan and is another matter entirely — possibly an easier one to discuss. And trickier, it isn’t clear what eco-tourism even is or whether we can value ecosystems for more than their economic contributions, as well as what we make of this wriggly word “wilderness”.

That Aboriginal communities have lived in, and changed, some of the now-protected landscapes is without doubt. Likewise, human activity from the last two centuries is evident at countless sites in the World Heritage Area. If wilderness means a place untouched by humanity, then wilderness it’s not.

But for most people who spend time in this part of the island, that’s not what they mean by wilderness. It seems a disingenuous line of argument from the Tasmanian government, an ugly way to sneak through the back door — or come from above in a chopper. There aren’t many bushwalkers or fishermen who can articulate why they crave what they call “wildness”, but they want solitude, or quietness, or simplicity, or even discomfort. Many will say that such experiences aren’t just beneficial because they attract tourists, but because they cultivate health and well-being, reduce feelings of alienation and loss, and provoke unique ways of being and thinking as well.

On the other hand, are these “remote recreationists” just sentimental members of the middle-class? What are these feelings worth in the face of potentially lucrative economic opportunities, in a state where unemployment and lack of education is rife?

Tourism operations are ramifying across the island. Previously industrial towns — like mining hub Queenstown, or Triabunna, whose out-of-action sawmill was controversially purchased by environmentalists — are counting on tourism to continue to grow in Tasmania. On a social level, however, the jury’s out on whether the local populations of these towns are ready to adopt the arts or bushwalking as their lifeblood. But so far, it seems that Tasmanians of all stripes have been ready to embrace what some have called “the MONA effect” — though that’s not a phrase most locals will use.

Largely, I think, this is because tourism operators in Tassie have adopted the local heritage as a part of their business. The successful Queenstown Heritage and Arts Festival is one example; in the same town, tours for mining history and rainforest journeys exist simultaneously. Local perspectives are included and local voices are heard in these tours and projects.

Can operators in the Wilderness World Heritage Area have a similar sensitivity to these concerns? I’d like to think we can. With expressions of interest received — those that have been accepted are now being scrutinised for viability and appropriateness — the reactions from my clients and colleagues is interesting. A large number of the projects are exciting. Unique, low-impact accommodation centred around the new mountain-biking trails in the Blue Tier forest? Bring it on.

But what people seem to be worried about is an overkill of mechanised access into these remote places. Helicopters, jet skis, roads reaching further into the wilderness — they have the capacity to destroy what makes Tasmania such a viable tourism location. They dismantle people’s sense of place, and they show disregard for the heritage of the area.

One proposal involves a helicopter-provisioned lodge being placed at one of central Tasmania’s most remote fishing lakes, one which is already serviced by an old fishing shack, with its own decades-long history that a number of hardy trout-loving folks have scrub-bashed towards in order to make it a site of their own memory and folklore.

For those attracted to remote locations, there aren’t many places left in the world for them. Tasmania is lucky to have these locations, and the longer we preserve such wildness, the more enviable we will be.

It goes beyond sentimentality. As local philosopher Pete Hay points out, there is something strange about being placeless. “The grief, the deep sense of loss experienced by people who are forcibly removed from home, has been well documented,” he says, “Yet modern (and post-modern) existence seems to opt voluntarily for just such a pathological condition.”

*This article was originally published at Daily Review

Tasmania

Mar 17, 2014

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The last time the Liberals were in power in Tasmania, Google had not been invented. Bill Clinton was in trouble over his relations with a certain intern, the Spice Girls were on the radio, and Pete Sampras triumphed at Wimbledon.

That was 1998 and the start of a 16-year era of Labor government in Tasmania. That ended on Saturday when the Liberals thumped Labor at the state election to win a clear majority. The Liberals will hold 14 or 15 seats in the 25-member lower house — a win so emphatic they may get two terms.

So where to next for Tasmania? Premier-elect Will Hodgman has every reason to celebrate, but he faces serious challenges in governing a state that has long tended to fall behind economically. The Australian has been running a campaign that the Greens, who shared power with Labor since 2010, have ruined the Tasmanian economy — “a shameful legacy” — and the Liberals will “set about reopening Tasmania for business”. But it’s not that simple.

