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Legislative Council - Fifty-Second Parliament, First Session (52-1)
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Parliamentary Committees

SELECT COMMITTEE ON HARVESTING RIGHTS IN FORESTRYSA PLANTATION ESTATES

The Hon. R.L. BROKENSHIRE (15:55): I move:

That the interim report be noted.

Many members will possibly want to talk on this interim report when parliament resumes in February next year, and I will speak further to the select committee at an appropriate time when we are in a position to bring up a final report. However, I think that given the circumstances at the moment, it is important to spend some time talking to the interim report.

Firstly, I would like to acknowledge our parliamentary colleagues who were on the committee. There have been some changes due to certain members being promoted to ministerial positions, but they have been ably replaced by other government members. We have been meeting as regularly as we can to do our work as quickly, but as diligently and thoroughly as possible.

I need to put on the public record that it was not a unanimous interim report. It was a majority report but, as you would expect, government members—and rightly so from their point of view—did not support the findings of the majority of the committee. The committee felt that it was important that this interim report be tabled to the parliament before we got up at the end of this year for the Christmas and new year recess, so again I thank all colleagues on the committee for their efforts.

One of the reasons the majority of the committee thought that we should report is that, whilst we were doing our work as a democratically elected select committee, the government, mainly through the Treasurer, was proceeding quite rapidly with further developments in getting the forests ready for sale. About two weeks ago, the EOI was advertised and a press release was issued associated with the preliminary advertising for expressions of interest.

Not long before that, we also saw Hancocks (an international company, I think, primarily in the business of superannuation) approach the ACCC on the basis that they wanted to get a sign-off from the ACCC (similar to the action that Coles took before they started their 'down, down and staying down' campaign) to see whether or not the ACCC would approve the company as a purchaser, albeit that they had recently purchased other significant forestry assets in Australia, and they did that in a way whereby they looked at bringing in a partnership under an MIS, and I understand that the ACCC has proceeded down the analysis track for that international company.

Therefore, we felt that it was important for people not only in the South-East but right across South Australia. I know that the South-East has particular concerns about risk factors when it comes to the privatisation of the forests, but I can tell you that, having spoken to many people right across South Australia, including those in the metropolitan area and in marginal seats, there is a lot of interest and quite a lot of concern as to why the government would be privatising three forward rotations. In fact, the time period for these three rotations is well over 100 years.

The Treasurer said that he would take note of the recommendations made by the round table he had set up and attempt to accommodate them within the context of the government's forward selling the three rotations. Also, we were in the middle of our deliberations, and we felt that it was important to make sure that all South Australians had a chance to look at the report.

The first recommendation I want to speak to was supported by the majority. Again, to be fair and to make sure that it is clear in Hansard for all who read it, there was not absolute agreement of the committee; two members did not agree. However, the majority did agree to the first recommendation that the sale should not proceed, based on the evidence. When members have a chance (and hopefully they will) to look through the interim report, they will see that the overwhelming evidence was against the sale. In fact, the only support for the sale was from Treasury and that was it.

If you analyse the evidence given down in the South-East by ForestrySA, including from the head of ForestrySA, Mr Robertson, and also the then chairman of the ForestrySA board, Mr John Ross, you will see that, whilst they were very careful in their evidence, it is clear that ForestrySA itself also had huge concerns about this privatisation. In fact, it is fair to say that, from the evidence in this report, it is pretty clear to me that Treasury is absolutely dominating when it comes to this and that ForestrySA, with all the expertise—

The Hon. D.W. Ridgway interjecting:

The Hon. R.L. BROKENSHIRE: —with all the passion and with all the delivery of the benefits to the state so far, really was silenced, as the Hon. David Ridgway said.

In summary, the reason the majority of us put as No. 1 that the sale should not proceed is that it is clear that this is one of the very few jewels left in the crown of South Australian taxpayer-owned assets. I think that it is unfortunate that legislation does not have to come before this house. I know that some members of the government say, 'Well, Brokenshire was there when ETSA was privatised,' and that is true. However, it was a completely different ball game when ETSA was privatised. It is not financially a very different ball game now. I will not spend time on that now; I will spend time on that when we debate a motion I have about the former premier.

Notwithstanding that, at the time ETSA was privatised, the state was coming out of the State Bank situation. It had high debt, and it had been through a very difficult time. On top of that, the then prime minister, the Hon. Paul Keating, for the right reasons, although it does not seem as though it has panned out that way for electricity users when it comes to their power bills, believed that they had to break up monopolies and set up a national power grid and corporations and entities within the power industry. It was a different ball game.

It is not the case with the forests. There is no federal push to do anything like that with these forests. In fact, I put on the public record that for three centuries these forests have been owned by South Australian taxpayers. As custodians over those three centuries, whether it has been a Liberal or Labor government in office and whether it be the old woods and forests department or now ForestrySA, they have not only ensured that those forests have remained but also ensured that there were growth opportunities in that estate.

Over that period of time South Australians have, generally speaking, done very well when it comes to financial dividends from our forests. There were exceptions to that. The Ash Wednesday fires—many people may have been down there; I remember seeing them—devastated a lot of the asset of the government at that time. It was horrendous. There was also a fire after that, in more recent years, that wiped out quite a bit of forest as well, because I remember flying over it when we were down for the community cabinet.

The point is, notwithstanding those difficult periods where a lot of the forest was effectively wiped out, that they have still been able to provide excellent returns on investment to Treasury over the greatest part of even that period. In fact, in some of the evidence in the interim report members will see that whilst the ballpark figure for net return to Treasury over probably the last 10 to 15 years was around $40 million to $43 million, in the not too distant future ForestrySA projected, and gave evidence to the committee, that they felt it would not be too long before they could return $50 million a year and still see growth with respect to net returns to Treasury.

It is interesting that the annual report has just come out, as well as the Auditor-General's Report, and I note that in the last financial year $48 million has been returned to Treasury. On top of that ForestrySA has been able to accumulate $17 million in an account as part of its self-funded insurance liabilities. It has been able to put that aside, and it has been able to develop a state-of-the-art firefighting fleet which not only looks after ForestrySA and its estates but is also able to assist National Parks and Wildlife with native vegetation ownership there as well as other forestry investment and farmers' investments in that region.

When it comes to critical incident management, the majority of people who work even in the head office of ForestrySA in Mount Gambier are highly trained to assist in the management of a critical incident. These are all what would be called community service obligation benefits that have been there for a very long period of time when it comes to ForestrySA and what it delivers for what might be described as the public good.

It also became quite clear from the evidence that once you shift from the South-East—and the South-East is the jewel in the crown, as I said—there are other forestry responsibilities and obligations and other government-owned reserves and parks, through the Kuitpo Colony area of the Mount Lofty Ranges, a little bit down at Parawa and then quite a bit up around Willaston and those areas in the northern end of the Mount Lofty Ranges, and also through Wirrabara in the Mid North. ForestrySA was also able to fund the management of those.

