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Feb 2005 - public plantation sell off to break the corrupt subsidy to forest woodchippers

Backgrounders

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    This email below responded to an article the same day in the Daily Telegraph renewing speculation on a sell off by the Carr government.



    From: ecology action
    To:
    bensons@dailytelegraph
    Sent: Tuesday, February 15, 2005 1:49 PM
    Subject: support for conditional sale of NSW $1 billion plantation asset

    For the record this author strenuously opposed privatisation of the NSW electricity assets in 1997:

    - as a real essential service that should be in public ownership, unlike the plantation estate
    - which would lead to monopolisation effects at the expense of massively increased costs for poor consumers as happened in the UK. There is no consumer benefit in public operation of the plantation estate. On the contrary it will benefit the consumer to have plantation timber replacing native forest timber.

    This writer has also worked for various peak groups on forest conservation since 1992 including Total Environment Centre under Milo Dunphy, The Wilderness Society with director Karenne Jurd, and Friends of the Earth in Sydney, and represented the NSW Greens 1995-1999 at local government level.

    On reflection I do not find the objections of some in the green movement, though arguable, to be pursuasive particularly on the broader ecological strategy for reform of forestry in NSW given the 'land baron' trail of destruction in the hands of the State Forests in collaboration with the pro woodchipping NSW division of the logging union since at least the mid 1970's and even earlier.

    This author has no party affiliation for five years.

    Your truly,

    Tom McLoughlin, principal ecologya action sydney
     
    ...................................................................
     
    Backgrounder early 2005
     
    The traditional (and we say ignorant) opposition to sale of the public plantation estate (eg The Green Party) is that the private sector are less partial to environmental regulation in how they operate these plantations compared to the government. But that's a pretty hard comparative case to argue when the public sector does such as this below just over the border in East Gippsland in active collusion with the NSW Govt support for woodchip mill at Eden in NSW:
     
    http://www.green.net.au/quoll/forests/slender.jpg
    Picture: file picture taken from this website 
     
     
    And this again by the NSW Govt licensing at Badja, NSW South Coast:
     

    Then when you consider the logging of these public forests thus trashed are at a financial loss, dependant on the profitable plantation revenue to break even, then it becomes obvious the best way to cut off the money financing the vandalism is to remove the plantation asset out of the hands of the systemically corrupt state govt logging agencies. We say corrupt because they are effectively conspiring to transform public forest into plantation for private profit with or without actual land tenure using public revenue to keep their jobs in a loss making enterprise (native forest logging). Better to ban native forest logging altogether and transfer profitable plantation land tenure to private interests (at a healthy upfront price) subject to public environmental regulation just like every other agricultural crop and break the corrupt cross subsidy.
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    Press release follows:
     
    Media release 15th Feb 2005

    $1 Billion public plantation asset sale* supported with conditions e.g. ban on woodchipping of native forests

    Ecology Action (Sydney) renewed its call for the Carr govt to keep its infamous 1995 promise to end native forest woodchipping by the year 2000 [see quote below], which is already 4 years overdue, as part of any sale of public plantation assets. The green group also called for strict regulation of sustainability issues for any new private owner.

    Principal of EAS Tom McLoughlin with 15 years experience as a conservation forest policy analyst both in the office and on the front line said

    “Up until now NSW public ownership of plantations has not prevented the now 130 log trucks a day into Eden’s woodchip mill, or woodchipper at Tea Gardens on the central coast. This eco destructive activity by State Forests in collaboration with the pro woodchip logging union in NSW is a financial loss making exercise grotesquely cross subsidized by the profitable plantation side of the business. This positive revenue has propped up a corrupt State Forests bureaucracy, and NSW Forestry Commission before it, acting as a land baron with scant regard for the public interest.

    “To cut this gross subsidy by realizing the plantation asset, while allowing for strict sustainability controls and employment and fire management issues, will be a positive for the environment and the funding of NSW public services like health, transport and education.

    “Secondly, if the NSW government are going to sell off this massive public asset, significantly downgrading public control, it must do the right thing by the environment and also ban native forest woodchipping forthwith according to its 1995 promise. Surveys regularly show 80% of electors across the board support this reform.”

