Ben Butler
The Age, January 31, 2011
Activists ramp up blitz on Reflex paper : http://www.theage.com.au/business/activists-ramp-up-blitz-on-reflex-paper-20110130-1a9si.html
A GREEN group has made corporate Australia its No.1 target, ramping up pressure on the makers of paper brand Reflex to stop using timber logged from native forests.
The Wilderness Society's battle with Australian Paper has already spilled over into cyberspace, with the company last week convincing internet giant Google to stop showing advertisements for the green group's ''Ethical Paper'' campaign.
Now the activists plan to target Reflex stockists including Wesfarmers subsidiaries Officeworks and Coles and new US entrant Staples, which took over Corporate Express last year.
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The green group is also considering taking legal action against Australian Paper under the Trade Practices Act, because a company website appears to endorse allegedly misleading facts created by state-owned logger VicForests.
Wilderness Society campaigner Luke Chamberlain said woodchips from state-owned native forests received a subsidy worth hundreds of millions of dollars, creating an unfair price advantage over plantation-sourced chips.
''It's not an even playing field here - this is corporate socialism whereby VicForests is acting as a middleman, handing over a public asset for private profit,'' he said.
''The question to Australian Paper is: why do we continue to rip out a public resource, extinguish a public asset, when there's perfectly good alternatives?''
He said his group had sent letters to corporate social responsibility officers at 2500 Australian companies and on Thursday began a phone campaign with the top 400.
Feedback from companies was ''incredibly positive'', Mr Chamberlain said. ''Obviously we're dealing with some of the major distributors of Australian Paper. They don't want to have environment groups on their back - they spruik their environmental credentials and I think their branding is potentially at risk if we target them.''
Wesfarmers, Australia's eighth-biggest company, already bears the scars of an earlier battle with the Wilderness Society. After a long campaign including embarrassing protests outside its Bunnings hardware stores, the chain switched from native to plantation wood.
The stoush flared up online last week, with Google pulling down Wilderness Society ads that appeared above search results for Reflex, after a complaint from Australian Paper.
The paper company, a subsidiary of Japan's Nippon Paper Group, has hit back with a website, ''Ethical Paper - The Facts'', saying more than half its fibre needs come from plantation timber and recycled paper. ''The remainder is sourced through VicForests,'' it said.
On Friday, the company, with 1200 employees, said it ''welcomes open discussion from all stakeholders'' about its performance.
31 January, 2011
Activists attack sustainability claim
Ben Butler
Sydney Morning Herald, January 31, 2011
ENVIRONMENTALISTS have made corporate Australia their number one target as they ramp up pressure on the producers of the top paper brand Reflex to stop using timber logged from native forests.
The battle between the Wilderness Society and Australian Paper has spilled into cyberspace: last week the company convinced Google to stop showing advertisements for the environmental organisation's ''ethical paper'' campaign.
Wilderness Society activists are planning to target Reflex stockists, including Wesfarmers' subsidiaries Officeworks and Coles and new US entrant Staples, which took over Corporate Express last year.
The organisation is also considering legal action against Australian Paper under the Trade Practices Act because a company website appears to endorse allegedly misleading fact sheets created by the Victorian government-owned logger, VicForests.
Luke Chamberlain, the Wilderness Society's Victorian forest campaigner, said woodchips from state-owned native forests received a government subsidy worth hundreds of millions of dollars, creating an unfair price advantage over plantation-sourced chips.
''It's not an even playing field here - this is corporate socialism whereby VicForests is acting as a middleman handing over a public asset for private profit,'' he said.
''The question to Australian Paper is why do we continue to rip out a public resource, extinguish a public asset, when [there are] perfectly good alternatives?''
He said the Wilderness Society had sent letters to corporate social responsibility officers at 2500 leading companies, and on Thursday began a phone campaign to follow up with the top 400 companies.
Fund managers will be the campaign's next targets, and the organisation is considering a print media advertising campaign.
Feedback from corporates so far had been ''incredibly positive'', Mr Chamberlain said. ''Obviously we're dealing with some of the major distributors of Australian Paper,'' he said. ''They don't want to have environment groups on their back - they spruik their environmental credentials and I think their branding is potentially at risk if we target them.''