Colleagues might say that they expect them to, but the point I am highlighting here is that they do not return net to the Treasury. They are probably going to become a liability if this privatisation occurs and, from the evidence that we were given, it appears that Treasury has not factored that liability into its decision on the sale. In fact, it hit me quite clearly during the evidence—I probably should have woken up to this a long time ago, because sitting around budget bilaterals you watch with interest just how Treasury works, but never before has it been so clear to me that Treasury really wants to get rid of as much asset as it possibly can. It wants to cast it adrift.

It will put up with the fact that there are certain things that they have to own and provide, such as hospitals and schools and a few of those things, but wherever they can, as I see it from the evidence given, it wants to get rid of assets. Basically, it wants to be more focused on managing income and expenditure on a cash flow basis year-in year-out and get rid of any potential risk. In fact, that is where I come to the next point and the reason the majority say that we should not proceed with the sale.

I refer not to the two honourable colleagues who have recently been appointed as replacements, but one who has recently retired—someone for whom I have a lot of respect and who is a former minister for agriculture, fisheries and forestry—and that is the Hon. Paul Holloway. One of the things that Paul had in his mind, which had obviously come from Treasury, was that we really need to get rid of this because it is a risk. It is a risk; it is a risky business. It is a risk and we should discard it, cash it in, get whatever we can from it and go from there.

Only as recently as just over a week ago or in fact the same day that this report was tabled in the parliament, the federal committee chaired by someone who knows a bit about forestry, I would expect—he is a member of parliament in the House of Representatives, a Mr Adams; I think he is the gentleman with a big beard from Tasmania—

The Hon. J.S.L. Dawkins: Dick.

The Hon. R.L. BROKENSHIRE: Dick Adams. Dick is the chair of that federal committee which handed down a report into forestry as part of its work as the federal parliamentary committee for agriculture, fisheries and forests. It is interesting, and I encourage colleagues to get on the internet and have a look at it, but they are saying that we are about to see one of the most exciting opportunities for forestry that you could ever imagine. In fact, they project that we need to expand our forests by a very large extent to accommodate the growth in demand in Australia for timber product.

Of course, parallel to that, we have seen an increase in timber imports into this country. When it comes to radiata pine, from all the evidence given to the committee, South Australian radiata pine and a little bit into Victoria as well, to be fair—that Green Triangle area there, the South Australian Lower South-East/Mount Gambier region and into Victoria is apparently arguably some of the best radiata pine softwood timber-growing country that you would find anywhere in the world, so there is opportunity there for expansion.

When members look at the report, the government department or one department, mainly—Treasury—said in evidence that there are limitations on how we can expand and we need to expand and whether the government really want to do that or not they were not sure, and yet Treasury did still sign off and approve over a million dollars for purchase of additional land in this last budget that we are working through now and also, before that, they always had money there each year to buy more estate.

To be fair, it was a bit difficult to buy for a while because when the MISs were fully on with respect to blue gums, they were just outpricing farmers and Forestry SA in buying the land but, since the government has made his decision to privatise the forests, MISs have fallen over and, in fact now they are talking about plenty of potential to buy existing blue gum plantations to fell those or mulch them in depending on their size and then to actually be able to plant them up with radiata, so there is actually an opportunity, different to what Treasury has been saying, for growing the estate.

The other final two reasons at the moment—and I will not spend too much more time on this, but I think it is important—came up on Monday night at Mount Gambier when I was down there for what I thought was going to be a public meeting, but we will not go into that now. There were a few of us there who thought we were actually invited to speak, and one of those was Brad Coates. Brad Coates is a former Labor candidate for Mount Gambier, I think in 2006 or 2010. He is a decent bloke, and he also heads up the union down there. He knows forestry.

He made the point that we need to see a plan on how we can grow our forestry in the South-East. He made a point also that there were already jobs disappearing, and he was very concerned about that. He was particularly concerned about what might happen in the future, because part of the concern about retaining those jobs and growing those jobs is: what is going to happen to the public ownership?

At the end of the day, public ownership is the major stakeholder. Forestry SA is the major stakeholder that underpins all the forestry, all the silviculture in the South-East. When it comes to R&D and coordinated approaches to managing and growing the forestry estate in the South-East, it is ForestrySA that is doing that. The government, in evidence, cannot guarantee that it will keep ForestrySA in the South-East. It cannot guarantee any jobs, not even for 10 years, yet we are talking about privatising for over 100 years. I think colleagues can see the concerns there. That was number one.

The majority of the committee felt that there needed to be some fallback position because some of us hope that the government will do a backflip on this. One of the reasons that has come out publicly through Treasury is that we need to sell these forests because we have to hold the AAA credit rating. In fairness, that has not been said since the Hon. Jay Weatherill has been Premier; that was said when we were looking at all of this when Mike Rann was premier, but the same Treasurer, the Hon. Jack Snelling, was there. It was indicated that we have to sell this because this is integral to holding the AAA credit rating.

When we heard some evidence from Treasury—and I would like to see Treasury come back now we have more time, given we have put this interim report in—they said, 'Yes, the retention of the AAA credit rating is very important to us. However, we have contingency plans. If, in the end, it doesn't sell, we believe we have contingency plans to still hold the AAA credit rating.' From that point of view, you would have to say, 'Why sell it then?' If you have other contingencies and this beautiful amount of money coming in and growth opportunities, why sell it?

Since then, we have seen the new Premier come out and say that we may not hold our AAA credit rating. If we are not going to hold the AAA credit rating and go to a AA plus or something like that, then why sell it? We might need the money to help repay state debt from a cash flow point of view into the future. I put that on the record.

If the government has its head so far in the sand on this issue, I think there will be a big risk in the marginal seats. If the government goes ahead with this sale, I have to say that I do not underestimate the tenacity, capacity, vigour and desire of the people in the South-East to mount a campaign right back into those marginal seats at the next election. I would not be surprised if we saw big log trucks running through marginal seats with very big messages about privatisation in the last week or so, when it really counts, in those seven marginal seats.

The government thinks, 'This is only going to affect the South-East, so we'll do this. We'll sell it out, we'll do it, and that will be it. We'll get it done and dusted. That's why we're pushing hard, because we can probably get this sold by March or April, May at the latest. We'll have the money in early in the next financial year and everyone will forget about it by the election, which is not until March 2014.' But the South-East will not forget about it.

I say to the government: if you want to be re-elected—at the moment, whilst I am not a gambling man, my analysis would be that it is line ball or maybe the government is a seat or two ahead—I would not be risking a seat or two and out of government, if I wanted to hold it, for $500 million or $600 million, when you have about $9 billion worth of core debt coming at you by about the next election. I think it is pretty close to that figure. I put that on the public record as something the government should consider.

