taxpayers to pay for pulp mill?-lol

It is bad enough with large local councils,now we seem to have a state run lottery government,that has been exposed at least with Hansard,to the detriment of the Australian Taxpayers,and the defacto regulator of finance the reserve bank,say nothing of the slush fund for this financial fiasco that is about to be blessed BEFORE June 30



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Hansard error: The explosive revelations

Hansard Error. Nick Clark, Mercury. 16.06.11 12:17 pm

Partial transcript from In Camera session of HA hearings last week.
Mr L?ESTRANGE
- There are certainly many lost opportunities. If you look at the creation of the hardwood plantation estate in this State, I think the Federal Government has contributed $500 or $600 million to create 50 000 hectares, the most expensive plantation in the world?s history.

CHAIR
- Which ultimately means you don?t have a snowflake?s chance in hell of getting an industry that is going to survive if it relies on public money to put it in in the first place.

Mr L?ESTRANGE
- Yes, that?s my view

? Thursday, Nick Clark, Mercury: $10m forestry row exposed

AN administrative blunder has exposed a $10 million dispute between Forestry Tasmania and its biggest customer Gunns Limited.

In a mistakenly published Hansard transcript of in-camera evidence, Gunns managing director Greg L?Estrange said Gunns disputed $9.8 million of $15 million that FT billed it on April 30.

He told a parliamentary committee Gunns acknowledged just $2.2 million of the claim which dated back to 2008-09.

The dispute revolves around a take-or-pay clause in a 20-year Long Term Pulpwood Supply Agreement for the Bell Bay pulp mill signed in 2007.

FT believes that the take-or-pay provision of the contract specifies that Gunns pay if it takes less than 85 per cent of the contracted 1.5 million tonnes of pulpwood a year until 2027 - whether it takes delivery or not.

When it was signed in 2007, former premier Paul Lennon said timber products would be worth $200 million a year more under the deal.

It is understood Gunns does not believe the contract is valid.

Mr L?Estrange said the issue could end up in commercial arbitration.

In other revelations, Mr L?Estrange:

Accused FT of establishing the ?most expensive plantation in the world?s history? and said it should get out of plantation.

Said FT was selling sawlogs to Gunns? competitors at a 10 per cent cheaper price.

Said FT ?overcharged us $5.4 million for China volume?.

Agreed punishing Gunns was part of the reason FT charged Gunns higher rates.

The latest revelations come on top of a bitter standoff between FT and Gunns over softwood supply to the Bell Bay sawmill.

FT managing director Bob Gordon recently told the committee the company was owed a total $40 million but he would not reveal by whom, saying it was a publicly listed company.

Both firms have significant financial pressures with FT having been furnished with a letter of comfort by the State Government in February and Gunns having to repay its bankers $55 million by the end of June.

Of the $15 million claimed, Mr L?Estrange said $5 million was due to FT on normal trading terms while $9.8 million was in dispute.

Since the LTPSA was signed in 2007, Gunns has announced it would use only plantation timber in the pulp mill rather than native forest.

It also said it would quit all native forest operations, leaving a cloud over the LTPSA which runs to 2027.

Mr L?Estrange said FT had spent $500-600 million to create 50,000ha of plantation - ?the most expensive plantation in the world?s history?.

And he said publicly earlier in the same hearing that FT was the most difficult forestry company in Australia to deal with.

In response the next day, Mr Gordon described Mr L?Estrange?s behaviour as bizarre.

Committee chairman Kim Booth said it was a parliamentary error.

?I was shocked to discover that the transcript had been published by Parliament and I understand that steps have been put in place so that it never happens again,? he said.

Comments (24)

Gunns have benefited massively from FT?s shonky dealings and the government money: are they biting the hand that feeds, or banking on FT?s imminent departure?

Posted by salamander on 16/06/11 at 01:03 PM
?CHAIR
- Which ultimately means you don?t have a snowflake?s chance in hell of getting an industry that is going to survive if it relies on public money to put it in in the first place.

Mr L?ESTRANGE
- Yes, that?s my view?

Then why oh why do you and our Governments persist in this farce?

Posted by Russell Langfield on 16/06/11 at 01:33 PM
I strongly object to the publication of any information given under the assurance of Parliamentary confidentiality, no matter what the circumstances.