To the results first. The Labor/Green administration has long been troubled as resentment built over the minority government, unemployment, economic stagnation and the bitter dispute over forestry. The Liberals were at short odds to garner the 13 seats needed to form majority in Tasmania’s quirky Hare-Clark system; they did this and then some.

With about 80% of the vote counted the Liberals have won 51.4% of the primary vote, a 12.4% swing. They have taken 14 seats and may win another (Braddon).

Labor suffered a painful 9.5% swing the other way, holding just 27.4% of the primary vote and six seats (Labor might win one more). The party is probably two terms away from decent representation. MPs like prospective party leader David O’Byrne, Brian Wightman and Brenton Best are probably out.

The Greens fared the worst. They bled more than a third of their votes and lost crucial seats. They started on five and could end with two (although they will probably win Bass as well, and are a long shot in Lyons, where Lazarus-like candidate Tim Morris could fight back). This tends to happen to Tasmania’s minority governments. The voters punish everyone involved.

Clive Palmer’s hopes of a Palmer United premier in Tasmania have been dashed. PUP polled 5% and probably won’t win a seat. They’re a chance in Braddon but won’t be in balance of power. Perhaps Palmer should have tried South Australia instead?

With the result unequivocal, here are the four major challenges the Liberals face in governing in Tasmania over the next four years. It’s worth noting that their No. 1 promise is to reduce unemployment, which is at 7.4%, by about a quarter.

1. Keep their promises while balancing the budget

One of Hodgman’s key pledges is to “get budget spending under control”. Apparently he will do this by: spending more on health and education, hiring 105 teachers, 108 cops, 85 nurses and 26 literary specialists, spending $30 million on irrigation schemes, $33 million on shipping, $28.5 million on forest burns, $76 million on elective surgery, etc.

But the state budget is in a hole, and spending money won’t get it into surplus. The Liberals’ approach is a little Clive Palmer-esque.

From the 2013-14 Tasmanian budget, negative figures are in brackets

Hodgman has promised to cut 500 public service jobs and find $500 million in budget savings, but it’s going to be a tricky juggle. To meet expectations, the Liberals must cut unemployment, spend more on services, and reduce the budget deficit. But it’s possible that many people won’t pay attention, because of …

2. The forestry issue

The Labor/Greens government signed a peace deal between loggers and conservationists to end the 30-year war over Tasmania’s forests. The deal, which reserved some more forests in exchange for turning some other areas over to logging, did alienate some Labor voters, but it seemed to be working. The Liberals are strongly opposed to the deal and have pledged to remove it.

We don’t know the details of what Hodgman will do on forestry and which reserves will be turned over to logging; the policy is threadbare, and it amounts to tougher treatment of forest protesters and greater rights for businesses to sue protesters.

The thing is, as Crikey wrote last week, if the Liberals really scrap the deal then they will face another round of the forest wars, which may overshadow much of what they do. This is a minefield, and plenty could go wrong for Hodgman. It may be the toughest policy issue he faces.

3. Convince other Liberal leaders not to cut Tasmania’s funding

Tasmania gets more from the federation than it puts in, as The Australian regularly reminds us. It relies quite heavily on GST payments from the federal government, plus federal welfare payments (the participation rate is low). But there’s a push from cashed-up mining states to change the GST system so they lose less money to poorer states. And the federal government has flagged that it may cut some welfare spending. Both would spell trouble for Hodgman. He may be in the same party as most other leaders, but it could get tense around the Council of Australian Governments table.

4. Manage a lack of ministerial experience

That is, none — no Liberal MP has ever been a minister. The closest they’ve got is several MPs had a father or uncle who was a minister. It took a while for this reporter to google it because, well, Google wasn’t invented when the Liberals were last in office.

The Liberals have been a very effective opposition: disciplined, on-message and united behind Hodgman. But there’s a difference between pointing out when things go wrong and being in charge. With such a fresh frontbench, mistakes will happen. This challenge is not insurmountable, however; key Liberal MPs — Hodgman, Jeremy Rockliff, Rene Hidding and Peter Gutwein — have been in Parliament a long time, so they know how things work, and MPs Michael Ferguson and Guy Barnett have sat in federal Parliament.