If the government still goes ahead, we have said that 20 per cent of the proceeds of the sale be placed in a legislated ForestrySA forward sale legacy fund to fund social and economic stimulus activity exclusively in the South-East. I do not see how a government can put at risk a whole region. Sure, there are arguments about the global financial crisis, all the worries in Europe and all the rest of it at the moment, and I acknowledge them to an extent. However, the economy and what is happening in Mount Gambier and the South-East at the moment is absolutely terrible, and they will need some assistance. That area has been part of the significant rural engine room of this state since it was first cleared and settled.

We are arguing that there should be a fund. There are already things like the Riverland Futures Taskforce. We do not know if they are going to sell it for $500 million or $600 million—maybe $650 million; maybe less than $500 million. However, we know from the evidence given to us by people who are very highly qualified, like Dr Jerry Leech, that if you sold it for under a billion dollars you would be giving it away, and that its value is probably more like $1.1 billion, at least. That is if you are just trying to capitalise on the current value, not from the point of view of where your overall benefit might be with the money you put up-front to reduce your interest component through Treasury as against the growth opportunities for forestry in the future. We in the majority said it should be 20 per cent.

The South Australian government must fund whatever remains of ForestrySA to maintain and ensure the existence of state-of-the-art rapid responsive firefighting capabilities. There are a lot of recommendations here but I want to touch on that one. I will not go through all the recommendations because my colleagues are busy today; however, they all have a copy to read. This one is very important because the CFS volunteers said that they cannot look after the fire risk in the South-East or, indeed, any of the other areas where the South Australian government owns forestry, unless the government makes sure that the minimum we have is the standard that we have now with no reduction whatsoever. That is a very important consideration.

One of the other considerations that has been recommended in section 2 by one of my colleagues is that, if the sale is to proceed, the report of the round table should be published prior to the sale. There is no doubt about that. The government is putting a fair bit of pressure on the round table to compromise and appease people but still assist with the government's intent. I am worried about that because, although I have no absolute evidence on it, when you go down to Mount Gambier and walk around the streets, people feel that the round table is under undue pressure from Treasury, and I do not think that is good, and certainly the Hon. Jack Snelling should ensure that it is published.

That is one of the reasons we did not make a final report now. We could have put in a final report but our colleagues need to know that we have not finished with our recommendations at this time. The other reason we did not make a final report is that we have been trying to get documentation from ForestrySA on board minutes. I am not allowed to talk about these in detail because they have only just been received but they are being published at the moment (or may already be published) and so everybody can look at them for themselves.

The point I want to raise is that we had to make an interim report because we were waiting for ForestrySA board minutes and we were only able to table them today. I thank my colleagues on the committee for their cooperation so that they were tabled today. They were held back because someone decided that they needed to have the Crown Solicitor's Office and crown law go through them to see that there was nothing that might have been against the issues of commercial-in-confidence and cabinet submissions.

We also looked at issues around raw log, ensuring that there are guarantees of provision for local processing mills because more and more raw log is already being taken down to Portland and exported. We had anecdotal evidence—I highlight that it was only anecdotal and I would like to see some factual evidence—from the South-East where we were advised that up to 50 pulp mills are being built on wharves in China at the moment and that they will be very hungry to buy raw log or basic log and, of course, there is a lot of concern in forestry about that.

We have also said that, if the forward sale proceeds, the state government should conduct a full and proper consultative and transparent regional impact assessment within 18 months of the date of sale. There is a further recommendation that, where possible, the conditions identified by the round table to be placed on the forward sale of forest rotations should be incorporated into the Forestry Act 1950. That is a good recommendation in my opinion. It shows the concern that some members on the committee have for the future of forestry and how assured we will be of the roundtable recommendations being adopted.

One of the reasons for the regional impact assessment recommendation is that to this point we do not have a regional impact statement. ACIL Tasman did what they had to do within their terms of reference and they did what we would call preparatory work for a regional impact statement. Treasury had to complete that and, as best I understand from the advice given to us, that has not been completed, nor has a net cost-benefit analysis. In fact, I believe the evidence from Treasury says that they will do that once they have had a look at the EOIs. I find that extraordinary, frankly. I felt that you would have been doing all your modelling, you would have had a look at all the pros and cons of this proposal and you would have known exactly what the net cost-benefit analysis was telling you.

I also want to highlight one or two other recommendations that the majority felt were important and that is:

That the Auditor-General:

(a) investigate and report to Parliament on the current forward sale process with full disclosure:

(i) from Treasury on the extent of its own Regional Impact Assessment…

(ii) of any full-cost benefit analysis conducted by or for Treasury; and

(iii) of the forestry estate's harvesting rights' various valuations, over time and during the sale process, proposed reserve purchase price and ultimate sale price (if reached before the conclusion of the Auditor-General's investigation).

I think this interim report is a good report. I have a lot of time for the Hon. Jack Snelling as a person and he is under the pump at the moment, but he has just dug in and said, 'We're going ahead with the sale and that's it, and we're not going to take any notice of the select committee.' I will ensure that the community knows about that later on if this privatisation does continue, because I thought that we were away from the arrogance now, that we were actually into consultation, that we were seeing the odd backflip, some half backflips, and certainly seeing a Premier moving more through the regions.

I put this on the public record for the Hon. Jack Snelling to answer: if this was his own asset, if his family owned this, would they privatise it? Would they actually make this decision to go out and privatise it if it was owned by the Snelling family? I don't believe so. Why would you privatise something that is delivering such a magnificent return to the people of South Australia, that underpins 5,000 jobs or more in the South-East, that has the opportunity to grow, to return more investment to the South Australian community?

With renewable energy opportunities coming forward into the future, with the carbon tax and climate change policy and legislation we are now seeing coming through federally, I just have to conclude by saying that I see from the evidence given in this interim report that it is a very bad decision to privatise these forests. It is the wrong decision for the South-East, it is the wrong decision for South Australia, and it is certainly the wrong decision for future generations.

I will be the first person to come out and congratulate the Premier, Jay Weatherill, if he comes out and says he has had a look at it. He is now the Premier—and he has said this on a couple of other occasions already—and he has weighed it all up. He has an economic background, as well as a legal background; he has weighed it all up and he is going to withdraw this, because there are other ways of managing it.

There are other ways of managing it. Sure, when you have high debt sometimes you have to sell off the back paddock, find a back paddock there that is not paramount to your farm. You sell that off, but you do not sell your best land, you do not sell what is generating the income for you. South Australia is starting to sadly lack in economic generation net returns that are significant to the state government.