    “It is also far preferable that the new owners are strenuous competitors with the native forest sector. This is best served by a company with no commercial investments in the industrial native forest sector. Otherwise we will see bogus competition instead of head to head replacement of dinosaur wood production from old growth and native forest logging generally. This highly mechanized activity promotes fires, damage to water catchments, ferals, weeds and loss of biodiversity”

    Mr McLoughlin concluded.

    More: Tom McLoughlin 0410 558838, ecologya@telpacific.com.au, t. 02-9599 8499


    * Refer page 16 ‘Chip off NSW block’ story in Street Talk column, Australian Financial Review 17th December 2003 referring to

    “The NSW Government could be a whole lot richer after a final report from adviser ABN AMRO recommended the sale of its plantation forest assets. The bulk of the assets are pine plantations spanning 205,807 hectares, with a book value of $1.07 billion, and 30,000 hectares of hardwood plantations.”



    ** In March 1995 Bob Carr was elected on this promise and I quote: “We will end export woodchipping by the year 2000”.

    For more on the slide in Bob Carr’s green credibility over woodchipping and other green issues since the 1995 election refer to [this web page]

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    [Report and discussion paper dated 12/5/04]

    Privatisation of nsw plantations likely, disbanding of State Forests into other agencies critical, Green Party exaggerated ideology re non essential service? Possible sale conditions for domestic processing and other public concerns

    Tom McLoughlin, convenor ecology action Sydney 12th May 2004.

    The following is my report and now discussion paper after the event:

    Forum 11th May: Selling off NSW Timber Plantations
    6.30 pm Tuesday 11 May 2004
    [Waratah] Room, Parliament House, Macquarie St, Sydney

    Hosted by Greens MP Lee Rhiannon. Chaired by John Kaye, Greens NSW Lead Senate Candidate. Speakers: Dr Judy Clark, Forestry Expert, ANU, Craig Smith, Secretary, Forestry Division, CFMEU

    Comment re speakers and attendance

    The undoubted expertise of the first two speakers Clark and Smith was apparent with lots of statistics. The third speaker was Gerry Watt (tbc) the South East Forest coordinator for The Greens who was also good: Apparently retired teacher and organizer from the Teachers Federation with a good grasp of politics and economics though obviously ideological too. Gerry fully supports in principle opposition to privatization.

    Suzanne Russel, NSW spokesperson for the Greens on forestry and Ian Cohen proxy was in the audience as was 10 or so idealists from The Wilderness Society (TWS), general manager of Tumut council, Mayor of Tumbarumba, two councillors from Bombala. There were perhaps 30 people in the room – a good turnout and a hot issue.

    A cfmeu indusrial officer in the audience perhaps unwisely confirmed that ‘a cast of thousands’ of MP’s and ALP stakeholders were given a briefing on the privatization proposal of this ABN AMRO valued asset of a shade over $1B about 6 weeks ago and Gerry Watt said he had a copy of this ‘confidential’ report. TWS have said they understand it’s on within the next 3 months perhaps after the Federal election.

    I also noted the tone of voice of experience and indeed cynicism at question time of Russel regarding the anti conservation interests represented at the forum now cosying up to the Green Party in their quest for a unified anti privatization ticket similar to nsw electricity assets. Read below why that struggle is highly distinguishable. I noticed the seating arrangements of unionist with Rhiannon, and Russel quite separate. Rhiannon said Cohen was also anti privatization – I wonder. I notice Smith corroborated that there was no common ground on closure or relocation to Portland of SEFE/Daishowa. Smith also said the power brokers in the corridors of the ALP machine were thrashing this out right now.

    What they said

    First to say thankfully with all speakers the rhetoric factor was pretty low putting their strong points forward to a broad based audience. Rhetoric returned full bore in the question session.

    Judy Clarke unprompted promised to put her speech on the web – which web? Perhaps The NSW Greens NSW at: ….

    Craig Smith similarly said he would though again unclear how committed to this or where.