Wesfarmers, Australia's eighth biggest company, already bears the scars of an earlier battle with the Wilderness Society. After a long campaign that included embarrassing protests outside its Bunnings hardware stores, the chain switched from native forest timber to plantation wood.
Mr Chamberlain said the Wilderness Society had been talking with Australian Paper about moving away from native forests for ''probably five to six years''.
''So far Australian Paper has buried its head in the sand,'' he said. The stoush flared up online last week with Google pulling down Wilderness Society advertisements that appeared above search results for Reflex, after a complaint from Australian Paper. The company, a subsidiary of Japan's Nippon Paper Group, has hit back with a website entitled ''Ethical paper - the facts'' that mimics features of the Wilderness Society's ethical paper campaign site.
On that website, its says more than half its total fibre needs come from plantation timber and recycled paper. ''The remainder is sourced through VicForests which is a Victorian government enterprise responsible for the sustainable harvest and commercial sale of wood from state forests,'' the company said.
In a separate statement issued on Friday, Australian Paper said it ''welcomes open discussion from all stakeholders about our performance''. It said it employed about 1200 people and the industry had been hit by the closure of two Tasmanian mills last year at a cost of 300 jobs.
''Our plight is not unlike that of Kimberly-Clark whose Millicent tissue mill in South Australia faces closure and the loss of 170 jobs in May,'' the company said. ''Our statements and claims are independently checked and comply with Australian Competition and Consumer Commission guidelines.''
Mr Chamberlain said VicForests fact sheets on the company's ethical paper - the facts website were ''mythology and propaganda''.
''We'll be taking that up now with the ACCC as part of this campaign.'' He said it was practical for Australian Paper to use only recycled paper and plantation-sourced timber.
''We're looking for Australian paper to show leadership in true sustainability and create a much greater recycled paper industry.''
Sydney Morning Herald, January 31, 2011
ENVIRONMENTALISTS have made corporate Australia their number one target as they ramp up pressure on the producers of the top paper brand Reflex to stop using timber logged from native forests.
The battle between the Wilderness Society and Australian Paper has spilled into cyberspace: last week the company convinced Google to stop showing advertisements for the environmental organisation's ''ethical paper'' campaign.
Wilderness Society activists are planning to target Reflex stockists, including Wesfarmers' subsidiaries Officeworks and Coles and new US entrant Staples, which took over Corporate Express last year.
The organisation is also considering legal action against Australian Paper under the Trade Practices Act because a company website appears to endorse allegedly misleading fact sheets created by the Victorian government-owned logger, VicForests.
Luke Chamberlain, the Wilderness Society's Victorian forest campaigner, said woodchips from state-owned native forests received a government subsidy worth hundreds of millions of dollars, creating an unfair price advantage over plantation-sourced chips.
''It's not an even playing field here - this is corporate socialism whereby VicForests is acting as a middleman handing over a public asset for private profit,'' he said.
''The question to Australian Paper is why do we continue to rip out a public resource, extinguish a public asset, when [there are] perfectly good alternatives?''
He said the Wilderness Society had sent letters to corporate social responsibility officers at 2500 leading companies, and on Thursday began a phone campaign to follow up with the top 400 companies.
Fund managers will be the campaign's next targets, and the organisation is considering a print media advertising campaign.
Feedback from corporates so far had been ''incredibly positive'', Mr Chamberlain said. ''Obviously we're dealing with some of the major distributors of Australian Paper,'' he said. ''They don't want to have environment groups on their back - they spruik their environmental credentials and I think their branding is potentially at risk if we target them.''
Wesfarmers, Australia's eighth biggest company, already bears the scars of an earlier battle with the Wilderness Society. After a long campaign that included embarrassing protests outside its Bunnings hardware stores, the chain switched from native forest timber to plantation wood.
Mr Chamberlain said the Wilderness Society had been talking with Australian Paper about moving away from native forests for ''probably five to six years''.
