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Forestry Tasmania – Ta Ann


Cassy O'Connor MP

Cassy O'Connor MP  -  Wednesday, 9 December 2020

Tags: Forestry Tasmania, Native Forest Logging

Ms O'CONNOR - Minister, when did STT and/or yourself or your office first come to the understanding that Ta Ann would be closing its Huon mill? Was there a formal notification?

Mr BARNETT - I can't think of a particular point in time.

Mr WHITELEY - I think we can discover that for you, if you like, minister.

Mr BARNETT - My CEO might be able to assist, because it's clearly an operational matter and relevant to STT.

Mr WHITELEY - 11 November.

Ms O'CONNOR - Thank you, Mr Whiteley. Are you able to share with the committee what the key provisions were in the original contract with Ta Ann, and what liabilities the state has potentially been left holding? My understanding is there is a $40 million subsidy or allocation to Ta Ann, historically. What were the key provisions provided for in the contract with Ta Ann?

Mr BARNETT - Let's just clarify for the record, it was Monday 9 November in terms of Ta Ann informing the Government that they had made the decision to consolidate their operations and focus on their Smithton mill. They reiterated their commitment to continue operating in Tasmania in the long term.

You've asked about Government payments. The establishment of Ta Ann in 2007 was a culmination of a long process to attract new private sector investment in downstream timber processing in Tasmania. The Tasmanian and Australian governments provided significant financial support for the establishment of Ta Ann's mills. Tasmanian Government grants of approximately $10 million into the initial capital costs of the two veneer mills. Total investment was estimated at $79 million. An Australian Government grant of $7.5 million into the construction of the plywood mill at Smithton, and $26.5 million was paid by the federal government as compensation for 40 per cent reduction in logs volume, to offset the historical loss in the 20 years agreed volumes of supply, because the then Labor-Greens government tore up supply contracts as part of their failed Tasmanian Forestry Agreement -

Ms O'Connor - It's not failed.

Mr BARNETT - A policy that the Bob Brown Foundation wholeheartedly supported.

Dr Broad - They didn't.

Ms O'CONNOR - They didn't actually. You just misrepresented Bob Brown Foundation's position 100 per cent on the Tasmanian Forest Agreement, but good luck to you. I did ask you what were the key provisions.

Dr Broad - Do you want to correct the record?

Ms O'CONNOR - No, he doesn't correct the record, give us a break, Dr Broad.

Minister, I have asked you what were the key provisions provided for in the original contract? Did it contain, for example, default provisions or compensation provisions?

Mr BARNETT - That's clearly a question that's operation specific that I will have to ask the CEO to respond to.

I want to confirm for the record that some 40 per cent reduction in jobs as a result of the TFA, the Labor-Greens deal to lock up more of Tasmania, with some $26.5 million of taxpayers' -

Ms O'Connor - What about all of the jobs at Derby, the TFA-funded jobs?

CHAIR - Order, Ms O'Connor.

Mr BARNETT - money was expended as a result of that -

Ms O'Connor - You just talked about $80 million to Ta Ann.

CHAIR - Order, Ms O'Connor.

Mr BARNETT - agreement. With respect to the particulars, I will pass to the CEO.

Ms O'CONNOR - That is bare-faced dishonesty. Is there anything you can tell us, Mr Whiteley?

Mr WHITELEY - Anything in terms of our business, clearly that's different from a lot of the set-up contributions from the Government. We have a wood supply agreement; it has normal commercial terms. As I explained before, we're seeking to have that allocated to another party, so in that sense there would be expected to be no obligations. It's simply the transfer of a right.

In terms of the public land on which the facilities are billed, there are provisions through the Environment Protection Authority to do the normal environmental controls in terms of approvals. Anything that Ta Ann did would need to adhere with normal regulatory controls that are in place all through business.

Ms O'CONNOR - Chair -

CHAIR - You have definitely had three questions. The first one you thanked Mr Whiteley; the second one was a comment on the Bob Brown Foundation. You've just had a response then, Ms O'Connor, so yes I have taken notes. The call goes to Mr Street.

Ms O'Connor - It wasn't a question. It was a statement of fact about the minister not being truthful at the table again.

Mr STREET - She's keeping a good eye on you, Ms O'Connor.

Ms O'Connor - No, that's a complete miscount of my questions but good luck to you, Mr Bouncer, up the end of the table.

 

Ms O'CONNOR - Minister, before you were derisively talking about the Tasmanian Forest Agreement and the use of public money. I need to confirm your previous answer when you didn't answer my question. Are you saying that over the course of its time in Tasmania, Ta Ann has received more than $80 million in state and Commonwealth support? I heard the number that came from you was the original Lennon government contribution or subsidy of $10 million and then I heard a figure of $79 million, and then you talked about another $7.9 million, which I take it was a TFA compensation payment. What is the total level of Commonwealth and state support to Ta Ann over the 13 years?