So much of the problem with the Forestry debate is associated with lack of trust in our Parliamentary process, and manipulation of information by Government agencies.

This kind of ?scoop? only further undermines public confidence in our Parliament. I take no pleasure from seeing it here on TT.

The leakers/oversighters should be severely plugged.

Ben Quin

Posted by Ben Quin on 16/06/11 at 03:41 PM
The leakers/oversighters should be severely plugged.

Ben Quin

I thought there was legislation being put into place top protect whistle-blowers?

These are OUR assets and OUR tax money and the future of OUR forests that is being discussed. Why the hell does it have to be done in secret when all the politicians prate about transparency?

I am personally of the opposite opinion - everything should be open and aboveboard. I?m sick of secret deals and the way this government tries to conceal everything that is of an inconvenience to them. Why shouldn?t we know what?s happening. We are not children. Some of us would like a little honesty for a change!

Posted by Barnaby Drake on 16/06/11 at 05:25 PM
Re #3
Excuse me, Ben!

I think any information showing that the CEO of a loser business, trying to squeeze a few hundred million or BILLIONS of dollars more out of the public, believes that he is in a dead-end business SHOULD be made public!

Posted by Russell Langfield on 16/06/11 at 06:37 PM
Re #3
How can you possibly say that ?public confidence in our Parliament? could be any further undermined?

Posted by Russell Langfield on 16/06/11 at 06:39 PM
#3: What is so objectionable, the publication of the information, or the information itself?

It seems to me that the Lib/Labs operate with a degree of honesty, openness and transparency of which the average Third World dictatorship would be most approving. Under the circumstances, leaks should be welcomed if the people of this state are to have any idea of what is really going on. It is not the leaker (assuming this revelation was not a simple oversight)who shows disdain not only for democratic processes but also for the very notion of democracy, it is the government itself.

In my opinion, there is little reason to regard the government of this state, and its multitude of agencies (such as certain GBEs), as little more then a kleptocracy, aided and abetted by such inducements to corruption as the ?commercial-in-confidence? pretext for keeping the public in the dark while who knows what is going on behind the scenes (or under the table). It would be interesting to know how many modern, honest democracies elsewhere regard this ?commercial-in-confidence? rort as even legal.

It was announced in today?s budget that some 1700 public service jobs and 20 schools, among many other things, are to go. I wonder what those targeted by these cuts feel about the alleged profligacy of FT?

Posted by RJ Peak on 16/06/11 at 07:27 PM
L?Estrange placed himself under the protection of our Parliament and our law. He was betrayed by both.

I stand by what I said and am further dismayed by the lack of understanding of the issues at stake by those who seek to reprimand me here.

Ben Quin

Posted by Ben Quin on 16/06/11 at 09:16 PM
3; I understand the point you are making Ben, however, isn?t the lack of trust to which you refer a result of business being done ?in confidence?.

After all this is our State, our Government (sob!) and our resources. Why is this stuff being done ?In Camera? in the first place?

Posted by Steve on 16/06/11 at 09:39 PM
I can?t help but find myself in agreement with both Steve #9 and Ben #3 & #8.

Far too much information regarding public assets is held back for the thinnest of ?commercial in confidence? type excuses. I think this has had the effect of undermining public confidence in both the institutions managing public assets and the companies seeking to profit from them.

However, once a person is given an assurance that his evidence is ?in camera?, to betray that trust is appalling. Apart from being morally bankrupt, it means that the next time someone is giving evidence ?in camera? they are likely to be less forthright with sensitive information.

I notice the article states it was an administrative blunder. I accept people make innocent mistakes. I truly hope that is exactly what happened here.

Posted by Alpal on 16/06/11 at 10:33 PM
It has been disclosed that the 20 year Wood Supply Agreement signed by Gunns includes a take- or-pay clause specifying that Gunns pays if it takes less than 85 % of the contracted 1.5 million tonnes of pulpwood a year until 2027 - whether it takes delivery or not.

If Gunns now wishes to leave native forests due to lack of a market for its woodchips then the take-or-pay clause would presumably require them to pay 85% of the contract cost for 1.5 million tonnes annually for 20 years. Given the conservative estimate of a delivered price of $15 per tonne, this would amount to $382 Million over 20 years.