''So far Australian Paper has buried its head in the sand,'' he said. The stoush flared up online last week with Google pulling down Wilderness Society advertisements that appeared above search results for Reflex, after a complaint from Australian Paper. The company, a subsidiary of Japan's Nippon Paper Group, has hit back with a website entitled ''Ethical paper - the facts'' that mimics features of the Wilderness Society's ethical paper campaign site.
On that website, its says more than half its total fibre needs come from plantation timber and recycled paper. ''The remainder is sourced through VicForests which is a Victorian government enterprise responsible for the sustainable harvest and commercial sale of wood from state forests,'' the company said.
In a separate statement issued on Friday, Australian Paper said it ''welcomes open discussion from all stakeholders about our performance''. It said it employed about 1200 people and the industry had been hit by the closure of two Tasmanian mills last year at a cost of 300 jobs.
''Our plight is not unlike that of Kimberly-Clark whose Millicent tissue mill in South Australia faces closure and the loss of 170 jobs in May,'' the company said. ''Our statements and claims are independently checked and comply with Australian Competition and Consumer Commission guidelines.''
Mr Chamberlain said VicForests fact sheets on the company's ethical paper - the facts website were ''mythology and propaganda''.
''We'll be taking that up now with the ACCC as part of this campaign.'' He said it was practical for Australian Paper to use only recycled paper and plantation-sourced timber.
''We're looking for Australian paper to show leadership in true sustainability and create a much greater recycled paper industry.''
Grand ash forests face destruction
Jill Sanguinetti, Narbethong
The Age (letter), 31 Jan 2011
VICFORESTS' misleading claims have been swallowed whole by the government. According to VicForests' website, 66,000 hectares of merchantable timber is available to it in the Central Highlands and 2500 of this is being clear-felled there annually. At this rate, it will all be gone in 26 years.
Yet the minister plans to grant security of access at the current rate for 20 years. By then there would be nothing left of our grand ash forests but regrowth (depleted of tree ferns, hollow-dwelling fauna and countless floral species) outside of national parks. With predicted climatic instability and the likelihood of increasing droughts and bushfires, even the survival of regrowth is uncertain.
Moreover, the claim that the annual harvest is "less than .01 per cent of Victoria's native forests" is a furphy: this is a percentage of the total forestry estate of 78 million hectares, including dry, open woodland forests in the north and west, degraded forests that are past logging, forests on private land and in national parks.
So the 0.01 per cent figure is irrelevant to the sustainability of logging in particular locations but is intended to deceive us into accepting the intensive logging of remaining old-growth, species-rich forests in the Central Highlands.
The Age (letter), 31 Jan 2011
VICFORESTS' misleading claims have been swallowed whole by the government. According to VicForests' website, 66,000 hectares of merchantable timber is available to it in the Central Highlands and 2500 of this is being clear-felled there annually. At this rate, it will all be gone in 26 years.
Yet the minister plans to grant security of access at the current rate for 20 years. By then there would be nothing left of our grand ash forests but regrowth (depleted of tree ferns, hollow-dwelling fauna and countless floral species) outside of national parks. With predicted climatic instability and the likelihood of increasing droughts and bushfires, even the survival of regrowth is uncertain.
Moreover, the claim that the annual harvest is "less than .01 per cent of Victoria's native forests" is a furphy: this is a percentage of the total forestry estate of 78 million hectares, including dry, open woodland forests in the north and west, degraded forests that are past logging, forests on private land and in national parks.
So the 0.01 per cent figure is irrelevant to the sustainability of logging in particular locations but is intended to deceive us into accepting the intensive logging of remaining old-growth, species-rich forests in the Central Highlands.
26 January, 2011
Forestry is solution
Shaun Ratcliff, Victorian Association of Forest Industries, Melbourne
The Age (letter), 26 Jan 2011
MURRAY Barson is right (Letters, 25/1): our public forests should be managed on a scientific basis. However, Peter Walsh is correct: Victorian forestry is conducted on a sustainable scale. About 5000 hectares of native forest was harvested last year: 0.07 per cent of the 7.8 million hectares of public native forest in Victoria. Areas are also reserved to protect endangered or threatened species.
