Tasmanian Forestry - The State of Play

part of a story by Sally Glaetzer Mercury

The lift is slightly rickety as it ascends the three floors to John Gay’s modest office suite in the heart of Launceston’s central business district. Here, the former woodchip king once considered the most powerful man in Tasmania runs his family’s veneer business. Specialty Veneers and its offshoot Corinna Timbers supply timber and decorative veneers, mostly for kitchen makeovers and shop fit-outs locally and interstate.

Forico chipmill

Gay is pale and clearly fatigued late on this Friday afternoon when we meet as planned in the company’s tiny, bare-walled conference room. Gone is the bolshie businessman I spoke with earlier in the week by phone when he told me – with good humour – he had no desire to participate in a profile article for TasWeekend.

“If you lose a grand final, that’s it,” Gay had said. “You can’t go back and play it again.”

This is Gay’s admission that the other side has won, referring to what he calls “the extreme green groups” who undermined his plans for a pulp mill and – he says – manoeuvred behind the scenes to have him ousted from Gunns, the once-mighty timber giant he ran for nearly four decades. He similarly blames outside forces for his criminal conviction for insider trading in 2013.

Despite not wanting to be interviewed for a personal profile piece as such, Gay is happy to meet for a “general chat” about the timber industry in Tasmania. He makes it clear he has no interest in defending his legacy. Gay is comfortable in his own skin and content in the knowledge that those who in his mind matter still hold him in high esteem.

The 74-year-old, who was worth $50 million on paper at Gunns’ peak, is still in the industry he loves – albeit on a much smaller scale. Specialty Veneers was once a subsidiary of Gunns and was shut for four years after the company’s collapse, until Gay started it up again. In court, he was granted special leave to run the business, which has a small factory at Somerset and employs 35 people, including Gay’s daughter. He has another two years to go before he can serve as a company director on a larger company.

Gay admits that by the end of a working week he is exhausted. In 2007, he was diagnosed with prostate cancer. At the time, his doctor warned him that if radiation therapy did not work, he would have six months to live. The radiation bought him time but now Gay has secondary bone cancer.

The Hobart office of the Commonwealth Director of Public Prosecutions confirms Gay has paid the $500,000 pecuniary penalty he was slapped with under proceeds of crime laws late last year. “The lawyers have cost me more,” he says.

The Australian Securities and Investments Commission pursued the penalty after there was widespread criticism of the relatively minor $50,000 fine Gay copped in court after pleading guilty to insider trading. The criminality related to Gay selling $3 million of Gunns shares in 2009 while privy to price-sensitive information.

Gay reveals he is writing a book about Gunns, but not covering his court case or the period after his forced resignation from the company in 2010. In September 2010, Gunns’ replacement chief Greg L’Estrange declared the company would quit old-growth logging and transition to a plantation-only business in an unsuccessful attempt to shore up pulp mill investors. Two years later, the company went into receivership.

“I’m sure if I had stayed on and been left to carry on, the business would still be there,” Gay says. “It might have been smaller and with no pulp mill, but I’m sure the business would have survived.”

It has been a turbulent time for Tasmania’s timber sector since Gay’s ignominious downfall and the post-GFC collapse of the woodchip market. Many industry watchers, including conservationists and those who want to see an end to constant taxpayer prop-ups, had hoped the native forestry sector would be allowed to contract naturally. With the state-owned Forestry Tasmania posting a $67 million loss last year Resources Minister Guy Barnett says he has a plan to end subsidies without shrinking the industry.

Barnett’s solution to the woes of FT, which is losing money on more than a quarter of the trees it harvests, is to bring forward the felling of forests previously earmarked for future reserves, but leave it to the private sector to log the contentious areas. He is giving FT the optimistic new name of Sustainable Timber Tasmania, alleviating some of its non-commercial responsibilities such as firefighting and road maintenance, and lifting prices of sawlogs “to offset costly coupes”.

 

The new name is designed to reflect what Barnett hopes will be a return to a sound financial footing for FT, while, on the environmental front, the Government still hopes to achieve crucial endorsement of its management practices from the Forest Stewardship Council. FT has been told by FSC auditors it needs to lift its game in habitat protection and clear-felling old-growth forests before timber from state-owned native forests can be declared responsibly managed.