The Hon. Jay Weatherill is going to Mount Gambier on either 8 or 9 December, as I understand—that is next week. Now, the Hon. Jay Weatherill is going down there with good intent; there is no doubt about that, I am sure. Part of the reason he is going down there is because there is a lot of criticism that the former premier just would not go to Mount Gambier to discuss this issue.

I understand that the Hon. Jay Weatherill is meeting with a number of key stakeholders when he is down there. If he goes to Mount Gambier simply to say, 'Well, I have been down and visited,' or if he goes down there and makes an announcement about new lights on a commercial road, or a bit of infrastructure like that, that will not appease the people of the South-East.

The Hon. Jay Weatherill needs to go down there having looked at this interim report—and it is important that the Premier does look at this interim report before he goes to Mount Gambier because, contrary to what Treasurer Jack Snelling has said, this report is the most detailed information transparently available to the public and the Premier that has been provided so far.

It is clear from evidence, as we developed this interim report, that Treasury has not done the work that we have done, and Treasury is just out there, wanting to sell this at whatever price it can get. If Treasury ends up selling this for $300 million or $400 million, there will be war over this matter—that is how I see it.

Members interjecting:

The Hon. R.L. BROKENSHIRE: Seriously, there will be a political war—

Members interjecting:

The Hon. R.L. BROKENSHIRE: There will be a political war in this state from now until the next election, because people are sick and tired of privatisation. They are sick and tired of fire sales and lack of management, and that is why I say there will be a political war. Mark my words. How dare Treasury sign off on pretty much anything they can get for this? I say to colleagues: do a little bit of homework on how much the Queensland forests sold for. Do a bit of homework on that; have a look at how much they sold that for, and have a look at what we may end up getting if this is privatised.

In conclusion, I also want to acknowledge—and I will not name them—the parliamentary and research officers who have been so busy, committed and professional in the way they have gone about their duties. We still have a way to go, and I believe that, as the debate continues, the committee will need to meet a few more times. I will be suggesting to the committee that there are some witnesses we need to get back, particularly from Treasury, because I think there are a lot of questions that have not been answered by Treasury.

Finally, I appeal to the government to have a close look at this interim report and to halt the sale proceedings until they at least see the round table recommendations and the final report of the select committee. Again, I thank my colleagues, and I commend the interim report to the chamber.

The Hon. D.W. RIDGWAY (Leader of the Opposition) (16:33): I rise to speak to this interim report of the forestry select committee. It is unusual that we have a compilation, if you like, of recommendations; some proposed by the Hon. Robert Brokenshire, some proposed by the Hon. Gerry Kandelaars, and obviously, some proposed by me—so, I guess, Family First, the Liberal Party and the Labor Party.

The Hon. John Gazzola mentioned at one of the committee meetings that this was a silly thing to do, that we would look foolish, and we should not be tabling the report in this way. I do not think that we are foolish, and we are not silly. It is a little irregular to table a report where you have a group of recommendations, but the majority of the committee felt that it was important enough to actually get these recommendations out there so that the community can tell who was actually serious about sticking up for them, rather than those on the committee who would just roll over, have their tummies tickled, and do what their superiors in government ask them to do. This announcement, which promulgated the formation of the round table, came earlier this year with Treasurer Snelling announcing that the forward sale of three rotations would go ahead.

It is rather interesting. The Hon. Robert Brokenshire spoke about other ways to manage the finances and other solutions. He mentioned that the Premier, the Hon. Jay Weatherill, comes from an economic background and that Treasurer Snelling was under the pump. I reminded him that nobody forces Treasurer Snelling to do this job, and I do not recall seeing anybody—any soldiers or any army in the street with guns—forcing any of us to do this particular job, but you have to put it into context. This is a party that is in power, selling our forests. Their own party had a hotel in Port Adelaide that has gone broke. Of all the places in this state to have a hotel that then goes broke—if they cannot run a pub in Port Adelaide, then clearly our state's finances are at risk.

This decision was made on the back of a decision by former treasurer Foley to, as he claimed, investigate the forward sale. We heard evidence, and I will come to a number of the pieces of evidence we heard. We heard anecdotal evidence. I was not in parliament or in government. Treasury has for some time put that up as one of the options for government to consider, and the former Liberal government chose not to ever accept that option. There were some tough decisions made by the former Liberal government, but they were not prepared to sell out the people of the South-East.

Of course, during that whole process, when the former Liberal government was making tough decisions, the former member for Mount Gambier, the Hon. Rory McEwen, was elected to parliament and, of course, he was forestry minister at the time this decision was made. I recall the premier, when the Hon. Rory McEwen and the Hon. Karlene Maywald were made cabinet ministers, saying, 'This is my rural conscience, my country conscience, in cabinet, because we don't have any country members in cabinet from within the ALP.'

This was a way of making sure that there was somebody within cabinet sticking up for rural and regional South Australia. I think it was a very clever ploy by former premier Rann because this certainly portrayed to the community, especially the rural community, that they did have a couple of people on the inside who would stick up for their interests. I would just particularly like to refer to some of the comments the Hon. Rory McEwen made. He made an opening statement, and I will just quote from Hansard. He said:

Kevin Foley...Thank you, David. Kevin said to me, 'How would you feel about selling ForestrySA?' I said, 'Over my dead body. You know where I stand.' He said, 'Only joking. I knew that's how you felt. Besides, we agree because we've got a no privatisation policy.' But then he said, 'What about having a look at another way of using the revenue stream? If we hold an investigation...using the revenue stream, how do you feel?' I said—

this is Rory McEwen—

'I don't have a problem with that. It's going straight into consolidated revenue.' My thinking at the time was that, if we do an inquiry into that, here is an opportunity for us locally to say, 'If you want to use that revenue stream differently, we wouldn't mind hypothecating a bit of it and using it locally.' So, there was a little bit of community self-interest in saying, 'I've got no problem with the inquiry into looking at the revenue stream, but don't go and announce it'—

That was what he said. Then, of course, it changed. Mr McEwen went on and spoke about some other matters, then he came back and said:

I then said to Foley, 'Make sure...that, if you're going to say anything about using the revenue stream differently off the balance sheet—on the balance sheet we'll simply borrow the money and use the revenue stream for service if that has an impact in terms of debts and equities', and all that public accounting stuff that I don't understand. I said, 'But make sure you qualify this here and now. Make sure you say...it's not about outsourcing [the management of] ForestrySA, it's not about selling the trees...it's not about selling the land...it is only an investigation.' That was all done.

We can see from that point in the discussion that the former minister and former local member, the Hon. Rory McEwen, made it very clear to us. I suggest that either he did not make himself clear to the Hon. Kevin Foley or the Hon. Kevin Foley did not make his intentions clear to the Hon. Rory McEwen, because it certainly appears from the evidence that Mr McEwen gave that he was absolutely opposed to the sale, although he did say that he did not understand all that public accounting stuff. So maybe he did not understand some of what was said in that conversation.

