Tiwi Islands – Northern Territory

Great Southern wants More money from Govt

Posted by tiwiccbb on March 31, 2009

Source:
http://202.14.81.34/Hansard/reps/commtte/R11032.pdf

COMMONWEALTH OF AUSTRALIA
Official Committee Hansard
HOUSE OF REPRESENTATIVES
STANDING COMMITTEE ON INFRASTRUCTURE, TRANSPORT,REGIONAL DEVELOPMENT AND LOCAL GOVERNMENT
(Roundtable)
Reference: New regional development funding program
MONDAY, 28 JULY 2008
DARWIN

Monday, 28 July 2008 REPS ITRDLG 53
INFRASTRUCTURE, TRANSPORT, REGIONAL DEVELOPMENT AND LOCAL GOVERNMENT
[12.47 pm]
PATTERSON, Mr Andrew Warrock, General Manager, Great Southern Forestry Northern Territory Pty Ltd
ROSE, Dr Robert Anthony, Farm Manager/Mentor, Gwalwa Daraniki Enterprises Pty Ltd
MOIR, Mrs Keryl Margaret (Kerry), President, Executive Board, Local Government
Association of the Northern Territory
TAPSELL, Mr Tony Francis, Chief Executive Officer, Local Government Association of the Northern Territory
MARSHALL, Mr Alastair Bruce (Bruce), Executive Officer, Maningrida JET Centre
PRATT, Mrs Leonie, Executive Manager Northern Territory, Masonic Homes
D’AMBROSIO, Mr Raymond, Executive Officer, Northern Territory Area Consultative Committee Inc.
FULLER, Mr Colin, Chair, Northern Territory Area Consultative Committee Inc.
MALONE, Mr David Anthony, Executive Director of Regional Development, Department of Business, Economic and Regional Development, Northern Territory Government
HICKS, Mr John Sydney, Executive Secretary, Tiwi Land Council
TROY, Mr Trevor Martin, Director, Infrastructure and Civil Services, Victoria Daly Shire Council

Page 59
ACTING CHAIR—Now, Mr Patterson, you missed out when you came in before. Could you give us an overview of your project and any contribution you wanted to make to today’s deliberations.
Mr Patterson—Yes. I am General Manager of the Tiwi Island forestry project. The project is owned and managed by Great Southern Ltd, and Great Southern Ltd is a plantation and horticultural investment company based in Perth and listed on the Australian Stock Exchange, with a market capitalisation of around $250 million to $300 million. The Tiwi Island forestry
project has been in operation for approximately 10 years, and Great Southern became involved when it purchased the interest of a company called Sylvatech Ltd, which initiated the project in the late 1990s. Every time we do a harvest and need to plant again, we need to go to an investment market and attract funding to get that investment to happen again. One of the things an investor will assess is how much it will cost to do the planting, to look after the trees for the next eight years and to harvest them at the end of eight years. One of the key components of those costs is the degree of infrastructural support that is provided on the island.

…Our initial involvement in talking to Mr D’Ambrosio and the ACC was in relation to roads. We are very concerned about the fact that the roads, apart from the ones we have improved ourselves, are completely incapable of taking the sort of traffic that is going to arise in the harvest. That will happen in about four years. So I guess that is why I am underlining the need
for a process like this. This is not about seed investment capital; this is about a project that is there on the doorstep and is inadequately supported by current infrastructure. The gap between what is required for the roads on the island and what is there now is not anything that could be remotely addressed through the budget of the Tiwi Islands local government. It is of a greater order of magnitude. Many of the roads, when they were initially made, were done on a shoestring budget without the knowledge

