Forestry consultant Dr Jerry Leech continues his probe into the forward sale of the region’s forestry estate in this second installment. He has reignited calls for a Royal Commission into the controversial sale.
THE Labor Government gave away the use of this land in the forestry estate for 100 years for nothing.
The incompetent Labor Government was advised by incompetent senior Treasury officials.
They also ignored the community service obligations provided by ForestrySA.
These included the cost of fire protection to non-forest areas, the management of the native forests and the ongoing management of the Central and Northern Forests after sale.
Forests Minister Gail Gago did not even know ForestrySA managed more native forest than was in the region’s national parks.
These CSOs alone conservatively cost some $10-20m per annum which, at 5pc real discount rate, are worth $198-$396m.
It can be argued that to the people of South Australia the value is as high as the standing timber value plus the land lease value plus the CSOs, a total of at least $1341m.
I always argued the South East forests were worth far more to the people of SA than any likely sale price.
In December 2012, Forests Minister Gail Gago replied to a letter from MLC Robert Brokenshire.
I have recently been given permission to cite the letter.
It states “in recent years ForestrySA has been paid about $3.1m per annum in relation to its CSO activities” and from 2014 an additional $1.2m per annum will be provided for community and native forest fire protection, $900,000 for general firefighting capability and $500,000 for legacy forests.
This totals $5.7m per annum.
Member for Mount Gambier Troy Bell recently asked Treasurer Rob Lucas how much the state actually received?
The answer was carefully crafted by Treasury staff. Treasury partitioned the $670m into $635.1m as “the aggregate consideration”, $32.8m in South Australian stamp duty and $2.1min Victorian stamp duty.
The letter also acknowledges that $3.1m was paid in February 2013 finishing the state received $664.8m.
This is farcical.
The stamp duty would have been received on any sale and should not be included in the return from the sale.
The letter from Minister Gago states clearly the $3.1m was not a once-off but was to be an annual payment.
The new owners could check to see if they actually received $3.1m annually for the last five years.
The land lease value at 2.5pc, is worth $470m.
The standing trees alone were worth more than $670m.
The annual payment of $3.1m stated by Minister Gago, but which seems to have only been paid once, is worth $61m at 5pc real, or $113m if it is $5.7m per annum.
What was the cost of staff take over?
I have been told it was some 10-15pc of the sale price in Queensland.
This is why I asked Troy Bell if he could find out how much was actually received.
The figure is unknown but could be $67-$100m.
The $670m is actually $635.1m, less $3.1m, less $470m for the land, less $61-$113m for the CSOs, less $67-$100m for staff.
We need the official figures. It looks like the sale could have cost the state money.
Why did they not simply mortgage the forests as they had a proven asset?
Then Senator Nick Xenophon said at the Senate Inquiry the sale had the potential to be a worse debacle than the State Bank.
In retrospect, has it?
What we need is a Royal Commission into the sale of our forests.