However, clearly, in the early days, somebody was misled. It was either Mr McEwen who was misled by Mr Foley and the rest of cabinet, or Mr McEwen knew exactly what was going on and was not straightforward. Those who saw any television coverage would know that he and I had a robust debate in the select committee. I think he genuinely does not want the forest sold; he may well have been just a bit quiet when all the negotiations were going on. He then went on to say:

Things might have changed. Obviously, I have been out of [cabinet] for 2½ years, but I just want it clearly on the record what happened at that time. There was some argy-bargy between my chief of staff and Kevin's chief of staff about the wording. I didn't want the wording to be able to be misrepresented, and forward selling three rotations I thought was gobbledygook. I don't think anyone to this day knows what that means.

Sadly, we do know what it means: that the South-East's asset is to be sold. He went on:

At least I was comfortable to know that it did not mean outsourcing the management, selling the trees or selling land, and it was only an investigation that would last for 18 months. That was December 2008.

At the select committee I sought all of the notes and correspondence in relation to the—as he described it—'argy-bargy between my chief of staff and Kevin's chief of staff'. Sadly, on my understanding, and I think I am correct, we have never been provided with any of that correspondence or the argy-bargy, shall we say.

If it was of that much importance that the former member for Mount Gambier (the Hon. Rory McEwen) was concerned about the wording, you would think there would have been copies of the draft wording, draft statements, press releases, etc., so that he was comfortable with the wording.

The Hon. J.S.L. Dawkins: Did it exist?

The Hon. D.W. RIDGWAY: My colleague the Hon. John Dawkins interjects—and I know it is out of order, Mr President—that he wonders whether that ever existed at all. The local member (the minister at the time) said that he did not support the sale, yet, since then, the sale has gained momentum. The government's intention is to gain momentum.

The other thing I come back to is who misled or misunderstood whom. It is my understanding, and the committee's understanding, that the forward sale was factored into the forward estimates for the purpose of holding on to our AAA credit rating. If Mr McEwen was of the view that it was just a creative look or a study into the revenue, how could that then be looked upon by the ratings agencies as absolutely guaranteed to be available in the forward estimates to reduce government debt. The two statements do not have any correlation. I do not know how Moody's and Standard & Poor's can look at a figure that was, in the minister's view, just an investigation. Yet they have taken it to be factual and that it will be in the forward estimates.

I think there are some important questions that have not yet been answered by Treasury. I certainly hope—as the Hon. Robert Brokenshire said—that we will have Treasury back to give us some more evidence and to have some more scrutiny. I think there is a period of time where there have been two different points of view about exactly what has been happening.

Mr McEwen said he never agreed to it. Maybe he should have jumped up and down a bit more. We understand that really nothing was announced. If we look at that study, it culminated, and the announcement was made after the Hon. Rory McEwen retired from parliament. I guess in that sense he was well out of the way. I was opposed to it; I did not support it. Of course, he blamed the zealots in Treasury.

The Hon. Rory McEwen should have been more vigorous and pounded the desk more, and he should have been alert to it. He was around in parliament and in public life in the South-East for the last 20 years. He would have known that the zealots—as he expressed it—in Treasury had always been after it. To allow an investigation and to agree with it, to me, just seems crazy. It is interesting that we saw the Hon. Jane Lomax-Smith excused from cabinet to criticise cabinet decisions. It is interesting that the Hon. Rory McEwen either did not seek to be excused or was not excused, and you would have thought this would have been the perfect opportunity for him to defend his community's major asset by excusing himself from cabinet to attack the government.

We heard from a range of witnesses. They were local experts, local government people, businesspeople, the CFS and Treasury. Of the local experts, I think the one that had the most credibility was Dr Jerry Leech, who is an expert on assessing the values of standing forests. He gave evidence on a number of occasions and spoke in the media on a number of occasions. I suspect that, if there are competing bid teams wanting expert advice on the value of the forest, they will be using his expertise.

He indicated that the asset was significantly undervalued, if the figure of about $600 million, maybe $700 million at an absolute maximum—and that is an absolute maximum price that was ever given to us in evidence that it might be worth. He indicated, as the Hon. Robert Brokenshire said, that in his view the asset was worth between $1.1 billion and $1.2 billion. On the pure raw figures of an asset that returns $45 million a year to Treasury, and to sell it for $600 million (for the purposes of this argument) which is roughly 15 years of revenue, and you are selling 100-plus years for 15 years, just does not make sense. It is the bargain of a lifetime.

It seems rather strange that the very top figure we were ever given was $700 million. Off the record I was given a figure that could possibly be as low as $300 million. It is a tragedy; the forestry asset should not be sold at all. I just hope that the state's finances are not in such a disastrous state that Treasury and cabinet finally sign off on a sale that is just a fire sale. Even at $1.2 billion, if that sort of figure was achieved, it is something you should not entertain when we are looking at over a century of activity within the South-East to build this asset only to then sell it and put it off to another owner with some uncertainty about the future.

Members will recall when the Treasurer announced the sale, he appointed a roundtable—not straight away, though. There was some community pressure. I think the former premier was feeling some heat about the decision, so they announced a South-East Forestry Industry Roundtable. That roundtable was made up of some community stakeholders; I think Brad Coates from the union was there; there were some timber mill people. I cannot recall the exact make-up, but I think it was a very representative—

The Hon. R.L. Brokenshire: Mayors—one of the mayors.

The Hon. D.W. RIDGWAY: A couple of the mayors—I think it is very representative. We are certainly not critical of the composition of that roundtable. What I am critical of is that you had to sign a confidentiality agreement and they are not able to discuss that outside, not allowed to talk to anybody and not allowed to provide a copy of their recommendations, even to our select committee. At the end of the day, the community really does not know whether those recommendations arrived at by the roundtable will ever be taken into consideration. I will come to that when I speak to the three recommendations that I proposed.

We spoke to local experts and it was easy to see that this sale, if it was to go ahead, would be at such a massive discount to what the asset is worth that it really should not be considered. Local businesses also gave evidence—the hardware businesses, saw millers, transport operators. They were all very concerned. The hardware industry was concerned about the supply of building timber. This is a great source of framing timber for the housing industry. While we do produce a lot of iron ore—and South Australia will produce more iron ore, I suspect—iron ore is a component of our exports and, at the end of the day, they saw that as a real risk to their industry to have to import framing timber. We already import some. There was a risk that if logs were exported and less timber was milled into framing timber, then there would be a risk to the quality of housing and also to jobs in the South-East.

