CHALLENGES
FOR TASMANIAN PUBLIC FOREST MANAGEMENT: THE CURRENT POSITION
This paper
was written for the Forest Economics Conference held at Mona from 28th
to 30th November 2023.
CONTENTS
Background
Tasmania’s forests: A snapshot
Sustainable Timber Tasmania (STT): An overview
Issues
Tragedy of the commons
STT: A business, a guardian, or a godfather
STT in transition
Current markets
Information asymmetry
Summary
Forestry facts
Less popular forestry facts
Challenges
Background
Tasmania’s forests: A snapshot
Tasmania’s native forests cover three million hectares,
about 40 per cent of the State. Two thirds are publicly owned of which only 21
per cent is currently available for production. Almost as much again is
designated as available for future harvesting should the necessary approvals be
granted. Most native forest harvesting occurs on public land. In 2022/23, 89 per cent of timber logged from
native forests came from publicly owned forests, with the balance from private
forests. Of the total, 25 per cent were sawlogs, peelers for Ta Ann[1] and peelers for export,
with the balance of 75 per cent destined for woodchips and a small amount of
fuelwood. Of the sawlogs and peeler logs
locally processed only 20 per cent ends up as finished product[2]. Half of the waste is
sawdust whilst the balance is added to the woodchip pile. The following
chart sets out the production (in quantity terms) in the 2022/23 year.[3]
Apart from the 75 per cent of product which is destined
to the woodchipper the other striking feature of the chart is the small amount
of sawlogs sourced from private forests, and the continued reliance on publicly
owned forests to source native timber for the industry.
The current plantation estate adds another 10 per
cent, or about 272,000 hectares to the total forested area in Tasmania.
In 2022/23, in volume terms, plantations produced 80
per cent of total product from forests (52 per cent from hardwood plantations
and 28 per cent from softwoods). The balance of 20 per cent was from native
forests. [4]
Of the private plantations on private land
approximately 90,000 hectares are owned under the New/Forests/Forico[8] banner and about 19,000 by
Reliance Forest Fibre[9] . The former were a
mixture of Gunns’ MIS plantations and Gunns’ own plantations[10]. The latter were
originally FEA’s[11]
MIS plantations.
Private plantations on public land were sold by STT to
help buttress its native forest activities which were running at a loss. The sales were via forestry rights whereby
ownership of the land remained in public hands, but the rights owner acquired
the trees plus a right to conduct forestry operations for the term of the
right.
The hardwood plantations on public land are a mixture
of Gunns’ MIS plantations originally grown on STT/Crown land but transferred to
STT following Gunns’ collapse, plus other plantations funded by Federal TFA and
TCFA grants[12]
funds to help STT transition to a plantation-based future. Reliance Forest Fibre
bought the 30,000 hectares of hardwood plantations from STT via a forestry
rights deal in 2017/18.[13] The private softwood plantations
on public land are managed by New Forests on behalf of foreign pensions funds
and other large investors[14].
It is a little difficult to compare returns from
public native forests and private plantations based on published figures
because the end product differs. In the case of say STT, the end product is a
mill door delivered log, whereas for the private operators the end product may
be exported woodchips or sawn softwood timber for the local market.
STT has chosen to disclose less information each year.
In 2022/23 the sparsely available information doesn’t include the long-abandoned
disclosure of mill door revenue for various timber types. There is no breakup
of revenue between timber types, not even between plantations and native forests.
There is fortunately a little information on the quantity side, the tonnes[15] and areas harvested. For
both native forests and hardwood plantations the harvest yield was similar, at
230 tonnes per hectare for 2022/23.[16]
STT doesn’t disclose the ages of logged forests. If
the plantation hardwoods were 15 years old that implies an annual growth rate of
15 tonnes per hectare. If the logged native forests are 60-year-old regrowth,
that implies an annual growth rate of 4 tonnes per hectare.
