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Treasury – Forestry Subsidies


Cassy O'Connor MP

Cassy O'Connor MP  -  Monday, 23 November 2020

Tags: Forestry Tasmania, Subsidies

Ms O'CONNOR - Page 332, State Growth. My first question is, why was the community service obligation in the last financial year $2 million higher than through the out-years? Do you agree that $8 million for basically operating costs for Forestry Tasmania is a subsidy by another name?

Mr GUTWEIN - No. You are well aware that Forestry Tasmania has a range of commercial activities and a range of non-commercial activities. It is the non-commercial activities that are funded.

Ms O'CONNOR - What is the extra $2 million in 2019-20? Maybe Mr Ferrall has this information, but you are a shareholder minister, so -

Mr GUTWEIN - From memory it was $12 million stepped down to $10 million, stepped down to $8 million in terms of the business.

Ms O'CONNOR - It would be good to have some information on the record about this because it is a mine trap.

Mr FERRALL - There is a note in last year's budget papers which showed the improved outlook for STT in terms of the CSO, so it dropped $10 million in 2019-20 to $8 million each year in forward Estimates, and as was indicated last year, the CSO was reduced on the basis of an improved financial outlook.

Ms O'CONNOR - For clarification, Chair, and through the Treasurer, is that an indication that Forestry Tasmania inexplicably is more profitable?

Mr FERRALL - Yes.

 

Ms O'CONNOR - Treasurer, we were talking earlier about Forestry Tasmania's community service obligation, which we regard as a subsidy by another name. The secretary of Treasury and Finance and you indicated that you believed Forestry Tasmania is in good financial shape. When you go to table 5.9 in the General Government Revenue section of the Budget papers -

Mr GUTWEIN - Which Budget Paper are you in now?

Ms O'CONNOR - This is Budget Paper No.1, page 93. In the last financial year, the projection of the dividend that would be paid by Forestry Tasmania was zero dollars and then the actual payment from FT was $2 million dividend. Then it is projected that there will be a $2 million dividend from FT in this financial year, but you will notice that the three forward Estimates years flatline, so there is no projected dividend from Forestry Tasmania. How do you reconcile that? That tells us that Forestry Tasmania is costing taxpayers and it is not contributing. How do you explain those flatlines in the out years for an entity which is allegedly turning a profit?

Mr GUTWEIN - Correct me if I am wrong, secretary, but the CSO was 12 and then we stepped it down to 10 and now we have stepped it down to eight over the forward Estimates, is my understanding.

Sustainable Timber Tasmania is doing more of the heavy lifting regarding its own CSO, but that CSO as I have indicated, the business has two separate parts: one is a commercial arm and the other is where it maintains many of the reserves around the state that people access on a regular basis. So it has a role in supporting the community.

Ms O'CONNOR - Any opportunity to get information on this entity, we will grab.

Mr FERRALL - If the Treasurer is happy I can provide some comments on the dividend.

Mr GUTWEIN - I am happy to read the section here:

Sustainable Timber Tasmania has been in a financial position to consider paying dividends again since it reported a profit in 2018. The board recommended dividend payments of $2 million in both 2019-20 and 2020-21 and discussions are currently underway with the company regarding appropriate dividend policy going forward.

Ms O'CONNOR - Do you believe that Forestry Tasmania will be paying a dividend? It looks like Treasury's belief is that it will not be in a position to pay a dividend, which is why there are three flatlines in the forward Estimates.

Mr GUTWEIN - I indicated that discussions are under way concerning the dividend policy, moving forward.

Ms O'CONNOR - It will still be costing the taxpayer, we know that.

Mr GUTWEIN - There are non-commercial aspects of its business. You have to concede that.

Ms O'CONNOR - Sure, but what does it actually cost?