To allow the take-or-pay payments to be waived by cancelling the wood supply agreement would in effect be giving Gunns $382 Million, an extremely generous ?compensation payment? for exiting native forests. Any suggestion that they are also due for a possible huge ?compensation? rort from the Federal Government appears to me to be nothing less than obscene and would amount to a taxpayer funded gift towards their stinking Pulp Mill.

Posted by Tamar Devil on 17/06/11 at 12:01 AM
Small wonder Gunns and FT seem to be on the way out when they can?t even get their invoicing straight.

Right or wrong I?m not sure, but its interesting to see what goes on behind closed doors isn?t it?

Posted by Dave Groves on 17/06/11 at 05:45 AM
Ben, I understand your point, but submit that the revelations should be prompting a call for a royal commission where the naughty people can be compelled to speak by a theat of a spell away from the pleasures of home.
Where do you stand on that issue.
There comes a point at which we must decide whether we have a system of governance worth having, or whether we need to start building a new one.

Posted by Simon Warriner on 17/06/11 at 08:08 AM
I agree that information given in camera should be kept confidential.
I do have a problem with what information meets the requirements of being given in camera.
We need governance for the people, we don?t need a nanny or parent relationship which we seem to have now.
We are not children, we don?t need our parents to protect us from the truth or hard facts. I don?t trust the people that are in parliament to make proper decisions on my behalf. Parliament is just another section of the Bread and Circus paradigm, they see themselves as actors.
The only evidence that should pass as suitable for ?in camera? are cases such as whistle blowers or public servants who may be villified for telling the truth.

Posted by Pete Godfrey on 17/06/11 at 08:34 AM
I have no problem with the revelations of the infighting between these 2 rogue operators, I wonder if their annual reports will give some detail to the legerdemain (slight of hand) going on between (2) arguably the most environmental destructive and financially deficient State Forest logging and looting outfits?
For many years Gunns Ltd were happy with the miniscule charges for Forestry Tasmania harvested (pillaged?) logs, now that both are in dire financial strife, the fighting and blame-tossing is screeching loudly from their former crafty back-slapping liaisons, as more dirty doings are being disclosed. (Albeit via the leakage of in-confidence parliamentary privileged circumstances?)

What is recognized, is that as a by-product of the present disputes by these (2) former allies is the level of chicanery that had been introduced into their dealings?
Now where are and why are the meticulous kept records of these events that will support either of these (2) operators log of claims? claim of logs? (sic)

The amusing climax to these allegations by both of the State?s (2) biggest bullies, will be the recorded informational facts if kept by either antagonist?
Now what are those sounds I hear in the background, is it the echoing beat of war-drums, or the soft beginnings of sweetly sounding Violins rising from the distant valleys?

Posted by William Boeder on 17/06/11 at 09:23 AM
If I correctly understand the wood supply agreement, Gunns signed a deal for what it considered to be a very good deal.
Putting this deal into something that I can understand, If I took a 20 year lease on the building that my business rents, an extremely good deal for myself but things changed, I should be able to relinquish my rental agreement and my landlord compensate me for doing so.

Posted by max on 17/06/11 at 10:15 AM
Re #8
L?Estrange (or more to the point, Gunns) has placed himself/itself above any and every legal process in Tasmania, even to the point of drawing up their own legislation.

Ben, The ?issues at stake? is the corruption of our state, its economy and laws.

These are OUR assets, OUR money and OUR Government, Ben.

Re #10
Something of this nature should never be ?in camera? in the first place.

Posted by Russell Langfield on 17/06/11 at 10:33 AM
I agree with Ben (#8) that the information should have been kept confidential.

Now that the cat is out of the bag, a take-or-pay agreement is serious. Just look at the mess the Government has got itself into over the Duke Energy gas pipeline where, presumably, they also have a take-or-pay agreement. Hence the rush to role out retail gas, the push to have the pulp mill which would be a large gas consumer, the need to have Aurora buy the Alinta gas power-station.

If the liability this agreement entails is added to Gunns? liabilities, the company looks very, very fragile indeed. More to the point, to my knowledge this potential liability has never been mentioned in any stock-market releases or in Gunns? accounts. Surely this is market relevant and the potential liability disclosed?