STT’s revenue for 2022/23 works out to be $86 per
tonne across all timber types. It’s not clear
from STT’s Annual Report but this is likely to be mostly on a mill door basis,
but some, possibly the plantation timber,
could be on a stumpage basis,[17] implying the average mill
door delivered price was probably around
$100 per tonne .The price for plantation hardwood logs was believed to
have been close to $100 per tonne in 22/23
which doesn’t leave much scope for premium sawlogs to have fetched prices much
above the average. Certainly, nowhere near the price needed to compensate for
the much slower growth rates for native forests.
In summary, production from plantations far exceeds
that from native forests, both in volume and value terms even though Tasmania
has proportionally the largest native forest industry in the Federation. Hardwood
plantations are currently experiencing a small decline, in annual value terms
as the first harvest of MIS timber has peaked, and in terms of size as
approximately 25 per cent of harvested areas aren’t replanted. Softwood
plantations principally produce sawlogs for Timberlink P/L[18] and woodchips for Norske
Skog paper mill[19].
Hardwood plantations produce mainly woodchips (for export) and peeler logs (for
export). The absence of all but a few
sawlogs or peeler logs from private forests, both plantations and native
forests, demonstrates there are still considerable challenges for the industry
to prepare for the future.
Sustainable Timber Tasmania (STT): An
overview
STT is the Forest Manager appointed pursuant to the
Forest Management Act 2013 (FMA) to look after Tasmania’s public native forests.
Section 8 sets out STT’s functions:
(a) to manage and control all permanent timber
production zone land.
(b) to undertake forest operations on permanent
timber production zone land for the purpose of selling forest products.
(c) such other functions as are approved in writing
by the Minister and the Treasurer.
STT is the Forest Manager for
the forest estate which in most instances is owned by the Crown. STT includes
the forest estate which it manages in its financial statements. Essentially
STT’s role is to undertake timber operations on designated land. It is not
known whether shareholder Ministers have directed STT to pursue other functions
pursuant to Section 8(c).
As we have seen 89 per cent of
native forest production was from public forests, STT’s 2022/23 Annual Report provides a breakup for
timber types in that year (in quantity terms)[20]:
Production is largely driven by
the statutory requirements of the FMA to supply a minimum quantity of high-quality
sawlogs, by contracts with sawlog buyers and by long term contracts to supply
peeler billets to Ta Ann.
STT’s primary function is to
manage the forest estate for timber production. There is an almost universal
recognition that native forests are crucial perpetual ecosystems, yet STT
treats native forests as a timber source, not entirely surprising since that is
its statutory role. Not only are non-timber values ignored when STT values its
forest estate, the assessment of net proceeds from harvestable timber ignores
the costs of regenerating native forests, which is difficult to understand
given that a native forest is a perpetual ecosystem. This methodology allows
STT to claim it is financially sustainable.
Apart for forest land and trees most
of which it doesn’t legally own, STT is a shell company, with a few bits of
property plant and equipment and working capital offset by payables and
employee entitlements, the latter fortunately much lower since the government
agreed to assume over 80 per cent of STT’s unfunded superannuation liability in
2017. STT no longer has any borrowings. It can’t service any debt. Whilst it
continues to post headline profits [21]
its cash earnings[22]
before government operating grants are
always negative and made even worse by including the mandatory costs of
regenerating felled forests. It wasn’t until 2022/23 that STT started expensing
the costs of regeneration. Previously they were capitalised thereby overstating
profits. If one also includes other cash outlays for minor plant, motor
vehicles and roads which are still capitalised, the cash deficits from STT’s
forest operations are even larger.
STT’s net equity of around $220 million comprises
the value of the forest estate. A forest estate is valued on the basis of
future net proceeds[23].
