Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Minister for Agriculture, Fisheries and Forestry (Senator Ludwig) to a question without notice asked by Senator Milne today relating to the Tasmanian forest industry.

I rise to take note of an answer from Minister Ludwig, in relation to the performance audit of the grants that were made to Tasmania under the community forest agreement.

This was an agreement negotiated under the former Prime Minister, John Howard. Grants were paid between 2005 and 2010. It cost the Australian people $252.2 million. That was given to Tasmania. Part of that money went to forest contractors and people working in the industry but a substantial amount went to Forestry Tasmania—$145.7 million of the $252.2 million went to Forestry Tasmania. It was paid up-front by the Commonwealth. It was paid for a number of reasons but a large proportion of it was to establish plantations in Tasmania, and the whole idea of this process was to get out of native forest logging.

That money has virtually been wasted, because we now have a situation where the Auditor-General in Tasmania has had a look at it and said that Forestry Tasmania has been using money that was paid by the Commonwealth up-front for its operating expenses, for its cashflow. In fact, the Auditor-General pointed out that, in the event that that did not occur, Forestry Tasmania would have been in dire straits. The Auditor in Tasmania has said that they have concerns over Forestry Tasmania's longer term liquidity.

So when you look at that Commonwealth money that went into Forestry Tasmania—they received $145.7 million. In that time frame, Forestry Tasmania has only paid $3.7 million in dividends, $3.5 million in tax; a total of $7.2 million which represents a cost to the community of $138.5 million over five years. That is how much the Australian community, the taxpayer, is out of pocket to Forestry Tasmania for in that time.

And it is not the first time. When I was in the Tasmanian parliament, $272 million of the Tasmanian forestry commission debt was transferred to the general state debt when the commission was corporatised in 1990. So they were in debt then—$272 million—and it was forgiven. They moved it off their balance sheet onto the cost of the consolidated fund, and Forestry Tasmania as a corporation started in the black, thanks to the taxpayer. They have managed to get themselves right back into a hideous amount of debt, to the point where—and I am not sure if the minister is even aware of this—in the financial statements it was noticed that Forestry Tasmania is currently in breach of a lending covenant related to its debt to capital leverage ratio.

TASCORP advised them that they had waived this breach whilst a letter of comfort provided by the Treasurer remains in place. So Forestry Tasmania had to go to the Treasurer of Tasmania and ask for a letter of comfort or else its directors would not have been able to sign off in relation to their solvency. That is how bad Forestry Tasmania is. They have now had two letters of comfort from the state Treasurer in order to be able to keep operating. So I want the minister for forestry to recognise that Forestry Tasmania is back with its hand out right now for the Commonwealth to pay over more money as part of the current negotiations. It is my view that Forestry Tasmania should be disbanded. They have proved that they are financially incompetent. They have cut down Tasmania's forests and cost the taxpayer at the same time. We need to be protecting the forests and setting up a new agency to manage those forests in the longer term for conservation, for biodiversity and for carbon content. We need to employ people to manage those forests, but those current directors of Forestry Tasmania and that current operation should be disbanded. They have demonstrated over 20 years that they are incapable of running that organisation without needing a direct chequebook flow from the Commonwealth. I simply want to see a performance audit of these grants and to see who has been responsible for the complete mismanagement of Commonwealth finances.

Question agreed to.