Senate Inquiry Report – Tiwi Forestry – 29 October 2009

http://www.aph.gov.au/SENATE/committee/eca_ctte/tiwi_islands/report/report.pdf

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http://www.abc.net.au/news/stories/2009/10/29/2727934.htm

Tiwi timber plantation in dire straits

By Gina Marich

A Senate Committee has tabled a grim assessment of the commercial forestry plantation on the Tiwi Islands.

The acacia plantation takes up almost 30,000 hectares and was facing criticism long before the collapse in May of the corporate partner in the project, Great Southern Limited.

Earlier this month, the Tiwi Land Council took over the plantation.

It was hoped the trees would return almost $700,000 annually to traditional owners.

But the Senate inquiry has found the plantation will be completely unprofitable without a massive injection of cash.

The inquiry found major hurdles to selling any of the timber, including the high costs of maintaining the plantation, a need for major infrastructure before harvesting can start and problems with the trees themselves, which are not growing properly.

The Green’s spokeswoman on Indigenous affairs, Rachel Siewert, says the scheme was badly planned.

“We are not convinced that this project is sustainable,” she said.

“We are very concerned that it will not provide the returns that were hoped for when this project first started.

“And given the fact that the proponents of the project in the first place have gone into receivership and the administrators say that the project is unviable, I think that raises very major concerns about the future of that project.”

Australia’s shame Part 2: Tiwi Forestry – 30,000 hectares of “bankrupt monoculture”

http://blogs.crikey.com.au/northern/2009/10/28/australias-shame-part-2-tiwi-forestry-30000-hectares-of-bankrupt-monoculture/

Australia’s shame Part 2: Tiwi Forestry – 30,000 hectares of “bankrupt monoculture”

October 28, 2009 – 8:20 am, by Bob Gosford

The Northern Territory has seen a number of what might politely be called “adventurous” broad-acre agricultural schemes that have resulted in inglorious failure.

Readers will know that I have borrowed the name for this blog – The Northern Myth – from a favourite book of mine of the same name published in 1965 and written by the distinguished agricultural scientist and economist Dr Bruce R. Davidson.

Davidson was a man well before his time and of whom many of the current boosters of the mantra of “develop the north” should take notice.

He was highly sceptical of the overblown claims being made by politicians, commentators and other boosters in the 1950’s and 1960’s of the potential of the north as an unburdened paradise for broad-scale agricultural development.

Davidson’s The Northern Myth presents a brutally clinical assessment – based on good science and thoroughly researched economics – of the prospects for many areas of agricultural and pastoral development across the top one-third of the Australian continent.

Parts of Davidson’s book are of course somewhat dated – but I’m sure that Davidson would be just as sceptical of some of the current claims being made – by the same classes of people – about the apparently bountiful future of agriculture in the north.

The most well-known of the failed experiments in northern broad-acre farming in the Top End was the Humpty Doo rice farm project.

The good folk at the Litchfield Shire Council provide this useful snapshot of the rice project – and of the mood of the time that is strikingly similar to some current views:

Rice grown at Humpty Doo was going to feed the starving millions in Asia. The Northern Territory could become the world’s food bowl – and the post-war world desperately needed food. With new skills, new markets, big money, and big ideas, northern development would become a reality, not just a hollow cliché. Certainly there had been failures before, the optimists admitted. But things were different now, they reasoned. Past failures were attributed to bad luck, bad judgment, inadequate capital investment, and similar reasons. Now, all these limitations and reasons for failure could be swept aside by a new wave of large scale capital development. And the Territory’s coastal plains would at last live up to all the hopes which had been held for them since explorer John McDouall Stuart in 1862 said of the area “it could be the finest colony under the Crown – capable of growing any and every thing.”

It didn’t quite turn out that way.

Suddenly, in the 1950s, the area became the focus for national ambitions to develop the north. The spectacular failure of these ambitions made the name “Humpty Doo” part of Australian folk lore.

In 1954 the junior Menzies government Minister Harold Holt infected the American mega-millionaire Alan Chase with enthusiasm for rice growing at Humpty Doo. Chase formed a grand plan for planting half a million acres to make the NT the world’s biggest rice producer. Chase declared that the Territory would be a food bulwark against communism. “Hunger in Asia breeds communism, and I believe that we have here the means of removing that hunger.” A specially commissioned film, “The Miracle of Humpty Doo” was produced and widely shown.

Chase formed a company Territory Rice which began experiments and plantings. By 1959 there were 5,500 acres under cultivation. It was proposed that the rice growing area would be subdivided in to 400 small farms, with housing and townships.