STT is only profitable if the value of its forest estate increases. Its equity
position for all intents and purposes is the value of expected net future
proceeds derived by cherry picking a few numbers whilst ignoring others. Even though replanting costs are now expensed
they are not included in estimates of
future net proceeds. Nor are roading costs. If both are included it is likely
the value of STT’s forest estate would be negative. Its equity position would
become a negative number representing a provision for future losses.[24]
[25]
The 2022/23 Annual Report gave a
glimmer of what might be possible in the future. STT earned $299,000 worth of
ACCUs.[26]
It would be interesting to know if this relates to land legally owned by STT or
whether it relates to Crown land which forms the bulk of STT’s forest estate.
Not to recognise land as having any value but including income from abatement
measures on that land would be a puzzling outcome.
Now that STT recognises land as
having a value separate from trees, how should it be valued? Land which STT
legally owns has been reintroduced into the financials at historical cost but how
should the rest being Crown land which STT is required to manage be treated? With
a zero value as per the 22/23 financials? That doesn’t appear to be a prudent basis for
sensible public policy.
As a corollary should a notional
rent be included when determining future net market proceeds and hence the
value of native forests on Crown land? If one was valuing two similar coupes, one on
leasehold land and one on freehold land, one would need to include a notional
rent on the freehold land so a fair value for both crops was calculated. Not having to earn a return from public land
may be one reason public forests may have been overexploited. If notional rents
were included when assessing future harvest proceeds and hence values, there is
little doubt native forests would have a very large negative value. STT’s
financial position would be clear for everyone to see, an entity with negative
cash flows and negative equity needing a letter of comfort from the Treasurer
to keep trading.
Issues
Tragedy of the commons
By claiming financial sustainability
STT has diverted attention away from its commons dilemma[27]
where a few individuals over-consume a resource at the expense of the broader
community. STT role is to supervise our native forests and to derive the
greatest value from them. Faced with a commons dilemma, STT refers to the flow
on effects of its operations as a way of promoting the broader economic and
social benefits of its operations. Whilst undoubtedly true, to some extent at
least, this in no way helps mitigate a commons tragedy. The flow-on-benefits
argument does not acknowledge there may be alternative uses for the resources. The
externalities or spill over benefits have enormous benefit potential for Tasmanian
communities. This is the nub of the native forests issue. There is a growing consensus
that native forests need to be viewed, not merely a source for timber, but as a
perpetual repository hosting a variety of non-timber values crucial for the
common good. To ignore this at best is poor public policy, and at worst a
tragedy we will all come to regret.
STT: A business, a guardian or a
godfather?
STT operates in a grey area.
Were it a government agency, national competition rules would require it to
charge according to full cost attribution (FCA) rules laid down by OTTER, the Tasmanian
Economic Regulator. As a GBE it needs to avoid competing with private
businesses if it is propped up by its owner, the Tasmanian government.
Operating as a GBE gives STT space to distance itself from public scrutiny. It
is easier to invoke commercial in confidence.
STT’s job is a difficult one. Navigating
its way past the commons obstacles, trying to free itself from government
handouts whilst as a guardian of native forests risking being held captive by
the industry it is supposed to supervise; it cannot be easy. Any resolve to
reassess the role and function of native forests of native forest, must
inevitably lead to a review of the role of STT as laid out in the Forest
Management Act. What would optimal management of Tasmania’s forests look like?
What is the most advantageous path forward?
STT is not just a timber seller.
It guides and shapes the industry. Prior to receivership of Gunns in 2011, STT
was the monopoly owner of a hugely valuable native forest estate. By allowing Gunns
to over exploit the forests for inadequate returns Gunns became the dominant player
in the Tasmanian forest industry. This meant its demise left a gaping hole.
While Gunns was insolvent, STT famously
intervened and backed one of its highly geared clients with a history of losses
despite government handouts, to attempt a purchase of the Triabunna wood chip
mill. Treasury were scathing of the proposed deal. The effort failed, yet even
today STT provides working capital to clients via repurchase deals.
