Sunday, 29 March 2015

Americans buy FEA

FEA’s Receivers Deloitte has at last found a buyer for FEA’s land and trees.

Resources Management Services LLC (RMS) a forestry investment manager from Alabama paid $125.5 million for land belonging to FEA and trees belonging to FEA’s MIS growers.

The sale price confirms that forest assets have continued to plummet in value. The sale price is a disaster for everyone waiting for a distribution, the secured and unsecured creditors and the growers.

The insolvency practitioners stand the best chance of getting paid in full.

Sunday, 8 March 2015

Intergenerational nonsense

The fear of burdening our grandchildren with debt, we are forever being told, is the reason why there is a need to return to a budget surplus.

Few argue with the proposition, most only quibble about the speed to reach a surplus.

But not since the days of the flat earthers have so many unquestionably swallowed such nonsense.

Clearly if the Jones borrow long term from the Smiths, the younger members of the latter family may suffer a reduced standard of living by having to repay the debt, compared to the older members who received the benefits of the loan.

That certainly applies where the older members simply consumed the benefits.

It is less obvious when the benefits are of an enduring nature. Borrowing to build the Sydney Harbour Bridge would have few detractors on this score, especially given hindsight.

To extrapolate a family situation to the whole economy is however, complete nonsense, another example of the fallacy of composition, not unfamiliar in economics.

Friday, 6 March 2015

Things that can't last......

Things that can’t last forever usually don’t.

This morning’s Examiner reported on a leaked email from Forestry Tasmania (FT) Chairman to FT staff responding “to mounting concerns that the cash-strapped company may be dissolved and folded into a government department.”

In that event a radical transformation will occur.

Sunday, 15 February 2015

Has FT found the way?

Forestry Tasmania’s (FT) controversial small native forest coupe in the Flowerdale river catchment area at Lapoinya in NW Tasmania is one of its better coupes. FT is adamant clearfelling will be a profitable exercise.

After a relentless pattern over the years of failing to cover even $1 in staff wages from its operations this looks like a real live test case to establish which exactly of FT’s operations are profitable, if any.

From a strict financial accounting viewpoint, each year FT adjusts the value of its forest estate so that as at 30th June FT’s balance sheet contains the current value of its forest estate.

Hence clearfelling a coupe merely realises its current value. It is simply swapping trees for cash.

The accounting profits from the Lapoinya coupe should have already been recorded in FT’s books over the years if the current value of the trees as recorded is correct. The small profits over time scarcely dented losses from other sources.

Chopping down a coupe is a realisation exercise not a profit making one.

Monday, 9 February 2015

Harriss Protest Bill: It works

Yesterday saw the first application of Paul Harriss’ Workplaces (Protection from Protesters) Act 2014 when protesters were directed to leave a workplace pursuant to sec 11 of the Act.

Petrarch’s Bookshop and author Quentin Beresford were holding a book launch at the Tailrace Function Centre in Launceston when three protesters acting contrary to the provisions of sec 8 entered a business premise with the aim of hindering or obstructing a business activity.

The activity of promoting and selling  the book The Rise and Fall of Gunns meant the premises fell within the broad definition of business premises contained in sec 5 which includes premises used as a shop, market or warehouse.

Minister Harriss was unavailable for comment on the initial success of his controversial legislation.

Tuesday, 3 February 2015

The rise and fall of Gunns

A tale that needed telling.

Those are the words of Geoffrey Cousins referring to Quentin Beresford’s book ‘The Rise and Fall of Gunns Ltd’.

Mr Cousins is right.

It’s a tale that everyone interested in the future of Tasmania should read.

A failure to understand history increases the chances of repeating past mistakes, a common occurrence in Tasmania.

Quentin Beresford outlines the historical context of the Gunns’ debacle, from the hydro industrialisation era, the Wesley Vale campaign through to the Rouse bribery affair. The inadequacies, failings, Machiavellian manoeuvrings, dishonesty and unethical practices by participants are laid bare.

At no stage were lessons learnt.

Wednesday, 17 December 2014

Hydro praying for rain

There was more than a hint of Donald Rumsfeld’s maxim of ‘known unknowns’ when new Chairman Grant Every-Burns spoke of challenges facing Hydro Tasmania:

“The corporation is impacted by the well understood uncertainty around carbon pricing, renewable targets and rainfall variability. We are able to predict with certainty that the Hydro will be impacted for some years into the future.”

Hydro Tasmania appeared before a House of Assembly committee two weeks ago.

Scrutiny hearings often produce more heat than light, but amongst the wearisome adversarial exchanges was some useful information.