Things that can't last......

Things that can’t last forever usually don’t.

This morning’s Examiner reported on a leaked email from Forestry Tasmania (FT) Chairman to FT staff responding “to mounting concerns that the cash-strapped company may be dissolved and folded into a government department.”

In that event a radical transformation will occur.

Has FT found the way?

Forestry Tasmania’s (FT) controversial small native forest coupe in the Flowerdale river catchment area at Lapoinya in NW Tasmania is one of its better coupes. FT is adamant clearfelling will be a profitable exercise.

After a relentless pattern over the years of failing to cover even $1 in staff wages from its operations this looks like a real live test case to establish which exactly of FT’s operations are profitable, if any.

From a strict financial accounting viewpoint, each year FT adjusts the value of its forest estate so that as at 30^th June FT’s balance sheet contains the current value of its forest estate.

Hence clearfelling a coupe merely realises its current value. It is simply swapping trees for cash.

The accounting profits from the Lapoinya coupe should have already been recorded in FT’s books over the years if the current value of the trees as recorded is correct. The small profits over time scarcely dented losses from other sources.

Chopping down a coupe is a realisation exercise not a profit making one.

Harriss Protest Bill: It works

Yesterday saw the first application of Paul Harriss’ Workplaces (Protection from Protesters) Act 2014 when protesters were directed to leave a workplace pursuant to sec 11 of the Act.

Petrarch’s Bookshop and author Quentin Beresford were holding a book launch at the Tailrace Function Centre in Launceston when three protesters acting contrary to the provisions of sec 8 entered a business premise with the aim of hindering or obstructing a business activity.

The activity of promoting and selling  the book The Rise and Fall of Gunns meant the premises fell within the broad definition of business premises contained in sec 5 which includes premises used as a shop, market or warehouse.

Minister Harriss was unavailable for comment on the initial success of his controversial legislation.

The rise and fall of Gunns

A tale that needed telling.

Those are the words of Geoffrey Cousins referring to Quentin Beresford’s book ‘The Rise and Fall of Gunns Ltd’.

Mr Cousins is right.

It’s a tale that everyone interested in the future of Tasmania should read.

A failure to understand history increases the chances of repeating past mistakes, a common occurrence in Tasmania.

Quentin Beresford outlines the historical context of the Gunns’ debacle, from the hydro industrialisation era, the Wesley Vale campaign through to the Rouse bribery affair. The inadequacies, failings, Machiavellian manoeuvrings, dishonesty and unethical practices by participants are laid bare.

At no stage were lessons learnt.

Hydro praying for rain

There was more than a hint of Donald Rumsfeld’s maxim of ‘known unknowns’ when new Chairman Grant Every-Burns spoke of challenges facing Hydro Tasmania:

“The corporation is impacted by the well understood uncertainty around carbon pricing, renewable targets and rainfall variability. We are able to predict with certainty that the Hydro will be impacted for some years into the future.”

Hydro Tasmania appeared before a House of Assembly committee two weeks ago.

Scrutiny hearings often produce more heat than light, but amongst the wearisome adversarial exchanges was some useful information.

FT and the Economic Regulator

The Government’s willingness to breach the spirit of national competition policy by its use of State resources to prop up Forestry Tasmania whilst imposing austerity on broader sections of the Tasmanian community has struck a discordant note with many of the affected.

If prices charged by Forestry Tasmania were required to fully cover costs then it would be required to cease its unprofitable native forest harvesting.

A willingness by the affected to pursue remedies and solutions has precipitated this note.

Competitive neutrality complaints are handled by the Office of the Tasmanian Economic Regulator (OTTER) pursuant to the Economic Regulator Act 2009 .

A breach of competition policy?

The Forestry Tasmania scrutiny hearing left no doubt that its survival depends on selling more native forest woodchips at higher prices.

Filling the void left by Gunns’ departure and venturing into the space currently occupied by private woodchippers and exporters is not without public policy problems, notably a need to adhere to national competition principles.

Getting government funds into Forestry Tasmania is more than simply a question of a choice between deficit funding and equity transfers.

The principle of competitive neutrality applies to government businesses competing with the private sector, and ensures that any advantage arising solely from their government ownership be removed unless it’s in the public interest, and prices need to be set as if they were privately owned and are fully cost reflective.