Gunns drawn over State compensation deal
Fri 21 October 2011
Sharon Wright, Bachelor Journalism USC
Timber giant Gunns Ltd and the Tasmanian State Government remain at loggerheads over the compensation deal offered in the recent bailout agreement.
After 12 months of negotiations between forestry industry representatives and environmental groups, the Government said the purpose of the Tasmanian Forests Intergovernmental Agreement (TFA ) was to support the failing timber industry and its workers, and to guarantee the protection of an extra 430,000 ha of Tasmania’s native forests.
The Statement of Principles was brokered by former Australian Council of Trade Unions secretary Bill Kelty.
Neither Forestry Tasmania nor Gunns Ltd sat at the negotiating table.
The TFA was signed off on August 7, 2011, by Tasmanian State Premier Lara Giddings and Australian Prime Minister Julia Gillard.
Gunns Ltd and the Tasmanian State Government were still in negotiations over their share of the $A257 million bailout package.
The deal was struck to pull the state-owned Forestry Tasmania and its biggest customer, Gunns Ltd, out of financial ruin.
Gunns Ltd posted a $A355.5 million loss in the 2010-11 tax year.
Forestry Tasmania posted a $A12.09 million loss in the same year.
In a recent Australian National University report by research fellow Dr Jacki Shirmer, it was found that the Tasmanian timber industry had suffered a massive economic downturn over the last three years, resulting in over 3,500 forestry workers losing their jobs since May 2008.
Forestry Tasmania community liaison officer Tony Scott said the main reason for this loss of revenue was due to the high Australian dollar.
“We used to export the majority of our timber to Japan, but the tsunami and high exchange rates have priced them out of the market,” Mr Scott said.
“New markets are now emerging in China but they are hard negotiators and are very price conscious.”
In an announcement to the Australian Stock Exchange on August 25, 2011, Gunns Ltd attributed their massive loss in part to restructuring costs incurred from the company’s decision to exit the native timber industry.
Gunns Ltd chief executive Greg L’Estrange said “the results for the year reflected a business in transition”.
Gunns had also had substantial capital tied up in the highly controversial Bell Bay pulp mill in Tasmania’s Tamar Valley.
The company had spent over $A200 million to date on infrastructure to get what they claimed to be “the world’s greenest pulp mill” up and running.
Gunns claimed that when the mill was in full operation it would create 3100 new jobs and would contribute $A9.9 billion to the Gross State Product.
However, local environmental and community groups continued to protest against the hazardous effects the mill could have on air and water quality.
The influential Australian Greens party and Environment Tasmania publically denounced its approval by the State government.
In a statement earlier this year, the Australian Greens Deputy Leader Senator Christine Milne suggested that Gunns Ltd and the State government were engaged in underhanded dealings.
“The Greens remain opposed to the proposed Tamar Valley mill. No wallpapering over the cracks now will hide the corrupted approval process and lack of social licence for the mill,” Senator Milne said.
Gunns also recently came under public scrutiny over selling off the Triabunna pulp mill to environmentalists, Kathmandu founder Jan Cameron and Wotif? executive director Graeme Wood for $A10 million.
Liberal Party Senator for Tasmania Eric Abetz said The Greens were heavily involved in the Triabunna deal.
In a recent parliamentary speech Senator Abetz claimed that Greens Leader Bob Brown, personally negotiated the deal in return for a donation of $A1.6 million to his party by Ms Cameron and Mr Wood.
Regardless of any murky politics that could be at play in this issue, Tasmania’s forestry industry remained in financial trouble and the livelihoods of timber workers and their families were at risk.
Tasmanian Wilderness Society campaign coordinator Vica Bayley said the TFA was a landmark negotiation between forestry workers and environmentalists, and showed that the two groups could work together.
“For the agreement to work it needs to be targeted. Probity needs to be high and all parties need to be contributing to solutions to act and assist the change,” Mr Bayley said.
Forestry Tasmania said they need to claw back 130,000 ha of the 430,000 ha currently set aside for protection to fulfil their contracts .
To ascertain how Tasmania’s forestry industry could continue to operate under the conditions in the agreement, the State commissioned Australian Innovation Research Centre director Prof Jonathon West to identify areas for potential economic diversity.
Forestry Tasmania’s Tony Scott did not think tourism was the answer.
“There is plenty of wilderness here in Tasmania, 47 per cent of the State is already protected, an extra 5 per cent is not going to bring any more tourists here,” Mr Scott said.
Gunns Ltd was due to sign the compensation deal on Friday September 2, 2011.
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Submitted Comments
Clever title! Well written article.
Lauren