gunns feels misled

Gunns blazing on compo NICK CLARK | August 19, 2011 12.01am


GUNNS Ltd and the State Government exchanged insults yesterday after Premier Lara Giddings made it clear the maximum compensation for the timber company ending native forest logging was $23 million.

In an extraordinary attack Gunns managing director Greg L'Estrange accused the Government of misleading the company during the forest peace talks.

The decision could affect Gunns's ability to develop the Bell Bay pulp mill, he said.

The attack came after Ms Giddings appointed a probity auditor to look at compensation, and criticised the company.

"I recognise that for many in the community there is little appetite for payments of any kind to be made to Gunns, especially amongst the workers affected by the company's decision to exit native forest harvesting," she said.

"I have sympathy for this view."

Mr L'Estrange labelled the auditor move as a non-decision.

"When the Intergovernmental Agreement was announced Ms Giddings said it would take seven days to resolve the financial outcomes," he said.

"It has now taken two weeks to reach what is essentially a non-decision."

Gunns has sought up to $106 million in exchange for exiting native forests and has had its shares suspended for a fortnight awaiting clarity on the issue.

There was no word on lifting of the suspension yesterday.

"We feel misled. We were asked to take part in a process to end the 30-year conflict over Tasmania's native forestry.

"We were encouraged by all of the [forest peace talks] parties to stay in there with the explicit understanding of funding for a smooth transition out of native forestry.

"We chose to stick with an open, collaborative process and now it appears that we are being punished for that."

Mr L'estrange said he would like to remind the Government that a decision to exit the native forest industry was directly linked to Gunns's ability to bring the Bell Bay mill project to a reality. Gunns has less than two weeks to make a substantial commencement to the pulp mill before permits lapse.

It is understood that no earthworks tenders have been let and there have been reports on both sides of Bass Strait in the past week that Gunns is behind in payments to timber companies.

The Premier said that the probity process would include discussions with Gunns over a sum of more than $25 million that Forestry Tasmania claims it is owed by Gunns.

Compensation to forestry workers and the setting aside of up to 430,000 ha under the $276 million agreement cannot proceed until the Gunns issue is settled.

Ms Giddings said it was hoped an outcome could happen within two weeks.

Ms Giddings said the Intergovernmental agreement could collapse and that Gunns could go back into native forest if no agreement was found.

Liberal leader Will Hodgman said the Premier should abandon the agreement rather than pay money to Gunns for contracts voluntarily given up.

"In her haste to appease the Greens, Ms Giddings has agreed to lock up at least 430,000 hectares of production forest without first having back in her hands the wood supply contracts from Gunns she needed in order to take those forests out of production," he said.

Greens forestry spokesman Kim Booth said the Greens supported the appointment.

Also yesterday a four-page report from Professor Jonathon West, which was the basis for the decision that 430,000 ha could be set aside without affecting logging contracts, was tabled in the Senate.