Monthly Archives: January 2014

Seeking Stakeholder Feedback

FT Help Us Improve

Within the chaos and conflict being generated around the up-coming State election in March, Forestry Tasmania is in the initial stages of their Forest Stewardship Council (FSC) certification process. What a complete debacle!

They have called for feedback on their initial draft FSC Objectives and Criteria, with a closing date of 31st January.

http://www.forestrytas.com.au/help-us-improve

My feedback is purely focused on commercial management and practices at Forestry Tasmania. Private companies that apply for FSC certification don’t need to demonstrate good commercial management, it is fundamental to their very existence. Not so Government agencies such as Forestry Tasmania. They traditionally have no commercial focus. Forestry Tasmania has a very poor history of commercial management and performance. Therefore the FSC process provides a rare opportunity to put pressure on FT to improve its commercial performance.

At the moment FT is directly undermining my efforts to create a blackwood growers cooperative. FT is also draining $100 millions of taxpayer dollars from the State Treasury. This is money that should be going to improve our schools, hospitals and roads, not propping up an underperforming forest industry. These issues should be of vital importance to the FSC assessors.

In fact at a general level FT are applying for FSC certification even although nothing fundamentally has changed over the last 2 years. FT is still the same organisation with the same values and modus operandi. Given the last 30 years of conflict there seems to be little basis for hope in any of this.

So here is my submission for initial feedback, which I have emailed to them and posted here for your enjoyment. It will be interesting to see where all this goes, especially within the context of the State election. FT and the forest industry are very politically exposed. No matter what happens it will be another bad year for the industry.

[insert]

Dr Gordon Bradbury

12/12 Saunders Cres.

South Hobart, 7004, TAS.

 

January 28, 2014

Mr. Steve Whiteley

Chief Executive Officer

Forestry Tasmania

79 Melville St.

Hobart, TAS. 7000.

 

Dear Mr Whiteley:

 

Re: Draft Forestry Tasmania Management Plan FSC Criteria and Objectives

 

Firstly congratulations to Forestry Tasmania for seeking to gain Forest Stewardship Council (FSC) Certification. Good luck!

I will focus my feedback on the business/commercial aspects of the draft FSC Criteria & Objectives (C&O).

Generally-

It is very clear that the draft Forestry Tasmania FSC C&O continues the culture of community service and charity that has been the heritage of Forestry Tasmania for many decades, and completely ignores the significant commercial realities facing the forest industry today. This attitude will guarantee the continuing decline and extinction of the forest industry in Tasmania. Here are some basic facts:

  1. The growing of trees for wood production in Australia is a commercial business. It has nothing at all to do with community service, industry support, charity or any other politically-driven outcomes.
  2. The vast major of wood now grown and sold in Australia is grown by commercially driven private forest growers with which Forestry Tasmania competes in the marketplace. These private tree growers seek to maximise profit within the context of good forest management. That is their primary objective, as with all businesses.
  3. For Forestry Tasmania to operate in any way other than fully commercial and profitable is anti-competitive, disrespectful to all Tasmanians and destructive of the forest industry.

I repeat!

Forestry is a business!

Forestry Tasmania has a poor history of corporate governance, commercial management and performance. All reports and indications (including the recent URS Report) show that commercial viability will remain the major challenge for Forestry Tasmania. Potentially hundreds of millions of taxpayers’ dollars will be needed to prop up Forestry Tasmania for the foreseeable future. This is money that should be going to our roads, schools and hospitals not the forest industry. From a financial reporting and commercial management viewpoint the Forestry Tasmania Annual Report is a failure (for a better example of a State forest agency annual report see the NSW Forestry Corporation here).

Examining company websites is a useful way to gauge the focus, discipline and management of a business. Looking at Forestry Tasmania’s website it is difficult to see exactly what business they are in; certainly it does not appear to be wood production!

So it worries me that the C&O contains such nonsense statements as:

•           Provide the foundation for a strong, competitive and sustainable Tasmanian forest industry and support local processing and value adding of wood products.

