Tiwi Islands – Northern Territory

Tiwi May June 2009 News

Posted by tiwiccbb on June 5, 2009

http://www.radioaustralianews.net.au/stories/200905/2573105.htm?desktop

Radio Australia News

A big Agricultural investment firm fails in Australia.

Mon, 18 May 2009 10:00:00 +1000

An Australian company that allowed investors to join others in agricultural businesses – including at least one in islands to the country’s north – has collapsed.

Thousands of investors face the prospect of big losses after the collapse of Australia’s largest agricultural managed investment firm, Great Southern.

The firm has been placed in administration, part of the legal process in its collapse.

Its banks refused a deal that would have helped it repay part of its mounting debts.

Great Southern offers smaller investors the opportunity to invest in agricultural projects, and operates big timber plantations including one on the Tiwi Islands off the Northern Territory.

Market uncertainty

But it says it struggled to generate short-term cash because of market uncertainty surrounding managed investment schemes.

The company has about $700 million in debt.

But with market turmoil increasing uncertainty in managed investment schemes, the company has struggled to generate short-term cash flow.

Its problems intensified with the recent collapse of rival Timbercorp, which has made banks even more cautious about extending funds to agricultural managed investments.

Great Southern listed on the Australian Stock Exchange with a total market value of about $77 million.

The Australian Shareholders Association’s chief executive, Stuart Wilson, says he is pessimistic about the prospect of returns to investors.

“It’s a very serious situation for those who have invested; anyone who has invested in the company itself is likely to lose all of their investment, and there’s a good chance that investors in the funds are not going to see much return either,” he said.

Investors in the funds generally have priority in getting some of their money back ahead of shareholders according to company law.
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http://www.abc.net.au/news/stories/2009/05/18/2573187.htm?section=business

Great Southern collapses, administrators appointed

Posted Mon May 18, 2009 9:28am AEST
Updated Mon May 18, 2009 9:41am AEST
Tiwi Islands

The Tiwi Islands, about 80 kilometres north of Darwin. (ABC Local: Anna Daniels)

* Related Story: Great Southern investors face big losses

Administrators are contacting tens of thousands of investors after the collapse of Australia’s biggest agricultural investment scheme manager, Great Southern Plantations, which runs forestry projects on the Tiwi Islands.

More than 40,000 investors managed by the Perth-based company are facing big losses, after the appointment of administrators.

Great Southern offered investment plans in agricultural projects and manages 240,000 hectares of forest.

But with the market turmoil heightening uncertainty around managed investment schemes, it has struggled to generate short-term cash flow.

Its problems intensified with the recent collapse of rival, Timbercorp.

Despite trying to convince its banks that it had a plan to generate funds through asset sales, they have refused to lend it any more money.

Administrators Ferrier Hodgson will hold the first creditors meeting next week.

The Northern Territory Environment Centre’s Stuart Blanch says as well as Great Southern’s financial problems, there are concern the company has grown a potential weed on the Tiwi Islands.

“It’s a very poor project that should never of been approved,” he said.

“But the reality is once it has been approved, the Tiwi Land Council and Tiwis need assistance, capacity and the funds to look after this problem.

“And now I suspect many Tiwi Land Council members and Tiwis [are] thinking what are we going to do if no one comes and helps us.”

Meanwhile, the Senate Environment Committee will hold its inquiry into forestry and mining on the Tiwi Islands in Darwin and Nguiu this week.

It is investigating environmental compliance, approval processes and economic benefits to the Tiwi people.

Greens Senator Rachel Siewert says the uncertainty around Great Southern’s future makes the inquiry all the more important.

“I do think that we need to be a bit more creative,” she said.

“And I think that what tends to happen is that people look at what people see as Western traditional economic activities and I think we need to be a lot more creative and look at broader alternatives and valuing Aboriginal culture much more broadly.”

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http://www.abc.net.au/pm/content/2008/s2574031.htm

Great Southern plantation on Tiwi Island creates division in community

PM – Monday, 18 May , 2009 18:18:00
Reporter: Sarah Hawke
MARK COLVIN: Great Southern was Australia’s biggest rural investment scheme manager and its collapse has sent shock waves through communities reliant on the jobs that its projects provide.

