Call for an end to logging in the South West - tax payer charade - $106 million in losses

Gerry Georgatos - Western Australia could profit by over $400 million a year by the ending of logging in its native forests according to new research by the Australia Institute. The report confirmed logging is not only harmful to the environment, but also costs the State millions in potential profits.

Western Australia Forest Alliance (WAFA) spokeswoman Jess Beckerling said research confirmed long-standing views by the anti-logging lobby. “This is very welcome research for WA. What it means is that we stand to profit substantially by protecting our forests. It is a classic win-win solution.”

“By stopping and selling the resulting carbon credits we stand to earn between $16 million and $438 million each year, depending on carbon price. So, we can create employment, promote resilient economies in regional areas, protect habitat for our iconic threatened species and earn millions every year, by protecting the forests,” said Ms Beckerling.

Depending on the carbon price the report does find the WA Government stands to earn up to $438 million per annum between 2013 and 2013 through the sale of carbon credits if it were to stop logging the native forests in its South West.

The findings highlight an unviable position for the Forest Products Commission (FPC) however the FPC rejects that it is unviable. The Australia Institute research reports that the FPC is heavily reliant on theoretical revaluations of its assets. Ms Beckerling said that if it was not for accounting mechanisms which inflate its profit statements, theFPC would be forced to report a cumulative loss of $106 million. The FPC spokeswoman said that the FPC is scrutinised by the Auditor-General and accords to national accounting guidelines.

Ms Beckerling said stopping logging in the South West would benefit what would become its former timber towns. “The money earned selling carbon credits won’t just benefit the remaining timber towns but will benefit all Western Australians and protect our forest legacy.”

“It really makes sense economically and commercially for WA to develop policies to stop the logging of native forests in our South West. WA needs a new forest economy, one in which our forests are protected as biodiverse carbon stores.”

Author of the report, Associate Director of the Australian National University’s Centre for Climate Law and Policy, Andrew McIntosh said it makes economic sense for the State Government to adopt a new forest friendly economy based on protecting native forests and selling the resulting carbon credits.

“Forest protection could generate significant wealth for the Western Australian Government,” said Mr McIntosh.

“In addition to the financial benefits, the cessation of logging would generate a number of co-benefits including improved heritage, biodiversity and hydrological outcomes."

WAFA has made the South West’s forests a political hot potato with the upcoming March State elections and engaged The Block Agency to assist in their campaign targeting community awareness and piling on the pressure on political candidates.

“Logging is robbing us of potential profits through the sale of carbon credits. This comes on top of the fact that logging is operating at a loss to the WA taxpayer. The industry has become financially unviable. Now that this very beneficial alternative is available, it is in the interests of all West Australians to protect our forests.”

Greens WA leader, and South West upper house candidate said that the FPC’s Forest Management Plan (FMP) should be tossed out the window. “There is no mention of conservation in the FMP and instead what we really need is a Forest Conservation Plan.” She agreed with WAFA and the Australian Institute of Research report findings and also that plantation timber is the way forward instead of native forest timber.

Bridgetown resident and project engineer Jon Starling has called for an investigative inquiry into the viability of the South West timber industry. “We need to do it now, similar to the one in Tasmania. The Government should ensure this.”

Another resident, Kathleen Meares said the South West timber is replaceable. “There are only 500 people thereabouts employed in the logging industry. Jobs aren’t really on the line. Car factories, textile factories have been closing down in Australia and thousands lose their job in a day. The logging industry has a cottage like workforce however does enormous damage in our South West, which is drying up faster than anywhere else in Australia. If 500 people lose their jobs they will find them in eco-friendly jobs that will replace logging jobs, and in a plantation timber industry that needs to treble, and in tourism to our town.”

“Each day out through Bridgetown alone 30 huge trucks of Warrup timber rumble through each day. The destruction is killing everyone – habitats, species and our futures.”