Other local businesses, which I think is important, and I am not sure whether the Hon. Robert Brokenshire mentioned this, are the family owned sawmills. When the Liberal government sold a couple of the mills, what happened is that all of the second grade timber was pushed up into windrows and burned. Once these other mills were sold then, of course, ForestrySA had a commercial agenda, and you have three or four smaller mills that have come up, if you like, milling the second grade timber.

We met with the Whitehead family and we also met—I cannot remember the name of the business—the Forster family, who are out towards Glencoe. Those small businesses, to keep pace with competitors, need to be able to invest in new equipment and keep up with the latest technology. If they do not have a guaranteed log supply then they are not able to go to the bank. One company said to me that they have contracts for seven or eight years (I think), they had gone to the bank with a proposal to invest in some modern timber milling equipment and the bank said, 'Well, eight years isn't really enough. It is a bit uncertain. We would like you to have 15 or 20 years supply of logs.'

The awkward situation they find themselves in, as a small business, is that they have young family members who have finished secondary school who are wanting to bring some business acumen from university into the business, yet there is this uncertainty because of the supply of logs. So, the real concern these people raised with the potential sale is: are the logs still going to be available? Is a future owner going to export them all? We have heard evidence that that is unlikely to happen, but with things that are unlikely to happen, you just never know.

So, this potential forward sale has created a lot of uncertainty in the community. Local transport businesses were equally uncertain as to how it would affect them, what was being done in relation to freight movements and which businesses would get a chance to expand and which businesses would lose opportunities. It was not just the guys who might work in the timber industry, it was a flow-on effect right across the whole community.

One other issue that was raised was the fire risk. I think that is a little underestimated by people. We should not forget Ash Wednesday, and I think none of us do forget, but as things are more distant in our memory, the magnitude and the impact it had on the community is somewhat diminished. We heard evidence from local councils and the CFS that they were very concerned about the firefighting capability of the new owner. If a new owner is to own the forestry, will they provide the same level of fire protection?

ForestrySA does not only protect its forestry asset, it has an advanced warning system where it actually protects (I think) about 400,000 hectares of grassland, or farmland, beyond the forestry asset, because it is much easier to stop a fire out in the grass area than it is once it gets into the forest. There does not appear to be any commitment from anybody as to whether that will be maintained. There is a view that it should be maintained but there does not seem to be any guarantee that it will be maintained.

It is also of concern that, if the firefighting capability is reduced within the forest because of the sale, the CFS does not have the capacity to fight forest fires because they are bigger and more ferocious and different equipment is needed. It comes back to personnel. Nearly all of the ForestrySA personnel based in the South-East are trained in firefighting, so when there is a red alert day of 40 degrees and there is a hot north wind, they are all on stand-by and on call to be available. If the number of staff is reduced by a future owner then that capability is not there and the community is more at risk.

If the Hon. Gail Gago goes to Mount Gambier, which she has assured us she will do—maybe she will go down with the Premier in the next few weeks—she will probably fly there and as she flies in she will see that the township of Mount Gambier has a significant amount of forestry around it. So, if there is a risk of fire then we are likely to see a risk to human life as well. Some would say, 'If a new company owns the forest and they can't put out their fire, that is their loss and their problem,' but I think it puts an unacceptable risk on other private property, livestock and also human life.

In the evidence we will also heard from Treasury. They gave evidence to suggest that this was about retaining our AAA credit rating and it was an important factor. They said they would have a reserve price. I certainly can understand that they would not want to make the reserve price public because that is probably the only bit of information floating around that is commercial-in-confidence. It was about retaining the AAA credit rating.

It appears now, from commentary made by the Premier and in other statements, and I read some information in the Financial Review, that the financial media are now starting to downgrade South Australia, and I suspect that, even though Kevin Foley said it was something that would never happen again, we are on the cusp of losing our AAA credit rating. The forestry sale is already factored in so, if it is factored in and we are going to lose it, does selling this asset really achieve the outcome the government wants, given of course that it is likely to be sold at a significant discount from what it is really worth?

We also heard from ForestrySA. The chairman of the board, John Ross, and Islay Robertson, the CEO, came and spoke to us. I thought the evidence they gave was interesting. I almost could not understand it. As with some other commercial activities of government, the government set up the board of ForestrySA consisting of people they think have the capacity to operate and run that asset profitably, almost free of political interference so that the political argy-bargy is taken out of the management of the asset, but they are to run it in the best interests of the South Australian taxpayers and the state.

I was a bit surprised when, early in the evidence, the chairman (Mr Ross) said that the board of Forestry SA had not formed a view about the sale, so I asked him a bit later on to clarify, and I will quote from his evidence. I said:

I think your earlier statement was that Forestry SA has not formed a view on whether the sale of three rotations is a good or bad thing, or if you support it, on the basis that you have not really seen any of the modelling or the information. What information have you received? I find it a bit hard to understand. You are the body that manages the forest estate. Clearly, from Mr McEwen's evidence, there was an investigation, and over time it has gone from an investigation and use of revenue stream to the forward sale. Under Treasurer Jim Wright says he did not actually understand it.

I am a bit perplexed that this whole process could be going on. Former minister McEwen says he had one understanding, and I am not sure what minister O'Brien's understanding of it all is, other than that now we have reached a point where it appears that we are selling 100 years of timber. I am intrigued as to why you have not been involved and have not played a greater role. Clearly, you are the agency that is at the coal face or at the edge of the forest.

Mr Ross's response was:

I think that might be summarised, David, in as much as it's how the golden rule is applied—the people who have the gold make the rules, and in this instance it's the government of the day. Treasury have the gold; they have made the rules, it seems to me. I said earlier that I believe that the information that has been withheld from us that we would like access to is, as Treasury says, commercial in confidence, and we have to accept that. I think their view is that, if they provided us with the information and that were to be leaked somewhere, it would affect the bidding process. So, Treasury obviously are keeping a very guarded approach to this.

I suppose I would have to say that I resent to some extent the fact that we are not taken into the confidence of the people who we might be able to help if we are able to provide that advice. But, we haven't been asked to provide advice. The decision that's been made by the Treasurer to announce the forward sale is not a recommendation of our board. We haven't formed a policy on it because we are clearly in a position that we don't have sufficient information to advise the government or go public about it.

I haven't made any public pronouncements about this, and the board hasn't. I have said to the local community and to our employers that the decision has been made by the government but it's not our recommendation. I guess I can't say any more than that, but if we were better informed we could give better advice perhaps, but if the advice is not sought then so be it.

I think that is almost an unbelievable set of circumstances when you have the chairman of ForestrySA, the body set up to manage the asset on behalf of taxpayers at arm's length from the government, not asked for any advice—or was it that the government did not want advice from ForestrySA? It just beggars belief that it was not included, that it was not given any opportunity to comment and that it was not given any opportunity to look at any of the studies or any of the investigations into the forward sale of the three rotations. It beggars belief.