The company has nearly 30,000 hectares of plantation timber on the Tiwi Islands, north of Darwin.

The project has created division in the community.

Some Tiwi Islanders are angry about the environmental impacts and questioned the financial viability of the project.

But other community members argued that it was providing desperately needed jobs.

Sarah Hawke reports.

SARAH HAWKE: Plantation timber is nothing new to the Tiwi Islands; there’s been various forestry interests over the last 30 years.

When Great Southern invested into the Tiwi Island Forestry Project in 2005 it had a positive outlook.

As the transaction for the project was underway a cyclone destroyed all but 5,000 hectares of trees but Great Southern has now established nearly 30,000 hectares.

The Tiwi Land Council is a strong proponent of plantation timber because it provides jobs for the Tiwi people who’ve been mostly reliant on welfare.

John Hicks is the council’s chief executive.

JOHN HICKS: It’s an asset that will be harvesting 3,000 hectares a year in 2013/2014 and as long as you plant them back you have an economy that involves $40-million worth of contracts a year every year for Tiwi workers and returns something like $50-million per annum, which is about $25-million more than the current welfare dollar that’s spent on the Tiwi Island.

SARAH HAWKE: But the project has been shrouded by controversy.

A two year investigation found it had breached environmental guidelines.

In October the Federal Government ordered Great Southern to outlay $4-million for rehabilitation, a bond and a ranger program.

The return to the Tiwi people has also been questioned.

A Senate inquiry into forestry and mining operation on Tiwi Islands has started this afternoon in Darwin.

Aussie Rules great Maurice Rioli is a traditional owner now living on Melville Island.

MAURICE RIOLI: Most TIs would say is it worth it, considering land use payments for the land? Lease payments for the land are a lot lower than mainland plantations in other parts of Australia where a hectare block would be for, you know, can be leased for up to $100 a hectare, I understand in some place $50 per hectare.

Here I understand it started off at $16 per hectare. I question, like many others, is it all worth it for what they’ve done to the land?

SARAH HAWKE: But the project has provided nearly 30 full-time jobs for the Tiwi Islanders.

The Land Council’s John Hicks argues the full benefits of the project are still to be realised, and even without Great Southern there’s great demand for Tiwi trees because they’re closer to mills in South-East Asia.

JOHN HICKS: There’s 2,700 people who own the trees, not Great Southern. We’ve been phoned by investors this morning seeking the opportunity to contribute management funds to keep managing it. The NT Government is aware that it’s a project of substance and particularly suitable for landowners on the Tiwi Islands.

SARAH HAWKE: There is one prominent club on the Tiwi Islands that is worried about the future.

Aussies Rules if the Tiwi life blood.

In the last couple of years the Tiwi Bombers have played in the Northern Territory League and have been the Tiwi’s pride and joy.

Club chairman Alan McGill says Great Southern is a team supporter and provides some of the players with jobs

ALAN MCGILL: I guess from everyone’s point of view it would be great to find another investor who could take over, if that’s what happens, to reap the benefits of all the work that’s gone into it so far and to continue to create employment for Tiwi people.

SARAH HAWKE: I know there’s been a lot of politics obviously surrounding the actual project over there but the fact that there are jobs provided; what happens if those jobs disappear?

ALAN MCGILL: I guess wherever jobs disappear it makes it harder for the locals to continue on and the fact that the forestry industry does provide or has provided a good employment stream then it would be really disappointing and sad if that wasn’t to continue.

From the Tiwi Bombers’ point of view, Great Southern have been really great supporters and the employment options that they provide is just an added value to the development of the Tiwi people and the football club.

MARK COLVIN: The chairman of the Tiwi Bombers Football Club Alan McGill with Sarah Hawke in Darwin.
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http://www.theaustralian.news.com.au/story/0,25197,25504374-5006790,00.html
Tiwis aim to ride out partner Great Southern’s fall

Paul Toohey | May 19, 2009
Article from: The Australian

THERE was surprising calm on the Tiwi Islands yesterday, with Aborigines giving a sanguine shrug at news their partner in 30,000ha of forestry plantation, Great Southern, had hit the deck.