Posted by Andrew Wadsley on 17/06/11 at 10:44 AM
In principle I agree with Ben that an agreement should be honoured, but with our democracy being constantly undermined, our resources frittered away, our infrastructure in disrepair and finances appallingly managed, we are justified in feeling some delight in receiving a piece of honest assessment from a company that historically has not dealt honestly with us.
A scoop like this seems to be the only way to get the truth.

Posted by salamander on 17/06/11 at 11:11 AM
This issue cuts to the core of our vision for the future of Tasmania and how we will achieve that vision.

Tasmanians have lost confidence in Parliamentary process. Gidding?s budget is not worth a zac; nor is any political vision, policy, convention or law, if it is not carried transparently through the Parliament, and implemented with the moral weight of democratic agreement.

I have been a constant critic of the decline in the standards of Parliamentary process. I strongly believe that our Parliament has been subverted - a captive of narrow vested interests, tainted with the presence of Members of questionable ethical standards and riddled with the disease of opaque process. I trace this decline back to the decision to reduce the size of Parliament in 1998.

Release of information given under a Parliamentary guarantee of confidentiality is inexcusable. It simply proves that the guarantee of the Parliament on any issue is worth nothing. Thus the spiralling descent in public confidence continues.

A vision for the future of Tasmania cannot be nurtured in these conditions. No-one trusts anyone. Trust is the nucleus of vision.

Had I been the Premier-Treasurer, the first line of my budget speech would have been that Tasmania was setting aside funds in the forward estimates for the restoration of the House of Assembly to 35 Members. The second announcement would have been to provide immediate funding for a commission of enquiry into events surrounding the passage of the PMAA. I would have taken both these steps to demonstrate a commitment to the restoration of trust in the Parliament. Then I would move to the vision thing, including a frank statement about forestry and it problems. Then the hard lines about cutbacks necessary to get us over the bridge to the vision.

Instead, we have just passed a week where nothing has changed, even with the Giddings terror budget and the ?explosive Hansard revelations?. And in three years, Tasmanians will still be wandering aimlessly along, arguing with each other, still broke and broken.

Ben Quin

Posted by Ben Quin on 17/06/11 at 04:22 PM
Re #16
Well actually, max, I think the real-life situation is that your landlord would legally make you pay for the lot for breaching your contract.

The same surely applies to Gunns for breaching their contract with FT (ie: the people of Tasmania).

Look out! NAB has come in to make a quick kill on GNS shares. Surely, this is market manipulation?

Posted by Russell Langfield on 17/06/11 at 05:23 PM
Normally, claims to commercial confidentiality in dealings with government need to demonstrate that it is more important to the functioning of a democratic society than the public?s right to know what their servants are doing with their money.

This doesn?t apply, however, in a kleptocratic theme park.

John Hayward

Posted by john hayward on 17/06/11 at 07:04 PM
#21. Russell, I am inclined to agree that some form of enforcement to (for example: the early cessation of real-estate leases and whatever other contractual arrangements may be contained therein,) but back to the Forestry Tasmania contracted log supply agreement, is that it may contain specific clauses and or written in references to penalty payments or percentile charges as compensation for non compliance and or refutation to such stated undertakings, and or the non adherence, failed performance etc, of said signed contracted log supply for whatever term.

In other words I would suggest that Gunns Ltd may be answerable to Forestry Tasmania, maybe as to the non-performance, or abject failure to uphold their contracted rates of delivery?s, maybe even the lack of advices given by Gunns Ltd in view to their own initiated choices in producing such changed circumstances?

No doubt there will be a conveyancing solicitor ready to jump upon my assumptions here, then so be it.
So, as to this disputed matter even coming up before parliament, other this may be a strictly civil matter, but for the prior involvements or even meddling by State ministers, in this logging industry imbroglio, there will be a big winner or alternatively a big loser, more definately there will be one of each.

Private enterprise disputes do not really have a place in parliamentary proceedings, though this is Tasmania with its notorious Supreme Court topsy-turvy judgements and its quirky sentencing practices.

Posted by William Boeder on 17/06/11 at 08:26 PM
20; The problem is Ben, that most of us have concluded that any guarantee of parliament is worthless on any issue. It?s a long time since I?ve seen any principle operating in the Tasmanian parliament that goes further than staying in power.

Posted by Steve on 17/06/11 at 09:47 Pm


















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