Magpie geese got the blame, but there were many more fundamental reasons – the project was always undercapitalised; no allowance had been made for rainfall and sunshine variability; soils were poor and drainage unsuitable; costs were high and poorly controlled; and marketing was never properly organised.

A few years later the land-clearing bug was still afoot in the Top End.

This excerpt comes from the NT Government’s Department of Infrastructure, Planning and Environment report, Land Clearing in the Northern Territory, written by E.J. Hosking in 2002:

In 1967 the first large-scale clearing project occurred in the Northern Territory on Tipperary station by the Tipperary Land Corporation (TLC) and at the time was believed to be the one of the biggest single agricultural projects in the world (NT News, 24/07/1967). The scheme planned for 79,000 ha to be cleared over 5 years, however, poor management, seasons and trying to do too much too soon eventually sent the Texan-based company broke (Mollah, 1980). Not learning from these mistakes, the Agricultural Development Corporation (ADC) undertook a similar feat in the early 1970s on Willeroo Station. An estimated 48,600 ha was recorded as cleared, with only 16,000 ha ever being farmed (Fisher, 1977).

With self Government in 1978, the NT launched the Agricultural Development and Marketing Authority (ADMA) in 1981/82. This Authority assisted private cropping developments (Sturtz, 2000) that helped establish the NT horticultural industry, and resulted in further clearing on Tipperary station in 1988/89 and development of the Douglas Daly research farms.

The Senate Environment, Communications and the Arts Committee is currently having a close look at forestry and mining operations on the Tiwi Islands just off the coast from Darwin. The Committee was scheduled to submit it’s report by Monday 26th October but there is no sign of the report at the Committee’s website and it has yet to be tabled in Parliament.

I’d heard a few weeks ago that the Committee would not make that deadline, in part due to the sheer complexity of the matters it has been charged with investigating, and also because there is a fair likelihood of separate reports from the Committee members.

You can see the Committee’s Terms of Reference here.

I’ve previously examined the mess that is left of the Tiwi Forestry operations here and here.

Most recently I looked at the predictable failure of the MIS schemes promoted by Great Southern Plantations, the operators of the large-scale Acacia mangium plantations on the Tiwi Islands that have been left to rot after its collapse in May this year.

It is clear, to me at least, that the collapse of the forestry operations on the Tiwi islands represents not just a failure of an ambitious agricultural scheme but also a failure of good corporate governance and highlights the need to conduct appropriate risk, economic and environmental analyses of the overall project – particularly in environmentally and culturally sensitive areas.

And it is not just in Australia that the Tiwi Forestry operations have drawn attention.

In late September Verlyn Klinkenborg editorialised in the New York Times and pointed to the broader impacts of the collapse of the forestry scheme on the islands:

…this is not just another forestry project gone awry — 75,000 acres of bankrupt monoculture where there used to be native tropical woodland…What’s left behind is a sense of desolation and distrust. I talked with several Tiwi Islanders — over a dinner of mud crab, local barramundi, local mussels and magpie goose — and it was clear that many of them doubted the good faith not only of Great Southern and the Northern Territory government but also their own Tiwi Land Council, which had encouraged the partnership

…

The question that night at dinner wasn’t just the economic loss involved — the loss of jobs and royalties and individual investments. It was the meaning of this failure, its demoralizing effect on a people who have been striving to find a way toward economic self-determination. Like traditional owners on the mainland, the Tiwi have had to struggle with the cruel vicissitudes of Australian policy toward its aboriginal population — everything from the brutality of official racism to the confused tolerance that has come in more recent times with cultural and political empowerment.

Apart from the social fallout from the failure of the arrangements between the Tiwi Land Council and Great Southern Plantations there are the very real questions about what will happen to the trees in the ground – will they be left to rot or is at least some part of the project capable of being salvaged?

On 16th May 2009 Administrators were appointed to Great Southern Group. Subsequently, on 18 May 2009 McGrathNicol were appointed Receivers and Managers of Great Southern Limited and certain subsidiaries of Great Southern.

In September McGrathNicol issued Circulars to Investors advising that the Tiwi Island forestry schemes (which consisted of a large number of tree-plots leased by small investors) would be unfunded after 30 September.

On 2 October McGrathNicol issued a further Circular to Investors in the Tiwi Leases, advising that:

The Tiwi Island operations are commercially unviable. The operating costs and capital expenditure requirements are extremely high. As we have been without funding for the Tiwi Island operations from 30 September 2009, we have commenced cessation of these operations. We also wrote to the landlords, the Tiwi Land Council, on 30 September 2009 advising that we will not be accepting any liability for the lease costs from 30 September 2009.