The announcement came as, coincidentally, a Senate inquiry into forestry and mining on the islands began hearings in Darwin, with environmentalists taking an “I told you so” line that the Acacia mangium plantations on the islands were always going to be a disaster.

The inquiry has been driven by the Greens, ostensibly to look at how the forestry operations were working for the island, and the islanders, from an environmental and economic point of view.

There have been constant grumblings about land damage and royalty distributions from the forestry project, but an independent report commissioned last year by federal Indigenous Affairs Minister Jenny Macklin found the commercial arrangements were generally fair.

Greens senator Rachel Siewert, who is on the Senate committee, told ABC radio yesterday that the Western-style economic activities were not working on Aboriginal land and that “we need to be a lot more creative and look at broader alternatives and valuing Aboriginal culture much more broadly”.

This drew a sharp response from the Tiwi Land Council. “Senator Siewert says she wants to assist these poor Aborigines to return to their cultural roots,” CEO John Hicks told The Australian. “The Tiwis see this as a patronising approach.”

Mr Hicks said 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.”

Mr Hicks said the administrators were likely to look elsewhere first when disposing of Great Southern’s assets, because the Tiwi plantations were not yet ready for harvest. And the ground on which the forests stand is Aboriginal land, meaning it cannot be sold.

“It’s their land,” Mr Hicks said. “If Great Southern stop paying the lease money, then the forest is the Aborigines’ property.” He said the Tiwi people had an asset that was only going to increase in value as the forests grew. “We very much feel we still have a strong asset. The forests are fully planted. It is 30,000ha and Great Southern invested $170million to establish it.

“It’s basically in caretaker mode for the next four years until we harvest.”

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http://www.ntnews.com.au/article/2009/05/19/52291_ntnews.html

NT News
The NT Government is working to save jobs as Tiwi Islands forestry company Great Southern goes bust

Great losses as Tiwi company goes south

NICK CALACOURAS

May 19th, 2009

TIWI Island forestry company Great Southern has been put into administration, owing more than 40,000 investors up to $4 billion.

Great Southern, which is Australia’s largest forestry investment scheme, owes up to four times as much as Timbercorp, the group’s biggest rival, which collapsed in late April.

Tiwi Land Council chief executive John Hicks yesterday suggested the council could take over the plantation. Chief Minister Paul Henderson said he was concerned the closure of Great Southern would mean a loss of jobs on the Tiwi Islands.

“We’ll offer any assistance we possibly can to make sure jobs are maintained on the Tiwi Islands,” he said.

He was hopeful because the Tiwi people were “entrepreneurial … looking at different industries to bring different employment opportunities”.

The NT Government offered to send a business analyst to help the Tiwi people look at opportunities to run the plantation as a joint venture.

“Nobody is going to take those trees away,” Mr Henderson said. “I think the fundamentals of that business is sound. Like any business, it is commodity based. It depends on what is happening in the market.”

Opposition Leader Terry Mills accused the Government of contributing to the business’s decline because of its “hands-off approach”.

“Given the importance of such projects, it is essential that Government provides active oversight and engagement,” he said.

Environment Centre NT co-ordinator Stuart Blanch said that the Great Southern plantation project had not created many jobs for “ordinary Tiwis”.

“Where’s all the money gone?” he asked.

Mr Blanch said the Tiwi Land Council had tried to manage several large developments “and they have all turned to dust”.

Up to 43,000 people have invested in the stock exchange-listed group’s managed investment schemes.

The collapse of Great Southern could lead to as much as 1.75 million hectares of agricultural and forestry land flooding the market.

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http://www.abc.net.au/news/stories/2009/05/19/2575047.htm?section=business

Investigate Tiwi Land Council: Scrymgour

Posted Tue May 19, 2009 3:22pm AEST
Marion Scrymgour.

“I know a lot of Tiwis don’t have confidence in their own land council” … Marion Scrymgour. [File image]. (Anna Henderson)

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.”

But the land council’s chief executive, John Hicks, says he thinks the Melville Island forestry plantation will still be a success even if the Tiwi people have to take it over.

