Question Time

FORESTRYSA

The Hon. D.W. RIDGWAY (Leader of the Opposition) (14:19): I seek leave to make a brief explanation before asking the Minister for Forests a question regarding undervalued timberlands.

Leave granted.

The Hon. D.W. RIDGWAY: The government's own Auditor-General put a value of over $1 billion on the forestry commission's South-East timber assets which were forward sold, as the Treasurer himself said, for $670 million. That is a shortfall of over $300 million. The buyer is the Campbell Group whose corporate boast is that it takes an opportunistic approach to investing. The company's founder, Duncan Campbell, said, 'The Campbell Group capitalises on market inefficiencies to find undervalued timberlands.'

Meanwhile, the Forestry Corporation Act says that the corporation has to pay council rates on the land it owns. The Campbell Group has bought the forward timber but not the land on which it grows. The land is still the corporation's and, in fact, ours, the public's. My questions are:

1. Who is paying the council rates on that land?

2. Is the public paying rates on land for growing trees while the Campbell Group is opportunistically harvesting the trees on the same land without paying rates?

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women) (14:21): I thank the honourable member for his most important questions. There has been much said about the value of the sale. The government has financially closed the forward sale of the state's—

The Hon. D.W. Ridgway: I didn't ask about when it was closed.

The Hon. G.E. GAGO: You talked about the value of the forests, and I will refer to that and—

The PRESIDENT: Minister, just ignore him; he has asked his question.

The Hon. G.E. GAGO: I will answer the question in a comprehensive way. I need to do justice to this. We know that the opposition wants these matters trivialised. We know that the successful bidder was the Campbell Group.

The Hon. D.W. Ridgway interjecting:

The PRESIDENT: Just relax. We're all tired and grumpy.

The Hon. G.E. GAGO: In terms of the value of the sale, the $670 million was above the government's reserve price, and the proceeds of the sale will be invested across the state in key areas such as roads, hospitals, schools and, obviously, future infrastructure that will clearly benefit the state. Some people in the community believe that the state government sold the forward timber rotations for less than they were worth. They have commented in the media that the government has undervalued the asset or sold it at a cheap price. These people have quoted from the Auditor-General's Report which shows the forestry asset classified as held for distribution to owner and worth $1,033 million.

The information reported by the A-G's Report is obviously accurate and reflects the appropriate accounting standards that are applicable as per the Australian Accounting Standards Board. However, this reported information does not explain the specific distributions being undertaken as part of the FSA transaction. FSA will distribute the $1,033 million of the assets by transferring part back to general government and part to the new operator.

I am advised that the people who have this view are confusing the accounting or book value with the transaction or sale value. Obviously, you can only sell an asset at what the market is prepared to pay to run a commercial concern and not for a reported accounting value, which reflects accounting standards and various assets that do not form part of the assets, including the transaction with the third-party private operator. So that deals with the issue of the value of the sale. In relation to council rates, I do not have those details with me but I am happy to take those questions on notice and bring back a response.