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Forestry Tasmania Subsidisation Set to Continue

Kim Booth

Kim Booth  -  Friday, 5 December 2014

Tags: Subsidies

Forestry Tasmania is set to borrow $31 million against its letter of Comfort this financial year, and still does not have a transition plan in place to move to a full cost recovery business model to end future public subsidies, Greens Leader and Forestry spokesperson Kim Booth MP said today.

“Today’s Forestry Tasmania GBE examination reveals that the industry will receive public subsidies of at least $37 million this financial year,” Mr Booth said.

“The only part of the forest industry that the Minister, Paul Harriss, will ‘grow’ is ongoing public subsidies to both the GBE and the broader industry, and ongoing losses by Forestry Tasmania.”

“It is deeply alarming that the Minister could not rule out further public subsidies or equity injections into Forestry Tasmania beyond the Tas Networks injection.”

Mr Booth said that Minister Harriss has now admitted that:

  1. He has NO PLAN to get Forestry Tasmania onto a financially viable footing, but that he will look at the current review into the GBE when it is finished;
  2. Forestry Tasmania will borrow up to $31 million this financial year to fund its operational losses under the Treasurer’s letter of comfort;
  3. Forestry Tasmania will  receive $30 million dollars from Tas Networks to pay off  this debt the following financial year (2015-16);
  4. $4 million will be given to native forest logging contractors to pay off debt (sourced from the remaining $7 million provided by the federal government) ;
  5. Sawmillers who are receiving TFA exit assistance will be able to keep most of the  money  but stay in the industry, contrary to the intent of that program;
  6. Forestry Tasmania will subsidise this financial year transportation of pulp wood by $5 million to shift 265,000 tonnes of pulp wood (a contributing factor to the expected debt which the Tas Networks’ $30 million will pay off);
  7. Hardship assistance will be paid to an unspecified number of  other contractors.

“It is now absolutely clear that both the Premier and the Forests Minister lied to the public about withdrawing public subsidies from Forestry Tasmania.”

“It is beyond the pale to cry poverty to justify sacking teachers and nurses, while at the same time throwing millions of public money to subsidise an industry indefinitely.Further it is utterly irresponsible to continue to bleed the public purse to prop up a GBE which it is clear neither the Minister nor the Board have any idea of how to make viable or profitable.”

“This is not an investment in a transition strategy to a full cost recovery business plan, but instead is an exercise in hurling good money after bad into a black hole.”

“The best Forestry Tasmania was able to come up with as an industry plan is the need ‘to have faith’.This is simply not good enough when faith has been broken with the Tasmanian public by the Liberals’ broken promise to end public subsidies.”

“Well last thing I heard, relying upon faith or religion is not considered best practice within the world of corporate finance.The markets decide the product they want, the conditions and price, not blind faith.”

“Mr Harriss may be banking on a wish and a prayer, but public money is too scarce to gamble with so blindly,” Mr Booth said.