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Resources – Forestry Contracts

Cassy O'Connor MP  -  Thursday, 8 June 2023

Tags: Native Forest Logging, State Budget

Ms O'CONNOR - Minister, are you able to confirm that the contracts to which Dr Broad refers, which expire in 2027, were not negotiated on a cost-recovery basis, that is, that the subsidies to the native forest logging industry are embedded in the contracts?

Mr ELLIS - My understanding is that the negotiation for those contracts far preceeds me as minister. Obviously, matters around contracts are a matter for STT. We will, of course, have government business scrutiny in this place in about six months' time, towards the end of the year. We don't have any STT staff here in the room and as I mentioned, we're more than happy to work through that -

Ms O'CONNOR - That's interesting and thank you, minister. I'm not sure you can have it both ways because you said in your previous answer to Dr Broad, and paraphrasing you here, that you're working closely with the industry and sawmillers, so you as Minister for Resources are having discussions with industry players, presumably in part about these contracts which are heavily publicly subsidised and end in 2027. Wouldn't you agree you do have some line of sight to the subsidies in those contracts?

Mr ELLIS - Are you asking me about specific contracts that have already been signed?

Ms O'CONNOR - No, are you not listening? I'm asking you not about specific contracts. I’m asking you about the contracts to which Dr Broad repeatedly referred, the contracts that expire with sawmillers for supply to 2027.

Mr ELLIS - So you're talking about future contracts?

Ms O'CONNOR - No, I'm not.

Mr ELLIS - Because Dr Broad is asking about future contracts.

Ms O'CONNOR - I'm not going to reinterpret Dr Broad's questions but that is not exactly what he was talking about. I'm asking -

Mr ELLIS - Was that what you were talking about, Dr Broad?

Dr BROAD - I was talking about a renegotiation.

Mr ELLIS - Exactly. So future contracts.

Ms O'CONNOR - I'm asking you to confirm that within those contracts that expire in 2027, they're not negotiated or set on a cost recovery basis, that is, the subsidies to native forest logging are embedded in those contracts which effectively give away a public resource at a loss to Forestry Tasmania and the people of Tasmania.

Mr ELLIS - The first point to make, Chair, is that it's a completely incorrect assertion. Sustainable Timbers Tasmania has made a profit for the last five years and that's available -

Ms O'CONNOR - Do you want to tells us about that $8 million annual subsidy you give to them?

CHAIR - Order.

Mr ELLIS - And I know that Ms O'Connor doesn't want to listen to the answer because it hurts because her narrative has been around the unsustainability of forestry in a financial and environmental sense when it's actually the complete opposite. This is one of the most sustainable industries there is and financially, STT has made a profit for the last five years. We've done a significant body of work under this Government to get STT back into a sustainable financial position. The restructure of STT has been a big driver behind that. Of course, Ms O'Connor mentions community service obligations that STT provides. STT manages our landscape across Tasmania, particularly the 812 000 hectares of permanent timber production zone for multiple uses. That could include beekeeping, that could include tourism, for example, our Blue Derby mountain biking, that has actually-

Ms O'CONNOR - Point of order, Chair. I think if we could just help Mr Ellis understand your ruling earlier, which was to be relevant to the question. He avoided the question, which was, 'Can he confirm there are subsidies imbedded in those contracts?'

Mr ELLIS - Yes, so, as I mentioned, STT has made a profit for the last five years and -

Ms O'CONNOR - You should have made them sell their plantations.

Mr ELLIS - They made a profit for the last five years. It's a complete Greens fallacy to say that it's an unsustainable industry, because it's financially and environmentally sustainable. We make sure that we manage for multiple uses. Another great example is the fact that STT are one of our three -

Ms O'CONNOR - Point of order, Chair, again. It was a straightforward question. The second time I asked it, all I said was, 'Can he confirm that the subsidies are imbedded in those contracts?'

CHAIR - I will ask that the minister is relevant to the questions that are being asked, otherwise I'll hand the call back for another question to be asked if the question is not going to be answered.

Mr ELLIS - You can ask as many as you like, but as I mentioned, it is a complete fallacy to say that they are operating at a loss. They have made a profit for the last five years. It's available in their annual report, which, I assume that you have read. We are talking about a financially sustainable industry and an environmentally sustainable industry. They are one of our three key -

Ms O'CONNOR - You still have not answered the question.

Mr ELLIS - fire response agencies. They are operating across that land.

Ms O'CONNOR - You have not answered the question.

CHAIR - I think we will move to the next question, Ms O'Connor.

Ms O'CONNOR - Minister, as a principle, following up on the question from Dr Broad, when FT has to renegotiate those contracts, do you agree they should be renegotiated on a full cost recovery basis?

Mr ELLIS - As I mentioned, we will have GBE scrutiny later in the year and we will have -

Ms O'CONNOR - I asked you about the principle. The principle.

Mr ELLIS - STT people in the room for that GBE scrutiny into STT -

Ms O'CONNOR - Well, thank you, minister. You know that is a really gutless answer because it is a policy position that would be decided by government, and you are not prepared to say at this table that you think those contracts should be on a full cost recovery basis.