Legislative Council Tuesday 14 March 2017
Ms FORREST (Murchison) - Mr President, I am happy to proceed with this. I welcome the opportunity to reply to the Premier's Address. However, every time I speak on a motion like this one before us, I am not a pessimist, but there is a need to question some of the hype been passed off as perfecting the state of our state. It is true we are closer to a surplus than we have been for the past few years. It is largely a mirage. There are a few significant caveats.
First, there is the $80 million transferred from the TT-Line bank account to one controlled by Treasury. Second, there are capital grants from the Australian Government earmarked for spending on capital projects, either directly via the Government, or via equity transfers into TasRail and Tasmanian Irrigation, which are counted as income. Mr President, to put it in terms we could all understand, if your grandmother leaves you an inheritance of $50 000 to buy a car, it is not income. Yet governments always include capital amounts as income and exclude the ensuing capital expenditure when they calculate a surplus. It is not dishonest and is in accordance with accounting standards, but misleading to the punter in the street.
The biggest contributor to the turnaround in the Government's bottom line in the revised Estimates report issued in mid February is the $233 million increase over the forward Estimates in extra income to the Tasmanian Health Service, primarily due to the listing of hepatitis C medications on the Pharmaceutical Benefits Scheme. That needs to be pointed out to too.
The fourth point is to highlight that the next biggest contributor to the improved bottom line is $153 million increase in stamp duties on conveyancing transactions in this year and over the next three years of the forward Estimates. Overlook the one of fiddles and windfalls and the Government's position is not particularly robust. It is certainly better, I am not denying that, but good luck and a fair breeze will need to be in our favour.
I will point out one thing to members who have not read the committee's 20-page report into the RBF superannuation - we have not noted that report as yet. We asked the State Actuary how much cash the government saved by not making superannuation guarantee payments on behalf of members of the defined benefits superannuation scheme, as is required to do for all other employees as members of accumulation funds. The answer was $1.2.million, which, if it had been set aside with RBF, would now be worth $2.9 million. The previous government is mainly to blame, but the current Government follows the same practice. It does not set aside the 9.25 per cent for the defined benefits employees either.
All the talk about the previous government raiding the cookie jar, yet the current Government does exactly the same. Not that I am overly concerned because we found the Government's targeted outlays to cover unfunded amounts would not exceed 6 per cent of receipts in any year, and was achievable. The bragging about solving all our budgetary problems is a bit of a stretch at times.
From an accounting viewpoint surplus in this year and the next was close to inevitable. Government had no option but to find the $290 million the Government had already received as a capital grant for the Royal Hobart Hospital, and which had been spent elsewhere. The money had to be found from current receipts, meaning the Government had to find the funds from other current spending.
On the matter of rising stamp duties, I know the media is keen on reminding everyone that rising housing prices are a sign of good times. The media has a vested interest in advertising revenue from property sales, but I do need to adopt my grinch persona and remind everyone that there are two economies out there - a real economy that produces and sells things, including new houses; and a finance and real estate economy which buys and sells existing assets, hopefully at ever increasing prices, using borrowed funds. If housing credit is growing faster than the economy, then increased house prices are being propped up by increased bank lending, not necessarily by increased incomes from the real economy.
It is the problem we saw in the lead up to the crash of 2007-08, as rising credit was channelling into rising house prices, not into creating jobs in the real economy. We are the most indebted bunch of householders in the world. No one has a higher ratio of household debt to household income than we do. Every time house prices go up, we cheer, at least we baby boomers do. I just scrape into the baby boomer by a few years, in case you were wondering. Other prominent members of the cheer squad from higher house prices are state governments, because it is such a painless way of raising more revenue. No one complains about paying a bit extra in stamp duty because their houses have risen in value by heaps more, but there is an element of delusion. Real wage increases have all but disappeared, yet household credit and house prices keep rising. Doesn't anyone else get an uneasy feeling we are living in the world of illusion around some of this?