Federal

Sep 27, 2013

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George Brandis

“Bliss it was in that dawn to be alive, but to be young was very heaven,” sayeth the man of the French Revolution.

Similar sentiments were found on the Right a couple of years back, when Andrew Bolt was hauled up under section 18c of the Racial Discrimination Act for his “swatch politics” — going over light-skinned Aboriginal people for their mixed-race ancestry, in a manner drawn from the racist Dutch Calvinist tradition of his forebears. The finding was that Bolt’s remarks were not merely collectively offensive, but that he had made wildly untrue accusations of unfair advantage against a number of Aboriginal high achievers. The Right went cock-de-hoop over this “assault on free speech”, etc etc, and vowed to make it an election issue. They didn’t, of course, because no one gave a rat’s, save for the Tinfoil Right who follow Bolt’s blog, and the pronouncements of David Flint, a character in search of a Get Smart episode if ever there were one.

They also tried to make it a Right/Left thing too, with then-shadow attorney-general George Brandis authoring a long screed about how the Right is always the defender of free speech. This was bollocks, of course — the issue of grossly insulting and offensive racist speech is more complex than that. But in any case there were many of us on the Left who did express disquiet over such blanket “insult” provisions, especially as they were being rolled into the new Human Rights Act. Never mind. The Right needed a heroic narrative, and they got it, in their hinterland at least.

Well now they have a test of it, with calls by the Tasmanian forestry mafia for a law that would expressly ban calling for consumer boycotts of forest products made from old growth timbers, and even a criminalisation of the act of supplying information to potential buyers of such, to show that claims of ethical sourcing were false. “We’ve had enough of free speech,” said some consigliere of this discredited, corrupt, backward, rent-seeking movement (on the ABC’s 7.30) — an industry whose main activity these days is to damage the viability of Brand Tasmania as a source of ethical products and as a tourist destination. You couldn’t really put it more clearly than that.

Banning boycotts, and product information, is a doozy of a free speech issue, because it not only attacks the individual’s right to free speech, it attacks the market mechanism of information circulation. Since the market model assumes that I have infinite time to consider all the attributes of two comparable products, market efficiency relies on more information, not less. It’s a dual attack on liberal freedoms.

So you would think that the Right would leap right on it, right? Wrong. Since the push was announced last week, the silence has been deafening. Nothing from Bolt, nothing from Piers Akerman, nothing in Catallaxy, nothing from Tim Blair (who is on holiday in communist France) — only the rule-proving exception of Chris Berg, the Institute of Public Affairs’ tame potoroo, kept on to do amusing tricks. We await word from Planet Janet and the Wormhole Kroger, among others, as to what they think of the matter.

And nothing, as far as I can see, from Brandis, who is now the non-shadow Attorney-General. Yet this is the crucial test of his bona fides. Either you genuinely believe in a realm of open speech (it ain’t free when one man owns 70% of it), or you don’t. Will Brandis out himself as simply a servant of capital, willing to go into bat for the Murdoch empire and giving the Tasmanian brownies a free pass — or does he actually have a spine, somewhere beneath the place where his neck should be?

We will find out. This government is starting to get interesting. Bliss it was to be alive, etc.

Politics

May 1, 2013

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A tax increase by any other name. I am sure that most Australians agree with the ideas behind a plan to give people with disabilities a better life by governments spending more. I am equally convinced that most Australians object to having their taxes increased.

Which sentiment wins out is to be tested at the ballot box on September 14, and I am backing selfishness over altruism.

Today’s announcement of a 0.5% “levy” on incomes to pay for a National Disability Insurance Scheme looks like a political suicide note to me.

Peace in her time. Tasmanian Premier Lara Giddings must be the political optimist of all times if she believes what she said yesterday after the state parliament finally passed legislation described as a peace deal between the forestry industry and environmentalists.

Giddings might have got most of her state Green coalition partners to support the deal, but federal Greens leader Christine Milne was having none of it. She declared the deal “dead.”