There may be a sound argument to
assist infant industries but as most economists will attest there’s a real
danger infants will become senile adults still needing to be spoon fed. The
expectation that STT exists to supply timber at prices that will allow the
industry and all contractors who comprise the supply chain to be profitable, is
endemic.
STT in transition?
STT is in constant transition.
But to where exactly?
Twenty-five years ago, STT owned
50,000 hectares of softwood plantation and had the beginnings of a hardwood
plantation estate following the receipt of Helsham grant funds. Since then,
grants pursuant to the TFA and TCFA agreements were provided to allow STT to transition to a
plantation-based hardwood operation. The first tranche of the softwood
plantations was sold over 20 years ago because the then government needed funds
to fix its own balance sheet. The rest of the softwoods plus the most of the
TFA and TCFA funded plantation have since been sold to help STT survive. Most
of the trees intended to help STT transition to a plantation-based future have all
been sold well before maturity at considerable loss. With only about 22,000
hectares of hardwoods remaining, all approaching harvest time in the next 10
years or so, it would not surprise to see STT exit the plantation business,
leaving the field wide open for a manager like New Forests to either take over
or at least manage any future replanting.
Current markets
A quick look at the 4 main
categories:
·
The
native timber market is distorted by the over-arching behaviour of STT and its
inaccurate valuation and accounting methods. It barely warrants the label
market. It’s a clearing house for a few insiders who are privy to price and
quantity information necessary for even the most rudimentary markets. Even the
major by product woodchips has been controlled
by Artec a private monopoly which moved into the space vacated by Gunns,
because national competition rules prevent STT from competing with private
companies. Midway, an ASX listed company has recently expanded its operations
in Tasmania and has done a deal with STT for the supply of thinnings from
regrowth forests, believed to be 300,000 tonnes per annum. The market is fraught and lacking
transparency. As a result, only wealthy hobbyists, farmers and insiders will
risk investing in a business where there is such a long time between outlay and
reward, where market signals are muted and returns uncertain.
·
The
softwood sawlog business is dominated by the vertically integrated operations
of New Forests and its associated sawmill operations owned by Timberlink P/L.
Smaller softwood sawmills were squeezed when New Forests bought both STT’s
former softwood plantations and the processing facilities from Gunns’ Receivers.
New Forests have also purchased softwood plantations used to supply Norske
Skog. Long term investors contemplating establishing new softwood plantations
would be understandably wary. It’s a limited market by any stretch.
·
Hardwood
plantations for woodchips are almost exclusively the domain of New Forests/Forico
and Reliance Forest Fibre which both have vertical integrated businesses from
growing through to exporting. Add to this the trauma caused by failed MISs and potential growers will be reticent. More
domestic end users rather than exporting is the only way to build a market
necessary to attract new plantings by new participants. With existing operators
backed by large superannuation funds looking for new opportunities, the entry
barriers for new smaller players are real.
·
The
development of a reliable functioning market for hardwood sawlogs and peeler
logs from plantations received a huge setback when STT abandoned its attempts
to lead the way, instead selling its government funded plantations so it could
survive for a few more years, a decision no doubt in part caused by the need to
satisfy the long-term supply contracts that underpin STT’s cash flow problems. The
massive injections of taxpayer funds to develop hardwood plantations have ended
up subsidising overseas pension funds and large investors.
Information asymmetry
At every turn, wherever one looks
there is little evidence of functioning markets. Markets are supposed to be
places where buyers and sellers, and potential buyers and sellers meet
voluntarily to exchange information and possibly reach deals. Information about
prices, growth rates, ages at harvest are conspicuously lacking. The lack of
this information caused MISs to run much longer than they should have. It is difficult
for outsiders to obtain the necessary information to make informed decisions. And
even well-intentioned insiders can’t divulge data to outsiders because it’s
commercial in confidence. This has been a pattern with the forest industry in
Tasmania.
Information asymmetry is
hindering the management of a crucial resource,
not just the timber resource on public lands but all the other more crucial
non-timber values which constitute a forest eco-system.
