Loss-making Forestry Tasmania allegedly secretly spent AU$3.3M to buy former Gunns sawmill, prompting Greens party to claim state-owned agency is 'out of control'

SYDNEY, Australia , October 16, 2012 () – TASMANIA'S state-owned, loss-making forestry company secretly spent $3.3 million of taxpayers' money to buy a former Gunns sawmill without even telling the state's Forestry Minister.

The revelations yesterday sparked claims by conservationists and the Greens that Forestry Tasmania was an ``out of control . . . rogue agency'' working to kill prospects of a forest peace deal.

However, Labor Forestry Minister Bryan Green, FT and the timber industry defended the purchase as necessary to protect an ``important strategic asset''.

The acquisition has fuelled tensions between the state's Labor and Greens power-sharing partners over the future of the government business enterprise, which is projected to lose $18m to $43m a year for the next three years.

Greens forestry spokesman Kim Booth said FT's secret purchase of the Southwood sawmill, in the Huon Valley south of Hobart, was ``another act of deceit'' against taxpayers.

``There is no place in a modern economy for taxpayers' money being used to prop up a private company,'' Mr Booth said. ``Every time public money is used to interfere in the market and try and pick winners, the market fails.''

He said FT had acted to ensure the 40,000cu m annual sawlog quota attached to the mill was not freed up to assist in securing a peace agreement between industry and conservationists.

Those talks are at a crucial stage and appear likely to succeed only if a federally funded $15m-plus sawlog buyout scheme can free up enough timber to protect 525,000ha of native forest. However, conservationists previously had accepted that Southwood sawmill would remain in operation and there is speculation that about 40,000cu m of sawlogs will be surrendered under the buyout scheme.

That should be enough to deliver the 525,000ha of new reserves and secure a lasting forest peace deal, if the industry is willing to accept such a reduction.

FT assistant general manager Michael Wood confirmed FT had lent timber company Del Vista money to buy the Southwood mill from Gunns Ltd in April. However, when the company failed to repay the debt, FT ``assumed ownership of the sawmill''.

``It had become clear that the private sector did not have the confidence to invest in the timber industry during such a period of uncertainty,'' Mr Wood said.

Mr Green conceded he was unaware of the purchase until after the event, but defended it.
(c) 2012 News Limited

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