LOGGING IS DAMAGING ENVIRONMENTALLY AND ECONOMICALLY UNVIABLE

Gerry Georgatos - The Forest Product Commission (FPC) is dried up and antiquated according to the anti-logging lobby and conservationists who argue it is not only destroying habitats, negatively impacting on climate however is also utterly unprofitable – and instead is being propped up by a charade of fiddled numbers, by an accounting treatment that is beyond questionable.

40 Bridgetown residents turned up to a Sunday community forum to listen to speakers from various conservationist organisations and political parties about logging. The alleged unprofitability of the FPC and the logging industry was a focal point of the discussions.

The FPC rejected these allegations “as outrageous” and “offensive” and reminded that all valuations and their books are scrutinised by the Office of the Auditor-General and by Parliament. According to Peter Lane, a retired engineer, who is backed by an accountant and other interested parties, the Auditor-General has not disputed Mr Lane’s assertions.

Mr Lane said that the valuing of forests and that this valuation factored into generating profit margins were questionable. Without the valuation the tax payer is holding up a small industry that is doing extensive damage. Only 8 per cent of WA’s forests remain from since 1829 – colonial arrival.

“Despite lower rainfall and a dramatic decline in the production of quality logs, the FPC claims that since 2000, the value of our native forests has increased by $121 million,” said Mr Lane.

“Even though this claimed increased in value has been recorded as profit, the cumulative profit of the FPC since the formation has amounted to a meagre $15 million.”

This means that hundreds of millions have been invested by the tax payer to subsidise and capitalise the timber industry and that if the valuation was subtracted therefore expenditure by a factor of many outpaces revenue generated from the logging industry.

“In 2002, the FPC value of native forests was increased by $67 million. This increase was due to a reduction in attributable management and protection costs being excluded from the 50 year cash flow forecasts used for forest valuations. In 2005, the FPC value of native forests was increased by $33 million, and arguably by as much as $75 million, by removing an allocation of corporate overheads from these cash flows,” said Mr Lane.

“Both these increases were due to a change in accounting policy and as such should not have been recorded as profit. Without these and other highly questionable increases in the value of our native forests being considered as profit, the FPC would have recorded a cumulative loss from 2000 to June 2012 of $106 million.

Mr Lane has met with the Auditor-General over these figures. “The figures have not been denied.”

An FPC spokeswoman said the FPC has been frequently asked to respond to claims about its profitability however the individuals who raise their concerns “do not present their calculations.”

“The claims by Peter Lane fall into this class.”

“FPC is required under national accounting standards to value its assets and record any changes to those assets as a profit – increasing values – or as a loss – decreasing values.”

Therefore the FPC is arguing assets have a depreciation or appreciation value and this is normal incurrence in business however conservationists are arguing that the forests do not hold such a value, they are not privatised and cannot be effectively sold at these treated values. They should not have been capitalised by such an accounting treatment.

“The implementation of its accounting procedures is independently audited by both a major accounting firm and by the Auditor-General,” said the FPC spokeswoman.

“FPC’s financial accounts are also subject to the scrutiny of parliament. The value of timber assets can change for a number of reasons, including variations to interest rates and tree deaths due to drought and fire. FPC agrees with Mr Lane that changes in asset values do not provide a good reflection of operating performance. It is better to use operating profit.”

“FPC completely disagrees with the reported claim that it would have made a loss if it had not re-valued its assets.”

“In 2012 FPC reported an operating profit of $12.2 million.”

“Between 2000 and 2012 the aggregate operating profit is estimated to be approximately $57 million. FPC profits would have been greater had it not funded a number of industry development activities, including the development of plantations for salinity control and the forest science unit.”

Mr Lane stands by his statements and is supported by the West Australian Forest Alliance (WAFA), the Conservation Council WA, environmentalist Dr Beth Schulz and the Greens WA led by South West upper house candidate Giz Watson.

“I can confirm that with Dr Beth Schulz I have met with the Auditor-General on three occasions.” Ms Watson and Jess Beckerling, coordinator of WAFA have also met with the Auditor-General alongside Mr Lane.

“At not one of these meetings or in any correspondence have my conclusions been challenged.”