Forest facts
·
Native
forests are perpetual ecosystems yet are valued by STT on the basis that trees are
a single rotation crop, where regeneration costs are ignored and most forest land
is assumed to have a nil value,
·
Changes
in the estimates of future net proceeds from a timber crop has a material
impact on the determination of tree crop value which determines the
profitability of native forest logging.
·
Harvesting
is a cashing event. When forests are valued, changes are brought to account as
income (or losses) each year. Harvesting is, or should be, a realisation of
those previously recorded profits or losses.
·
Plantation
hardwoods grow four to five times faster than native forest on similar sites. Prima
facie that means native forest timber needs to fetch at least five times what
plantation timber does to achieve a similar return.
·
STT
has a composite role as a guardian and protector of native forests, as well as a
business trying to make a sustainable profit and as the godfather of the forest
industry.
·
Funds
will always be needed to look after native forests regardless of whether
logging occurs.
·
Harvestable
native forest coupes are becoming more remote on less accessible sites leading
to higher harvest and cartage costs.
·
Arisings
such as woodchip and peeler logs shouldn’t be allowed to drive native forest
operations as these can be produced much more efficiently from plantations.
Less popular forestry facts
·
Native
forest logging as currently managed by STT is not financially sustainable. If
the costs of regeneration were included when calculating future net proceeds
native forests would have a negative value.
·
As
a corollary, STT would have negative net equity, representing future
contributions required by government to indirectly subsidise a non-market
viable industry.
·
There is no way
a native forest which grows at somewhere between one and four tonnes per
hectare per year can ever be financially sustainable if only a tiny fraction
ends up fetching premium sawlog prices.
·
Harvesting may
generate cash at harvest time but that doesn’t make it profitable.
·
Only 20 per cent of timber harvested from all
Tasmanian forests in 2022/23 came from native forests, almost all from public
forests.
·
Twenty per cent
is also a reasonable proxy figure for direct employment in the native forest
industry as a proportion across the overall forest industry.
Challenges
·
To
refocus on native forests as a perpetual ecosystem rather than as a mere source
for timber. In particular to reinstate the primacy of land and all its associated
values rather than it simply being treated as a growing medium for trees.
·
To
determine what amount of human interaction is acceptable in a reimagined forest
system.
·
To
acknowledge and accept that it is possible for people from different
perspectives with different paradigms to guide their thoughts, to reach the
same conclusion via different routes.
Postscript
Nick O’Malley of The Age wrote a
summary of the Congress Logging
Tasmania: How Mona’s David Walsh, Kirsha Kaechele brought industry’s most
powerful players together (theage.com.au).
The
BluePrint Institute’s paper on alternate land use options for Tasmanian native
forests can be found Seeing
the forest for the trees: Exploring alternate land use options for the native
forests of Tasmania - Blueprint Institute
[1] Ta
Ann Tasmania P/L is part of the public listed Ta Ann Group publicly headquartered
in Sarawak, Malaysia. It was granted long term contracts for the supply of
peeler logs from native regrowth forests. Veneer mills to process the timber
were built in the Huon in 2007 and in Smithton in 2008. Originally the sliced
veneer was shipped back to Sarawak for plywood manufacture but in 2015 a ply
mill was built in Smithton, mostly funded by a government grant plus proceeds
from the surrender of roughly half the peeler log quota which had been granted
at a peppercorn price. The Huon mill closed following the Jan 2019 bushfires.
[2] Feedback
from industry at the Congress was this figure is now closer to 30 per cent.
[3]
From 2023 Annual Reports of Sustainable Timber Tasmania P/L and Private Forests
Tasmania.
[4]
ibid
[5]
STT means Sustainable Timber Tasmania P/L, formerly called Forestry Tasmania
P/L, a Tasmanian Government Business Enterprise (GBE).
