Saturday, April 13, 2024

The NSW Government is looking after its big end of town mates

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There has been a story around for some time, try 6 years, and, when you check, it is not a story, it is factual and not a narrative.

building under construction
Photo: Pixabay

In July 2021, timber mills in NSW have or are running out of timber in the middle of an Australian and international timber shortage, where timber supply comes from the NSW State Government.

People have or are about to lose their jobs. These are real people.  The little people or the battlers.  Not the high paid executives of multinational companies.

On 2 July 2021, one of these battlers in desperation called the media in Tamworth.  The company for whom he worked had run out of wood and could not get any from the State supplier, because it was all going to one big company, the mate of the Government.  The media reckoned they had a quick story, but when they realised there was some work involved, the story did not get off the notepad.   So here are the facts the media should have ascertained.

The timber is native hardwood timber harvested from NSW State Forests by a Government agency, Forestry Corporation, ultimately controlled by Government Ministers.  This is all controlled by four NSW Acts of Parliament.  About 1% of State Forests are harvested each year.  The timber finds its way, among other things, to power poles, decking, structural frames, furniture veneer and high grade flooring, firewood, power generation, paper, and world-class high grade construction cladding.  It is carbon friendly, creates many jobs in urban centres, and is absolutely renewable.

When the Coalition Government won office in 2011, it promised to fix the inequity created by Bob Carr in 2004 in regard to the contracting of native hardwoods from State Government forests into Northern NSW timber mills. 

In 2003, Carr had given Boral, a multinational and ASX listed entity, a special deal that worked against all other companies and businesses in the timber industry, including the workers and their families in these businesses. His reasoning had to do with a preference deal with the Greens, with which he won the election that year.  This deal did not become public until 2013.

In 2004, the Carr Government negotiated wood supply agreements with all other Common Agreement Holders, as if the 2003 Agreement had never been entered. Including contract clauses and public statements that negated the terms signed off in 2003 in an MOU, and then a contract.

In 2012, the Coalition Government privatised State Forests.  A move that has proved greater than a disaster.  It has been an environmental disaster for the State Forests.  It has also been and is proving to be a commercially iniquitous deal for all timber businesses, save Boral.

In 2014, the Liberal Moderate Faction Minister, who holds a timber seat, allowed Forestry Corporation to give Boral an even better preferential deal which gave Boral a fixed quantity of all the better tree species in the forest.  This gift, along with $8.55 million in cash and a contract extension of 5 years, was kept secret until a Court case revealed the truth. 

The contract was on a public website: www.forestrycorporation.com.au (search for ‘wood supply agreements’). The Boral Pole Agreement 2014 is there, the 2003 Boral Agreement (Allen & Taylor), as are other companies’ wood supply agreements. The Boral 2014 Variation was there, but it has apparently been removed. (Commentary on this contract can be viewed in a Timber NSW submission made to the NSW Legislative Council Portfolio Committee No 4 found at https://www.parliament.nsw.gov.au/committees/inquiries/Pages/inquiry-details.aspx?pk=2762#tab-submissions, Submission Number 222).

The details of this deal are important.  Boral got 85% of all the top preferred species harvested annually from the North Coast forests.   This is from the Lismore to Cessnock.  The same form of deal operates on different percentages and volumes for all other top preferred species. Simply think of the top-grade flooring timbers.  But the deal did not stop there.  Boral was given a cap on all non-preferred timber.  This is important because it means Boral gets all the good stuff, and all the hard to market and impossible to mill timber goes to their competitors.  Smart stuff if you are Boral.  But wait, the deal gets better. If timber harvesting falls below a certain volume, Boral gets the entire supply of harvested timber.  Nothing goes to their competitors.

The 2014 variation was given to Boral on a falling timber supply.  It had been falling for over a decade, and the trajectory was downhill, and this has proven to be the case.

In 2004, after Carr gave Boral their deal, the Government official gave a new contract to the balance of the North Coast timber millers. They were given representations, before contracting, on contracts that are now known to be extremely misleading and deceptive.  The current NSW Government effectively acknowledges this behind closed doors.  Those doors are now so closed, no one can speak to the Government about this issue.

Arriving in 2021, with wet weather and bushfires, the Government agency responsible for harvesting said it cannot meet supply.  The timber is there, but it seems the EPA is undertaking to stop any harvesting anywhere in NSW.  (Read here another Moderate Liberal Minister).

In spite of a greatly reduced timber harvest on the North Coast, Boral still receives all its timber allocation in the North of the State. This is in spite of supply contracts saying all businesses will share equitably in the available resource in times of notified supply difficulties. 

Complaints have been made to the Government for years, but interestingly, as the years have progressed, the Government has shut its doors more firmly.  In spite of the national and international timber shortage, the Berejiklian Government does not want to talk about it, hear about it, nothing, nothing.  Why?

Supply is intermittent for some mills. Plenty of promises to businesses, but very little delivery. There are some worried people out there at the moment.

The only logic that can be applied to this circumstance is simply that Forestry Corporation is simply incompetent or duplicitous, or they are under NSW Ministerial Direction, permitted under the State Owned Corporation Act.

Mills will only survive with timber from private sources, not the State Government. This is a finite source. Disincentives within the Commonwealth Government with carbon sequestration are seeing private owners putting timber back into cattle pasture. The State Government pays private ownership timber resources with lip service only.

Well, this is where you have to start scratching your head.

The facts are clear:

  • the Liberal Moderates gave a very special and anti-competition deal to Boral, together with cash. Cash that was used in their international operations.
  • This advantageous contract meant that on a falling timber supply Boral would be eventually the only timber miller left on the North Coast.
  • The Government agency supplying timber has continued to provide Boral with its normal timber allocation in times of notified shortage contrary to contractual terms across the entire North Coast industry.
  • Even with mills having to close due to no timber the Government will not do anything. 
  • This means the NSW Government is favouring, as against meeting its obligations, an ASX multinational, over which the owners of Channel 7 are seeking to gain control, in preference to the mums and dad businesses in the timber industry from Lismore to Cessnock.

As Marcellus in the Shakespearean play “Hamlet” said; ‘There is something rotten in the State of Denmark!”.

Is there something wrong in NSW or is it merely the Liberal Moderates from the Inner City confines looking after their mates as they always have?  It could be foreign developers, foreign money or big business. Hard to prove, but the rumours abound. They have been getting away with it because the ALP has been missing and lost in inner Sydney as well.  Where are the Nationals, well, well you might ask?  The Minister for Forestry is the Deputy Premier.  A noisy bloke who says nothing on this.  As a senior National Minister said last year to some locals in her electorate who work in the timber business: ‘You have no social licence’.

The real narrative, based on documentary and observed facts, is that the Conservative Berejiklian Government has stepped away from the people in small businesses and the workers in the timber industry on the North Coast.  They have been left to join the ranks of the unemployed. 

All this whilst the need for timber supply to the construction industry in Sydney is growing.  A fact is prices are rising upwards of 30% due to the current and increasing shortage of timber.  Australia has some of the most bountiful native hardwood forests in the world. 

Leaving Hamlet behind and using Australian street talk: ‘Go figure!”

Related story: Building timber shortage

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