FT has since stopped clear-felling in coupes identified as containing more than 25 per cent old growth, although environmentalists are less than impressed by FT’s alternative practices, which one forest activist describes as clearing in strips rather than swathes.
Last month, environmentalists including Greens leaders past and present converged on the lawns of Parliament House in Hobart to oppose the Government’s plans to allow logging in 400,000ha of land set aside for potential future reserves under the now-defunct peace deal negotiated in 2012. Now classed as Future Potential Production Forest, the area was to be protected until 2020 and conservationists had hoped that by then a case would have been made to add the area to Tasmania’s permanent reserve system. But Barnett plans to make the forests available to private companies to log from 2018, a move that needs to be passed by parliament.
What initially looked like a public-relations disaster, sure to reignite conflict in the forests, is starting to look like a stroke of buck-passing genius. Barnett is effectively handballing responsibility for accessing these contentious forests to private companies.
The move will not affect FT’s existing bid for FSC certification, because the extra forests will come under the tenure of a different government entity. Companies wanting to access them will have to achieve their own third-party forest management certification for any logging operations.
Key industry spruikers such as Australian Forest Products Association chief Ross Hampton insist Tasmania’s forestry operations are world-class, even without meeting FSC criteria. But Hampton admits past practices were not “as they should have been”.
Gay is not willing to concede as much, saying Gunns’ operations were always carried out responsibly. “Gunns never decided what forests it would access, it was always the government’s decision,” he says.
He dismisses his reputation as an environmental vandal, calling himself a “conservationist”, a comment not likely to go down well with those who were around to witness the large-scale destruction of publicly owned native forests in Gunns’ heyday as it exported millions of tonnes of woodchips a year.
“It was never ‘John Gay is trying to do this’,” Gay says. “I was at the top of the company but I was being paid to do a job and work hard.”

Forico tree nursery

The pile of woodchips is back at the Burnie port, but it is no longer the divisive symbol of Tasmania’s forestry industry it once was. These days, the chips are predominantly FSC-certified and plantation-grown from the coupes Gunns planted in preparation for the pulp mill that never eventuated.

Sydney funds manager New Forests bought 100,000ha of plantations from Gunns’ receivers a couple of years ago, along with two woodchip mills. Forico, the company set up to manage the assets, is on track to export 1.6 million green tonnes of woodchips this year, driving Tasmania’s total forest product exports above three million tonnes for the first time in five years.

As with everything forestry-related, Forico’s success is being used as ammunition by both sides as the age-old debate continues to rage over the future of the state’s timber industry. Barnett lauds the company as a beacon of positivity – proof, he says, the timber industry as a whole is back on track.

Environmentalists say Forico validates their arguments for a transition from native forests to plantations. Jenny Weber from the Bob Brown Foundation says the FT restructure would have been the perfect opportunity to transition out of state-owned native forests.

“It’s such a shame,” Weber says of Barnett’s decision to open up more native forests to the private sector. “We have such a missed opportunity here to be protecting native forests by transitioning out of native forest logging.”

Gay is also lamenting what he sees as a missed opportunity, not in the FT restructure, but with the resurgence of woodchip exports from Tasmania’s ports. “Those three million tonnes of woodchips are going to Asia to create jobs in Asia,” Gay says. “They would have been better used in Tasmania.”

Gay questions the long-term viability of a plantation-only company such as Forico once it has exhausted the harvest-ready resource it snapped-up in the Gunns asset sell-off. Although he is no longer in the chip industry, Gay says he knows enough to understand that shipping woodchips offshore is not profitable enough to cover the cost of growing trees.

“I believe it will be a great thing to really build an industry around plantation, but the only one that was really viable to pay for the high cost of growing trees was a pulp mill,” Gay says.

Over at Forico’s timber nursery at Somerset, the orange-clad workers are only visible from the waist up in a sea of gum tree saplings. “If anyone wants evidence that we are here for the long haul, we are replanting as we speak,” Forico general manager Bryan Hayes says, brushing off concerns from Gay and others about the longevity of Forico’s operation.

“This year we will replant more than 6000ha of plantations at a cost of $15 million. We currently have 65 tree planters out in the field. We are committed. Our 100,000ha of plantation will be revegetated back to plantation.”

Hayes says the “world has changed” since his days at Gunns, when he was the former company’s general manager of forest products.

“I’ve worked with these assets (plantations and mills) since 1972,” he says. “I spent many years working in the native forestry sector. I quite unashamedly speak about that because it’s what the industry was. But to me, today, we’re operating in a new paradigm.”

“I’m hesitant to use the term ‘trust deficit’, but that’s what it is,” sawmiller Matthew Torenius says of the perceptions plaguing the native forestry industry. In theory, Torenius can see the benefit of expanding the area of land open for logging, but only if harvesting operations were scaled back to minimise waste.

But he says the history of conflict in Tasmania makes it unlikely a “log widely but lightly” approach would gain community acceptance. “The industry is completely different to what it was 10 years ago but we can’t move on because of the mistakes of the past,” he says.