Thank goodness it is not like Sydney or Melbourne here in Tassie. Nurses, police and teachers cannot buy houses in the cities in Sydney and Melbourne. They are the very people a city needs to function and they cannot buy houses close to where they work. We are not at that point here, but should be aware of the risks of unintended consequences policy decisions may create. As for the more lowly paid waiters and cleaners who are just as vital to a cities needs, they have no option but to live in rental digs, either in squalor nearby or hours away by commute.
If one manages to find a house to buy then they will usually need two incomes to service the mortgage. It requires a premature return to the workforce by the primary carer if and when children appear on the scene. This end of it requires the government to pay child care to help couples service mortgages, which keep growing because of governments' unwillingness to do anything about the housing crisis because, in part, state governments like ours are dependent on the income that comes from stamp duties.
It is a vicious cycle, Mr President. The housing situation is a good example of governments' approach to public policy. The real issues are avoided. Any discussion about alternatives is carried out at an adversarial level.
Take the matter of TasWater for instance. There are lots of things wrong with the way TasWater runs its business. It has been borrowing money to pay dividends to councils. How long was that supposed to go on for? What business borrows to pay dividends and lasts to tell the tale? An outline of the problem and a chance for the public to disseminate the situation - after all, it has been apparent for a few years what the issues are. It would have been much more useful than an autocratic announcement we are going to take over the show. We will show you how to run the business just as we have with the government itself. I am happy to agree with a couple of the Government's views on TasWater, but do not agree with the chest beating, bull-at-a-gate, unilateral lack of consultation displayed by the Treasurer and Premier.
Then there is forestry. The Government was never going to continue with subsidies, remember? Then they found a back door way of channelling money from TasNetworks. Everyone knew it was still a subsidy. Next, they arranged to sell plantations subsidised by the Australian Government and somehow that is not a subsidy either. Finally, after realising the current contracts are loss-making, they figure out a way to get into the forests locked away for the future because harvesting cost may be less. Is that not also a subsidy? Subsidising the present with the future? A subsidy is a subsidy is a subsidy even when you call it something else. What is worse is that none of the industries wanted to go down this path. Another sign of the paternalism, chest beating and distinct lack of consultation.
The Premier's Address always comes across as a rallying cry for the faithful rather than an honest appraisal of where we are, and this is not a precedent for this Government any more than it is the same for previous governments. We see it all the time.
Why then, was there no mention of the sale of the 30 000 hectares of hardwood plantations in the speech? This process was started by the former member for Huon three years ago. Surely the Government must have pulled it off by now and sold them. What was the sale price? Is it one of these rent-free 99 years' arrangements under the Forest Rights Registration Act 1990? People criticise the previous government for their forestry deals, but the Tasmanian people do not realise we are about to give away plantations grown with Australian Government subsidies via huge loss making rent-free arrangements for 99 years in the name of responsible fiscal management.
Mr President, there is bad news you cannot keep under the carpet. The latest draft of determination of the Australian Energy Regulator is public and the latest revised Estimates report makes a downward revision of $75 million over the forward Estimates in respect of income from TasNetworks. The public needs to know what is happening in the electricity market. The energy security to moor to the mainland may assist Hydro recover from the Basslink debacle even more quickly, which is welcome, but there are plenty of chances ahead for the electricity industry and the AER determination has just indicated this.
There are good news stories out there and the Premier mentioned most of them, but we are all grown ups, we can handle a bit of reality and that is what is missing from the Premier's Address.
There is a lot of volatility out there. The variations outlined in the revised Estimate reports are quite significant and then there is the GST split up for the 2017-18 years which the Government should now know. The Commonwealth Grants Commission would have reported its determination for splitting the GST pie for the next year 2017-18 to the federal Treasurer by the end of February. The Grants Commissioner always bases his determination on the last completed triennium, which in this case will be the three years ending 30 June 2016. All eyes will be on the determination to see the effects of the downturn in Western Australian mineral royalties and Perth property conveyance duties. Will they flow through to higher GST payments for Western Australia? In which case it will mean lower GST for Tasmania.
