Image for Over to you Mr Nikolic ...

In the small town of Scottsdale the loss of more than 300 jobs in a community of 7000 is virtually the kiss of death.

This was the blow dealt by Gunns when it moved its softwood milling operations to the FEA sawmill at Bell Bay and closed the Scottsdale mills - with little or no community consultation.

My history of this site commences in 1978 when Mr W R Moore was contracted to investigate the underlying geological problems regarding timber mill sites near Scottsdale.

New locations for timber mills and timber yards owned by G & K French Pty Ltd at Scottsdale and Ling Siding have to be found in the near future. A new type of sawmill saw recently installed at Ling Siding requires good foundations, preferably with the machine bed founded on competent rock.

The problem at the mill was that Ling Siding was set on tertiary clay and the engineers would not guarantee the new machine bed foundation beyond five years.

The new high-speed multi-blade breaking-down saw required very stable foundations with a concrete machine bed founded on competent rock.

Moore suggested that because of the problems existing at the Ling Siding site a new mill site should be chosen outside the confines of the Scottsdale tertiary basin.

G & K French sold the mill site to Auspine from whom it passed to Gunns Limited who operated a softwood sawmilling plant at Ling Siding until early 2011.

A fleet of log trucks

The firm of Samjack Pty Ltd owned a fleet of log trucks. Samjack comes to public attention when the company came before the Tasmanian Industrial Commission in 2003 regarding the Samjack Enterprise Agreement between the firm and their full-time log truck drivers.

In 2007 Samjack Pty Ltd was taken before the Anti-discrimination Tribunal regarding images portraying naked and semi-naked women, of a nature degrading to women displayed on the sides of nine log trucks owned by the company. The case was dismissed.

Samjack, a company owned by Noel Gerke and his wife Yvonne, started with a single truck delivering gravel; by 2010 the fleet consisted of 28 specialised logging trucks. Apart from running a traditional trucking business Samjack was also a vehicle manufacturer designing and building a special log truck trailer.

The majority of its fleet was Cummins diesel trucks, each of which would take a payload of approximately 28.5 tonnes;  and on designated air bag routes an extra four tonnes.

They were fitted with on-board scales to aid safety in truck loading and the firm moved more than 400 tonnes of timber per truck per week.

Prior to the TFA the company had an annual revenue of $2,536,920 and employed a staff of about 35 people; the firm being established in 1988.

Gunns Limited, in a complex deal, was about to acquire the FEA mill at Bell Bay (in October 2010)

Gunns promptly announced to the ASX that it would close the Scottsdale Ling Siding softwood sawmill within four months and dispose of the complete on-site inventory and assets regardless of whether Gunns acquired the FEA mill.

Gunns had assessed the softwood sawlog volume available to the Scottsdale mill combined with the mills operating cost structure as unviable, both in the short and long term, the whole being unsustainable as a continuing business.

This badly affected Stronach Timber Industries of Scottsdale, owned by the Brill family who wished to relocate their business to the Gunns’ site and grow it as a regional timber hub.

The family attempted to purchase the Ling Siding site from Gunns’ receivers, KordaMentha for the purpose of a value adding. Mr Brill would not disclose his bid price but stated that the site would need an amount $1.5 million in rehabilitation costs.

The receiver KordaMentha had instructed GraysOnline, auctioneers of industrial equipment, to sell the plant on the 23rdMay 2013. The Brill family do not appear to have applied for, or had access to public money, for this proposed acquisition.

Prior to Gunns going into receivership ...

The family subsequently leased the site from Gunns and Michael Brill tendered in evidence to the Select Committee on Scottsdale Sawmills (appointed 17 November 2010) with a Report in 2013 that they had worked with Auspine and Frenchpine as an outsource contractor for Gunns at the Ling Siding mill in April 201; employing 34 extra people.

Mr Brill made the following submission in relation to the operation of Stronach prior to Gunns going into receivership:

We went and managed the mill for Gunns at Ling Siding. It had been painful going through that process ... we were a very loyal contractor fortunately or unfortunately; we ended up losing $520,000 dollars at the end of the day.

The Dorset Mayor, Barry Jarvis, testified to the same committee:

... the Scottsdale sawmilling industry had a turnover of around $90 million per year with wages to the community of $13.5 million … this is purely the impact of this resource going out of the area.