On 1 October 2009 the Tiwi Land Council terminated all head leases on the Tiwi Islands, relying on a clause contained in the head leases which entitled the landlord to terminate in the event of the insolvency of GSMAL.

In June the Tiwi Land Council had told the ABC that it needed a total of $120 million in order to:

…make the forestry plantations on the Tiwi Islands viable following the collapse of Great Southern Plantations…the land council’s Cyril Kalippa says he has asked the Federal Government for help because Great Southern’s account estimates show substantial money will need to be found to keep it going. “We need about $80 million for the next three years – that’s for the wages and the things that we need to operate the forest. “And also we need $40 million to extend the wharf or the jetty so that 50 tonne ships can come in and pick up the chip wood.”

Apart from the huge sums to keep the trees in the ground and alive – and the money to rebuild a ruined jetty – there remain very real questions about the viability of the whole scheme and who might front the large sums of money in a very tight market to a project with a troubled past and a far from certain future.

In early October The Australian reported that the Tiwi Land Council was optimistic that the project was still viable:

Despite the withdrawal of support from a banking consortium last month, Tiwi Land Council chief executive John Hicks said global demand for woodchips indicated the scheme was “clearly a viable operation”. “We have got it debt-free,” Mr Hicks said. “And it has a minimal rate of return of between 15 and 30 per cent.” The plantations will be harvested on decade-long cycles and landowners now have title to all fixed assets, including the camp headquarters, sewerage farm, port infrastructure, and airstrips. The TLC estimates it will need $80m to manage the plantation to maturity in 2013 and fix the Melville Island wharf so the trees can be exported.

Mr Hicks said at least 15 private investors had indicated they were prepared to support the group in the run-up to the first harvest in 2013. Mr Hicks said the 20 staff on the operation had been retained and that the plant had the potential to create 660 jobs in associated industries.

The controversial venture has already fallen victim to a cyclone and Great Southern was last year ordered to pay $4m for breaching environmental guidelines.

On 2nd October – the same day that McGrathNicols described the Tiwi Forestry project as “commercially unviable”, Dr Judith Ajani gave evidence to the Senate Committee’s Inquiry at Hearings in Canberra.

Dr Ajani is an economist specialising in forest and plantation research at the Fenner School at the ANU, where she has worked since 1996.  She is the author of ‘The Forest Wars‘ (MUP 2007) and is well placed to comment on the Tiwi forestry schemes.

Dr Ajani’s evidence to the Senate Committee centred on her assessments of the short-term propsects of Australia’s woodchip production and exports, the likely demand for the low-grade woodchips from the Tiwi Islands over the period 2010 to 2014 and the looming glut in supply caused by the rapidly increasing supply of plantation hardwood chips from plantations planted under the MIS schemes.

This is a glut that Dr Ajani says will require Australia to double the volume of sales into a flat market (Japan) where we export up to eighty-five per cent of out chips and where we  already supply about one-third of their intake – and that this will commence as soon as early in 2010.

Responding to questions from Greens Senator Rachel Siewert, Dr Ajani told the Committee that:

Dr. Ajani: What we have at the moment, and it is the really crucial issue here, is a very big volume of hardwood chip resources coming on stream from [Australian] plantations and we also have the native forest resource hanging in there as a continuing significant supplier of hardwood chips.

…

So what we are looking at here is Australia’s plantation chip resource increasing from our current level of production of around 4 million cubic metres per annum—that is the volume of that resource that we export currently from hardwood plantations—to around 14 million cubic metres per annum by 2010-2014. Native forest resources in there at the moment are supplying around 5½ million cubic metres. We have inevitably some very big resource volumes coming on stream very quickly. Some people might say that this is not a glut situation. I think they are not being open in their assessment of the reality here.

…

…with a glut we have a problem that happens in any commodity industry. Lower quality resources are the ones that always struggle to get market share and, in particular, to get market share at the price they expect.

…

…the Tiwi Islands chips using Acacia mangium are of a lower quality. They are of a lower quality, according to Great Southern plantations, because they have a lower pulp yield—in other words, you need more wood to make the same volume of pulp—and they are of a lower quality in terms of the additional costs that are required with respect to bleaching for paper production. That is information that Great Southern itself presented.