    All said they were against privatization [and TWS have similarly stated this as recently as Sat 8th May at campaigners forum Mystery Bay], though I still remain unconvinced and I notice another old head in the ngo conservaton movement seemed to agree with me there was an inordinate amount of special pleading as we walked away from Macquarie street last night. But why unconvinced? Read on.

    [also interestingly Tumut and Tumbarumba local govt Local Govt support signing of Kyoto for carbon credit trade.]

    : General economics and finances of nf woodchip cross subsidy

    As I heard and interpreted the speakers State Forests (SF) has 1.1 Mha as operational native forest land, with another 1.3Mha dedicated/informal reserves (Smith) with 207Kha softwood (sw) plantation (pl), 29Khardwood (hw) pl.

    That is 85Kha sw pl Tumut, 65Kh sw pl Tumbarumba, Monaro 35Kha sw pl Monaro (Bombala), Dorrigo 24Kha sw or hw?.

    Age classes of sw pl 0-14 yrs is 61Kha, 15-30 yrs 103Kha, 31 yrs+ 28Kha.

    But here is the fascinating information about sw pl cross subsidy propping up SF [and presumably the SF well known activities involving corrupt red neck empire building land control involving eco terrorism against forest fauna and conservationist defenders – end rhetoric]:

    Smith says its almost impossible to separate pl from native forest (nf) revenues on the SF balance sheet. Best estimates via Green Party (Kay, Watt) is $120-140 million revenue per year, and Smith says a [pitiful] $5M per year is paid to Treasury thus Kay asked where is this $120-140M going?

    [The clear implication is that its going to three places:
    - back into the hw pl establishment business
    - back into the sw pl business operational costs
    - cross subsidy of nf read woodchipping industry

    This third point needs to be teased out. The cross subsidy is basically funding for SF to control large tracts of land and regionally based equipment and all that implies for rural political influence re fire prevention etc. Ownership of plantation itself is not as socially influential across regions. Thus they can use plantation revenue which should be going into Treasury - to benefit all taxpayers -into their narrow policy games which include:

    - stealth conversion of nf to defacto hardwood plantation
    - ideological nf woodchipping (95% of trees in SENSW) with sawlog figleaf despite out competed by sw/hw pl

    Thus taxpayers collectively lose in several ways from SF ongoing control of 1.1Mha of operational nf (and probably higher given ‘informal reserves’ euphemism) re:

    1. onging loss of nf water catchment and biodiversity which properly belongs to all citizens. [This compounds the massive loss of environment from original plantation establishment in 1950’s onwards]
    2. large undefined fractions of sw pl revenue improperly directed to nf management and infrastructure and other costs means this income is lost to Treasury or even processing/ employment investment/development and landscape corrections in sw/hw pl estate. The irony is that money is directed to nf woodchipping for conversion to hw pl which must be exposed and stopped as corrupt, contrary to public interest.

    The best way forward probably is to break SF up as soon as possible and transfer staff to NPWS control or other agencies. This transfer will be necessary to keep up public service regarding fire safety and other matters of prime concern to communities and local government in those regions regarding social capital. However it is blatantly clear the objects of SF regarding nf wood production are now economically redundant thus failing to outweigh their dangerously contrary activities re water and conservation public interest and in fact involving siphoning off scarce funds for ethical pl industry and employment development in a bureaucratic survival strategy involving liquidation of a large chunk of our natural nf estate. ]

    Clark made some profound big picture points – the timber industry is the plantation industry (67% of all timber products plantation based). Plantation is mostly processed here and a big job generator unlike nf (read woodchips). From memory she said 80% of economic activity was pl 20% nf and thus ownership issue of the pl stockpile was more important than all the NSW Regional Forest ‘Agreements’ (RFA) put together.

    [By way of corroboration her graphs amplified the song I have been singing for ten years that plantations are the economic gorilla in the corner and were disgracefully ignored by the SE and NE RFA’s].

    Why is she against privatization? What I heard between shrill voices from the Chamber/corridors and voting bell was that in her view investment in processing is the main game for jobs and local economic benefits (I would like to check these points from her web posted speech).