…At present, apart from the roads that Great Southern has made to the more remote areas that we have planted, there is one piece of reasonably improved road.
It is of about 30 kilometres. There are about another 200 kilometres of roads there that are at various stages of upgrading from bush tracks. They have been attended to and they have attempted to be maintained by the local government with inadequate equipment. The problem really is that insufficient capital was spent on them in the very first instance. This question will arise: has our activity put undue stress on those roads and is that what has caused the problem? We did do
some heavy work on those roads over a couple of years when we were clearing and harvesting some of the plantations but that has now stopped. During that period of time we committed quite large amounts to the local government. We actually had a memorandum of
understanding with them for the maintenance of those areas. Since we have stopped doing that we have stopped providing that funding, because our day-to-day activities are not that much heavier than anybody else’s. We have a certain amount of light vehicles going over them. When there are fires there are some fire units and when we are establishing new areas there are some semitrailers with seedlings. But they are nothing like what will be required in about four
years time when we come to harvest.

…On the Tiwi Islands the roads are not too good now, and I do not see any program in place to make them any better. Along with many other factors that make a regional area like the Tiwi Islands more marginal in terms of being attractive, that is going to be another negative.

Monday, 28 July 2008 REPS ITRDLG 57
INFRASTRUCTURE, TRANSPORT, REGIONAL DEVELOPMENT AND LOCAL GOVERNMENT
Mr Patterson—We made submissions along with the council and other Tiwi organisations last year at ministerial level in the federal government, really on the basis that this was a somewhat special case because it would be pretty hard to find another comparable Indigenous community that had the sort of need that was emerging with the roads there.
ACTING CHAIR—In round figures what was your total ask?
Mr Patterson—The total ask at that time was about $14 million, of which $2 million was for new equipment for the Tiwi Islands shire council.
ACTING CHAIR—So, to be able to do roadworks into the future.
Mr Patterson—The rest of it was a capital investment in what had previously been public roads. They go between communities on the islands; they are not just the roads to our plantations. They are actually central transport corridors. We applied for about $12 million. A
more recent figure has been put together by the incoming Tiwi Islands local government, which I
understand exceeds that. It picks up roads on Bathurst Island. All of our forestry is located on Melville, so we did not include that. But it has picked up roads there, and that figure is in the vicinity of $30 million.

…The point is that when we come to harvest in 2012 everybody will want to see trees replanted there. Obviously we will, but obviously the Tiwi Islanders will because it is their future—a sustainable industry. Sixty per cent of the cost of growing and exporting trees is at the harvest end—nearly two-thirds are required at the time that you harvest. It is an incredibly capital
intensive time and it requires a lot of transport to go over roads. An investor is going to say: ‘What are my chances that, when I come to harvest this next lot of trees in another 10 years time, someone will have built better roads, because if they haven’t the cost of my hauling the logs might go up by 25 or 50 per cent?’ The next question they are going to ask is: ‘If I’m not
too sure that that’s going to happen, what are my alternatives?’ They are going to look at other shires in Australia where they can grow pulpwood.

—whereas in the Tiwi Islands there is no road asset. Many of these roads are, as I say, upgraded bush tracks and if you go to them at any time of the year, instead of a road being formed and having drainage off to the side, they look more like a dish than a hump. So they fill up with water and effectively become rivers during the wet season. The point I am making is that the fundamental initial capital investment in that infrastructure has never been made,

…Mr CHEESEMAN—You have got $40 million or $50 million worth of product there to be harvested in three or four years time. If no one does anything, how are you going to get that product to market?
Mr Patterson—We made the assumption that it is not a case of not being able to get it through; it is a case of the cost of doing so. At the time that our investments were made we made an assumption that through these sorts of processes and other applications for funds we could secure some funding—it was quite high on my list. I have commenced working very closely with the Tiwi Islands local government, which seems to me to be the appropriate vehicle to do that. My task is to try and get investment to ensure that the transport cost comes down and is lower than it would be at the moment. I think it was a fair assumption at the time the investments were made that we would achieve
this. This had not been achieved so far and it is something that is certainly on my agenda to
do. But to ask that we perhaps fund it all, because there does not seem to be any other source
of funds on the island, is to put not only us but future investment in that project in some jeopardy because future investors will have to factor in the cost of building and maintaining roads.

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