•           Make available an ongoing supply of forest products (including high quality sawlogs, peeler billets and special species timber) in accordance with the Forest Management Act 2013 and the Tasmanian Forest Agreement Act 2013.

•           Maximize the recovery and utilisation of wood products from forest operations.  

There is no mention at all of “commercial, efficient, competitive, profitable wood production”. No mention of regular annual dividends to be paid to the Tasmanian Treasury. Absolutely no commercial focus at all.

Forestry Tasmania continues to regard the forest industry as disabled or handicapped, in need of continuous prosthetic support. The forest industry is not disabled or handicapped. The only handicap the industry has is being too willingly dependent on Government largesse, lack of commercial focus and proper market processes.

No private tree grower would ever consider adopting these three objectives. They represent commercial suicide. For Forestry Tasmania to adopt these objectives is anti-commercial and anti-competitive. They undermine the competitiveness and profitability of the entire industry, and existing and potential future private forest growers.

For examples of sensible FSC C&O that have been developed for commercially-focused private tree growers check out:

http://www.sfmes.com.au/wp-content/uploads/2013/10/SFM-Forest-Management-Plan.pdf

and

http://www.pfolsen.com/nz_index.php?sect=fsc&inc=ogs

There is no mention in these examples of industry support or obligated wood supply, or meeting political objectives, and certainly no mention of picking up the last piece of firewood regardless of cost/profitability. That’s not what private tree growers want at all. There is no mention of competitive, efficient and profitable either because these goals are fundamentally implicit in running a private business. Not so with a government business enterprise.

The only commercial objective Forestry Tasmania needs is to be a fully commercial, competitive, efficient and profitable grower of wood.

Now to specifics-

And now to the specific reason for my critical submission. For the past 3 years I have been attempting to get a blackwood growers cooperative established in Tasmania, but with limited success. This is in part due I believe to poor State forest policy and the policies and practices of Forestry Tasmania.

Special timbers represent the very worst example of “commercial” management by Forestry Tasmania. The fact that Forestry Tasmania no longer regards special timbers as part of its commercial operations is absolute nonsense, commercial sabotage and disrespectful of the Tasmanian community. That Australia’s “most valuable” timbers are supplied to the market as a taxpayer-subsidised community service is an absolute disgrace. What a joke the forest industry has become.

The only forests that should be harvested are those that can be harvested profitably. There should be no “cost-neutral”, “non-profit” or taxpayer-subsidised harvesting of public (or private) native forests.

This Forestry Tasmania “non-commercial” policy undermines my attempts to create a blackwood growers cooperative. Blackwood has been Australia’s premier appearance-grade timber for over 100 years. Blackwood (Acacia melanoxylon) represents approximately 80% of the annual harvest of special timbers by Forestry Tasmania, with Forestry Tasmania being by far the dominant supplier. Blackwood is the only Tasmanian native timber that can be grown in commercial plantations, which New Zealand farmers have been doing for the past 30 years. Blackwood also occurs commonly on private land across northern Tasmania. Therefore any “non-profit, subsidised” blackwood harvesting by Forestry Tasmania directly undermines the ability of existing and future private land owners to grow and harvest commercial blackwood.

I will save my criticisms of the sales and marketing policies and processes used by Forestry Tasmania for a later submission.

The corporate governance, commercial management and performance of Forestry Tasmania have been the subject of much analysis and criticism for many years by many observers, including the State’s own Auditor-General. The draft FSC C&O provide no cause for optimism that this is about to change. The current commercial management at Forestry Tasmania encourages and rewards rent seeking behaviour within the forest industry that results in negative economic outcomes.  Forestry Tasmania must either be managed like a commercially-focused profit-driven private forest grower or it must be shut down.

In conclusion, these so-called commercial objectives in the draft FSC C&O are a joke. They are anti-commercial, anti-competitive, and disrespectful to the Tasmanian community at a time when the State is already financially challenged. For the forest industry to continue to be a drain on the public purse whilst discouraging new investment is unacceptable and unworthy of FSC recognition and support.

 

Sincerely,

 

 

 

Dr. Gordon Bradbury.

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