NT Labor Senator Trish Crossin asked Dr Ajani how the Tiwi might deal with their very real practical problems – they have trees in the ground that will cost a lot to maintain before they can be harvested and sold into an uncertain market:

Dr. Ajani: …it is a complicated problem…the Tiwi Island issue is embedded in a much bigger problem, which is the plantation MIS arrangements as a whole. The first job is to contain the problem. It is not just for the Tiwi islanders but also Australia wide—that is, in my view we should terminate the plantation MIS arrangements, because the last thing we want is greater havoc being played because we have more investment going into these operations while we are facing the market as I have described. The issue you raise is: what then happens to the trees?

…

…given the information that Great Southern itself provided some time ago and given the market conditions, there should be a great care about further expanding the plantation estate.

Liberal Senator Ian McDonald, in previous governments a Minister that provided no small measure of support for the plantation industry in general and MIS schemes in particular, asked a number of forceful questions of Dr Ajani, concluding with a question that revealed his belligerence and inability to comprehend her evidence:

Senator IAN MACDONALD—Chair, I am at a loss to understand the evidence Dr Ajani is giving.

Chair of the Committee is the Liberal Senator for South Australia, Simon Birmingham asked Dr Adjani about the prospects of the world hardwood chip market.

CHAIR— Dr Ajani, is the global hardwood chip market still growing?

Dr Ajani—The global hardwood chip market is largely flat…The trade figures are largely flat. The current downturn also is not presented in this graph on page 4. I do not see the hardwood chip trade globally recovering to such an extent that the wood volumes that we have coming on stream, virtually immediately, are going to be cleared easily and without putting pressure on the price.

Dr Ajani—…We are seeing globally a very strong separation of wood into wood products—paper and sawn timber—and the actual production trends of those products. In other words, what we are seeing globally are resource saving technologies coming through such that the strong growth in wood products is not flowing through to strong growth in wood input.

CHAIR—Recycling technologies and so on are substituting for plantation and native woodchips—is that your contention?

Dr Ajani—Yes. The main play here in the paper market is the role of recycled paper dampening the demand for wood despite strong growth in paper consumption.

Senator McDonald returned for one last unsuccessful shot at Dr. Ajani:

Senator IAN MACDONALD—What is your concern about the Tiwi Islands, from the Tiwi Islanders’ point of view?

Dr Ajani—I think they have a product which is not well placed in the play that is going to unfold over the next few years as our hardwood plantation resource comes onto the market.

In short, it seems that the Tiwi have been landed with a white elephant of monumental proportions – large swathes of pristine, high conservation-value tropical forest have been stripped and burned – or sold off in curious deals that have only made a loss to date.

The Tiwi have now been forced to go cap-in-hand for money from a cautious market and Governments that, understandably, have little inclination to throw good money after bad for a resource of dubious sustainability and diminishing value.

Many think that Tiwi Forestry is just another Northern Myth – an ambitious but poorly-researched and managed scheme that will – if it has not already – see large tracts of precious tropical forest land laid to waste for no good end.

As I indicated above, the Tiwi Islands forestry case is complex and I have only just touched the surface here.

I don’t expect everyone to agree with me – so if you have a view contrary to mine please register, and leave a (hopefully constructive) comment.

Similarly if you feel you may have something to add to or support my comments then please do the same.

You can read some background material (from a blog run by the NT Environment Centre in Darwin) here.

And I’d encourage you to read the Submissions and Transcripts of Evidence given to the Senate Committee at the Committee’s website here.

Thanks for taking the time to get this far!!

Tiwi Bombers logs

http://www.ntnews.com.au/article/2009/10/21/94501_ntsport.html

Bombers ask for patience as oval issues dealt with

NT News

GREY MORRIS
October 21st 2009

Bombers chairman Allan McGill has called for patience as Tiwi Oval on Bathurst Island continues to be developed as an NTFL venue.

McGill was responding to criticism of the oval surface after home games against St Marys and Waratahs.

Most of the criticism centres around the hardness of the ground and several uneven areas.

A chronic lack of shade and proper changeroom facilities have also been a problem.

“I think people have to understand we are still developing the ground after its $1.5 million upgrade,” McGill said.

“I agree the surface is hard and we’ll be talking to the shire about that.

“It obviously needs more watering but that will have to be paid for so we’ll have to discuss that with them. The shade is definitely a problem, even though we’ve erected some bush-type shelters around the ground on matchdays.

“There were 20 trees planted around the oval that don’t seem to be doing too well, so we will have to start them again.”

McGill said there was an offer from a prospective sponsor to erect permanent sail-type shades at the ground.

Those plans include using logs from the Tiwi Islands as the foundation for the shadecloth.

McGill agreed the changeroom facilities were not ideal, but conceded not a lot could be done in the immediate future.

Visiting clubs change at a school near the oval while the Tiwi side has access to the swimming pool and its rooms.