The greatest threat to our forests is fire, not forestry. The three landscape-scale fires of the past decade - 2002-03, 2006-07 and 2009 - burnt about 3 million hectares of land. Much of this was native forest.
Forestry is not the problem but part of the solution to managing fire risk. Forestry workers, particularly those in the native forest sector, are based on-location and are skilled and experienced in fire management (thinning, and maintaining fire breaks and roads to ease access to fires) and suppression, and most forestry equipment is useful in firefighting.
The Age (letter), 26 Jan 2011
MURRAY Barson is right (Letters, 25/1): our public forests should be managed on a scientific basis. However, Peter Walsh is correct: Victorian forestry is conducted on a sustainable scale. About 5000 hectares of native forest was harvested last year: 0.07 per cent of the 7.8 million hectares of public native forest in Victoria. Areas are also reserved to protect endangered or threatened species.
The greatest threat to our forests is fire, not forestry. The three landscape-scale fires of the past decade - 2002-03, 2006-07 and 2009 - burnt about 3 million hectares of land. Much of this was native forest.
Forestry is not the problem but part of the solution to managing fire risk. Forestry workers, particularly those in the native forest sector, are based on-location and are skilled and experienced in fire management (thinning, and maintaining fire breaks and roads to ease access to fires) and suppression, and most forestry equipment is useful in firefighting.
Numbers add up
Sarah Rees, Healesville
The Age (letter), 26 Jan 2011
IN THE article ''Minister challenges logging advice'' (The Age, 24/1), Forestry Minister Peter Walsh gives a welcome commitment to examine the status of endangered species in areas exposed to logging.
While the minister appears unaware of the Department of Sustainability and Environment's science up until his appointment, basic skills in maths should make light work of this investigation. Mr Walsh says he ''find(s) it hard to understand how such a small area of logging can have such a big impact''.
Some 70 per cent of the ash forests in this state - the wood the chippers are after and home to many of Victoria's endangered species - is available for logging. Logging is taking out between 2 and 3 per cent of these forests each year.
Given that intensive ash logging has taken place since the 1950s, how many years of logging will it take to reduce 70 per cent of the old ash forest to young saplings incapable of housing hollow-dependent mammals?
Couple this with fires in an average of 40 per cent of the ash forest in national parks and, bingo, you have an extinction crisis.
The Age (letter), 26 Jan 2011
IN THE article ''Minister challenges logging advice'' (The Age, 24/1), Forestry Minister Peter Walsh gives a welcome commitment to examine the status of endangered species in areas exposed to logging.
While the minister appears unaware of the Department of Sustainability and Environment's science up until his appointment, basic skills in maths should make light work of this investigation. Mr Walsh says he ''find(s) it hard to understand how such a small area of logging can have such a big impact''.
Some 70 per cent of the ash forests in this state - the wood the chippers are after and home to many of Victoria's endangered species - is available for logging. Logging is taking out between 2 and 3 per cent of these forests each year.
Given that intensive ash logging has taken place since the 1950s, how many years of logging will it take to reduce 70 per cent of the old ash forest to young saplings incapable of housing hollow-dependent mammals?
Couple this with fires in an average of 40 per cent of the ash forest in national parks and, bingo, you have an extinction crisis.
Extinction state
Phil Alexander, Eltham
The Age (letter), 26 Jan 2011
YOU have to admire Ted Baillieu's environmental credentials: a climate change denier, he puts cattle back in sensitive Alpine habitats and appoints an Agriculture Minister who holds the view that cutting down forests has minimal impact on plants and animals. Maybe our number plates should read: Victoria, the Extinction State.
The Age (letter), 26 Jan 2011
YOU have to admire Ted Baillieu's environmental credentials: a climate change denier, he puts cattle back in sensitive Alpine habitats and appoints an Agriculture Minister who holds the view that cutting down forests has minimal impact on plants and animals. Maybe our number plates should read: Victoria, the Extinction State.
25 January, 2011
Mind the habitat
Murray Barson, Hurstbridge
The Age (letter), 26 Jan 2011
AGRICULTURE Minister Peter Walsh ''find[s] it hard to understand how such a small area of logging can have such a big impact'' on state forest biodiversity (''Minister challenges logging advice'', 24/1). (One wonders if he is a climate-change sceptic too.)
