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Treasurer – Sustainable Timber Tasmania CSO

Dr Rosalie Woodruff MP

Dr Rosalie Woodruff MP  -  Tuesday, 7 June 2022

Tags: Forestry Tasmania, Treasury

Dr WOODRUFF - Thank you. Treasurer, I have some serious questions about the community service obligations Treasurer's instruction. Number GBE 13-114-04. That instruction was written in 1996 and according to the Treasury website it has never been reviewed. Can you confirm whether or not this is the Treasurer's instruction through which Sustainable Timber Tasmania's community service obligations is determined and managed?

Mr FERGUSON - Thank you, Dr Woodruff. I appreciate your raising that issue. It seems like a very dated Treasurer's instruction and I will ask my advisers here to assist me with that and to support the Committee appropriately.

Dr WOODRUFF - According to the Treasurer's website, it hasn’t been reviewed but if you could confirm that.

Mr FERRALL - GBE 13-114-04 - that is still the current Treasurer's instruction.

Dr WOODRUFF - So that makes it 26 years old, I think, so various elements of that instruction suggest that it was meant as a sort of transitional measure, including key dates in 1997 by which certain actions were to have taken place and there are consistent references to the reform agenda of the time. Treasurer, do you agree that this is overdue for a review?

Mr FERGUSON - Thank you for the question, Dr Woodruff. I am not personally familiar with every Treasurer's instruction in detail, particularly one that has not been brought to my notice for a while. I am looking over the Secretary's shoulder at this particular one, and I can see -

Mr FERRALL - Are there any particular aspects of the Instruction that you believe need to be reviewed?

Mr FERGUSON - And I am sorry, I would like to finish before you asked that question which we are not supposed to do, but I will just say, just because of its age, does not necessarily mean that it is outdated. But I accept that with the passage of time, perhaps there might be elements that could be contemporised, and as the Secretary was suggesting if you have any ideas that we could respond to we are happy to take them on board.

Dr WOODRUFF - The question was, do you think it is time for a review after 26 years?

Mr FERGUSON - I do not, because I do not have any evidence in front of me that there is a problem with it, but if you or others would identify issues that you feel are not working well for the state's interest then there is an opportunity to raise that with me. There are many Treasurer's Instructions and some are changed quite frequently like our 'buy local' Treasurer's Instruction. But ones that perhaps are as old as that might indicate that it is serving its purpose quite well. You or others might argue that it is out-of-date.

Dr WOODRUFF - Okay, I will point to some issues. Does STT have a contract for its community service obligations? If there is a contract does it have key performance indicators? What are those key performance indicators and how is Sustainable Timber Tasmania reporting to, and performing against, those KPIs in this Budget?

Mr FERGUSON - I am advised that we should ask for some time to respond to that and provide that to the committee. If I can do it during the day I will.

Dr WOODRUFF - Okay, do you want me to write those down?

Mr FERGUSON - Do you want to read out the questions you would ask and I will take them on notice?

Dr WOODRUFF - Yes thanks. It is whether we have a contract for the community service obligations? Whether the contract has KPIs? What the KPIs are for, and how STT has performed against those KPIs in this Budget?

Mr FERGUSON - Okay. I am happy to take all of those questions on notice. That last one sounds like there is an element of subjectivity to it. I will take them all on notice and answer them as best I can. I feel that it is likely that we will be answering them in writing to the committee, but there is possibly some other advice here. I am happy to take them on notice -

Dr WOODRUFF - Thanks.

Mr FERGUSON - unless there is something coming forward. Do you have something? Again, I am advised we should take it on notice. Is that okay? Are there any follow up questions on that that I might be missing?

Dr WOODRUFF - When you said 'something about this Budget', I would have thought that community service obligations would have a financial impact on the Budget and therefore there ought to be some sort of reporting to each budget, so that is why I asked the question about how they have been performed against for this Budget. It costs STT - it is a CSO so that means by its name there are obligations to do things. The things are presumably costed, they have a value, it should part of the Budget. So, we are looking at what are the KPIs and what is the cost or value to the Budget?

Mr FERRALL - Through you, Treasurer, just going back one step, and again it does not address the question in terms of this being some 26 years old, but we were looking at this particular Treasurer's Instruction prior to COVID-19 and we put that aside whilst we were doing various other things through COVID-19, so it is on the list to be reviewed and looked at.

In terms of STT, I think there are three requirements under its CSO, I am just checking whether there is a specific explicit contract in place or whether there is effectively letters of agreement in place, but I just need to check that. We will be able to give you - I am just checking on the agreement.

Dr WOODRUFF - Okay. It is great that we have these little devices.