    1. A sale now is the wrong time and means the buyer will export unprocessed logs or chips rather than increase and improve processing which is already very substantial (corroborated by Smith’s longish list of mills and plants).
    2. She said something about govt avoiding responsibility in processing investment (?)
    3. Also govt will lose chance to control policy over movement of loggers/transport workers etc from nf into a publicly owned industry.

    I tackle these points below. Smith similarly opposed privatization on the basis its wrong morally and debt in the nsw public budget is okay and will affect unionists with CFMEU, PSU, AWU. Local govt not on the speakers list said they would lose a lot of social services from SF if large chunks were privatized or it fell over.

    The ethical approach for conservationist non govt, non party political green groups focused on ecology.

    I can’t help noting that I have no knowledge of forest blockading or in situ forest activism of the two or three most prominent anti privatization Green Party representatives at the above forum ie Dr Kaye, Lee Rhiannon MLC or Gerry Watt. They clearly support forest conservation but probably have greater ideological commitment to public ownership/anti privatization.

    This author is also a member five years of the ASU too but with lots of forest activism.

    For green ngo’s as distinct from Party, why should conservationists care that the govt is not involved in pl wood business just as it is not appropriate for govt to run non essential industry sectors like beer, paint, food, cars, etc etc. This is not like the electricity sector and is not an essential service as such. A somewhat fraught resolution was passed at the south coast forest campaigner forum 8th May against privatization for which I too voted but the most experienced forest campaigners (say 5 of us) were mostly being diplomatic (re two wrongs don’t make a right) and were more committed to the resolution of restructure out of nf “regardless of ownership” also carried unanimously. I submit this latter remains the main game.

    Gerry Watt, SE Greens argues annual revenue (gross?) of $120-140M should not be lost as privatized windfall to corporates getting major profits after only say 10 years then forever. [I worked strenuously against privatization of the electricity sector in the late 1990’s which succeeded.] Yes there are public policy moral issues about loss of a great public asset, but what value is it when large fraction of the revenue is corruptly diverted to nf woodchipping land control/conversion agendas, and lost to reinvestment even in the plantation sector let alone the general budget of NSW? Frankly SF are siphoning the sw pl revenue into influence peddling that comes with large scale nf land control and destruction. The reality is revealed by the paltry $5M dividend to Treasury despite that massive annual revenue. Something is rotten here. At least with a divestment of the asset a large financial value is realized to the Treasury and the broad citizenry and the cross subsidy to nf woodchipping is broken.

    Gerry Watt also argues woodchipping increased in Victoria post sell off, but they didn’t have the 350 new national parks to foreclose on that depradation. But the point is well made. A sell off of sw/hw pl MUST include concurrent break up of a systemically corrupt SF control of public nf into other agencies.

    Smith/Union also counters that after sw/hw pl sell off the nf public estate would be next sell off. This doesn’t ring true as nf even in the hands of SF is critical public resource for water, biodiversity, recreation etc etc. That is a fight the public will win to keep its public forests distinct from non natural tree farms.

    Kay and Rhiannon and Greens generally argue loss of policy control means less chance of restructure of nf workers into a publicly owned pl sector. Sadly history proves this is wrong. Despite 50 years of plantation development no government has ever supported this overtly despite public ownership over that period, despite even Keating at one point saying this was the future and Button saying woodchipping is a “bastard”. History says they won’t support this though right without major change in political landscape like replacement of the social/political component of the SF function in regional and rual NSW. Which is quite do-able within govt umbrella.

    This concern MUST be dealt with by conditioning the sale to include mandatory redeployment of nf workers component on the buyer into that plantation sector.

    More serious objection to a sell off is Clark’s point that it’s the wrong time for job and local processing investment/development and that the buyer will realize new asset with low value export cashflow like whole log exports. This MUST also be subject of condition of sale regarding domestic processing and probably requires many kinds of industry, policy, legislative and economic measures and instruments that frankly are out of my league.