The man admits his ignorance and should take the scientific advice offered, not hide behind the wasteful procrastination of a departmental study. Habitat destruction is not an easily reversible process.
If the state's timber industry is indeed financially unviable, ''20 years' access … to timber'' only prolongs the agony, but may irrevocably damage the forests.
Vested interests, factional pressures and marginal electorate sensitivities must not be allowed to warp the decision process.
The Age (letter), 26 Jan 2011
AGRICULTURE Minister Peter Walsh ''find[s] it hard to understand how such a small area of logging can have such a big impact'' on state forest biodiversity (''Minister challenges logging advice'', 24/1). (One wonders if he is a climate-change sceptic too.)
The man admits his ignorance and should take the scientific advice offered, not hide behind the wasteful procrastination of a departmental study. Habitat destruction is not an easily reversible process.
If the state's timber industry is indeed financially unviable, ''20 years' access … to timber'' only prolongs the agony, but may irrevocably damage the forests.
Vested interests, factional pressures and marginal electorate sensitivities must not be allowed to warp the decision process.
24 January, 2011
Minister challenges logging advice
Adam Morton
The Age (article), January 24, 2011
VICTORIA'S new forestry minister has challenged scientific warnings that the timber industry is putting endangered species at risk of extinction, arguing that only a fraction of the state's forest habitat is logged.
Agriculture Minister Peter Walsh, whose portfolio includes responsibility for state forests, denied claims the forest industry was in crisis, but said it was ailing, after years of gradual cuts to timber allocation from state forests stymied investment. The Coalition has promised to restore industry confidence by guaranteeing access to current levels of state forest timber for up to 20 years.
The commitment comes amid warnings from scientists led by David Lindenmayer, an Australian National University ecologist who has worked in Victorian forests since the 1980s, that the combination of bushfires and aggressive logging in the central highlands is putting threatened species such as Leadbeater's Possum, the state faunal emblem, at risk. But Mr Walsh said he was not persuaded the timber industry was a significant threat.
"I find it hard to understand how such a small area of logging can have such a big impact as some people are saying when you consider the totality of the forest area that's never ever touched,'' he said.
''The Department of Sustainability and Environment has never carried out any survey work on threatened species outside of these small areas of production forest. It's difficult to quantify the impacts of the timber industry if you don't actually know against what you are making a comparison. We have asked the department to do this work.''
Professor Lindenmayer said Mr Walsh's comments were those of a minister still getting on top of his brief, and offered to give him a briefing and a tour of central highlands forests.
He said dozens of books and hundreds of scientific papers had been written showing the threat that clear-fell logging in the state's 171,000 hectares of mountain ash forest posed to endangered species.
''We're logging in a way that is very intense and sets back the forest many centuries,'' he said.
Coalition support for state forests logging was a point of difference with Labor, which had promised to sponsor Tasmanian-style "peace talks" between the industry, unions and environmental groups.
Environmentalists say logging in state forests is economically unviable and being propped up by government subsidies.
Mr Walsh said he had no problem with talks being held over the industry's future, but the government should not be involved.
"If the unions and the industry and whatever want to sit down and have discussions I think that's appropriate that they do it, but by government being in there when we've said what we want to do would not necessarily be the most productive thing,'' he said.
He said his office was considering results of a Treasury review into the state's logging agency VicForests, which received a multimillion dollar bailout from taxpayers last financial year. But he was dismissive of a Brumby government plan to replace the agency with a body that had a broader remit also to allocate water and carbon rights.
"I really think they [Labor] were trying to be all things to all people and I really don't know how it was going to actually have a meaningful role - it just seems such a broad brush thing with no detail," he said.
The Age (article), January 24, 2011
VICTORIA'S new forestry minister has challenged scientific warnings that the timber industry is putting endangered species at risk of extinction, arguing that only a fraction of the state's forest habitat is logged.
