Image for Forestry Tas: Devoid of commercial purpose

Having recently spent time in the library doing research I came across this little piece of forest history that might interest some readers. It clearly demonstrates the abyss that exists between forest industry and political rhetoric in Tasmania, and the painful and costly reality we continue to endure.

In the light of recent events around the dire condition of the State budget it is very relevant.

The 1994/95 Forestry Tasmania Annual Report was the first annual report produced following the corporatization of the former Forestry Commission. As such the new organisation was keen to define its new identity and role. The Annual Report provides the following:

Mission Statement
Forestry Tasmania’s business is the sustainable production and delivery of forest good and services for optimum community benefit.

No mention here of commercial intent or profitability. Never mind. This mission statement is then followed by:

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There were three other business directions dealing with markets, sustainable forest management and community support, but my interest is with the commercial management of Forestry Tasmania.

Just a few comments about these noble objectives. As many TT readers will know, I believe that forestry is a commercial business. Producing timber for sale is all about meeting market demand and making a profit. Just ask any private tree grower. So I am perfectly happy with the above objectives and goals; Forestry Tasmania should have been run from day one as a profit-driven business. But it was not.

In my opinion this is one of the major causes for the demise of the forest industry in Tasmania.

As a curiosity I wonder what happened to the Profit Improvement Plan? Was it ever written? And what about the competitive bidding? I don’t remember that ever seeing the light of day. Two very good ideas that never eventuated.

And as for the “expected outcomes”. Clearly reality never came close to achieving these lofty commercial goals.

Despite a worthwhile beginning the commercial management at Forestry Tasmania gradually reverted back to the wasteful, unfocused public service model.

Over the years Forestry Tasmania’s commercial goal posts were continually moved and shrunk until by 2003/04 these commercial objectives and performance criteria were reduced to:

Objective

Improve profitability

Goals

• Growth in sales quantity;

• Improve price structure;

Any business owner or economics 101 graduate knows that increasing sales by itself does not lead to increased profitability. It can in fact lead to the opposite outcome. As to what “improve price structure” means or how it contributes to improved profitability the annual report provided no details.

There is nothing measurable or quantifiable here. Clearly by 2003/04 the commercial goal posts had become opaque.

Finally by 2012/13 after just 20 years Forestry Tasmania now has NO commercial objectives or performance criteria at all. NONE!!!

A Government Business Enterprise with no interest in money or profits.

In fact the word “profitability” appears only twice in the 2012/13 Stewardship Report:

The Directors wish to acknowledge government underwriting, which enabled the business to keep operating. While every effort will be made to return to profitability as quickly as possible, it is highly likely that Forestry Tasmania will continue to require government support for some time to come.

And,

The URS business review highlighted ongoing trading difficulties for the organisation for the foreseeable future. The Government response was built on the bedrock of ongoing support for Forestry Tasmania and the industry, along with changes to ensure we maintain our focus on the need to restore profitability at the earliest possible opportunity.

“Every effort” and “maintain our focus” clearly mean ensuring the complete absence of commercial focus or anything commercially quantifiable. No Profit Improvement Plan this time around, just a blatant acknowledgement that the Tasmanian taxpayer will have to continue to cough-up. Those ever-generous Tasmanian taxpayers.

What the URS business review of Forestry Tasmania actually found (if you bother to read the document) is that under various scenarios tested, there were no foreseeable circumstances under which Forestry Tasmania could ever become profitable in the future.

Please read that last sentence at least twice so it sinks in.

Money means nothing to an organisation devoid of commercial purpose and immune to starvation and bankruptcy. This is a pretend business wasting taxpayers’ money giving away public assets to a pretend industry.

Forestry Tasmania’s own annual reports clearly document the decline in vision and practice over the past 20 years. And all of this gross mismanagement is seeking to gain FSC certification as if good forest management has nothing whatsoever to do with business.

If it’s not good business how can it be good forest management?

Remember also that Forestry Tasmania competes in the marketplace against private tree growers and farmers who do not have perpetual access to taxpayer subsidies.

In the interests of Tasmanian taxpayers, farmers and the broad Tasmanian community I think it is time for us all to stop pretending.

It is time to stop this game of pretend forest industry.

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