Torenius’ family runs a small sawmill at Forcett in the South East. His parents came to Australia in the ’60s from Finland, which is one of the world’s biggest producers of timber products. Torenius dreams of a Tasmanian industry of which locals are proud, based on high-value products such as furniture. He is disappointed by the Government’s so-called Southern Residues Solution, which is seeing low-grade native logs shipped off to Asia in containers from Hobart’s Macquarie Wharf.

“Residues”, as the government likes to refer to the 80 per cent of material created by felling native forests, remains the ultimate conundrum for the timber industry.

“Nobody likes to see whole logs transported offshore,” Torenius says. “In an ideal world, you would like to think those logs could be processed on the island and exported as a higher-value product.”

SPOTLIGHT ON WIELANGTA

Environmentalists fear for the future of Wielangta Forest, and even sawmillers say it would be a risky harvest site as they try to improve their sustainability credentials

In a debate in which both sides are obsessed with semantics, it is important to note the Wielangta forest is not pristine wilderness. It is, however, unarguably picturesque. And, Wilderness Society campaigner Vica Bayley argues, incredibly important endangered species habitat.

The Wielangta road is badly potholed after winter, but the scenery makes the white-knuckle drive worthwhile. From the Kellevie end the dark-hued forest expands down to the ocean at Hellfire Bluff, and at Orford the vista is even more spectacular, with expansive views of the East Coast from Maria Island to Freycinet. We take a break from the pothole dodging, pulling over at the Sandspit Reserve, a pocket of towering wet rainforest protected by a dramatic sandstone overhang.

The boardwalk along what was once a lovely little loop walk is in total disrepair and the interpretation signs have been removed. Up the road there are clear signs of illegal wood hooking, with trees hacked down and piles of freshly splintered wood. “Someone has been around who clearly doesn’t have any taste,” Bayley says, picking up an empty can of XXXX Gold.

The forest has been in a state of limbo for the past decade. In 2006, former Australian Greens leader Bob Brown won a Federal Court case challenging logging in Wielangta over the impact on species such as the endangered swift parrot, wedge-tailed eagle and rare stag beetle. The logging ban was overturned on a technical appeal and laws were subsequently changed to prevent any further challenges.

In 2012, the area was among the 400,000ha set aside as potential future reserves under the now-defunct Tasmanian Forest Agreement. But its current status – aside from a few small reserves within the boundary – is Future Potential Production Forest, which the State Government intends to make available for logging. There is quite a bit of “I told you so” going on within Tasmania’s conservation movement. While the forest agreement split the timber industry and State Parliament, it also divided environmental groups. Signatories to the deal, including the Wilderness Society, were accused of selling out by accepting an amendment forced by Tasmania’s Legislative Council to delay the reserve status of the 400,000ha.

Bayley insists the compromise was better than the alternative. “If we didn’t accept the compromise in the Upper House, we wouldn’t have had a boundary around the 400,000ha or the World Heritage extension,” he says, referring to an extra 170,000ha added to the WHA under the peace deal.

Veteran Smithton saw miller Glenn Britton has seen – and survived – it all during his 50 years in the industry. Although Forestry Tasmania is unable to meet its contractual obligation to supply Britton Brothers with high-quality native saw logs, Britton is hesitant to advocate accessing the contentious forests.

“Brittons has no intention of going into this area until such time as it is clear as to what the longer-term outcomes are going to be,” Britton says. “We’re not going to put our business at risk. Let’s be clear, much of that land is already reserved so we’re not talking about 400,000ha. We would be talking about a portion of that. But we need to find out what the real status of that land is. Is it genuine scientific high-conservation status or isn’t it? What is the expected volume of wood that would be sustainably available?”

Even the main industry body, Forest Industries Association Tasmania, questions the sense in reigniting conflict for the sake of a questionable wood resource. FIAT chief Terry Edwards says the higher sawlog prices flagged by the minister could also drive some mills out of business.

Bayley objects to the Government’s use of the term “lock ups” in describing land reserved for protection. After all, it is only since Forestry Tasmania relinquished control of Wielangta that the many forestry gates throughout the area have been cut down. The yellow gates lay bent and broken by the tracks they once barred access to.

Just imagine, Bayley says, if these tracks were converted for mountain bikes or bushwalkers. Imagine if the road was sealed, providing tourists with what would have to be one of the best scenic drives in the country, linking the East Coast and Tasman Peninsula. Why open up national parks to tourism development, when such a goldmine of opportunity exists in places like Wielangta, he asks.

“Tasmania should be protecting these forests for themselves, for the species they house, for the carbon and for other values,” Bayley says. “But they also possess myriad opportunities from a tourism and community perspective.”