Agriculture Minister Peter Walsh, whose portfolio includes responsibility for state forests, denied claims the forest industry was in crisis, but said it was ailing, after years of gradual cuts to timber allocation from state forests stymied investment. The Coalition has promised to restore industry confidence by guaranteeing access to current levels of state forest timber for up to 20 years.
The commitment comes amid warnings from scientists led by David Lindenmayer, an Australian National University ecologist who has worked in Victorian forests since the 1980s, that the combination of bushfires and aggressive logging in the central highlands is putting threatened species such as Leadbeater's Possum, the state faunal emblem, at risk. But Mr Walsh said he was not persuaded the timber industry was a significant threat.
"I find it hard to understand how such a small area of logging can have such a big impact as some people are saying when you consider the totality of the forest area that's never ever touched,'' he said.
''The Department of Sustainability and Environment has never carried out any survey work on threatened species outside of these small areas of production forest. It's difficult to quantify the impacts of the timber industry if you don't actually know against what you are making a comparison. We have asked the department to do this work.''
Professor Lindenmayer said Mr Walsh's comments were those of a minister still getting on top of his brief, and offered to give him a briefing and a tour of central highlands forests.
He said dozens of books and hundreds of scientific papers had been written showing the threat that clear-fell logging in the state's 171,000 hectares of mountain ash forest posed to endangered species.
''We're logging in a way that is very intense and sets back the forest many centuries,'' he said.
Coalition support for state forests logging was a point of difference with Labor, which had promised to sponsor Tasmanian-style "peace talks" between the industry, unions and environmental groups.
Environmentalists say logging in state forests is economically unviable and being propped up by government subsidies.
Mr Walsh said he had no problem with talks being held over the industry's future, but the government should not be involved.
"If the unions and the industry and whatever want to sit down and have discussions I think that's appropriate that they do it, but by government being in there when we've said what we want to do would not necessarily be the most productive thing,'' he said.
He said his office was considering results of a Treasury review into the state's logging agency VicForests, which received a multimillion dollar bailout from taxpayers last financial year. But he was dismissive of a Brumby government plan to replace the agency with a body that had a broader remit also to allocate water and carbon rights.
"I really think they [Labor] were trying to be all things to all people and I really don't know how it was going to actually have a meaningful role - it just seems such a broad brush thing with no detail," he said.
02 January, 2011
State-owned VicForests logging firm 'non-viable'
Ben Butler
The Age (article), 2 Jan 2010
TAXPAYERS have been forced to fund a multimillion-dollar bailout of VicForests, with severe financial pressure putting the future of the government-owned company that logs state forests under a cloud.
VicForests' operations are now being reviewed by the new Liberal-National coalition government, which says it will explore ''all management options'' for the Victorian native timber industry.
Set up by the former Labor government six years ago, VicForests bled out more than $16 million in cash over the the 2009-10 financial year.
To cover the shortfall, VicForests needed an extra $16.6 million in the form of a low cost loan from the Victorian Treasury, according to the logging company's latest accounts.
VicForests would not have been able to declare a profit of $3.6 million if not for a $10.8 million government grant to cover the costs of salvage logging after the Black Saturday bushfires, and made a complex change to the way it accounts for logged areas that are returned to the state.
A senior analyst with a major financial institution, who asked not to be named, said VicForests was ''very much running out of cash''.
''It's a business that's completely non-viable and if it was a business that was standing on its own two feet without government support it would either be long-gone or guilty of insolvent trading,'' the analyst said. ''Notwithstanding their cheap access to forests, there's not enough cash flow to keep this merry-go-round going.''
Dr Judith Ajani, a resource economist with the Australian National University, said state-owned loggers such as VicForests had been left behind by a structural change caused by a move from native forests to plantation timber. ''What we're dealing with here is state governments that simply won't deal with an industry problem,'' she said. ''They are propping up a fundamentally dead business.''
VicForests' annual report shows that it has removed millions in expenditure from its operating statement by changing the way it accounts for regeneration - the cost of replanting logged coupes with seedlings. While, in 2008-09, replanting cost $4.8 million, the latest set of accounts list regeneration expenses as $0.
