The Tasmanian forests agreement is hanging by a thread.
Political parties have reverted to their old adversarial ways, people who should be getting a say have been excluded from the process, and the large corporations involved have been unaccountable. Is it too late to save this historic agreement?
In August 2011, the Tasmanian State and Federal Governments signed the Tasmanian Forests Intergovernmental Agreement (IGA) to provide more than a quarter of a billion dollars in finance to restructure Tasmania’s ailing forest industry.
The agreement reserves large areas of high conservation value forests in national parks in return for financial compensation, continued logging in state forest, and “a” pulp mill. It was directly negotiated by groups representing economic, social and environmental constituencies.
But today the IGA is in crisis.
While the reasons are complex, the stalled negotiations can largely be explained in terms of governance failure. “Old governance” by political parties has bolstered adversarial positions. “New governance” by business and civil society actors has excluded key stakeholders. “Corporate governance” by Forestry Tasmania and Gunns Limited has been self-serving and unaccountable to broader constituencies.
Problems with old governance
Political parties dominate our modern representative multiparty electoral systems. Under the Westminster system, the role of the Official Opposition is to oppose government policy, sometimes for opposition’s sake. Their ultimate goal is get a vote of no-confidence passed to force an early election.
This system generates trite public deliberation and sound-bite politics. The need for complex and difficult compromise amongst diverse constituencies is denied in favour of simple, popular solutions. According to the Tasmanian Liberal Party, the current forestry crisis has been caused by the IGA so the answer is to tear it up.
Such populism plays well in the media and with elements of Tasmania’s business community. Clearly, however, it is no substitute for serious policy. The position completely ignores structural shifts in the global forest industry. These include more availability of plantation fibre, decreased demand for native forest products, increased demand for Forest Stewardship Council certification, and a rise in corporate social responsibility.
Problems with new governance
The idea of brokering an agreement directly between economic, social and environmental groups — the three core constituencies of sustainable development — was conceptually sound. Implementation, however, has left much to be desired.
Basically, a small, self-appointed group formed, deliberately excluding others who nonetheless had a clear stake in the outcome of the negotiations. These excluded groups — Aboriginal Tasmanians, Forestry Tasmania, local governments, and grassroots and community-based environmentalists — have understandably refused to legitimate the IGA process.
The result has been efforts to destabilise the negotiations. There has been a memorandum of agreement between the Tasmanian Aboriginal Centre and Forestry Tasmania to vest any new reserves with the Aboriginal Land Council of Tasmania. Twelve of Tasmania’s 15 Upper House Legislative Council members proclaimed they would not pass any legislation proposing new parks. The Huon Valley Environment Centre and Markets for Change continue to target Ta Ann’s production facilities in Tasmania and sales to Japan.
A more inclusive process undoubtedly would have had even greater difficulty reaching an agreement. However, the greater legitimacy of the process would have generated the “durability” that the industry craves and needs.
Problems with corporate governance
The two dominant actors in forestry in Tasmania — Forestry Tasmania, a corporatised “Government-Business Enterprise” and Gunns Limited, a woodchip exporter — have experienced significant losses in recent years resulting in corporate restructures and redundancies.
Forestry Tasmania is currently the subject of a government-mandated strategic review, conducted by URS Forestry and Deloitte. In the first of three reports, URS Forestry provides only lukewarm support to FT’s preferred corporate strategy of refocusing its business on shipping low value-added commodities to China.
Forestry Tasmania has resisted adopting an ecosystem-based management approach which would qualify it for FSC certification. Instead, by backing the much weaker Australian Forestry Standard it has endorsed an outmoded, sustained-yield approach. Its constant questioning of the High Conservation Value Forest concept, which has been extensively applied to resolve conflicts in Canada, testifies to its failure to modernise its thinking.
Forestry Tasmania is not the only poorly performing corporate body. Gunns Limited is, itself, struggling to survive. Desperate for cash to pay off almost $600 million in debt, the Company announced that it had signed a “term sheet” with the Richard Chandler Corporation (RCC). The RCC was to invest $150 million with a further $130 million to be raised from a rights issue, subject to a due diligence investigation.
Term sheets are not signed lightly; thus, it can be presumed that the RCC had already been briefed on matters in the public domain — especially the controversy over Gunns’ proposed Bell Bay pulp mill. A Google search of “Bell Bay pulp mill” produced 134,000 hits, the third being the Wikipedia entry that provides a detailed account of opposition to it.
Recently, however, RCC dropped a bombshell on Gunns by announcing it was not proceeding with the deal. In damage control mode, Gunns immediately tried to pin responsibility on anti-pulp mill groups and the Greens. More recently, however, Gunns has admitted that it failed to meet RCC’s corporate social responsibility requirements as set out in its evaluation criteria.
Gunns is currently suspended from the ASX and is working on yet another capital raising plan. All eyes will be on it when it returns to trading, currently scheduled for next Monday.
Like the IGA, the company too appears to be hanging by a thread.
Getting the IGA back on track
The practice of good governance, especially regarding environmental issues, requires a great deal of patience, inclusion, transparency and accountability. All of these have been in short supply recently.
It is time for the parties to once again set aside their differences and return to the negotiating table. They should also reach out to disaffected groups and secure a role for them in the discussions.
Reinvigorating the negotiations will be difficult though because the basis for the original deal has fallen apart.
A leaked consultancy report indicates that Forestry Tasmania will struggle to meet existing contracts with its current forest estate, never mind trying to do so with one that is substantially reduced. If true, then environmentalists will have to adjust their expectations with regard to the area to be reserved.
The Tamar Valley pulp mill will never obtain a social licence. The essential fact remains: the project was never publicly, independently and comprehensively assessed. Until it is, investors will and should walk away. Industry should take the pulp mill off the table.
Notwithstanding these developments a deal can still be done. The money is there in the IGA to structure a compromise between industry, workers, communities and environmentalists. With some innovative thinking and a more inclusive approach, an agreement could yet be realised.