You saw this play out in this last weekend's election. I was watching some of the commentary around where all the mining companies were based and so many of them now are vacant offices. The income is just not coming in for Western Australia and we saw the public respond quite markedly. This will effect the GST distributions for the whole country so it is still a hand-to-mouth existence.
We are seeing some positive signs around Tasmania, which is very welcome. Unfortunately some areas of growth are very patchy. In areas such as tourism the south of the state and the greater Hobart area is doing really well. The same cannot be said for many parts of the north-west and west coasts. The Premier stated more tourists are coming to Tasmania than ever before, 12.5 per cent up from three years ago. This may be the case overall but for many tourism providers in my electorate this is not their experience.
Tourism numbers, particularly in terms of accommodation nights, are not as good as they have been over the Christmas and New Year period this year compared with last year. Certainly nothing like the growth seen in other parts of the state. I acknowledge the growth in number of tourists in the south and on the east coast and it is quite welcome and great for the state. More needs to be done to encourage visitation to the north-west and west coast in particular. It is often said we all do well when we all do well.
The first important step for those heading up Tourism Tasmania and working in the minister for Tourism's office, that is the Premier, is a need to acknowledge that there is a challenge here. They should not keep saying publicly that everything is rosy and all tourism numbers are up geographically and seasonally, because they are not. The Premier needs to get out to these regions, meet with the tourism providers and listen to what they have to say. The Premier also talked of the more positive economic indicators. He highlighted the many challenges the state faced last year resulted from the drought, fire and floods. It certainly was an extraordinary year and hopefully not one we will see repeated. However, we can be quite sure we will have more fires, more floods and experience more droughts. That is the nature of living in Tasmania and part of being Australian.
Climate change is a reality and we need to be as well prepared as we can for the extreme weather events and other challenges and opportunities this brings. Energy security will be more fully debated when the Public Accounts Committee finalises its report. Clearly the combined cycle turbine at the Tamar Valley Power Station is an important part of the energy security requirements for the state. Despite comments made at GBE hearings in December 2015 I believe the Government has been less than honest about their plans for the CTT, a matter that will be debated more fully later.
More attention needs to be paid to the household use of renewable energy as these solutions become more affordable to install. I noticed what is happening in South Australia at the moment with their battery storage. Declaring my own involvement with renewables at this stage, with the house we are renovating in Wynyard and extending, we are putting on solar panels and battery storage. We probably will not have a power bill. We can afford to do that but many people at this stage cannot, but it is becoming more affordable. If energy prices keep going up it becomes more affordable more quickly.
I am aware of one big dairy farm in my electorate that is looking at getting a container of these batteries that we are getting and running their whole dairy operation from renewables, including their milking and irrigation. The member for Western Tiers would validate the costs of those aspects of energy.
Mr Valentine - Futureproofing.
Ms FORREST - It is also cutting your costs. The initial investment will be returned quite promptly.
The Premier acknowledged that even though the unemployment rate has fallen a little, people are still concerned about job security and there are still areas of the state like the north where unemployment remains too high, particularly youth unemployment.
Education is the most important investment we can make. Well-educated people are more likely to be employed, have better health outcomes, have greater participation, not only in the workplace but in the community, and are far less reliant on government support. This means we need to get education right and improve educational outcomes.
I agree with the Government that early years is vitally important and we must invest more in this area. This is about having children attend quality early learning opportunities that are play based, inquiry led. However, this must not be at the expense of our early education and care sector that provides a vitally important service from birth to five years as well as some providing after school care. If these centres are put at risk of closure, or close as a result of government changes, everybody loses. Parents will find it almost impossible to work in some of these areas and children from all backgrounds, disadvantaged to affluent, will lose access to quality childcare. There is a real risk of this in our rural settings. Closure of centres in these areas is not in the best interests of our children or the families. It is also a concern in some metropolitan areas.