And on the other side of the political divide the Liberal Opposition leader Will Hodgman vowed to change things if and when he formed a government.

Peace in her time? Not likely.

No interest rate relief. The odds are still favouring the Reserve Bank board leaving official interest rates unchanged when it meets next Tuesday. The Crikey Interest Rate Indicator this morning:

A message from Craig Thomson. It is easy to sneer at the request from the now independent member of the House of Representatives Craig Thomson for donations to help him pay his legal fees, and I’m sure many people today are doing so. I am not one of them.

Having had a few experiences of court appearances over the years I know about the staggeringly high cost of the justice system. An MP’s salary might be $190,000 or so a year, but at the rate decent lawyers charge that amount is eaten up in no time.

Proper access to justice these days is only for the very, very rich.

News and views noted along the way.

Asia-Pacific

Apr 15, 2013

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timber

The Australian native forest sector has been in decline for the past two decades and all but fallen off a cliff since the onset of the global financial crisis in late 2008. My paper issued today by The Australia Institute traces this decline. The forestry lobby has tried to lay the lion’s share of the blame for its predicament at the feet of the environmental movement, claiming that increases in forest reserves and campaigning in Japan have restricted its access to logs and stifled demand.

But the problem with the tale spun by the industry is that it requires the suspension of reality. Basic economic principles suggest that when the supply of a product is restricted, its price will rise. This was vividly illustrated in the aftermath of Cyclone Larry and Cyclone Yasi in 2006 and 2011. Both cyclones caused extensive damage to banana plantations in Queensland, triggering sharp increases in banana prices.

In contrast to this standard market response, the restrictions imposed on the Australian native forestry sector since the mid-1990s have not resulted in an increase in the price of native hardwood products. Indeed, for the past 10 to 15 years, the real prices of these products have been largely stagnant or falling. Over the same period, harvest, haulage and processing costs in the native forest sector have been rising. If costs increase and prices fall, output should decline, as it has in the native forest sector.

The other well-worn line from the forestry lobby is that campaigning by Australian environmental groups is the reason why the Japanese pulp and paper industry has turned its back on native woodchip suppliers. This too is stretching reality. The native forest sector has faced intense competition in woodchip markets from plantations. Up until the early 1990s, approximately 90% of Australia’s plantations were softwoods, which were intended to provide sawlogs for solid wood product markets. Since 1990, the profile of Australia’s plantation estate has changed dramatically.

Between 1990 and 2011, about 700,000 hectares of hardwood plantations were established, most designed to produce tax benefits for investors and woodchips for export. As these plantations have progressively reached harvest age, they have captured market share from native forest suppliers in woodchip export markets. On top of the competition from domestic suppliers has come a surge in exports from south-east Asian plantation producers, particularly in Vietnam and Thailand. In 2000, Vietnam exported just over 400,000 cubic metres of woodchips. By 2011, its chip exports had ballooned to 10.4 million cubic metres, a 2300% increase. Over the same period, woodchip exports from Thailand rose by 630%, from 0.8 million cubic metres to 5.7 million cubic metres. Vietnam and Thailand are now the world’s first and third largest chip exporters respectively (Australia comes in second).

“Governments should be wary of falling for a form of sunk cost fallacy, where they ‘throw good money after bad’ …”

The Australian environmental movement is not to blame for the fact that the native forest sector has lost market share in Japan — it has been out-muscled by its competitors. Plantation suppliers have simply out-competed the native forest sector on both price and quality (pulp producers prefer plantation chips because they produce higher yields).

This is not to say concerns about the sustainability of native forest chips have not affected demand, or that the increases in forest reserves and changes in forest management regulations have not affected supply. Both have contributed to the shrinking importance of Australia’s native forest sector. However, they have not been the primary drivers of the trends in the sector. The contraction of the native forest sector is primarily attributable to structural changes in the domestic and international supply and demand for wood products.

Federal and state governments seem to be in denial of this fact and are in the process of conjuring up rescue packages to save the sector from complete collapse. This is what is occurring in the Tasmanian Forest Agreement process. Politicians and others are selling the agreement as a conservation initiative. In reality, it’s an industry assistance package dressed in green.