He says Marion Scrymgour’s concerns about the market for woodchips from plantations are not valid.

“It is an asset that will be harvesting 3,000 hectares a year in 2013-14,” he said.

“And as long as you plant them back, you have an economy that involves $40 million worth of contracts a year, every year, for Tiwi workers and returns something like $50 million per annum.”

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http://blogs.crikey.com.au/northern/2009/05/19/if-an-mis-fell-in-the-forestthe-timbercorp-great-southern-industry-of-greed-in-the-nt/

If an MIS fell in the forest…the Timbercorp & Great Southern “industry of greed” in the NT
May 19, 2009 – 5:50 pm, by Bob Gosford

From the very interesting piece by Angus Grigg in this mornings The Financial Review on the collapse of Great Southern Limited and Timbercorp, the largest of the “Managed Investment Scheme” (MIS) promoters:

The collapse of Great Southern and Timbercorp has only served to highlight the flaws in an industry that many believed was unsustainable from the beginning. “The original plan was to get city money into the bush,” says Liberal senator Bill Heffernan, a long-time critic of the MIS industry. “But it quickly grew into an industry of greed that relied on the generosity of the Australian taxpayer.”

And he might have added the venality of the promoters and the rank foolishness of the so-called investors.

Not long ago, just before Great Southern really went south, Michael Pascoe had this to say about the banks that have supported these rorts and the mug punters that invested in them:

So ANZ has a $500 million exposure to the failed Timbercorp tax deduction empire. What fools. It’s hard to know for whom to feel the most scorn – bankers stupid enough to back inherently flawed businesses or the mugs suckered into buying products on the lure of tax deductions – and the salesmanship that tends to come with particularly fat commissions. And then there’s Great Southern Plantations, trading presently suspended pending some further attempt at rescue. Ditto the scorn for all involved. Oh, and the various “independent” expert reports that have been purchased by management at various times, never mind alleged “investment recommendations”.

Angus Grigg also makes the following interesting comments about the impact of the MIS industry on the Douglas Daly region to the south-west of Darwin:

The Douglas Daly region of the NT provides a recent example of how quickly an area can change once the MIS industry moves in. The Queensland Country Life newspaper has reported a doubling of prices for cleared freehold land over a two year period.

It also estimates that 50 per cent of the 100,000 hectares of freehold land in the region, two hours south of Darwin, has been snapped up by the MIS industry. To many observers the situation in the Douglas Daly neatly encompasses the advantages enjoyed by the MIS industry over traditional agriculture.

The ABC’s The Country Hour covered the controversy over the MIS schemes move into the Douglas Daly in March 2008.

Back then it reported that:

In the Daly, south-west of Darwin it’s believed cleared land that was worth about $1m a few years ago is now being sold for up to $14m. Herron Todd White’s Land valuer Frank Peacock says he’s heard the same thing, but he couldn’t be specific about which properties are changing hands because many of them are still being settled. He can confirm though, that there has been huge interest from forestry companies. “The majority of land sales over the last 18 – 24 months has been to timber plantation companies and I’d estimate close to half the freehold area in the Douglas Daly would have gone to tree growers.”

He says freehold land, as opposed to pastoral land, has risen to $2,500 a hectare, and some sales have risen to $4,000 a hectare. “It’s unprecedented really for cleared freehold land in the Daly. It’s just a matter of supply and demand and there’s only 25 or so properties in the Douglas-Daly and they have the rainfall and the close proximity to the Port of Darwin and they also have the well-drained red soils and when it’s in tight supply that will underpin demand.’ The Northern Territory government’s moratorium [on land clearing] on the Daly has also seen prices elevated, and Mr Peacock expects values will hold because there are up to five plantations companies vying for freehold land in the Daly.

The Country Hour believes the forestry companies buying up land are Great Southern Limited, Timbercorp, Northern Tropical Timber, and Plantation Tropical Timbers. New South Wales Snowy River grazier Robert Belcher compares these companies to cancer. He’s dedicated his life to lobbying against corporate forestry companies because he says he’s seen the devastation they cause to rural communities. “The first thing you’ll see is a massive acquisition of land, that will displace population and you’ll start suffering population decline which means your infrastructure services will decline. For example educational facilities, health facilities, that sort of thing. I’ve seen it in every state in Australia. “It happens everywhere where there’s rainfall and decent soils. Anywhere from Grafton in New South Wales to Tasmania.”