I am sure other members will be aware of the recent attempt to silence Steve Biddulph at a speaking engagement recently. The minister has apologised to him for this appalling error, or whatever it was, but the whole incident did nothing to assure me that a proper process is going on around consultation regarding the proposed change. This change is not a done deal, in spite of some of the rhetoric that is going around. I need to be convinced that the real concerns of the early education and care sector have been heard and we do not see centres closed in our regional areas.
I do not want to see families lose access to quality early education and care, nor do I want to see small business owners bankrupted by this decision. That is a real risk. There is much more work to be done in this space and with the KPMG report, I commend the member for Huon for the questions he put on the Notice Paper today. They are the things I have been asking the department around the economic and social impact assessment that KPMG are doing. It is important that proper and broad consultation goes on right down to the grassroots level. People still feel their voices are not being heard. They are not being invited to the forums. I keep hearing that the time lines are so tight and the demands are so great to get this body of work done that the pressure is on. You cannot consult properly if you do not have adequate time or budget for it.
This is one of the biggest things in town from my perspective - education and this reform. Unless it is done properly it all could go badly.
I appreciate the Government's support for my amendments to the Education Act 2016 last year that required a play-based, inquiry-led learning environment for all children from the time they start kindergarten to grade 2. However, to support an earlier starting age for kindergarten I will need to be convinced this change is more than words on paper and is adequately resourced and delivered at a standard commensurate with the requirements placed on the early education and care sector through the national law. There is more to be said about that later. Other members may comment on that as well.
Preventative health must be the key. We have had the Preventative Health Care committee report. We continue to see increasing demand on our acute or hospital services. Unless we can prevent people turning up in hospital, we are still going to face the same challenges. This is not unique to Tasmania. It occurs around the world.
The Premier stated that he understands that people are worried about health care, even though elective surgery waiting lists are down. I welcome the investment in the acute health services to see more elective surgery conducted but we must invest more in keeping people well and out of expensive health care, the acute sector, the hospital sector. I accept that as numbers increase in acute health services, and you increase the access by having more surgeries conducted, more demand is created effectively by opening the door a bit wider. In many respects it makes it difficult to meet demand and expectations. Governments, past and present, know that reality. Once you make provision for more surgery, people think they can have this surgery now and the demand increases. It is a never-ending cycle if we do not prevent people requiring the surgery in the first place.
We must also remember that waiting lists are one thing and waiting times are another. It can be much easier to reduce the numbers on a list if a lot of less complicated surgery - which requires less time in the operating theatre and in the post-op recovery ward, and wards generally - is addressed. We have many people still waiting far too long for more complex conditions that often result in significant discomfort, pain and suffering. It is the waiting times as well as the numbers on the list that are important.
I commend the Government for continuous support of the Mersey Community Hospital and its important function as a dedicated elective surgery centre for Tasmania. As the Premier said in his speech, more than 2600 Tasmanians received a procedure or surgery at the Mersey since July last year. It is great. A similar proposal was originally part of the Tasmanian health plan that was - in my view - destroyed by former prime minister John Howard in his bid to try to save the seat of his local member, only to lose it anyway. Imagine how much further ahead we would be in elective surgery waiting lists if this dedicated day surgery unit had been established 10 years ago. It gives pause for thought. Decisions relating to past political pork-barrelling and populist nonsense, unfortunately, have long-term consequences.
I want to speak briefly about the issue of child protection; a very challenging and difficult area and a problem for every government, past and current. The Premier stated that the Government is investing over $20 million to redesign the child protection system to better support vulnerable children and families. The key elements include new child safety workers and additional support for family services. He said implementation of the redesign is on track.
The Government has committed to immediately implementing all the recommendations of the recent report into out-of-home care by the Commissioner for Children and Young People. I would appreciate an update on the progress being made on this. Maybe the Leader could do this in her reply, or a briefing may be helpful in looking at the progress being made in implementing those recommendations.