The Hon. Robert Brokenshire spoke of the minutes. We asked for quite a lot of documents from ForestrySA. This select committee met back in May, I think, for the first time. It was certainly before the Hon. Paul Holloway went off and enjoyed his retirement and when the Hon. Russell Wortley was on the committee. They were both backbenchers at the time and not ministers; so, it was certainly earlier in the year. We have been trying for the best part of six months to get information from ForestrySA.

Finally, a couple of meetings ago, we refined it down to, 'We just want the minutes,' and, at the time of this report being laid on the table here last week, we had not received those minutes. I think that we may have received some correspondence since then, but it is not part of this report so I will not speak to that.

What government is doing here is really quite damning of the whole process. You have got the board of ForestrySA and we are not even allowed to look at its minutes. I expect that some parts of it may include confidential information—odd bits of correspondence—but as yet we have not had a chance to look at the minutes of the board of ForestrySA. You have to ask the question: what is the government hiding? I am sure that it is not ForestrySA—it is happy to release it; it will be someone within government, whether it is Treasury, crown law or minister Gago's office.

Of course, she is now the Minister for Forests, although, in questioning her in the last couple of weeks, it does not seem that she is that much across anything to do with forests. I think that, again, it was an indictment on her as the minister and the government when she said, 'Oh, well, that's all being handled by Treasury; I'm not involved.' It is almost unbelievable that she has not yet been to the South-East (I don't think) to look at the forests and meet with the people. She has no understanding because it is just Treasury.

The Hon. G.E. Gago: Oh, rubbish!

The Hon. D.W. RIDGWAY: She wanders back in from her salubrious leader's office to say that it is rubbish. It is not rubbish, Mr President. She has not been there. She says that it is all to do with Treasury. If you are the Minister for Forests, then you should take an interest and find out what is going on.

I come to my recommendations. I will speak only to the three that I have provided to the committee. The first one is obvious—that the sale should not proceed. The only evidence which we heard and which backed up the support of the sale was from Treasury, which has a particular view of the world and an agenda, and I am not surprised that they gave us that evidence. However, every other person who gave us evidence said that they did not want it to proceed—from former minister McEwen right the way through to all the local stakeholders, the local mayors and the councils. No-one can see any sense in this at all.

My first recommendation from the committee (and I hope that when we do have our final report that we do come up with a condensed set of recommendations) will be that the sale should not proceed and that the whole process is flawed. I know what this government is like. It is not that interested in rural and regional South Australia. It talks the talk but it does not walk the walk, and I suspect that, very, very sadly, this sale will go ahead.

I am a bit like the Hon. Robert Brokenshire. I would be delighted if when the Premier visits he said, 'Well, actually, we got it wrong. This is a mistake and we're not going to sell the forests.' I will be delighted if he makes that statement, but very surprised if he does. We have a round table that has been asked to compile a list of recommendations that the Treasurer said will be conditions as part of the sale. I asked Treasury how they would be factored into the sale.

I think that my second recommendation is that the recommendations of the round table should be made public before the sale goes ahead. We know that they are confidential, or we are told they are confidential, but, as luck would have it, I have a letter to the Treasurer from the round table outlining its recommendations, and I think it is only fit and proper that I now read that into the record.

The Hon. R.L. Brokenshire interjecting:

The Hon. D.W. RIDGWAY: I've only had it for a couple of hours. I will provide this to the committee once I have read it.

The Hon. J.M. Gazzola: It's probably a dodgy document.

The Hon. D.W. RIDGWAY: They might think it's a dodgy document. It is stapled together with a letter from the Treasurer, so I do not think there is anything dodgy about this, Mr President. I will not read the preamble other to say that this is a letter from the round table saying the following to the Hon. Jack Snelling:

Dear Treasurer,

Thank you for your response to the [South-East Forestry Industry Roundtable] correspondence dated August 29th.

Within this correspondence is both the [South-East Forestry Roundtable] reply to your letter dated 6th October and a more detailed outline of the key issues that should be incorporated within the proposed conditions-of-sale of the plantation estate.

I will not read the other bit of preamble. These are the points:

Production Volume

The purchaser shall honour all existing ForestrySA contractual obligations;

As supply contract periods approach termination, the volume to be offered to the local industry within 12 months prior to termination;

Additional volume which becomes available from time to time must be offered to the local industry either as part of a longer term volumes or in smaller short term contracts. All local processes must be able to submit offers.

When offering the volume to the market the purchaser shall ensure the product specifications and parcel volumes are flexible enough to maximise the range of purchasers who are able to tender.

Any new Supply Agreements shall have a minimum term of 20 years, unless otherwise agreed by both the purchaser and processor.

The purchaser shall maintain the net plantation area potential of the Green Triangle ForestrySA estate, understood to be around 80,000 ha of P radiata plantation taking into account the unplanted landbank areas as well as current planted area. The productive capacity of the plantation resource is to be at least maintained to meet current and future predicted volumes. Any potential reductions as a result of carbon credits or water policy changes shall be offset with additional plantings to maintain the productive capacity of the resource.

The purchaser shall quarantine a minimum of 80 per cent of total available log volume per year (of all log categories), for supply and processing by local processors.

Based on past performance, this annual volume should include a minimum of 75 per cent sawlog (including recovery sawlog), with a maximum of 22 per cent of pulpwood and/or woodchip and 3 per cent of preservation material.

The purchaser shall continue ForestrySA's practice of expanding the radiata forest estate (approx 500 hectares/yr) within the Green Triangle Region up to a minimum target estate area of 90,000 ha by 31 December 2020. The above conditions shall apply to any additional volume generated from an increase in the forest estate.

Wood quality

The purchaser shall maintain all current ForestrySA contractual Terms & Conditions of current Supply Agreements, including product specifications, product diameter proportions and product mix and length percentages.

The purchaser shall maintain an area-weighted average forest rotation age of 35 years, to ensure maintenance of log size and quality.

Price

The purchaser shall maintain all current ForestrySA contractual Terms & Conditions of current Supply Agreements, including prices and price adjustment mechanisms.

Competitive Neutrality

ForestrySA land leased and managed by the purchaser will be subject to full Local Government Rates that are payable directly to the invoicing Council. Under competitive neutrality principles, the new owner of the future rotations should be subject to the same (no less and no more) obligations as other private forest growers in the region. These principles would mean that the new owner should pay fees such as, but not limited to, local government rates, road charges, taxes, NRM levies, fire levies, drainage board levies, FWPA R&D levies, water license fees, and be subject to the same current or future regulation as any other private grower.