Mr FERGUSON - In the interests of time for the committee, if I have something more I can say during the session, I will; but I'm happy to take it on notice and provide the committee with a written answer.

Dr WOODRUFF - Thanks. I have a follow up question on that. Just to be clear, from what I understood you said, the community service obligations (CSO) of Sustainable Timbers Tasmania (STT) are done through a Treasurer's Instruction. It's not some other part of Government that has provided this?

Mr FERRALL - The Treasurer's instruction provides the guidelines around the CSOs and they provide a framework for entities to apply for a CSO and for them to be considered by the Treasurer and ultimately funded. In some cases, as you would be aware from the Guidelines, they can be an unfunded CSO as well. It provides that framework in respect of the CSOs. Part of Treasury deals with the CSOs that we are responsible for, and we would negotiate, with STT in this case, in relation to those specific activities under the CSO.

Dr WOODRUFF - Thank you. Minister, could you tell me whether there other CSOs that are held by GBEs, and the number of them that are funded by GBEs as well as the number that are funded in part, or in full, by the public account?

Mr FERGUSON - Yes, there are quite a few there. I will invite the secretary, if he can, to provide a verbal answer. We would like to come back to that, if that is okay.

Dr WOODRUFF - Can we come back to that in this session?


Dr WOODRUFF - Treasurer, the community service obligations again. The GBE CSO Treasurer's Instructions were developed after COAG agreed to a range of National Competition Policy reforms and the purpose of them was to enable competitive neutrality. In other words, the granting of CSO funding is meant to occur when a GBE is required to undertake community services that its competitors are not required to undertake. The funding of a CSO is then effectively a grant from the State to undertake non-commercial activities.

In the case of STT, Sustainable Timber Tasmania, the CSO is for land management, fuel reduction and fire prevention, we understand. These are in fact functions that all forestry operations have to undertake under their Forest Practices Plan, and the additional requirements of the Fire Service Act 1979, and the Fire Service (Miscellaneous) Regulations 2017. Treasurer, do you admit that the CSO for STT is therefore a subsidy and operates contrary to those principles of competitive neutrality and against the Treasurer's Instruction for GBE CSOs, and against the National Competition Policy?

Mr FERGUSON - Thank you Dr Woodruff. I would not be prepared to agree to the request or the suggestion that you offer. I am aware of where you are coming from. I understand the nature of the question. If Mr Ferrall can add to the answer I am very happy for him to do so, noting that we have said to you that we feel we should do the work and obtain that information on notice for you in relation to the previous questions. I am not sure if you have anything to add at this moment. I am happy with the discussion if you wish to continue with it.

Mr FERRALL - By way of comment, the CSOs have moved on somewhat since the National Competition Policy. You are correct in terms of that was part of that framework and the agreement that was put in place at that point in time. In terms of how we negotiate or work with entities in respect of CSOs, they do have to provide support or evidence in terms of why they would require or request a CSO, and so we work through that. We also have discussions with entities in respect of their particular request for a CSO, whether that would be an activity they would perform if they were in the private sector. So, in relation to something like fire management, it is recognised that STT as effectively a commercial forester, would be providing some form of fire management in event anyway. The CSO is more or less an additional component to it.

In respect to STT, it relates to hazard reduction burns, provides assistance with hazard reduction burns co-ordinated by other state entities. That is at the request of the Government for the whole of state purposes so it goes broader than just its own land management area that the corporation would not undertake as part of its commercial or 'good neighbour' activities so it actually is, as you indicate, that there is a base level that it would undertake as part of its commercial or 'good neighbour' activities but the broader component of hazard reduction burning of the CSO is funded because it goes wider than that net.

Dr WOODRUFF - Treasurer, can we have a copy of the CSO contract with STT?

Mr FERGUSON - We can. At least, I am advised to take it on notice, the direction that you were reading from.

Dr WOODRUFF - I've already asked a question and put on notice about KPIs and whether they're in that contract. Are there KPIs?

Mr FERGUSON - I am advised to take it on notice. There is a bundle of questions here. I am not avoiding the question.

Dr WOODRUFF - Sorry. I want to ask another question and I already asked if there are some KPIs. You don't have to talk about them now, you will provide those details. What Mr Ferrall just said separates out the work that STT should anyway do itself. The CSO is in relation to work it wouldn't be expected to do. Is that figure considered to be proportionate? How is that arrived at?

Mr FERRALL - I couldn't tell you that, unpacking the calculations and how that works for the CSO side. I can't tell you if it's proportionate or not. I can indicate there is a component that it is accepted that they would be doing but I couldn't comment on the proportion.

Dr WOODRUFF - And I already asked you about how many other GBEs have got CSOs. Did you say that I could take that question on notice?

Mr FERGUSON - Yes, sure.