Safe Pathways would appear to have been an unmitigated disaster. Some of the most vulnerable children and challenging young people were not being provided with the care they needed, and the staff were not able to provide the basics for them. What happened to all the money paid to Safe Pathways, and why were staff having to put themselves and the children they were caring for at such risk? I have a number of questions without notice with the Government awaiting a response, as I believe there is much more the people of Tasmania and Australia need to know about this organisation, and to avoid other children suffering.
It is a for-profit organisation run out of Queensland. It makes an enormous amount of money. Some of the stories that were publicly aired indicate really serious concerns. I would be looking for those answers, hopefully tomorrow or Thursday. I know we had a long weekend and there has not been as much time to prepare answers, but it is a really serious issue and I will be chasing it further.
I would like to make a few comments on roads and other infrastructure. The need for a long-term plan - one that is not subject to the vagaries of election cycles and pork barrels in the investment infrastructure - is imperative. Until we get this, we are going to continue to see the same effects of pre-election commitments in marginal seats, which do not necessarily plan for a long-term future.
Intergenerational assets are something governments should borrow money to invest in, as it is investing in our future. A couple of areas I would like to mention in terms of road infrastructure is the bypass of the area behind Wynyard, the Bass Highway behind Wynyard. I have raised this many times, as have members of another House who represent this region. We have had meetings, we have had plans, and we have had draft solutions to this area. There are probably up to six significant intersections on a section of the Bass Highway. Solutions have been proposed. I attended a meeting before Christmas in the Waratah-Wynyard Council Chambers with a draft plan. We have had a number of deaths on this section. We have had a number of serious crashes and terrible injuries on this section. We do not seem to be able to get it going.
I do not know if it is a matter of money. It is an area that really does need to be addressed. I understand that money has been allocated for it in some forum, but we need to make a decision and get on with it.
It does not only need to deal with some of those key intersections that cross the highway. I have nearly been hit while driving down the highway. The person went straight across in front of me without even looking. It is the whole area between Burnie and the other side of Wynyard, on the Flowerdale side. Those who live up there, or those who will have driven up there at the wrong time of the day, would know about the Cooee crawl. It goes down to single lanes and it is bedlam. People living in that section cannot get onto the highway; you have a primary school and a high school exiting onto this area, and car yards going through this section. It requires a long-term approach, and a solution.
Further down the Bass Highway is the section of highway between Detention River and Black River in the Circular Head area. That is an area truck drivers constantly raise concerns about. The shoulders are very narrow and are not sealed. In one instance, I was driving to Circular Head. I was coming along the straight, around a corner into an area I know to be quite narrow and there is some vegetation on the side of the road. As I came around the corner I could see a truck coming toward me. What I could not see around this corner, where the Armco railing would not even be a metre from the side of the road on each side, was a four-wheel drive passing the truck. I came around that corner and the Armco railing was on both sides. There is nowhere anyone could go. The truck driver looked mortified - he could see the four-wheel drive coming past him. I looked mortified, slammed on the brakes and came to a stop. I was not going too fast, and thankfully the four-wheel drive just made it in between myself and the truck. The truck driver also braked as hard as he could.
These sections are a constant concern for the truck drivers, but there are also school buses. A couple of school buses come out of Smithton every day, taking students to Marist College. You also have the local school buses going to the local schools. There is a section that could have been upgraded during the Sisters Hills upgrade a number of years ago, but it was not put forward at the time by the Circular Head Council. I am not sure about the details around that, but that section is still a very difficult section for producers going in and out of the area on a regular basis. Those who travel in that area would know the number of trucks - milk trucks, log trucks, container trucks - that use that road all the time and particularly throughout the early morning, and then there are the school buses.
Mr Valentine - It would be a good case for light rail up there.
Ms FORREST - A lot of that corridor has been subsumed into farmland. It certainly needs investment in the road infrastructure.