But, one of Australia’s largest tree companies has rejected claims it’s driving farmers out of the Douglas-Daly region.

Great Southern Limited, has recently purchased land in the area, to plant African Mahogany trees. Communication manager David Ikin says the forest industry will strongly support the local region.

And at about the same time the ABC also reported the comments about the effects of the MIS industry from of the operators of a company established to produce biofuel in the NT:

But, Energy Crops Australia were more concerned with what’s happening in the Douglas Daly because they can no longer afford to invest there. “The Douglas Daly has been crucified by the managed investment scheme where the price of land has escalated beyond all reality. Come By Chance (sic – should be “Kumbyechants”) sold for $15 million dollars, purchased for $1.4m four years ago. It’s out of anyone’s price range who hasn’t got massive tax deductibility.” He says these companies will crucify the community and have devastating social implications. “The Douglas Daly as a farming community is finished. When people are getting that sort of money they’re just taking the money and running so there’ll be no farming in the Daly, there’ll be just trees.” He says he’s aware of Great Southern Plantations, Timbercorp and another two forestry companies buying up land in the region.

And, as that icon of independent journalism, the NT News reported as recently as January this year, a lot more land in the Douglas Daly was being acquired, or was targeted for acquisition, to be turned into plantations:

The Northern Territory’s timber industry is likely to undergo a rapid expansion following the buyout of four cattle stations. Up to 40% of the newly-acquired stations will be planted with African mahoganies and the rest of the land kept for cattle. The stations are the 5000ha Stray Creek, 16,000ha Gypsy Spring and 5000ha Kumbyechants in the Douglas Daly region and the 5000ha Rocktear Park near Katherine.
Plantation Tropical Timbers paid $5.9 million for Kumbyechants and Willmott Forests paid $5.5 million for Rocktear Park.The stations are all small but further buyouts are expected.

As recently as three weeks ago the voice of the Australian plantation timber industry, the Australian Plantation Products and Paper Industry Council was trying to put a brave-faced spin on the imminent collapse of the MIS house of cards :

Timber plantations funded through managed investment schemes (MIS) will continue to grow a large proportion of Australia’s future wood resource, despite the decision by leading agribusiness MIS manager, Timbercorp, to go into voluntary administration. Richard Stanton, CEO of Australian Plantation Products and Paper Industry Council (A3P) said today that Timbercorp’s decision was a response to the convergence of several factors directly affecting that company’s business, and did not indicate an impending collapse in plantation forestry investment or some inherent problem with the MIS business model. “Forestry remains a sound long-term investment, negatively correlated with other asset classes, which many regard as an important element of a diversified investment portfolio,” Stanton said…”Up from about 5% in the late 1990s, MIS forestry now accounts for more than a third of the national plantation estate – nearly 700,000ha of 1.97m ha at the end of 2008 – and over 80% of the annual establishment of new timber plantations, as well as a substantial and increasing area of replanting following final harvest.

It is a little too early to tell what the medium-term effects of the collapse of these schemes will have on the viability of what is undoubtedly a valuable and useful agricultural enterprise – there is nothing wrong with growing high-value fine grade timber, for which there is a growing market – but it remains to be seen how many of the trees that have been planted will ever be harvested – or just be left to rot in the ground.

But back to Blinky Bill Heffernan – the ABC reports today that:

Liberal Senator Bill Heffernan has announced the Senate’s current inquiry into food production will now also consider the impact of MIS. He says startling evidence has already come forward.

Looks like the Senate Committee are going to be very busy in the NT for a while – the Senate Environment, Communications and the Arts Committee is currently conducting an inquiry – with Hearings on the Tiwi Islands as I’m writing this post – into “forestry and mining operations on the Tiwi Islands”.

You can see the Terms of Reference for that Committee here and what appear (because I haven’t got around to looking at them…yet) to be a very interesting set of Submissions – here.

