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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
2012-03-27 Daily Xml
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FORESTRYSA

The Hon. J.J. SNELLING (Playford—Treasurer, Minister for Workers Rehabilitation, Minister for Defence Industries, Minister for Veterans' Affairs) (14:12): I seek leave to make a ministerial statement.

Leave granted.

The Hon. J.J. SNELLING: On Tuesday 3 May 2011, I confirmed that the South Australian government's intention was to proceed with the proposed forward sale of ForestrySA plantations in the South-East originally considered as part of the 2008-09 Mid-Year Budget Review. This decision was made following the preparation of a regional impact statement by an independent external economic consulting firm and a broad consultation process.

Members interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: At the time I gave my pledge to the house and to the community that steps would be taken to protect the interests of the South-East.

Members interjecting:

The SPEAKER: Order! Treasurer, can you sit down, please, for a moment until we have some order in the place. Members on my left will behave or they will leave the chamber. Treasurer. Sorry.

The Hon. J.J. SNELLING: One of the most important steps taken after that announcement was the establishment of the South-East Forestry Industry Roundtable, which is made up of community leaders and union and key industry representatives. The round table was set up to examine the broader issues the forestry industry in the South-East is faced with and to provide me and the Minister for Forests advice on specific conditions to make certain we protect the long-term future of the timber industry and the interests of the South-East community should the sale of forward rotations proceed.

Members interjecting:

The SPEAKER: Order! Treasurer.

The Hon. J.J. SNELLING: As I promised, the roundtable recommendations and my response to those recommendations have been made public, and I am pleased that, after thorough consultation, the government has reached a consensus with the round table. Through this effort I think that the people of the South-East can feel secure that jobs are now—

Members interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: —protected and that their futures in the forestry industry will continue to thrive. The agreed conditions of sale will be enforceable and will include four main measures of rotation length, domestic supply, reporting requirements and replanting obligations. Firstly, to keep the integrity of the standard of forest product coming out of the region, the new purchaser will need to achieve a minimum area weighted average clear fall age of between 32 and 35 years, which will be for at least 32 years. This length is consistent with the policies currently adopted by ForestrySA.

To guarantee a future local timber industry, the purchaser will need to ensure that there is a commitment to match ForestrySA's current level of planned viable domestic supply. The purchaser must offer uncontracted sawlog that it wishes to export for sale pursuant to a competitive open market tender process that incorporates domestic and international customers. This will not prohibit the purchaser from continuing to supply sawlog to domestic customers pursuant to existing sawlog sale contracts (including the extension of any such contracts), new sawlog sale contracts or spot sawlog sales. The purchaser is not allowed to enter into any sawlog export contract with a term greater than two years.

We have also set strong reporting obligations to make sure that the purchaser is meeting the conditions imposed on the sale. The purchaser will be required to report annually to the government on many matters over the life of the transaction. Additionally, there will be an obligation on the purchaser to report material breaches as soon as the purchaser becomes aware of them. If the purchaser breaches the contract, in certain circumstances this government could impose financial remedies and/or sanctions if the terms are not being met. For severe breaches, such as failing to use the estate for forestry purposes, the state can terminate the contract and, if necessary, take back complete authority over the forests.

To protect the long-term sustainability of the plantation, the new purchaser will be obliged to replant areas of the estate when they are felled or destroyed by fire. The purchaser will be compelled to use the available land for forestry purposes only. All other matters raised by the round table have been considered as part of the sales process. These include:

the South Australian government retaining ownership of the Green Triangle forest land, the water rights and any carbon rights;

all current ForestrySA staff will remain with ForestrySA as public sector employees; and

the government ensuring the current level of community fire protection remains. The successful purchaser will be required to fund the specific fire management costs that would be borne by a private plantation estate. Additional fire service will be funded by the government.

This government recognises the importance of the state's forest industry and is committed to addressing the many challenges facing the industry, irrespective of the proposed forward sale of forest rotations. The government intends, and will act, to protect the interests of industry, the community of the South-East and all South Australians.

I would like to take this opportunity to thank round table chairman, Mr Trevor Smith, and members of the round table—Phil Lloyd, Ian McDonnell, Richard Sage, Brad Coates, Matthew Brookes, Chris Peterson and Mark Braes—for their countless hours providing comprehensive recommendations to benefit the forestry industry and the local community. I would also like to thank the member for Mount Gambier for his constant representation to me and for his questioning in this house on this very important matter on behalf of his constituency—in stark contrast to members opposite, who just want to play political games and talk down the people of Mount Gambier.

Members interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: The member for Mount Gambier—

Members interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: The member for Mount Gambier has demonstrated his genuine passion for the people of the South-East.

The next stage of the sale process is to release a Request for Indicative Bids to shortlist potential bidders following the release of the Information Memorandum last Friday. The Information Memorandum included the conditions that I have described in this statement to the 11 interested purchasers, so that they can put to the government their indicative bids for the asset. The short-listed bidders will then be able to determine their binding bids and submit an offer for final negotiation later this year. Cabinet will then decide if it approves the final bid for the sale. The forward sale process is expected to be completed by the end of this year.

Members interjecting:

The SPEAKER: Order!

Members interjecting:

The SPEAKER: Order! Member for MacKillop, behave.

Members interjecting:

The SPEAKER: Order!

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