One of the key infrastructure issues I would like to mention relates to King Island. For those of you who have been watching the shipping issues, this has been going on for a very long time. When Flinders Island was having some challenges with shipping, we looked at King Island. King Island was not on the radar at the time, except to say that we knew there was a problem coming when the current vessel was replaced. That current vessel only gets into the Grassy port because it has a dispensation allowing the captain and the pilot to get it in there. Sometimes it cannot make it in because of the weather.
A reliable shipping service is essential for King Island. Anyone thinking about it would realise. We had a couple of solutions, which have all fallen over. The minister did say he would keep me up to date. He has not contacted me about any of this and I have to ask information of other people.
Those involved, who have much more knowledge of the shipping ways than I have, say the proposed barge is not a solution, not even an interim solution. It is a small, all open deck, flat bottomed barge and the chances of it getting into port in winter on a regular basis is not going to work. As it is smaller it will have to do a number of trips. As they are putting containers up the front, it could even tip and perhaps fall into Bass Strait. If you talk to any of the people who brought cars over when they have had open decks in the past, by the time it gets to King Island, regardless of the colour it was when it left Tasmania, it is white when it gets there and then it rusts in no time at all. It is not the solution.
The Government is saying it is an interim solution. We know how interim solutions sometimes drag on and on, so we need to take much more long-term view and consider all the options.
There have been discussions about who should own the ship. Should it be the government, King Island Council or private enterprise? Should the service be subsidised and provided entirely by private operator with or without subsidy? They are the sort of questions that should be asked.
With a small freight task at some times of the year, if a small ship is deemed all that is necessary, then will such a ship be able to get into the port regularly? In its current configuration one would suggest not. Can a large ship get into the port en route to Melbourne? At the moment, no, it cannot. All these questions need to be considered and we should be looking at the port itself. If this was upgraded, the issue of a suitable ship and who owns it would be much less of an issue, if an issue at all, and it would also open up other opportunities for King Island.
This would be an expensive exercise. The cost would be disproportionate to the number of boats on King Island, but we do need to take a long-term view. Long term infrastructure investment is an area government should be focusing their attention on. This is the type of project that is reasonable for a government to borrow funds to undertake. Get support from the Commonwealth. Borrowing rates are low at the moment and it is a long-term intergenerational asset that could remove a lot of these problems about shipping on King Island.
The Acting President has some chance with the tidal port on Flinders Island. At least you have a deep water port on King Island, but you cannot always get into it, so you do need a fairly robust vessel to safely navigate that entry.
Madam Acting President, agriculture is an important area and there is growth occurring all the time, literally and figuratively in that area, and the investment in irrigation followed through from previous to current governments is really important and making a real difference. One particular good news story from my electorate is regarding Hill Farm Preserves based in Sisters Creek and they put out a media release the other day saying 'NW firm cracks premium South Korean food market'. This is a little boutique business in many respects, but it is increasing its range of product and the product is really high-rate. When we did my electorate tour a number of years ago we called in there and some members would remember visiting. I remember the Acting President actually did a bit of stirring of the apricot jam while we were there. This is the same spot and it is all handmade and hand-bottled at the moment.
Just reading from the media release -
Tasmania mustards will soon be gracing the shelves of premium French patisseries across Seoul following confirmation of an order from a large South Korean company for Hill Farm Preserves products. The first shipment of two types of mustard, seeded Mountain Pepper Mustard and Paste to Pub Mustard left the Sisters Creek kitchen this week bound for Seoul. They are to be retailed in 20-30 premium bakery cafes in the Paris Croissant chain owned by the SPC Group. It has widely been hailed a coup to secure an order from this global food company.
'I was delighted to meet representatives of SPC as a delegate of the Tasmanian Government Trade Mission to East Asia recently. Meeting face to face after negotiating the business deal via email and phone was crucial to consolidate the relationship', said Karen Luttmer, owner of Hill Farm Preserves.
'Throughout the trade mission we were reminded that the eyes of East Asia are on Japan. SPC scouts had discovered our premium products in Japan, where the brand has been on high-end department store shelves, in restaurants and in luxury hotels for over 15 years. What Japan has, other countries want. Never underestimate the power of being visible in an aspirational market', she said.