This cycle has been seen before. Facing market-induced structural reform, the sector reaches for taxpayer subsidies and, to make it palatable to the electorate, governments bundle the assistance with a transfer of state forests to national parks. This serves the political needs of governments and provides a temporary reprieve for the sector.

In Tasmania alone, they are on their fourth major round of negotiated settlements. There was the Salamanca Agreement of 1989, which fell apart in 1990; the Tasmanian Regional Forest Agreement (RFA) of 1997, which promised to be the “agreement to end all agreements”; the Tasmanian Community Forest Agreement of 2005 (which amended the RFA); and now the Tasmanian Forest Agreement process.

Little has been learnt from these previous processes, least of all the simple lesson that subsidies can only hold back the tide for so long. Just as billions of dollars of subsidies have failed to stop the contraction in the Australian car industry, handing over more assistance to the native forest sector will not cure it of the market pressures that are pushing it toward oblivion.

The only glimmer of hope for the native forest sector is that it might be saved by growing Chinese demand for woodchips and emerging markets for bioenergy and biomass feedstocks. While it is possible these new markets might revive the sector, it is unlikely. The sector is uncompetitive and getting more so. In all likelihood, its structural challenges will persist, meaning any government assistance package will merely postpone the inevitable.

Governments should be wary of falling for a form of sunk cost fallacy, where they “throw good money after bad” in a futile attempt to perpetuate an activity that is not economically viable.

* Andrew Macintosh is an associate professor at the ANU College of Law and is acting director of the ANU Centre for Climate Law & Policy. His paper on the Australian native forest sector was released today. 

Comments & corrections

Apr 12, 2013

5 comments

Framing the forest debate

Dr Robert Musk, senior forest biometrician at Forestry Tasmania, writes: Re. “NBN zero or hero? Why framing matters” and “The $1 billion taxpayer-funded Tassie forestry gravy train” (yesterday). I see what you did there. Following up an article on debate framing with yet another diatribe directed at the evils of the Tasmanian forest industry is a delicious irony well enjoyed. But it is unfortunate that Crikey readers are continually subjected to such ill-informed comment on forest management.

Successive governments formulating forest policy have sought to increase the area of forest in conservation reserves (particularly tall wet forest at the expense of less photogenic types) while maintaining the yield from the remaining area through investments in plantation establishment, forest thinning, and the harvesting and processing equipment required to operate in this different resource.

We might be well served by a debate about the merits of this approach to forest policy on many levels, but the fact is that the “billions wasted” have not been. Our current sustained yield calculations point to over half our future sawlog grade timber arising from plantations established under these programs. That timber supply will sustain many livelihoods and generate wealth for the Tasmanian community in perpetuity.

Howard and the Iraq War

Deirdre Sparrius writes: Re. Howard: another old white man claiming credit for the Arab Spring(yesterday). Bernard Keane wrote: ” … the weapons of mass destruction threat from Iraq was ‘very, very small’ and far less significant than that posed by Libya. That is, Blair knowingly led the UK into an illegal war based on a lie. But until such an investigation here, Howard can be given the benefit of the doubt on that issue.”

Is there any doubt on that issue? It is interesting to hear Howard rewriting the circumstances of the Iraq War. The UN delegation investigating team continually reported that they had found no evidence of the stockpiling of “weapons of mass destruction” and urged the allies to delay their decision to attack until such evidence was found. As I recall observing from TV interviews, Howard’s demeanor was one of excitement and anticipation, as he ignored these urgings and attached himself to the back side of USA and UK. It was shameful then and more-so now, as he has obviously learnt nothing from that time.

Thatcher

David Hardie writes: Re. yesterday’s editorial. Ronald Reagan once contended that “government is not the solution to our problem; government is the problem”. Although she never put it as succinctly, Margaret Thatcher’s philosophy was closely aligned with this sentiment. In her time as PM, she reduced or eliminated state support for well, almost everything. Now, in her death, she is being afforded a state-funded funeral, although it is technically not a “state funeral”. Perhaps if we wanted to celebrate her legacy, perhaps getting her family to foot the bill for the funeral would be one of the most appropriate ways we could do this.

