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House of Assembly - Fifty-Second Parliament, First Session (52-1)
2011-05-03 Daily Xml
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Adjournment Debate

FORESTRYSA

Mr PEDERICK (Hammond) (16:58): As the shadow forestry minister, I rise to support the comments made today by the deputy leader, the member for MacKillop, on the devastation that will occur in the South-East with this Labor government's shortsightedness in forward selling up to 111 years of forestry and at least $1 billion on calculated net revenue to government coffers alone. It is interesting to note that this announcement comes the day after the SACA vote. As the deputy leader rightly said, good on the Crows, good on the Power, good on the SACA, they will get their Adelaide Oval upgrade, but at what cost? At what cost to this state? It will be a massive cost. It will see, I believe, the South-East becoming a shadow of its former self.

There has already been social disarray and unease in the South-East about what will happen with the potential of the forward sale of three rotations of the forest and this will just cause more unrest in that area. We note that the Mount Lofty Ranges and the Mid North forests are exempt from the forward sale.

The Hon. M.J. Atkinson: Don't tell me, it's a conspiracy.

Mr PEDERICK: Well, I believe it is a conspiracy against the regions of this state, which the member for Croydon would hardly recognise.

What we are seeing once again is that regional South Australia is paying the price for Labor's Colosseum in Adelaide, and that is essentially where the money will go from the forward sale. We do not even know how much we are getting from this forward sale yet. The Treasurer today even indicated that he needs to look at the economic modelling, yet here we are with a government coming out and making this announcement today. They put their own report on the Treasury website, which seems very much at odds with the local regional impact report that was commissioned by the three regional councils in the South-East, and it certainly is at odds with what everyone down in the South-East has been saying, including Rod Evins from Banner Hardware, timber sawmillers, and even Brad Coates who is one of the union leaders in the South-East.

I wonder how Brad Coates is feeling today about being dudded by the party that his union supports—or does his union support it? That is the good question, because it will be those union jobs in the South-East that will go with this decision. I certainly believe that it does directly put at risk 3,000 jobs, because what is there to guarantee that logs will not be exported? We see all sorts of clauses that are supposedly going to be put into a contract to safeguard the jobs with the sale of these forward rotations, but all it is talking about is an extra five years on top of the probable 10 years or so with the contracts that are in place.

I will go through some of the community's own concerns with the forward sale, and this is direct from the government's own report:

In summary, the Community expressed the following concerns during our consultations:

1. Export—the new purchaser will not have the same regard for facilitating the local industry and may export large quantities of logs.

2. Log quality—the purchaser may not adopt the same high standard of silvicultural and plantation management practices as ForestrySA and log quality may decline as a result.

3. Stability—the sale of the rotations may destabilise certain aspects of the industry and the harvesting, handling and processing industries may suffer as a result.

4. Water—the sale of the forward rotations may increase the estate's exposure to possible increases in future water costs, thus increasing the cost of logs. The harvesting, hauling and processing industries may suffer as a result.

5. Carbon—the sale of the Forestry estate would include selling a potentially lucrative carbon sink.

6. Fire protection—the purchaser may not give the same priority as ForestrySA to maintaining forest and regional fire fighting capacity.

And 7 is the cruncher, I think. These are the social impacts the community are talking about in regional South Australia—regional South Australia, I emphasise:

7. Social impacts—the community is concerned that other problems will flow from the above impacts. For example:

(a) The community is concerned that with reduced economic activity house prices will fall (some believe they have already fallen).

(b) With reductions in employment in the area that would follow if there was a substantial impact on the processing sector (in particular), the community is concerned that people would leave the area, with harmful effects on the social fabric through reduced demand for schooling, potential school closures, and closures of community sporting clubs. These concerns stem from the primary concern that log would be exported in large quantity and thus that job losses would occur.

(c) Further, the community regards ForestrySA as an important part of the fabric of local society through its sponsoring of community events and other forms of community support. The community is concerned that there will be a general decline in community welfare if the proposed sale proceeds.

In the government's own report it makes the note:

In respect of the process, the community feels that it is not well informed—

well, they would not be the first ones in South Australia to feel not well informed; in fact, I think you could put most of the population in that category—

about the detail of the Government's intentions. It is quite likely that this has given rise to at least some of the community's concerns.

But there are other concerns. The report indicates that some of the concerns are not in the scope of the regional impact assessment. I will just go through these:

1. The sale would not represent value for money, as the government would sell the asset at a lower value than the present value of the future earnings.

2. The alternative uses of the sale proceeds have a lower value than maintaining ownership.

3. There would be a transfer of wealth from the region to the metropolitan areas.

4. It is impossible to know what the timber price will be in 50 or 100 years, so therefore it would be impossible to establish a reasonable asking price for the rotations.

5. One of the most common issues raised during our consultations, was that the proposed sale, and in particular uncertainty surrounding the details, was already having an impact. Clearly, any level of uncertainty would cause the loss of confidence in the community generally.

Well, that is certainly happening. It continues:

The greater the speculation about the sale and its impacts, the more likely the local community will lose confidence. It is possible—

and this is an interesting line—

that speculation about the sale will have a greater impact on the region than the sale itself. This may be reversed once the situation becomes clearer.

In my mind, the situation has been clear for a very long time, and I could have saved the government a lot of that money on this impact statement. It is a very simple fact that anyone who picks up the forward rotation of forests in the South-East is most likely to be a Chinese investor or an American superannuation firm—that is two possibilities.

The government makes out it has all these things that it will put in place to ensure the jobs will stay in the South-East and to ensure that a minimal amount of logs will be exported. Guess what? Does it reckon that it will be able to tell a Chinese buyer to even sign on the dotted line, let alone respect the contract, when you could probably get a container to China for $500? If they can mill it over there and sell it back to us as finished product, I think there is a very high risk of that occurring. The same can be said for American superannuation firms picking up the forward rotation of forests. What thought have they got for the region of the South-East? What thought have they got for the saw millers who are already under the pump and who do not know whether or not to invest? They have no thought at all. This process will go on for another 12 months, put more uncertainty into the South-East, Mr Acting Deputy Speaker; and I know you have an affinity with the South-East. I just hope that the people in the Labor Party who are against this will push their position.

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