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An open letter to the Shareholder Ministers of Forestry Tasmania, 

                              THE TREASURER AND THE MINISTER FOR ENERGY AND RESOURCES

The Legislative Council Government Administration Committee ‘A’, chaired by the Hon. Ruth Forrest MLC certainly highlights some rather interesting facts regarding the ongoing viability of Forestry Tasmania.

In part their report states under findings:

                                “ The Committee is concerned about the ongoing viability of Forestry Tasmania.

                                The following findings are made from the evidence obtained during the course of the Inquiry.

                                a.  The shareholder Ministers are the Treasurer and the Minister for Energy and Resources;

                                b. It is not mandatory for Forestry Tasmania to publish an interim financial report;

                                c. Forestry Tasmania is to be commended for publishing an interim financial report,
                                    however the report released by Forestry Tasmania and considered by the Committee
                                    was inadequate and not in accordance with AASB standards.

                                d. It was difficult to obtain concise information from Forestry Tasmania about their
                                    operating cash flow position;

                                e. Forestry Tasmania provided an expected cash deficit position of $3.156 million for the
                                    first six months of the 2010-11 financial year;

                                f. Forestry Tasmania’s operating cash position for 2010-11, as reported in the 2010-11
                                  financial statement is recorded as a deficit of $12.117 million.

                                g. Forestry Tasmania requires a minimum operating cash flow of $20 million to cover capital
                                    expenditure;

                                h. Forestry Tasmania provided the committee with a general indication of the steps being
                                    taken by them to address the decline in their cash flow position through cost savings measures.
                                    They failed to confirm their strategy of how the decline in cash flow would be addressed in terms
                                    of the growth and development of their business;

                                i. The strategies employed and the measures taken to reduce spending are unlikely to be adequate
                                  to generate a positive cash flow position in the short term;

                                j. Cost savings should flow from the closure of the Mersey District;

                                k. TCFA funds appeared to have been used to fund ordinary operations.
                                    These funds will need to be repaid at some stage in order to fund the remaining TCFA obligations.
                                    Given the current state of Forestry Tasmania’s operating cash flow, it is unclear how this will be
                                    achieved;

                                l. In trying to understand the TCFA funding in the context of Forestry Tasmania’s profitability,
                                  the committee was unable to determine with confidence the accuracy of the accounting for the
                                  TCFA funds due to inconsistency in the reported figures provided to the committee by
                                  Forestry Tasmania, in its Annual Reports, and reports of the Auditor General.
                                 
                                m. Funding to meet the statutory CSO costs was provided by Government until the 1998-99
                                    financial year;

 
These findings from this report go on through the letters of the alphabet, passed z. and on to cc., all in the same sad vein, raising question after question.

The Auditor-General estimated that Forestry Tasmania had utilised $2.965 million of TCFA funds for operating expenses outside that agreement, which would need replacing at a future date.

Then, in in 2010, however, Forestry Tasmania,s finances encountered trouble, (Really! the brackets are not part of the report)

There was a decrease in operating revenue from $182.952 million in 2008-09 to $162.277 million in 2009-10 and return on assets decreased from 1.1% to 0.3%.. Essentially, Forestry Tasmania was generating negative cash from it’s operating activities, a situation the Auditor General described as ‘not sustainable’.

Can the Treasurer and the Minister for Energy and Resources, given the information contained in this report, tell our taxpayers that Forestry Tasmania is truly solvent, or if as has been suggested, they have applied a hands-off approach to the financial performance issues facing Forestry Tasmania, and don’t know?

Do we have anyone in our government ranks with the expertise to form a viable and sustainable business around the timber industry, without needing to over harvest the existing resources available?

How many extra hospital beds would the $110 million set aside for contingency was used to provide for people on waiting lists?

How did the people responsible for the running of this government entity allow Forestry to fall into such a sorry state?

Stay tuned, there is more to come!

• FORESTRY’S STEALTH CAMPAIGN TO LOCK UP THE FORESTS
Another Blatant Attempt to Undermine the IGA

Kim Booth MP
Greens Forestry Spokesperson
Monday, 28 May 2012

The Tasmanian Greens said today that Forestry Tasmania was attempting to undermine conservation goals of the Forests Intergovernmental Agreement by aggressively locking in and extending supply contracts in defiance of the both the IGA and whether the volumes are actually available.

During a Budget Estimates hearing today, Greens Forestry spokesperson Kim Booth MP queried the Minister about a Greens Right to Information Request which had revealed that Forestry had been pursuing a strategy of radically extending its pre-existing contracts, which is in breach of the terms of the IGA.

“Forestry Tasmania is attempting to lock up the forests with a strategy that involves signing lengthy supply contracts for wood that may not even exist, to prevent any areas going into reserves on the basis that contracts must be met,” Mr Booth said.

“Despite the IGA clearly stating that no new timber contracts can be signed until the conservation objectives are met, Forestry Tasmania has been aggressively signing contracts and the Minister was today unable to rule out that they are on new terms.”

“Minister Green admitted that this could force the State into the position of having to buy back some newly renegotiated supply contracts at great expense, confirming that this is a blatant attempt by Forestry Tasmania to hold the taxpayer to ransom.”

“Given that voluntary saw miller exit packages will soon be opened up, Forestry Tasmania has now locked the Minister into the outrageous position where public bailouts are required for contracts that should never have been signed in the first place.”

“The evidence for this is in mid 2011, just before the IGA was signed, the number of timber supply contracts held by Forestry Tasmania which exceeded 15 years was just one.  By the end of the year, it was 12.”

“It is an obvious attempt by FT to undermine the ability to deliver conservation reserves by over-allocating timber supply even when there is no market demand for that volume.”

“At a time when public money is being made available for the buyout of sawlog quotas, specifically for the purpose of reducing the over allocation of native forests, Forestry Tasmania is trying to block this inevitable change by locking them up for logging.”

“Forestry Tasmania has seen the writing on the wall, and it’s clear that they plan to either sabotage the IGA or if necessary the Minister to achieve their ends.”

“Forestry Tasmania has gone rogue and this wilful act to undermine government policy, is just another example of why they should be wound up,” Mr Booth said.