Hill Farm Preserves manufactures condiments and preserves from natural ingredients, without adding colours, artificial flavours or preservatives. The commercial kitchen is located in the lush farming country at Sisters Creek, in Tasmania's north west, where all products are hand bottled and labelled. The yellow mustard seeds featured in the seeded mustard are grown and harvested on the nearby farm. Products include jam, marmalade, GM Free cold pressed Canola Oil, including an infused range, jelly flavoured vinegars, fruit paste and seeded mustards, and relish chutney.
Some of the infused canola oils are just amazing. There is a ginger one, garlic one, and lemon one, and they are just beautiful.
Karin Luttmer purchased the business in April 2016 from Carolyn Nichols. Carolyn is the third owner of the Hill Farm brand. SPC is considered a tier 2 conglomerate in South Korea with a motto, 'We deliver happiness to the world with our best quality products.'
It is a really good news story. It is a little business that grew from a little tiny business. I did ask one of the representatives the other day if they are going to be able to manage to keep the hand bottling and hand-labelling. It is a pretty labour-intensive task. That will remain to be seen, but the quality of the product will be there regardless. The use of local product is really important. There are some good news stories out there.
The dairy industry continues to struggle along in many respects. There is a committee of inquiry looking at aspects of the dairy industry and we will wait for the report to see what they have found. There are a huge number of opportunities in the dairy industry, particularly for downstream processing and value adding of our product in the state, as well as the exports occurring from Van Diemen's Land dairy at Woolnorth. It is important though to remember when you are operating into a Chinese market that things can change quickly. We need to have a variety of opportunities for dairy, not just rely on sending our whole milk. If we do and something happens to the market, whether it is a regulatory change or a contamination scare, or any of those risks that can occur to any food business, we need to be sure we have a contingency plan and not all our eggs in one basket.
Briefly on forestry, this issue has again raised its head in terms of potential unrest in the sector. There has been growth in the timber industry, I have seen it around my electorate, but it has been in the plantation sector. The increased market has not been occurring in the native forest sector. Forico are doing a wonderful job. They bought their trees at a bargain basement price - and good on them - from the Gunns liquidation. They are replanting, which they will need to do, for the long term. There is a lot of activity going on there.
As far as opening up the Future Potential Production Forest early, 356 000 hectares or thereabouts, the employers in the forestry sector in my electorate are adamant and very unequivocal they do not want that to happen. They have their own contracts and own businesses, but they see a serious threat to their businesses if this occurs. There is increased activity by protesters because we have gone in and done this early, particularly when we have not received Forest Stewardship Council certification as yet for Forestry Tasmania.
It is about public perception. You can argue all you like about the reality of it, but it is the public and the customer perception. One of my major employers up there is facing cheap FSC certified imports in their product they produce from China. When you have imports that compete directly with them coming in from China FSC certified, the last thing they need to have is another threat to their business that would see their board perhaps make a decision about whether they continue in the state or not.
Mr Valentine - Not logs we have exported to them coming back, are they?
Ms FORREST - No. These are ones being downstream processed here. The last thing I want to see is a significant employer in my electorate being forced to close because of this decision. This is the real concern I am hearing. I have not heard anyone, not only in my electorate but other parts of the state, saying they want this product at the moment. It may be the case in the future and I am happy to keep that in mind. At the moment it is a real risk. By all means work on the plantation sector, continue to see the growth in that. People like Ta Ann are looking at using plantation timbers as pure logs, not just as native timber. They have made it clear they will not go anywhere near any timber that might be taken from these areas. They do not want it opened up because their Japanese customers see Tasmania as quite a small geographic area. They can say until the cows come home they are not taking timber from that area, but if the Japanese get concerned about it they can go to China where it is FSC-certified.