“We don’t have the money as a club so it will have to come from somewhere else,” he said.

“But it’s important to note we are only in our second season of hosting matches and third game overall, so there will be changes.”

Tiwi CEO John Hicks says $80 million needed Oct 09

Tiwi Land Council urges backers to chip in

http://www.theaustralian.news.com.au/business/story/0,28124,26169380-36418,00.html

Lex Hall | October 06, 2009

Article from:  The Australian

TRADITIONAL owners on the Northern Territory’s Tiwi Islands are looking for new investors to support a $275 million forestry project that environmentalists say is a white elephant.

Prior to its collapse earlier this year, forestry group Great Southern Plantations ran the 30,000ha acacia forest on Melville Island, north of Darwin.

Receivers McGrath Nichol last week ended their lease agreement, handing control of the $275m asset to the Tiwi Land Trust.

The project, seen by some as a means of beating welfare dependency, is now in the hands of Tiwi landowners, who will manage the project for the next four years.

Despite the withdrawal of support from a banking consortium last month, Tiwi Land Council chief executive John Hicks said global demand for woodchips indicated the scheme was “clearly a viable operation”. “We have got it debt-free,” Mr Hicks said. “And it has a minimal rate of return of between 15 and 30 per cent.”

The plantations will be harvested on decade-long cycles and landowners now have title to all fixed assets, including the camp headquarters, sewerage farm, port infrastructure, and airstrips. The TLC estimates it will need $80m to manage the plantation to maturity in 2013 and fix the Melville Island wharf so the trees can be exported.

Mr Hicks said at least 15 private investors had indicated they were prepared to support the group in the run-up to the first harvest in 2013.

Mr Hicks said the 20 staff on the operation had been retained and that the plant had the potential to create 660 jobs in associated industries.

He said he was also hopeful of securing $500,000 a year in commonwealth funding for controlled burning and other maintenance work that needed to be carried out.

The controversial venture has already fallen victim to a cyclone and Great Southern was last year ordered to pay $4m for breaching environmental guidelines.

NT Environment Centre head Stuart Blanch questioned the viability of the project, saying it “stinks like a white elephant”. Mr Blanch said Tiwi islanders should knock down the plantation and return the land to natural bush to try to gain an income from a future carbon trading scheme and tourism.

“There are other opportunities for indigenous people to make money — and destroying the land isn’t one of them.”

The Australian Plantation Products & Paper Industry Council said the plantation had the potential to return a profit. APPPIC manager of plantation investment Alan Cummine said that despite the global slowdown there was still demand for acacia products.

“The species that’s being grown by the Tiwi islanders, acacia mangium, is the main species that’s used by the Indonesian paper and pulp industry, which actually supplies a lot of Australia’s photocopy paper.

“So it’s recognised pulpwood species for quality paper production.”

Centre for Aboriginal Economic Policy Research director Jon Altman said the Tiwi needed to explore all options for those living on the islands.

“If they have undertaken due diligence and see existing plantations as an unencumbered prospect then they should pursue it,” Professor Altman said. “But with realism, not as some silver bullet for Tiwi disadvantage.”

A spokeswoman for Indigenous Affairs Minister Jenny Macklin declined to say whether the government would contribute to the scheme.

“The Australian government believes the future of the Tiwi forests is a matter for the Tiwi Land Council to negotiate with potential alternative operators in the private sector,” the spokeswoman said.

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http://newsstore.smh.com.au/apps/previewDocument.ac?docID=GCA00995453GTP&f=pdf

..McGrathNicol… October 5th, 2009

“…The Tiwi Island operations are commercially unviable. The operating costs and capital expenditure requirements are extremely high. As we have been without funding for the Tiwi Island operations from 30 September 2009, we have commenced cessation of these operations. We also wrote to the landlords, the Tiwi Land Council, on 30 September 2009 advising that we will not be accepting any liability for the lease costs from 30 September 2009.
On 1 October 2009 the Tiwi Land Council terminated all head leases on the Tiwi Islands, relying on a clause contained in the head leases which entitled the landlord to terminate in the event of the insolvency of GSMAL. As a result of the termination of the head leases, investors with woodlots located on the Tiwi Islands will no longer have a licence or sub-lease in relation to their woodlot.
There is a high risk that the exercise of this right by the Tiwi Land Council will mean the loss of the Scheme timber on that land and any future harvest proceeds for investors.
A list of woodlots located on the Tiwi Islands has been posted on the investor portal (http://investors.great-southern.com.au). If you have not registered for the portal, please refer to the Great Southern website http://www.great-southern.com.au/investoronlineaccess.aspx) which details how to register.
Any investors with woodlots on the Tiwi Islands must carefully make their own assessment of the issues outlined in the Circular and should consider seeking independent legal advice. In particular, investors may want to obtain legal advice as to their ability to obtain a court order reinstating a terminated lease, subject to any conditions the court sees fit to impose.
Queries
Should you have any questions please refer to the Frequently Asked Questions on the Great Southern website (www.great-southern.com.au). Alternatively, specific questions may be emailed to gsp@great-southern.com.au or to fm-gs@mcgrathnicol.com or you may call the Investor Hotline on 1800 258 348…”