The collapse of Great Southern is of great importance to the Tiwi islanders – Great Southern bought out the previous operators, Sylvatech, a few years ago and the forestry scheme, which will produce pulp from about 30,000 hectares of Tiwi lands, has been mired in a web of controversy since the beginning – a coming attraction here at the Northern Myth.

The forestry operations on the Tiwi Islands are a very complex issue to tackle – so bear with my while I get my head around it!

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http://business.smh.com.au/business/growing-the-trees-is-the-easy-part-20090522-bib3.html?page=-1

Sydney Morning Herald

Growing the trees is the easy part

Paddy Manning
May 23, 2009

Green investors can be taken advantage of like any other – perhaps more easily, if they have an idealistic rather than financial bent.

The collapse of the two largest agribusiness promoters – Timbercorp and Great Southern – in the past month will have hurt many people who piled in for (yes) the up-front tax deductions, but also because they believed plantation forestry had environmental benefits.

Those benefits are hotly debated, to say the least. Timber plantations do relieve pressure on wood supply from native forests, providing two-thirds of all logs harvested in 2005-06, for example.

And clearing native forest for plantation is a travesty. Forestry Tasmania and Gunns have long faced accusations that they used napalm-like incendiaries to remove debris after clearfelling native forest, with devastating effects for wildlife.

Great Southern made much of its environmental credentials and apparently handled its Victorian hardwood plantations sensitively, but also had to pay $2 million for remediation last year after breaching environmental conditions when clearing 26,000 hectares of native forest on the Tiwi Islands, north of Darwin, to plant acacia.

Another criticism is that plantation forests are mostly monocultures – the MIS regime, regulated by the Tax Office, only allowed one plant species to be grown per scheme.

Plantation forests are thirsty (though some claim they increase water supply by giving off moisture and inducing rain). They absorb carbon, but only until they are harvested.

It’s a complex equation, solved case by case. On balance the Australian Conservation Foundation’s forest campaigner, Lindsay Hesketh, believes plantation forestry can provide environmental benefits – particularly in areas degraded by salinity – but there has to be a deliberate effort to achieve it.

Such a framework was lacking under the previous government’s “Plantations 2020” strategy under which 1.3 million hectares of timber plantations were established in the decade from 1997 – mainly through managed investment schemes promoted by the likes of Timbercorp and Great Southern.

Says Hesketh: “The way it was rolled out, because of the massive amount of cash put in, it was on steroids.

“Locations were not picked out for their relevance to environmental protection. There was no broad strategic framework.”

Hesketh is hard-pressed to identify a single scheme which had a good environmental outcome. “We don’t see any benefit in the MIS regime. MIS was basically an acceleration process [which] distorted demand for capital. I don’t think we get good outcomes by maintaining subsidies in any industry.”

As has been made clear in the past fortnight – and will become clearer if mooted class actions get under way – most MIS were tax-driven schemes designed to generate lucrative fees for the financial advisers and fund managers promoting them, not to generate long-term returns for investors – notwithstanding product rulings from the Tax Office. Management practices were in many cases questionable.

Damien Lynch is one of the pioneers of the ethical investment movement in Australia and runs a tiny fund called August Investments, with about 35 shareholders, from Sydney. He co-founded the country’s first green fund manager, Australian Ethical Investments, in the 1980s, and launched the Earthcare revolving fund. He works part-time at Greenpeace now, managing August on the side.

In 2001 August launched EcoForest, an attempt to invest in beneficial reforestation which was not tax-driven but would generate a positive return for investors.

On 93 hectares of land bought for $227,000 in 2000 at Mill Creek near Stroud, in the Hunter region, EcoForest planted a mixture of tree species native to the region (originally logged by Australian Agriculture Company in the early 19th century), to be used as structural timber. The operation was small-scale and based on permaculture principles. There was no pesticide use.

EcoForest owned the land and trees. Investors bought shares and hoped for a long-term return. There was no borrowing. In the early years there would be no income, of course, but losses could be claimed against income from harvesting which would begin after seven years.

In forestry, long term really means long term. Lynch’s projections showed returns would be 50 per cent higher on a 25-year timeframe, than on the shorter timeframe of 10 or so years demanded by the MIS regime.