Everyone is looking after their own interests. It is a real issue. The major employers in my electorate in the native forest sector say there is a real risk in doing this, a real risk of job loss and I do not want to see that. We will debate that more at a later time.
The mineral prices have improved in most commodities over recent years. All of them are up and down at times. It does not take much, some hiccup in China and the iron ore price tanks again. Those things can happen. You can see the nervousness around some of the mining sector in terms of ongoing investment in drilling and exploration.
Others are wanting to reopen, like Copper Mines of Tasmania in Queenstown. Whilst the copper price has been holding up fairly well, there is a lot more work to be done there. I am hearing positive signs and comments around that. I do not like to get too excited about these things because if you do people expect it to happen tomorrow. We have a way to go. There is a lot of dewatering to do in the mine if they get going. A different mining method will be used in that mine. I am confident it will start operations again, hopefully by the end of the year. We will wait and see.
There are other projects that are going well. A good amount of exploration is going on at Henty. Henty looks like it is going to close then it has a change of ownership and off it goes again.
There has been a sale imminent at the Avebury mine at Zeehan. There has been another extension to the finalisation. I am hopeful it will get going soon. It will make a huge difference to the west coast and the employment opportunities there. One big challenge for a big operator and employer in the north-west, Grange Resources, is the cost of gas. They have a gas pipeline going directly to their smelter and pelletising plant. The cost of gas is becoming a major issue for them. The concern about the lack of contract with the gas pipeline is creating great nervousness. It is an ongoing thing and the Government has to make some decisions. If that is not addressed it could be a big challenge for them.
Before I conclude I will make a few comments regarding TasWater. We can read all manner of reviews and concerns regarding the recent announcement by the Treasurer regarding TasWater. Local Government Association of Tasmania has clearly expressed their views. Commentary abounds in the media. Local government members are speaking out, particularly regarding the lack of consultation. People want and deserve affordable, safe drinking water and compliant sewage systems. Clearly something needs to be done. To continue to borrow money to pay dividends to the owners is clearly unsustainable, especially if the business urgently needs to spend more on capital upgrades. TasWater's 2016 financial statements explain this reality with an extra $65 million borrowed during the year, and $20 million of this went to councils as dividends, in addition to the other distributions of $10 million. The remainder of the borrowings were needed to fund extra capital sending as the business experienced a fall in net operating cash.
The Treasurer is right to be concerned but what is the answer? Tasmanians want decent services at a reasonable price. The cost of living pressures are already a huge hurdle for many Tasmanians. I believe the majority of Tasmanians would prefer TasWater covering costs including costs of borrowings and keeping the assets in conditions that provide the necessary services now and in the future. The question of whether TasWater, regardless of the ownership, should be a profit generating business is the question. If a decision is made that there are not any profits, this will mean that there will not be any income tax equivalents or dividends paid to owners. This then begs the question of how local government is compensated for the loss of this revenue stream if such a brave decision was to be made.
This would make the Treasurer's offer of $30 million to councils in 2018, and $20 million per year for the next seven years thereafter, a deal that looks pretty good. The Treasurer has said quite a bit about the strength of the TasWater balance sheet, but if it is not intending to sell the business it really is a bit of a moot point. The Government also has a strong balance sheet but it cannot afford to service much debt. This is why almost all government debt sits on the balance sheets of the GBEs and state owned companies.
The remaining issue is how TasWater's extra debt is to be serviced, and that is where the Treasurer has been less than forthcoming. His failure to consult and construct a coherent plan with all the necessary details could be the downfall of a plan that does have some merit.
In closing, I would like to say the world has been in turmoil for the last eight years but hardly anything has changed. The tax system and the system of Federation is still the same. Any change to TasWater and the implications to councils and state revenues needs to be raised above the narrow approach with little or no consultation with key stakeholders. In my view, the only thing that is different since the onset of the GFC is the heightened adversarial sniping and the lack of consultation, the lack of demonstrated leadership, lack of vision and lack of big ideas. That is a tragedy of the Premier's Address speech.