Silviculture

The purchaser shall use the current ForestrySA silviculture practices as minimum standard and apply the best industry practice that meets the criteria and indicators of the Montreal Process for Forest Conservation and Sustainable Management and provide a compliance report to the SA Government (PIRSA) on an annual basis.

Log Exports

The purchaser shall comply with an export log policy that will have as its basis the requirement to provide resource in the first instance to the needs of the local industry in the South-East of SA. Consequently only one year contracts shall be offered to international log customers, with the proviso that such contracts can be reviewed by an appropriate authority (such as a possible future Forestry Industry Advisory Body) should there be a change in market circumstances. Log exports would be subject to a cap of a 4 year moving average of the past 3 years of export volumes (export figures would be based on those reported by the Australian Bureau of Statistics).

In addition to the above provisions to be incorporated within the conditions-of-sale, there a number of other matters which the SEFIR recommends the SA Government undertake, determine or facilitate which relates to overarching issues such as, corporate governance and compliance, monitoring owning carbon credits and water allocations.

As Trevor Smith wrote this letter:

As Chair of the SEFIR I would like to discuss with you in particular your views and intentions on the following matters:

Corporate Governance & Compliance Issues

What penalty provisions will be mandated (and policed) for non performance by the purchaser and who will enforce it?

What penalty clauses will be mandated for non-compliance of the conditions of sales?

Given the above, will there be a monitoring Structure or perhaps an Advisory Body to report to the Government on monitoring and compliance outcomes and other associated issues to ensure compliance and diligence is being applied by the purchasers.

Is the ForestrySA Board the relevant or appropriate body to oversee and direct a substantially revised ForestrySA role?

Research & Development and Regional Investment

The South Australian Government shall establish a level of funding from the proceeds of the proposed sale and any land lease arrangements to be utilised for continued research, development and innovative industry initiatives.

Other

If forestry receives a water licence who will this go to (the government has indicated in the past it would retain any water licenses), and who will be responsible for any proposed levy payments on these licenses.

If, for example, due to drought, there is a large decline in water availability and thus a decline in the amount of forest that can be grown, who will inherit the risk, the Government or the purchaser?

Will the purchaser be required to maintain the land productivity and value over the life of the sale, and how will this be monitored.

Can you provide Clarification as to how the State plans to retain rights to future carbon benefits if applicable, 'while ensuring that the divestment does not expose the State to unacceptable risks or potential future liabilities'.

Who is responsible to insure the plantation estate?

Will the purchaser be required/mandated that it must:

Provide adequate fire protection, fire management and fire suppression systems over the life of the contract and

Follow all aspects of the ForestrySA Manual.

With regard to fire management, there is also a need to acknowledge the difference between the fire obligations of all commercial plantation owners (and farmers) from special community services currently provided by ForestrySA. We note that your 6th October response suggested that ForestrySA will continue to provide the services however, the Government has only committed to ForestrySA for 10 years, what would be envisaged after that period? The key community fire protection services offered by ForestrySA are:

The provision of the South East community fire detection service via the government owned fire tower network

Fire management and response to proclaimed native vegetation reserves managed by ForestrySA.

In respect of the last point, it is noteworthy that attending to fires on non ForestrySA land should not be considered a community service. All commercial plantation company brigades and volunteer fire brigades are required to respond to fires on external land as part of usual community mutual support arrangements. The conditions of sale must ensure that appropriate fire suppression standards are met by the new owner and must include a fire bridge registered with the CFS which meets both CFS and forest industry brigade standards. The new owner must also maintain appropriate fire break networks in accordance with best industry practice, e.g. in accordance with the Green Triangle Regional Plantation Committee—Forest Owners Conference Plantation Design Guidelines.

I thank the members for their tolerance. The last two points are:

Blueprint for the future

The development of a blueprint for the future processing and innovative opportunities of the state's Forest and Wood Products Industry may need resources outside SEFIR's limited capacity. I would appreciate the opportunity to meet with you so that I can discuss this issue in more detail.

Forestry Industry Policy

The development of a Forestry Industry Policy to compliment the Forest Industry Strategy and the Blue Print for the future of the Industry is currently under discussion and look forward to presenting you with a proposal at the earliest opportunity.

SEFIR recognises that many of the issues contained herein may be perceived to be duplication of our original letter to you, however, the SEFIR is of the view that specific details of the issues of concern set out above are worthy of the support required to allay the concerns of all stakeholders.

Should you require any of the above matters to be discussed further, please contact me at your earliest convenience.

Your sincerely,

Trevor Smith

Chair SEFIR

There is also a letter from the Treasurer dated 10 November thanking him for the letter. You can see by that document that the round table has a large number of recommendations, and I suspect it is an evolving document, which is why that needs to be formally accepted by government and formally made public so the community knows exactly what is part of these conditions.

My third and final recommendation is that this should somehow be attached to the Forestry Act 1950 to give some legislative strength to it. I have had some discussions with parliamentary counsel as to how you might achieve that—and I have not shared that with my committee colleagues as yet—and it may well be that the recommendations which I have said should be put into Forestry Act 1950 may not be achievable. It may be better—this may not be quite the terminology parliamentary counsel would have used—that a report be tabled in parliament about the contract, which we understand will have some confidential information in it, detailing the degree to which the contract reflects the recommendations of the forestry round table. If the parliament is not happy that the community's concerns have been met by the contract, then the contract is disallowable by the parliament.

People might say that that is interfering with the day-to-day operation of government: no, it is not. It is just making sure that, if Treasurer Snelling says, 'I want this round table to tell me and the government what the community want as far as the non-negotiables for this sale,' then the parliament should have the right to call for an independent report. We do not need to see the details of the contract—there is some commercially sensitive information in there—but we need to have an independent report that says that the contract has honoured all the obligations set out in the forestry round table. It could be laid before the parliament. The report says, yes, it has honoured all of those conditions and the sale could go ahead if that is where, sadly, I think we will end up.

My three recommendations are: first, the sale should not proceed. The opposition's view—-and it has been from day one—is that this is just a crazy decision to sell the forests and now we have all this evidence to back that up, and it is not just the opposition having a different viewpoint from the government. There is a substantial body of evidence that says that this is a crazy decision. This government has a track record of making crazy decisions and sticking with them.

Therefore, my second recommendation is that we should have the round table recommendations, the non-negotiables, made public; and, thirdly and finally, we should have some legislative way of holding the government to account that it has honoured its commitment to the community in the South-East that it would put the non-negotiables as part of the contract of sale. Let us have a bit of parliamentary oversight over that so the South-East community know our view. The Hon. Robert Brokenshire, the Hon. Gerry Kandelaars and the Hon. John Gazzola would not want to support a government that did not honour its commitment to the people of the South-East. With those few words, I support the interim report of the select committee into the forward sale of three rotations of the forests.

Debated adjourned on motion of Hon. J.S. Lee.

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