Great Southern on the Tiwi Islands – Timber, Fear, Intimidation and a great tax dodge

Great Southern on the Tiwi Islands – Timber, Fear, Intimidation and a great tax dodge
May 26, 2009 – 1:07 pm, by Bob Gosford
Further to last week’s look at the likely fallout in the NT following the collapse of MIS (Managed Investment Schemes) promoters Timbercorp and Great Southern Plantations I want today to have a closer look at the operations of Great Southern on the Tiwi Islands.

Marion Scrymgour has never been one to hold back from a firmly held conviction – she has been fairly quiet since she stepped down to the backbench from her position as the most powerful elected Aboriginal politician earlier this year but in the last week or so she has come out in strong defense of those she says have been left out of the benefits that may flow from resource developments on her homelands, the Tiwi Islands, just offshore of Darwin.

The ABC reported Scrymgour’s latest comments on 19 May:

The Member for Arafura, Marion Scrymgour, is calling on the Federal Government to investigate the Tiwi Land Council’s finances and its efforts to stimulate economic development on the islands. Marion Scrymgour says she is sick of seeing failed commercial projects on the islands, including the marine harvest fish farm and the Matilda Minerals project. Now the future of forestry projects on the Tiwi Islands, which are run by Great Southern, are in doubt after the company went into administration. Ms Scrymgour says the land council was unwise to set up the deal with Great Southern. “I know a lot of Tiwis don’t have confidence in their own land council,” she said. “They’ve never had that confidence and until the Federal Government steps in with a bit more commitment, they’re never ever going to move forward with any economic prosperity.”

And while Scrymgour might be less than happy with the conduct of the Tiwi Land Council, the ABC report of the same day from her Chief Minister, Paul Henderson, could only muddy the waters:

The Northern Territory Government has promised to help the Tiwi Islands deal with the collapse of Great Southern, which has plantations on the Tiwi Islands. The Chief Minister, Paul Henderson, says the Government is willing to pitch in. “We’ll offer any assistance we possibly can to make sure those jobs are maintained on the Tiwi Islands,” he said. He has spoken to the Tiwi Island Land Council and offered to send across a business analyst to look at options for the future of the plantation.

Don’t you just love it when the left hand and the right hand talk from the same page?

The following day the ABC reported that the Senate Committee currently investigating the Tiwi Islands resource industries was concerned that it had taken 3 days for it comprehend how payments related to the forestry program might be distributed and of a climate of ‘fear and intimidation’ on the islands:

The Senate committee inquiry, which is examining the impact of forestry operations on the islands, yesterday held an in camera session because a number of women did not want to put their names on record. The Member for Arafura, Marion Scrymgour, says the women are concerned about the environmental and social impacts of the operations. She says some women have been threatened with physical abuse if they speak out. “The fear and the intimidation is a real thing and that’s what I keep saying,” she said. “People deny that it happens.” Meanwhile, the committee has raised concerns that it has taken three days of hearings for senators to work out how payments from Great Southern’s forestry operations on the islands are distributed to islanders.

…

But Senator Trish Crossin says the land council has not adequately communicated the royalty payment process to confused islanders. “They certainly need to be getting their message out better on how that money is collected, how you can access that money and how that money is given.” Great Southern was expected to appear before the committee today but its appearance was postponed because of the company’s recent fall into voluntary receivership.

There is no shortage of shills, hucksters and flim-flam men in the NT – sometimes they sit on the Government benches, sometimes they operate businesses big or small and sometimes they walk into the offices of the largest landowners in the NT – the Aboriginal land councils that, between the four established under the Aboriginal Land Rights Act (NT), administer nearly half of the land mass in the NT.

The Tiwi Land Council is one of the smaller land councils and controls just about everything that goes on on Melville and Bathurst Islands to the north of Darwin. The Tiwi people have always regarded themselves, for good reasons, as linguistically, culturally and politically distinct from mainland blackfellas.

