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Treasury - Forestry Tasmania

Cassy O'Connor MP  -  Monday, 6 September 2021

Tags: State Budget

Ms O'CONNOR - Treasurer, I want to talk about the financial viability of Forestry Tasmania. I am in the Policy and Parameter Statement in Budget Paper No. 1, page 52, that talks about income tax equivalents for Forestry Tasmania. It would be good to have your take on the financial viability of Forestry Tasmania. I note somewhere else in the large Budget Paper is the $2 million per annum community service obligation payment to Forestry Tasmania.

In a number I have not rediscovered yet, the state expects to receive no dividend from Forestry Tasmania from 2023-24 to 2024-25. Is that correct?

Mr GUTWEIN - I would have to look at the corporate plan but Sustainable Timber Tasmania -

Ms O'CONNOR - No, that is not its real name. According to the ASX, it is not its real name. It is just the Australian Stock Exchange. 'Aw, well' it all you like.

Mr GUTWEIN - Sustainable Timber Tasmania, I don't have the most recent dividend payments, but they have been providing around $2 million a year.

Ms O'CONNOR - That is what you have been paying, at a minimum.

Mr GUTWEIN - Over the forward Estimates, there is Sustainable Timber Tasmania in concert with industry and the Government. As we continue to transition, the industry will be providing support in ensuring that where we can move to milling plantation timber and where we can deal with smaller logs, those sorts of things, that we will be partnering with industry to ensure that that transition can continue. I hope that is something you might support. I know that -

Ms O'CONNOR - Most certainly, but you need to hurry up with it.

Mr GUTWEIN - Sustainable Timber Tas, from memory, will be providing about $5.2 million towards that program.

Ms O'CONNOR - Can we have some certainty on that number? The question related more to what kind of dividends, if any, the Government expects to receive from Forestry Tasmania, which you describe as Sustainable Timber Tasmania, and your view on its long term viability without substantial subsidisation?

Mr GUTWEIN - I don't believe it will need long term financial subsidisation. You would be aware that we've separated the commercial aspects of that business and its land manager role. It manages significant amounts of forests that it doesn't harvest and reserves as well. We'll continue to support that business in its land management role as we build the commercial side of the business.

My understanding is that there is an expectation that over the forward Estimates Sustainable Timber Tasmania will provide about $5 million in direct support to the industry as part of the transitional process. I'm not expecting to receive dividends while it delivers that program.

Ms O'CONNOR - Can I just unpack that number, Chair. So, that's $5.2 million that comes from the commercial arm of STT, yes? Is that right?

Mr GUTWEIN - Yes. Rather than providing a dividend, in the last two years Sustainable Timber's paid $2 million a year. We're not forecasting a dividend in 2021 22, 2022 23, 2023 24 as a result of that business providing support through that other process.

Ms O'CONNOR - Can you explain what that $5.2 million will be spent on?

Mr GUTWEIN - It will be used to ensure the industry can transition. I don't have the full details of what that program will look like but I'd expect -

Ms O'CONNOR - Do you mean transition out of native forest logging?

Mr GUTWEIN - Many in the industry are now starting to look at plantation based -

Ms O'CONNOR - Which is what the markets want.

Mr GUTWEIN - To look at plantation based. As the industry evolves, bearing in mind we have contracts to 2027 and a legislative requirement for native forest harvesting of cubic metres being provided to the industry, STT will work with its customers and its partners to invest and to ensure that transition can occur.