    Another important argument from Kay, Greens, is public ownership allows greater environmental policy control referring to sale of brown coal electricity generator in Vic leading to greater greenhouse and weaker political influence. However the argument is two edged. Govt financial interest in a sw/hw plantation may be a nasty conflict of interest. Witness Transgrid clearing of bushland along their transmission line in recent years. It may be govt less able to regulate in an even more direct corrupting financial influence than say political donations from corporates which at least are known for what they are. In other words there is no guarantee public ownership leads to better environmental performance. It still comes back to politics and public agitation and the law.

    Again any sale must be conditioned by serious environmental regulation concurrently and almost certainly legislatively post sale for ethical plantation management and with regional planning instruments as per recommendation of Commissioner Cleland into the Visy plantation and pulp mill Commission of Inquiry at Tumut for stage 2 of that project.


    Conclusion and strategy for green ngo’s

    Keep slamming the 1995 Carr promise to end nf woodchipping by 2000, 4 years broken. Carr must deliver to save his historical legacy and reputation on environmental policy. A former NSW MP Labor staffer asserted recently “Carr will go down as the worst premier in NSW history”. Not a pretty thought for any politician’s life work.

    Keep pushing for the above conditions to any plantation sell off for good public policy. At this point with these conditions privatization with concurrent break in the cross subsidy and disbanding of SF may well be in best interests of the environment.

    Alternatively done badly a wounded and smaller SF will escalate woodchipping like they did in Victoria with disastrous consequences for public nf over 1.1Mha (and probably more).

    Extract: Oz Forest & Woodland # 4 24th May 2004

    quoting Judy Clark, obscure prose demanding careful attention but important as Clark wrote the original academic study in 1990 proving there are adequate plantation resources to completely phase out native forest logging:



    "9. Privatization of the plantation economic gorilla in NSW.

    "OF&W criticize the Carr govt for failing to address the plantation sector in its forest conservation reforms in 1995-2000 period. Now with the $1 billion public asset on the chopping block in a cash needy state resource economist Judy Clark, an acknowledged expert on resource matters has written to say her paper can be found at:

    http://cres.anu.edu.au/people/clark.php

    and she adds

    “Whilst I concentrated on the eco[nomic] issues, I think there are important environmental issues for plantation ownership. In particular, the planting was pretty full-on over the 1960s to 1980s and some areas planted would not be planted today. After they are logged, it may be the land should be rezoned or subjected to specific management requirements. I'm talking in particular about steep slopes and water buffer zones and corridor linkages. These issues are just as important in the north as they are in the south, possibly more important. The process for making these adjustments (and keeping log volumes up - ie through productivity improvements on the next rotation and maybe replanting on more suitable land) will be MUCH easier if the plantations are in public hands.

    ”I was surprised about the comments on the native forest subsidy identification with privatization. If government wanted to know the extent of the subsidy, they could force this work. The issue is how would the NSW govt react with this information. I think some people are too quick in making conclusions - wishes - here. If they argue that the NSW govt would react in an economically rational way (ie lift native forest log prices and maybe close some regions), they need to explain why the NSW government is different to every other state government in Australia - even the WA government that is at the cutting edge of forest policy in Australia.”



    In response to Clark, OF&W has made some tactical observations evidencing public ownership does not guarantee good environmental management e.g. State Forests itself and the infamous Transgrid clearing episode in NSW not to mention financial conflict of interest of legislative and executive arms of govt. Her point on lazy accounting is valid calling up the dusty 1990 Public Accounts Committee bi partisan report into then Forestry Commission which report went the way of the dodo. As for differences in NSW [from other states who have done nothing to increase pricing in native forests]: Carr and his familiar refrain on greenhouse and 350 new national parks? But OF&W agrees to this extent that it’s a very arguable situation. Certainly Carr could retrieve an awful lot of bad vibes environmentally and generally by closing down the cronies in State Forests for good and cleaning up the plantation sector as the bright future for loggers in a sustainable landscape.

    ..................................

    The official state Govt position on privatisation of the public plantation estate is here, that is to corporatise only which surely is a prelude to privatisation:

    18/2/05... latest govt position to corporatise public plantations only

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