Those distinctions have been good for the Tiwi Land Council – they’ve been able to avoid some of the more egregious attention paid to the activities of their mainland counterparts by governments and the often rabid bites of the mainstream press and the Tiwis have been able to get political and commercial support because of their apparent readiness to do business – even it was business of dubious value.

The deal that is currently under the Senate’s spotlight are the arrangements between the Tiwi Land Council and Great Southern, the promoter of broad-acre MIS forestry schemes on the islands, which have seen vast swathes of virgin tropical savanna transformed into a monocrop of the fast growing Acacia mangium.

Crikey readers will be familiar with the controversy that arose around the Tiwi Land Council’s conduct in relation to the contentious 99-year lease deal over the largest township on the Tiwi islands, Nguiu, from reports from reports in Crikey here and here.

Crikey has also reported on the Tiwi forestry concerns before here and here.

In 2007 the ABC’s Background Briefing broadcast the most thorough media report on the timber industry on the Tiwi Islands to date.

Wendy Carlisle noted that the proposal had some serious problems from the start:

…in the ’90s, former Territory Chief Minister, Paul Everingham’s company, Sylvatech, restarted the dream. It was a grand vision of riches for all. They sought and gained under new Federal environmental laws, permission to clear 28,000 hectares of native forest. But there was no independent environmental impact assessment and no public consultation process
…
The reports also claimed that there would be a nett greenhouse benefit from replacing the forests with the acacias. Yet there was no reckoning with 9-1/2-million tonnes of greenhouse gases that would be emitted by clearing the forest in the first place. Or that they would be replaced with the acacias that would then be harvested for their pulp.

And an important, some say vital, part of the Sylvatech deal was that it would get to sell off the existing Cypress Pine plantations and Eucalypt logs felled by the clearing of the plantation coupes.

Wendy Carlisle spoke to Professor Brendan Mackey Director, ANU Wild Country Research and Policy Hub about the forests of the Tiwi islands. Mackey gives a clear indication of the importance of the forest cleared on Melville Island.

Brendan Mackey: That’s right, Northern Australia, taken as a whole, is one of the most intact natural areas left in the tropical world. Certainly most of the areas that are what we call tropical woodland and the eucalypt forests on Tiwi Islands, fall in that category. They’re not closed rainforest like you find in the Amazon, they have been severely degraded just about everywhere else in the world, and really Northern Australia, and this is the main point we’re making in our report on Northern Australia, is it represents one of the last chances to do something sensible in a tropical woodland environment.
Wendy Carlisle: Your report looks at all the top of Australia, from Cape York right across to the Kimberley, so in terms of the importance of the Tiwi forest, how significant are they in that huge sweep?
Brendan Mackey: They are the most productive, biologically productive forests in Northern Australia. They have the best rainfall and the best soil, so they really are the jewel in the crown.

Background Briefing again:

Wendy Carlisle: In 2003 Sylvatech and the Tiwi Land Council began exporting timber from the old pines, and the best of the timber from the cleared forests to China. There were wild estimates of the value of the deal to the Tiwis.

ABC News report: It’s a deal that’s worth about $1.5-million a year for the Tiwis who will fill more than half of the expected 250 jobs. Canberra says everyone’s a winner.
…
Wendy Carlisle: Over the next four years, seven barges of Red Tiwi sailed for China. But it was a fiasco. Instead of being worth millions, the shipments made a loss of over $700,000.

In 2005 Sylvatech was bought out by Great Southern Plantations – which collapsed in spectacular fashion nine days ago.

Tiwi Land Council Secretary John Hicks and the Tiwi Land Council appear to be comfortable with timber and other resource companies that fail. As The Australian’s Paul Toohey reported, Hicks told him that:

…the Tiwis had seen their forestry projects fall apart eight times in the past 30 years. They believe they can ride out the collapse of Great Southern, which acquired the project from Sylvatech in 2005.

“The pattern of these receiverships is not something we’re unfamiliar with,” Mr Hicks said. “Great Southern has far more impact upon us (than previous failures); however, Great Southern don’t own the trees. They’re owned by 2700 mum-and-dad investors and Great Southern managed the forests on their behalf.”

In December 2008 the Senate Standing Committee on Environment, Communications and the Arts commissioned an “Inquiry into Forestry and Mining operations on the Tiwi Islands“, the major focus of which has been on the arrangements between the Tiwi Land Council, Sylvatech and, since 2005, Great Southern Plantations.

To date the Committee has received thirty-four submissions. Like all such inquiries the submissions range from the self-serving to the irrelevant, overly long, tedious or just wrong-headed.