But the company's summary of financial results note ''substantial regeneration activities'' among factors that ''contributed further to the negative cash flow from operating activities''.
''It is anticipated that this will return to a positive level in 2011,'' the company says. The report, one of more than 200 tabled by the former Brumby government on the same day in September last year, also shows that borrowings from the Treasury Corporation of Victoria blew out from $2.3 million to $19 million.
All of the money is payable in the current financial year, but the terms of the loan can be extended by the Treasurer.
Agriculture Minister Peter Walsh, the National Party member for Swan Hill, said the government was ''committed to providing long-term security to the timber industry within a framework of world standard forest management practices''.
He said the Coalition would carry out its pre-election promise to reduce from three to one the number of government departments to which VicForests reports.
''The government is committed to implementing these promises and to exploring all management options that lead to an efficient and sustainable future for the timber industry,'' he said.
''The government will review VicForests' operations and it would not be appropriate to pre-empt the outcome of that investigation.''
Armed with a critical Treasury report into VicForests - which is yet to be made public - the former Labor Party had promised to abolish the company and replace it with a new entity.
Under the ALP plan the new body would have retained a commercial focus, but in addition to logging timber it would have been responsible for allocating water and carbon rights.
The Age (article), 2 Jan 2010
TAXPAYERS have been forced to fund a multimillion-dollar bailout of VicForests, with severe financial pressure putting the future of the government-owned company that logs state forests under a cloud.
VicForests' operations are now being reviewed by the new Liberal-National coalition government, which says it will explore ''all management options'' for the Victorian native timber industry.
Set up by the former Labor government six years ago, VicForests bled out more than $16 million in cash over the the 2009-10 financial year.
To cover the shortfall, VicForests needed an extra $16.6 million in the form of a low cost loan from the Victorian Treasury, according to the logging company's latest accounts.
VicForests would not have been able to declare a profit of $3.6 million if not for a $10.8 million government grant to cover the costs of salvage logging after the Black Saturday bushfires, and made a complex change to the way it accounts for logged areas that are returned to the state.
A senior analyst with a major financial institution, who asked not to be named, said VicForests was ''very much running out of cash''.
''It's a business that's completely non-viable and if it was a business that was standing on its own two feet without government support it would either be long-gone or guilty of insolvent trading,'' the analyst said. ''Notwithstanding their cheap access to forests, there's not enough cash flow to keep this merry-go-round going.''
Dr Judith Ajani, a resource economist with the Australian National University, said state-owned loggers such as VicForests had been left behind by a structural change caused by a move from native forests to plantation timber. ''What we're dealing with here is state governments that simply won't deal with an industry problem,'' she said. ''They are propping up a fundamentally dead business.''
VicForests' annual report shows that it has removed millions in expenditure from its operating statement by changing the way it accounts for regeneration - the cost of replanting logged coupes with seedlings. While, in 2008-09, replanting cost $4.8 million, the latest set of accounts list regeneration expenses as $0.
But the company's summary of financial results note ''substantial regeneration activities'' among factors that ''contributed further to the negative cash flow from operating activities''.
''It is anticipated that this will return to a positive level in 2011,'' the company says. The report, one of more than 200 tabled by the former Brumby government on the same day in September last year, also shows that borrowings from the Treasury Corporation of Victoria blew out from $2.3 million to $19 million.
All of the money is payable in the current financial year, but the terms of the loan can be extended by the Treasurer.
Agriculture Minister Peter Walsh, the National Party member for Swan Hill, said the government was ''committed to providing long-term security to the timber industry within a framework of world standard forest management practices''.
He said the Coalition would carry out its pre-election promise to reduce from three to one the number of government departments to which VicForests reports.
''The government is committed to implementing these promises and to exploring all management options that lead to an efficient and sustainable future for the timber industry,'' he said.
''The government will review VicForests' operations and it would not be appropriate to pre-empt the outcome of that investigation.''
Armed with a critical Treasury report into VicForests - which is yet to be made public - the former Labor Party had promised to abolish the company and replace it with a new entity.
Under the ALP plan the new body would have retained a commercial focus, but in addition to logging timber it would have been responsible for allocating water and carbon rights.
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