Mr BARNETT - I will not respond to the derisive remarks you have made about my answer. However, I can clarify for the record what I said earlier so that you and the committee members are aware of the funding that has been made available in Tasmanian and Australian government support.

Tasmanian Government grants of approximately $10 million went into the initial capital costs of the two veneer mills. What I said then and say again now, the total investment was estimated at $79 million.

Ms O'Connor - Total investment from taxpayers of $79 million,

Mr BARNETT - No.

Ms O'Connor - From the company.

Mr BARNETT - I said Tasmanian Government grants of approximately $10 million into the initial capital costs of the two veneer mills and the total investment was estimated at $79 million in the two veneer mills. In addition, an Australian Government grant of $7.5 million into the construction of the plywood mill at Smithton and then $26.5 million was paid by the federal government as compensation for 40 per cent reduction in logs volume, to offset the historical loss from the 20 year agreed volumes of supply - because the then Labor-Greens government tore up the supply contracts as part of the failed Tasmanian Forest Agreement. I respect the fact that you have a different view to the TFA, but the Tasmanian people responded overwhelmingly in support of this Government's view to tear up the TFA and they overwhelmingly supported a majority Liberal Government as a result.

Ms O'CONNOR - Minister, did the state Government get any legal advice following Ta Ann's decision to leave its Huon mill? Was there legal advice provided by the Crown Solicitor's office about what the state's position is here, and whether there's any capacity for to draw back any of that money that came into Ta Ann from Australian taxpayers? Was there legal advice about the state's position following Ta Ann's decision to withdraw from Huon.

Mr BARNETT - I am sure that at the time the Government in power - state and federal government - would have undertaken due diligence with respect to an investment of taxpayers money.

Ms O'Connor - That's not the question.

Mr BARNETT - I am trying to answer the question and I am now being directed by the questioner on how to answer the question. I will answer it as I see fit, as the relevant minister in this committee.

In response I say that the Tasmanian Government and no doubt the Australian Government at the time, would have undertaken due diligence about spending taxpayer's money to support the forest industry in and around the time; which was 2007, some 13 years ago. You're asking a question about what a government did some 13 years ago, state or federal.

CHAIR - Ms O'Connor, you can ask one more question when the minister has finished his answer but you know very well it is the same here as it is question time in parliament.

Ms O'Connor - Where we never get answers.

CHAIR - You need to allow the minister to finish his response then you can ask another question.

Ms O'CONNOR - Chair, I understand that but he's either misunderstood my question or he's willfully misinterpreting it.

CHAIR - You can ask another question in a minute.

Ms O'CONNOR - I asked him if he had legal advice about Ta Ann now - not 13 years ago.

CHAIR - The minister is responding. I ask that you allow him to finish his response please. Thank you, minister.

Mr BARNETT - Are you talking about like specifically in the last weeks.

Ms O'CONNOR - As I said twice in my question.

Mr BARNETT - I am not aware of any legal advice that's come to me. Other parts of Government may have that - say, the Department of State Growth. It's nothing to do with Sustainable Timber Tasmania but you're asking me a question and I am willingly answering it. So, not to my knowledge within my purview but there are other parts of Government, and of course you should be free to ask other parts of Government at any time.

Ms O'CONNOR - Okay, can we get some clarity. That's interesting that you as a relevant shareholder minister confirmed that you're not aware of any legal advice being sought to protect the taxpayers interests here. You're normally so quick to hand over to Mr Whiteley or Ms Weeding and you weren't on that occasion. Can we get some clarity? I know you answered some questions from Dr Broad earlier about FTs role in canvassing for any other entity Is it an entity that would take over the contract that Ta Ann had or is it simply to take over the site?

Mr BARNETT - That's an operational matter and I'll refer to the CEO.

Mr WHITELEY - In terms of the contracts that we hold we seek legal advice about incidents like this. We have contracts in place. There are mechanisms within those contracts; clearly when events occur we seek legal advice as a matter of course.

Ms O'CONNOR - This time?

Mr WHITELEY - Yes. For our contracts that we hold.

Ms O'CONNOR - Specifically in relation to the Ta Ann mill? Was there specific legal advice sought about the Huon withdrawal?

Mr WHITELEY - Once we were notified, we certainly sought legal advice from the lawyers that we deal with in terms of the contracts that we hold and the provisions that are contained within those contracts. We normally do in terms of administering a contract.