[6]
Managed Investment Schemes were pooled arrangements whereby investors paid tax
deductible fees to a promoter to acquire a leasehold interest in a little as
one third of a hectare of land to conduct a business of primary production by planting
trees, usually but not exclusively hardwood trees with a short rotation
intended for pulpwood. The upfront fees were a cash flow bonanza for promoters,
which quickly led to over promotion to taxpayers keen to buy tax deductions,
often with finance arranged by promoters. Hubris and greed, poor site selection,
poor growth rates, all led to abysmally poor returns ensuring investors would
quickly lose interest. Which they did along with 95 per cent of their initial
outlays, sweetened only by tax deductions gained from payment of upfront fees.
Following MIS excesses, a new Division 394 of the Tax Assessment Act 1997 was
legislated. This has failed to excite investors and has been largely unused.
Larger investors have preferred a New Forest model where funds are pooled to acquire
and operate forestry businesses. Smaller investors, speculators and tax
minimisers have gone elsewhere.
[7]
From 2023 Annual Reports of Sustainable Timber Tasmania P/L and Private Forests
Tasmania
[8]
Comprised 10,000 hectares of softwoods and 80,000 hectares of hardwoods. In
addition, 80,000 hectares of native forests were acquired which are held and
managed for non-timber values, plus two woodchip mills, a tree nursery and port
facilities. All assets were acquired from Gunns’ Receivers. New Forests manages
plantation forestry projects on behalf of large investors, often large
superannuation funds. In this case investors’ funds are pooled into the
Tasmanian Forest Fund (TFF), consisting of two sub-trusts plus an operating
company known as Forico Pty Ltd. For convenience’s sake the Group is known as
Forico. TFF was established as a 10-year closed end fund. Early in October
2023, upon expiry of the first 10 years TFF was restructured into a perpetual
fund with three owners with equal shares: UniSuper, an Australian superannuation fund, the Pension Protection Fund
from the UK and APG Asset Management from the Netherlands.
[9]
Reliance Forest Fibre is a Group which comprises Reliance Forest Fibre P/L and
the Reliance Forest Fibre Trust. It is structured like Forico. Unlike Forico
the ownership is murkier, with the last published accounts revealing the
group’s ultimate owner is a company resident in the Cayman Islands.
[10]
Gunns Ltd was an ASX listed company, originally a sawmiller of native forest
timber, became a woodchipper of renown, a plantation grower, a MIS promoter,
and a pulp mill aspirant. At one stage it was the largest timber business in
the country with integrated operations in both softwoods and native forests. It
collapsed in 2012.
[11]
FEA or Forest Enterprises Australia P/L, a former ASX listed company. The first
prominent Tasmanian MIS promoter it was overtaken by Gunns to end up as
Tasmania’s second largest MIS company. It collapsed in 2010. Trying desperately
to survive by belatedly developing an integrated business it built the Bell Bay
sawmill before collapsing. This mill was then acquired by Gunns. After Gunns’
demise the mill was snapped up by Timberlink P/L and now appears to be an
extremely profitable monopoly softwood sawmill operation in the New Forests’
stable.
[12]
The TFA is the Tasmanian Forest Agreement, the TCFA is the Tasmanian Community
Forests Agreement. The other two major Federal -State agreements to assist
restructure of the Tasmanian forest industry have been the Helsham agreement
following the 1987 Helsham inquiry plus the 2011 Tasmanian Forest
Intergovernmental Agreement (IGA).
[13]
This marked the beginning of Reliance’s operation. It subsequently purchased a
wood chip mill at Bell Bay (from Smart fibre). Reliance then acquired the
former FEA plantations plus some native forests managed for non-timber values
from Resource Management in 2019/20. Reliance currently has a portfolio of
49,200 hectares of hardwood plantations plus 16,400 hectares of native forests
so far spared from forest operations.