The planting went well. Against expectations, Lynch says growing the trees was “the easy part … the hard part was raising the money”.

EcoForest found it impossible to compete with MIS promoters and was under pressure to adopt their tax-driven structure. “We were squeezed out by competition from MIS,” says Lynch. “Every second investor asked if they could get an up-front tax deduction.” Told no, most turned away.

Ultimately, it got too hard for EcoForest. Voluntary administrators Hall Chadwick were appointed in 2005 and about 120 investors (including August) lost almost two-thirds of the $1 million-odd they had put in.

Not a great story.

If you can’t beat them, join them. In its listed portfolio August held a small number of Great Southern shares as at June 30, and had about $50,000 worth of forestry MIS – managed by Great Southern Plantations, Macquarie Forestry and Timbercorp Eucalyptus.

Lynch is mulling over what went wrong, now his competitors have followed EcoForest into administration.

Great Southern, which sold trees to investors but retained ownership of the land, had to keep borrowing to grow. Lynch believes the company got greedy, grew too fast, and was caught out by last year’s high finance costs.

“MIS has its place for a set product, like woodchip,” says Lynch. “But we don’t want it taken out of old growth forest.”

He hopes Great Southern’s administrators will continue to harvest the trees, because prices for woodchip are rising.

It all bodes poorly for private investment in reforestation – although many green investors would nominate this as one of their priorities, right up there with clean energy, water efficiency, pollution control, waste management, transport and green buildings.

The Great Southern and Timbercorp collapses will also blow another hole in many green share portfolios – including those managed by professional investors.

There is a deeper problem, beneath the obvious flaws of the MIS regime.

Hesketh says private forestry can only be made profitable if it is given a level playing field on which to to compete. State forestry agencies get huge public subsidies not available to the MIS promoters. Free land. Planning exemptions. No rates and charges. They are not required to meet the states’ obligations under the National Competition Policy – particularly, to achieve competitive neutrality with private operators.

Even so, the agencies lose money – like NSW State Forests, last month the subject of criticism from the state’s auditor-general for cutting down native forest faster than it could be replaced, and it still lost $14 million in 2007-08. The agencies sell wood at ridiculously low prices.

Hesketh says plantation prospectuses over the last decade generally show growers get between $35 and $60 per tonne for the wood they harvest – the so-called stumpage rate – whereas forestry agencies in NSW, Victoria and Tasmania have been accepting prices of about $10 per tonne or less.

“Private plantation sector forestry should be supported,” says Hesketh, “because it has potentially a lot of other benefits than just producing wood.”

There is an “enormous opportunity”, he says, to supply plantation timber from western Victoria to the Maryvale mill in the LaTrobe Valley, Australia’s biggest.

That will not happen while native forest timber from Victoria’s central highlands can be obtained at an artificially low and subsidised rate from Vic Forests.

“There need to be commercial drivers,” says Hesketh. “We need a responsible pricing policy to put a real market value into wood.”

paddy.manning@fairfaxmedia.com.au
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http://www.ntnews.com.au/article/2009/05/27/54261_nt-business.html

NT News

$10 million savings go south in collapse

NIGEL ADLAM

May 27th, 2009
Great Southern plantations cultural liason officer Gibson farmer and employee Aaron Trenfield at work on the Tiwi plantation.

Great Southern plantations cultural liason officer Gibson farmer and employee Aaron Trenfield at work on the Tiwi plantation.

TERRITORY investors lost more than $10 million when the Great Southern agriculture and forestry empire collapsed.

One man told Business Week he had put more than $100,000 into the company.

And Great Southern’s Darwin-based sales representative, Vic Minchin, said he lost hundreds of thousands of dollars.

He refused to give details about losses suffered by other Territorians, except to say that dozens of them had been hit.

“It’s a distressing time for everyone,” he said.

Mr Minchin, who was one of 35 sales representatives nationwide, has been made redundant and is now working for a finance firm.

Great Southern investors are not expected to get any of their money back.

The company is known to have raised $1.8 billion from 47,000 investors over the past five years.

One of its main projects was an acacia plantation on the Tiwi Islands.