But there are a few real gems, including that of Professor Stephen Garnett of the School for Environmental Research at the Charles Darwin University. Garnett points to a recent research paper that indicates the Tiwi may have been dudded big-time and would have been better off leaving their precious tropical savanna untouched rather than signing up to a tax rort:

The paper estimated that the Tiwi Islands forests that were logged by Great Southern Plantations in 2008 could have been worth up to $110 million under a REDD scheme under the Gold Standard of the voluntary carbon market.
…we recommend the inquiry determine why Tiwi Islanders appear to have been denied the opportunity to benefit from REDD opportunities…We think this is because of the way in which Great Southern finance their operations – that the tax savings available under a Managed Investment Scheme could only be attained if the forests were felled.

Dr Ken Eldridge has degrees in botany and forestry and, with more than 50 years experience of research and development in forest genetics and tree breeding, is well qualified to comment on the Tiwi forestry issues.

His submission expressed his personal opinions, and not those of the IFA or of CSIRO:

My impression of the Tiwi plantations, having seen industrial plantations of many species in several countries, was that ‘GSL have achieved good survival and weed control, and the trees were healthy with little damage from insects or fungi. However, stem and branch form was not good, many trees having forks, crooked stems or coarse branches. Such poor form is common when genetically unimproved ‘wild’ seed is used in Acacia mangium plantations elsewhere.’ Such form deficiencies reduce the return at harvest due to reduced yield and the extra cost of delimbing and debarking, prior to chipping for export at age 8 to 10 years.

In other words – they are planting and growing low grade seed-stock that will give poor returns.

Another of the very interesting submissions to the Committee is that of Peter Robertson, who for several years while living in Darwin and working for an environment NGO undertook investigations into the operation of the Tiwi (Melville Island) plantation project.

Robertson makes several important points about the administrative and corporate arrangements, sales and returns to the Tiwi, including that in addition to the MIS proponent Great Southern Ltd, and project ‘partner’ the Tiwi Land Council:

…there are at least four other corporate entities involved in
the Tiwi Island woodchip plantation project:
- Pirntubula Ltd
- Pentarch Forest Products Ltd;
- PenSyl Ltd; and
- Stratus Shipping Ltd.
There is a fundamental lack of transparency about the legal commercial agreements and contracts
that exist between the companies involved in the exploitation of the Tiwi forests and plantations.

…

There is far too little readily available information about these companies or the project’s
financial structure showing how much income each is making out of clearing the Island’s forests
and subsequent shipping and sale of high quality logs, or how much each will make out of the
woodchip export part of the project when it commences.
…
‘Commercial confidentially’ cannot be used as an excuse to deprive the Island’s landowners and
communities of clear and understandable information about the commercial involvement of these
companies in the exploitation of the Island’s natural resources, and the risks involved.

In relation to the valuation of the land used by Great Southern Robertson notes that:

There are two crucial issues here:
(a) how was the leasehold value of the Tiwi ‘Aboriginal Freehold’ land for plantation
establishment arrived at;
(b) how does it compare with leasehold land valuations for plantations elsewhere?
The Tiwi Islanders are being paid “~$17/hectare per annum (+ 2% of net harvest proceeds) for
plantation ready land and ~$1/ha pa for land that is not plantation ready”

There is ample evidence that this amount is a fraction of the amount landowners are paid by
plantation companies in southern Australia. An ANU research paper summarised lease payments
across Australia and found that they ranged from $75/ha/pa up to $300/ha/pa. The average is around $150/ha/pa – or nearly 10 times the amount Tiwi TO’s are being paid. These are already old figures and the current rates are likely to be much higher still.

Concerning the shipment and sale of logs clear-felled from the forestry site Roberston says:

According to GSL and the Tiwi Land Council, under the existing commercial arrangement the
Tiwi Traditional Owners will receive “2% of net harvest proceeds” from the eventual sale of
acacia mangium woodchips from Melville Island.
This means that only after all the other corporate parties involved – GSL and its tax minimisation
investors, Pentarch, Stratus Shipping, etc – have taken their cut of the income and profits will the
Traditional Owners receive a potentially miniscule residual income.
In fact, based on the log sale fiasco, it is quite plausible that they will end up receiving nothing at all, especially if there is a fall in the overseas commodity price for woodchips, which is entirely foreseeable.

And local MLA Marion Scrymgour, never one to suffer a fool gladly, has been concerned about the operations of the Tiwi Land Council for some time. As she said in a letter to yesterdays NT News:

There are many other things I have to say about the Tiwi Land Council and its governance but I will leave that for my submission to the Senate Committee.

Watch this space