[14] ANZFF
acquired the plantations in 2011/12. ANZFF, the Australia New Zealand Forest
Fund, pools investors’ funds in a manner similar to TFF/Forico. New Forests
manages ANZFF. ANZFF also owns Timberlink P/L, a softwood sawmiller.
[15]
One tonne refers to one green metric tonne and is roughly equal to one cubic metre
of timber.
[16] In
the case of native forest harvesting, STT discloses areas of clearfell
harvesting and areas of partial or selective harvesting. The latter are assumed
to be 50 per cent clearfelled in volume terms to derive a clearfell equivalent
area to enable a comparison with plantation operations.
[17] Trees
are usually sold either on a stumpage or a mill door delivered basis. In the
latter case the seller arranges and pays for harvest and cartage to a
processing facility. In the former case the purchaser acquires standing timber and
is responsible for harvesting and cartage.
[18]
Timberlink P/L is owned by ANZFF the owner of the 50,000-hectare softwood
plantation on public land. It acquired sawmill assets from Gunns’ Receiver in
2014 including the Bell Bay sawmill originally built by FEA, plus another large
softwood sawmill in Tarpeena, South Australia. The was added to ANZFF’s
existing softwood plantation assets acquired from Gunns when after shortly
taking over listed company Auspine in 2008 mainly by a share issue rather than cash, it sold most of the assets at a considerable
loss to raise cash to enable it to keep alive its ill-fated dream to build a
pulp mill.
[19]
Norske Skog is a Norwegian based paper company. Tasmanian operations are located
at Boyer in the Derwent Valley. It manufactures newsprint and magazine grade
paper.
[20]
Sawlogs includes high quality sawlogs, Cat 2 & 8 sawlogs and logs for posts
and poles. Peelers includes domestic and export logs. Special includes
blackwood, huon pine, sassafras and other craftwood species. Woodchips also
include the small amounts of firewood, bark and other residues.
[21]
Headline profit means net profit after tax.
[22]
Cash earnings means headline profits before interest tax and non- cash items
like depreciation and in STT’s case movement in the value of its forests. Often
called EBITDA (Earnings before interest tax depreciation and amortisation). It
excludes capital outlays.
[23]
STT’s 2022/23 Annual Report admitted to errors in the way it had valued its
forest estate since 2010. From 2010 to 2022 STT valued its forest estate on the
basis of future net harvest proceeds but then split that value between trees
and roads. From 2015 what was described a make good asset, being the costs to
regenerate/replant felled forests was also assigned part of the forest. Land
was given a zero value. In 22/23 it was decided to attribute all of the value
of the forest estate to trees and to value land and roads on an historical cost
basis less any depreciation if applicable. The make good asset was removed and
is now treated in the same manner as say a leave provision.
[24] A
detailed analysis of STT’s valuation methodology can be found at Tasfintalk:
STT's forest valuation charade, written
before the release of the 2022/23 Annual report which outlined minor changes to
valuation methods.. For details about the changes see Tasfintalk:
STT admits accounting errors.
[25] The
Forestry Corporation of NSW manages a hardwood estate of comparable size to STT
with approximately 1.8 million hectares of multiple-use native forest and
34,000 hectares of hardwood plantations. Hardwood assets have been fully
impaired, and the tree crop value is not recognised in the financial
statements. Other related assets, except for land, are also fully impaired. The
only trees recognised with value is FC’s much larger softwood plantation
estate.
[26]Australian
Carbon Credit Units issued by the Clean Energy Regulator for eligible
greenhouse gas abatement measures. ACCUs are tradable assets.
[27] Tragedy of the commons is an economic phenomenon popularised by a 1968 essay with that title by ecologist Garrett Hardin.
Thanks John,
ReplyDeleteNot quite as hard hitting as I would imagine, but this is Tasmania after all.
One has to wonder why the MONA forestry congress is even necessary??
The evidence is before us!
The only thing lacking is human understanding and wisdom.
Gordon
Any progress on metro accounts?
Delete