The Tiwi Land Council is considering taking over the venture, which employed local people.

A Darwin investor, who did not want to be named, said he was bitterly disappointed that Great Southern had gone into liquidation.

“I’m not a particularly rich bloke,” he said. “I put more than $100,000 into the venture on the advice of my accountant and have lost the lot.

“I hoped the return on the investment would allow me to retire before I was 65.

“It doesn’t look as though that will happen now.”

An army of financial planners was employed by Great Southern to bring in investors. They were paid 10c commission for every dollar invested. Receiver McGrathNicol is trying to sell 1.75 million ha of farm and forestry land in a bid to repay debts of more than $800 million. Great Southern leased the Tiwi land, which now reverts to its traditional owners.
—————————————–

http://www.watoday.com.au/breaking-news-national/nt-labor-in-crisis-after-mp-quits-20090604-bwmi.html?page=-1

WA Today

NT Labor in crisis after MP quits

* Tara Ravens
* June 4, 2009

Labor is clinging to power in the Northern Territory after the shock resignation of former deputy chief minister Marion Scrymgour.

Just one day after backing down on a threat to quit the party on Wednesday, Ms Scrymgour has plunged the government into crisis.

“I have told the chief minister that I can no longer be part of his government,” Ms Scrymgour says in a statement.

“I can no longer rely on all caucus colleagues to implement the concessions that I won in caucus yesterday.

“The report of that caucus meeting in today’s Northern Territory News is totally inaccurate.”

Her resignation has cost Labor its one-seat majority and leaves the Henderson government with 12 seats in the 25-member parliament, effectively giving Ms Scrymgour – who has decided to stand as an independent – and former indigenous affairs minister and independent Gerry Wood the balance of power.

The Country Liberals have 11 seats.

“They are going to have a minority government which will need the support of one of the independents,” Mr Wood told reporters in Darwin.

“They are going to have some difficulty if they’ve got legislation they are trying to put through that Marion doesn’t agree with.”

Ms Scrymgour – who was Australia’s highest ranked Aboriginal politician when she quit the NT cabinet in February because of ill health – has had a political career marked by controversy.

The mother of three was a vocal opponent of the intervention into Aboriginal communities, which she called the “black kids’ Tampa” and a “vicious new McCarthyism”.

Her comments sparked divisions within Labor ranks after the measures to combat child sex abuse were given bipartisan support through federal parliament.

Ms Scrymgour also split with her party over a 99-year lease on a community in the Tiwi Islands and opposed the controversial expansion of the McArthur River Mine.

After a week of high drama and political farce, she has now resigned three days after threatening to move to the crossbenches over the government’s homelands policy.

That threat was retracted by the rebel MP on Wednesday but Chief Minister Paul Henderson said a newspaper report, published on Thursday, had pushed her over the edge.

The report said she had “broken down and sobbed” at a meeting of caucus during which she told her colleagues she had visited her father’s grave and felt she would be betraying his principles if she abandoned Labor.

“The newspaper story today was grossly inaccurate. It significantly and severely upset Marion and I believe that was the tipping point in terms of the decision she made today,” Mr Henderson told reporters.

All of his ministers have denied leaking the report and Mr Henderson assured journalists there was no malice within the party.

He said Ms Scrymgour had told him she would support the government’s supply and appropriation bills, and provide a vote of confidence if needed.

Ms Scrymgour declined to speak publicly about her resignation although her statement says she will address the media on Friday.

Earlier this week, the former indigenous affairs minister accused her own party of “lying to” and “insulting” Aboriginal people.

“Marion could no longer work with a government that she says has lied, and that she was party to,” said Northern Land Council Chief executive Kim Hill.

“Now more than ever, the NT government needs to get its house in order and re-engage with its indigenous electorate.”

Labor could be turfed out if the Country Liberals call for a no-confidence vote and it is supported by Mr Wood and Ms Scrymgour.

“It’s a bit too early to be making rash decisions,” said Opposition Leader Terry Mills.

“It is sheer rank arrogance that has led them to this appalling situation and we need to let the dust settle on that first before we see what we’ve really got to work with.”

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