Forestry Tasmania and the RFA

The following was a background paper prepared as part of a series of articles on Regional Forest Agreements  by Gregg Borschmann published by The Guardian. An overview can be found  HERE.
The Guardian asked the Tasmanian minister responsible for forestry a series of questions about the RFA. The questions and the Minister's responses are included at the end of this blog.

The Tasmanian Regional Forest Agreement (RFA) signed in 1997, was supposed to provide a framework for the sustainable management of Tasmania’s forests.

If financial sustainability was the aim, the outcome has been a complete failure. Since 1997 the state-owned Forestry Tasmania (FT) has suffered cash operating losses of $94 million. In simple terms it was selling timber far too cheaply.

But the overall picture is even worse. Capital spending of $368 million on plant and equipment, roads and plantations, most sourced from government funds, failed to add anything to FT’s asset base.  FT’s total operating cash loss over 20 years was therefore $454 million.

That’s just the cash losses.

Not only did new capital spending fail to increase FT’s asset base, there were huge non-cash losses as forests under its trusteeship lost $750 million or 90 per cent of their value.

A surplus of lies

Treasurer Gutwein reckons even after factoring in all the promises made during the election campaign there will still be surplus totalling $104 million over the next four years.

"The key thing here is that we have arrived at a modest surplus to provide for a buffer moving forward," he was reported as saying.

Mr Gutwein forgot to mention the skinny surplus each year is solely because of the $40 million special dividend received annually from TTLine.

As explained in the last blog profits don’t imply cash surpluses. Now we have Mr Gutwein trying to tell us there is still a buffer when the tiny profits which he calls surpluses  are due entirely to transfers that are locked away and can only be used to fund vessel replacements.

Take away the TTLine transfers and even the paper profits disappear.