Sunday, 31 January 2016

Ta Ann dossier

This is a background note on the financial aspects of  Forestry Tasmania’s (FT’s) major customer Ta Ann Tasmania, as the new FT Board contemplates its future.

With a lack of continuity on the Board and uncertainty whether FT management will relapse back to the unfortunates ways of the Kloeden/Gordon era, this is a quick summary for new Directors of tawdry Ta Ann, its profit shifting activities and how it operates as part of a group which dwarfs FT in size and profitability yet is funded by the Australian taxpayer and partly underwritten by an insolvent FT.

Are Forestry Tasmania's losses even greater?

Assumptions of 80 to 90 year rotations in native forests formed the basis for estimating the future sustainable volumes that could be extracted from our public forests as part of the forest peace process.

It would be a pure coincidence if the sustainable rotations led to a sustainable FT.

If timber is sold with inadequate margins as FT does then it won’t be financially sustainable regardless of whether the forests are sustainable.

Yet FT claims logging a small poorly managed production forests like Lapoinya after 60 years of regrowth yielding only 245 tonnes of timber per hectare is a profitable exercise.

It’s only profitable if a lot of costs are ignored.

When FT personnel talk about a coupe being profitable they are usually oblivious to the fact that from a strict accounting viewpoint, profits now accrue each year with changes in the value of trees brought to account

Harvesting a coupe is a cash realisation exercise not a profit making event. This is a crucial distinction which most fail to grasp.

The following is a discussion about the subjective assumptions that underpin the way FT values its forest estate which is the crucial determinant of whether FT is profitable.

Perhaps losses are even greater?

A slightly different set of assumptions would make FT irrevocably unsustainable as it currently operates.

Sunday, 24 January 2016

Forestry profitability

Forestry Tasmania’s revenue from timber sales barely covers the costs of harvest and cartage let alone other costs.

The following short film discusses FT’s assertion that the Lapoinya coupe due to be logged now will be profitable.

What constitutes profitability?

The link is HERE .

Wednesday, 20 January 2016

FT directors quit

They’ve all gone.

All Forestry Tasmania’s independent directors including chairman Bob Annells are heading for the exits.

Friday, 15 January 2016

Hobart Airport: A cautionary tale

(As published in The Mercury 15th January 2016 here )

One reason for privatising public infrastructure like the Hobart Airport was the private sector is better at running airports than governments.

So we were told.

The performance of the airport in the eight years since it was acquired by a Macquarie Bank managed syndicate casts doubt on that proposition as many airport users will testify.

Annual financial statements confirm plundering by fund managers and financiers on a previously unimaginable scale to the detriment of the business, a vital cog in the Tasmanian economy.

The latest financial statement for 2014/15 show cash flow is positive at last, the long awaited Federal government bailout of $38 million has started to flow and much needed improvements are under way.

Why did a private syndicate need a handout? Why not contribute more funds or take on a partner just like any other business? It’s got a 99 year lease, plenty of time to invest and make a return?

Friday, 8 January 2016

A Swiss solution?

When Swiss banks are in the news it usually concerns hiding clients’ ill gotten gains.

This time it’s because a referendum planned for 2016 may strip them of power to create money leaving Switzerland’s central bank as the sole creator of money.

Whatever Switzerland does won’t directly affect us here in Australia, but it will introduce another policy option as we search for budget sustainability at the Federal level which in turn is a necessary condition for the sustainability of Tasmania’s budgetary position.

There’s a prevailing view that governments and central banks determine how much money circulates in an economy and private banks simply facilitate arrangements between borrowers and lenders.

This is a myth. It may exist in textbooks but not in reality.

Almost all money is created by banks out of thin air. If a credit worthy customer wants a loan, a banker doesn’t need to check his vault to see if there are unlent deposits. He simply sets up two accounts.... one a loan account that will need to be repaid over time with interest and the other a deposit account of equal value ready to be spent. The deposit account is new money that has been created out of thin air.