More skilled labour for WA?

Adam Duncan writes: Just on the Geraldton refugees, one would have thought that people displaying such resilience, courage and superior navigational skills would have been welcomed here in The West. After all, we’re crying out for skilled labour aren’t we ?

Companies

Mar 5, 2013

5 comments

The federal election scheduled for September means it’s a double header over the next 12 months for Tasmanian voters, with a state election due in March 2014. That means lots of Canberra visitors, lots of promises and at least a few presents, and this might be one: according to The Weekend Australian, Julia Gillard is yet to rule out assistance to get the Tamar Valley pulp mill off the ground.

Coincidentally, Gunns’ voluntary administrator also recently circulated his detailed report to creditors (Gunns planned to build the original pulp mill).

The pattern of behaviour of the Gunns Group over its last 12 months suggests it was insolvent for a while. Maybe it was insolvent as far back as August 2011, when Gillard and Premier Lara Giddings signed the inter-government agreement on forestry, promising $276 million in funding — some of which was used to save Gunns.

Unsurprisingly, the administrator has recommended liquidating the Gunns Group. A further period of administration won’t revive the patient. Even before the administrator was appointed, Gunns had disclosed that  liabilities exceeded assets. But it gets worse.

Employees’ benefits of $10 million will be paid, but secured creditors won’t be paid the full $636 million they are owed — including $446 million owed to the banks. Unsecured creditors, collectively owed $135 million, will remain penniless.

Once liquidation is the chosen path, voluntary administrators often produce a perfunctory report to discharge their statutory obligation. The task of pursuing miscreant directors is one for the liquidator. In this instance the administrator has shone the torch in a few dark corners requiring closer inspection by a liquidator.

Gunns, true to form for any company trying to scrape up enough to keep the wolves at bay, managed to mix up its own funds with funds belonging to others, possibly as much as $50 million.

As responsible entity for 18 managed investment schemes, the Gunns Group receives growers’ harvest proceeds and also insurance amounts from growers that need to be remitted to the relevant insurer.  The Gunns Group used these amounts as working capital.

But more significant was the use by Gunns of funds from the sale of Green Triangle land and trees. Some of the trees belonged to others and were secured by a covenant. Covenant holders have already obtained a preliminary court judgment that certain amounts belong to them and shouldn’t form part of Gunns’ kitty to be split between creditors. At this stage the list of unsecured creditors contains an amount of $39 million owing to Australian Executor Trustees, the trustees for the covenant holders.

The voluntary administrator also identified a number of voidable transactions, or payments by Gunns that might be reversible depending on the crucial date of insolvency.

“The cavalier way Tasmania begs for federal funds then absolutely wastes so much without the slightest concern for due diligence is an embarrassment.”

Clearly Gunns was insolvent when it approached the banks in September 2012 on bended knees and asked to be able to retain a little more from asset sales and also “that a debt compromise of a material portion of their debt was required to remain viable”, to quote the administrator.

Gunns was probably insolvent when it received a significant downward revaluation of plantation assets early in July 2012, making asset sales pointless and raising capital almost impossible. And it might have been insolvent in March 2012 when white knight Richard Chandler Corporation exited the data lock-up after half an hour and headed back to Singapore.

But Gunns might have been insolvent as early as September 2011, when it received $23 million of inter-government agreement cash. There was $23 million earmarked in the agreement to compensate Gunns, even though it had previously relinquished its contracts, a decision it quickly reversed when a bucket of money loomed as a possibility. The original plan was to pay Gunns $23 million provided the company agreed to pay half to state-owned Forestry Tasmania for amounts owing, as Forestry Tasmania was also insolvent.

Gunns dug its heels in, knowing it was in a good bargaining position as the IGA might fall over, and demanded the full $23 million. Funds for Forestry Tasmania had to be found from elsewhere.

Gunns needed the money pronto to make a $10 million loan repayment to banks and to start pulp mill earthworks, or else the mill permit would become null and void. It couldn’t borrow or raise more equity, asset sales were slow with prices continually falling and bank loans of $340 million were repayable in a few months.