To the same committee Mr Greg L’Estrange, CEO of Gunns, in-camera noted:

… if you create an industry that cannot compete the natural outcome is that you will lose jobs  to which the Chair of the committee asked him, ‘which is directly as a result of the source? L’Estrange replied that is an outcome of their strategy to date be it of the joint venture or whoever.

The problem was indeed over the ‘source’ of the pine logs and access to Forestry Tasmania’s pine forests.

This involved a deal with Auspine/Gunns over state forests resulting in the move to Bell Bay and the demise of FEA - a complex matter outside this essay - but it meant that sawmilling in Scottsdale was doomed from 2010.

Pine logs were still being taken to Scottsdale from 2007 - 2010 under a highly-subsidised regime paid for by Forestry Tasmania to carry out minimal processing for purposes of contract, namely taking a couple of faces off the sides before they were then taken to Bell Bay.

In a corruption of due process that kept the trucking subsidy from Strahan, King and Flinders Islands,  the logs were merely unloaded on to the ground and reloaded at Ling Siding on another truck the following day.

The sale of the pine plantations by Forestry Tasmania to overseas interests for $45 million (of which Lennon took $40 million for the State)  was a highly complex transaction that engendered enormous losses within Forestry Tasmania.

Evan Rolley, then FT CEO, should, in my view,  have been sacked from FT for allowing this transaction, which ripped out its financial heart.

The two brothers - Robin and Noel Gerke - signed contracts to purchase the Ling Siding site from the Receiver of Gunns in September 2013.

Exiting the logtrucking business ...

Noel exited his logtrucking business under the Contractors’ Voluntary Exit Grants Program. From details provided by Freedom of Information requests, Forestry Tasmania listed all forestry contractors employed by Forestry Tasmania in the year 2011/2012 and a list of all forest contractors after the exit package had been approved.

Samjack Pty Ltd does not appear on the latter.

Noel Gerke’s log truck company received $2.2 million in grant funding to exit the Tasmanian Public Native Forest contracting sector in March 2012. However the company is still registered with ASIC and has an active ABN &ACN number.

It could be suggested that this exit money in part purchased the Gunns Ling Siding site of 3.785 hectares with settlement on 11/11/2013 for $420,000, a site which was then about to be sold to Dorset Renewable Industries. Non-completion by Dorset was due to the non-arrival of a promised $2.8 million Federal Government grant. This grant was to be received under the Tasmanian Jobs and Growth Plan promised by former Prime Minister Kevin Rudd under the TFA.

The Examiner of December 19th 2013 noted that:

… although the incoming Federal [Liberal] Government has confirmed that the grant is available it has made it conditional for a value-for-money test stated Mr Hamilton of Dorset Renewable Industries…. the paperwork we need to complete for the value-for-money tests reads very much as if we are actually applying for the grant from scratch.

Mr Hamilton said:

he would contact Bass Liberal MHR Andrew Nikolic for his support … and continued while Robin Gerke has been positive, productive and helpful in our discussions…. No reasonable person could expect him to wait forever while the status of our funding continues to be uncertain.

An odd comment when the Gerkes had only paid for it a month before.

This week we have a Federal Government grant of 3 million (not $2.8 million) announced by Bass MP Andrew Nikolic to fund Dorset Renewable Industries in the purchase and developmentof the Ling Siding site:

This 3 million funding package will see the purchase of the former Gunns sawmill at Ling Siding Scottsdale and its restoration for timber processing.

Mr David Hamilton of Dorset Renewable Industries states:

… the purpose of our project is to purchase most of the site from a local businessman and restore it for industrial use… …he was confident that the project would achieve its aims of restoring an important timber processing facility…

Doomed as a sawmill or wood-processing plant ...

Gerke RG & SD are now in the sand, soil and waste management business in Scottsdale but from the above will retain part-ownership of the site.

With a past history as detailed I would suggest that the site is doomed as either a sawmill or wood processing plant.

This begs the question:

Why has Nikolic gifted this money to a private company; does he have the right to access this money with no TFA and who is actually going to benefit, Scottsdale, the Gerke family or Dorset Renewable Industries. Is this a case of political largesse?

The public deserves to see the reasoning behind this transaction as PB notes in comment 14 of Witch- hunter Barnett ( )

The using of public funds to purchase a site apparently by negotiation rather than open market tender directly on behalf of a private company amounts to malfeasance.

Over to you Mr Nikolic.

If you are in the mood and this is all legal and above board, can I have a gift of $3 million of taxpayers’ money to expand Bentley Farms?

I will put up a very deserving case.