If Tom Waterhouse was running a book on the date of insolvency, August 2011 would be well in the market.

Gillard and Giddings bailed out an insolvent company. Industry policy is indeed quite accommodating. It proved to be a postponement of the inevitable.

The postponement has meant a delay in the restructure of the forest industry and a continuation of mutual mistrust, as inevitably many see the inter-government agreement as simply a front for getting the pulp mill started.

Even now the state’s upper house is still deciding whether to pass the Tasmanian Forests Agreement Bill, 18 months after the first tranche of cash disappeared into a sinkhole.

The cavalier way Tasmania begs for federal funds then absolutely wastes so much without the slightest concern for due diligence is an embarrassment. Hinting that pie-in-the-sky projects are still possible when the Tasmanian forest industry has just suffered balance sheet losses in excess of $2.5 billion — and 150,000 hectares of plantations are looking for new owners after existing owners have lost 90% — is mischievous stupidity.

*This article was first published at Tasmanian Times

Companies

Dec 14, 2012

5 comments

In debates about native forestry, it’s common for the industry to claim its activities are sawlog-driven and carbon neutral. But as this infographic shows, a hard look at the data shows that most of the biomass affected by harvest operations is left to rot (or burn) on the forest floor, or ends up as woodchips and processing waste …

In fact, on average, every 100 tonnes of trees that are felled make three tonnes of sawn wood and wood-based panels. A further four tonnes out of the 100 becomes domestic paper products, and 23 tonnes are exported as woodchips. The remaining 70 tonnes is waste: 65 tonnes in every 100 is left on the forest floor as harvest residues (harvest slash) and five tonnes becomes wood processing waste that is burnt for energy or turned into mulch.

Contrary to the claims of the industry, the main “product” from native forestry is waste. This is one of the reasons why state forestry agencies struggle to make a profit from a resource they don’t pay for.

Other reasons for the demise of the native forest sector include the high Australian dollar, subdued international woodchip prices and a shift in consumer preferences away from native forest products. Ironically though, the final nail in the industry’s coffin could come from the valuable carbon credits that could be generated by not harvesting native forests. While it has been spoken about for decades, the day has come where native forests are more valuable standing up than chopped down.

Indeed, we recently claimed the latest deal to protect Tasmania’s forests will deliver the Commonwealth government around 7.4-8.2 million forest management credits per annum over the next 20 years, which are likely to be worth between $6-$7 billion in current dollars. In exchange, Tasmania is being offered $378 million to compensate forestry workers and help prop the industry up for another few years. It’s worth noting that Tasmania’s upper house yesterday delayed the implementation of the forests peace deal, sending the bill to a committee.

In recent days, Malaysian forestry company Ta Ann has threatened to shut down its existing mills if the forest deal is not endorsed by Tasmania’s upper house. This adds a twist to the story. With Ta Ann gone, and the Triabunna woodchip mill closed, the native forestry industry is likely to collapse, leading to the cessation of harvesting in public native forests. This would lead to the Commonwealth getting a further 6.1-6.7 million forest management credits per annum over the next two decades.

Combined, ending harvesting in public native forests in Tasmania would result in the Commonwealth getting around 13.2-14.6 million forest management credits every year for the next 20 years. In total, these credits are likely to be worth $11-$12 billion in current dollars; or an average of $550-$611 million per annum.

By propping up the forestry industry and ensuring continued harvesting in native forests, the Tasmanian Forest Agreement could end up costing both the Australian and Tasmanian governments billions in foregone carbon revenues.

The infographic helps explain how his could be the case. With only 3% of the biomass affected by harvest events being converted into long-lived wood products, most of the remainder is waste and much of the carbon in that waste ends up in the atmosphere.

*Andrew Macintosh is the associate director of the ANU Centre for Climate Law & Policy and Richard Denniss is the executive director of the Australia Institute. The data and graphics are drawn from a new Australia Institute report: Tasmanian Forest Agreement 2012: Who is the winner?

Environment

Dec 5, 2012

5 comments

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.