Letter to Lindsay Tanner

Hon Lindsay Tanner
Minister for Finance
2 December 2007

Can we really afford the huge subsidies provided for paper?

Dear Minister,

Congratulations on being returned to government.

Our organisation, A Better Austraila, has been representing a number of community-based groups in assessing the impacts and costs of the pulp mill proposal. The community is concerned at both the sheer scale of the total subsidies provided for pulpwood and the unmeasured opportunity costs as our food production industries are displaced by low productivity trees. We’re putting paper ahead of food.

If the mill is to go ahead, we believe that the entire implications need to be known prior to the mill being built. No independent studies of the impacts and costs have been conducted and we write to urge you to commission or support an independent study of those costs to inform you of the true financial situation.

For example, one issue of great concern is the level of subsidies enjoyed by the pulpwood industry in Tasmania. These subsidies in the form of cash payments or cost relief, total over $200 million each year from both state and federal governments, and are now being topped up with mill based infrastructure costs of over $200 million dollars. $200 million per year is $4 billion over the first 20 years of the mill’s life. All of this at a time when our hospitals, schools, social and other basic services are starved for lack of funds, food is at a premium and cutting down forests threatens our global climate.

The effect of the mill, at least in part, will be to ‘lock-in’ those subsidies for decades to come.

A large part of the total subsidy comes from federal tree plantation MIS that have the taxpayer helping to fund the conversion of food farms to trees. Gunns gets about $60 million per year from those programs, and ends up owning massive amounts of prime land at taxpayer/investor expense. This is a massive change of ownership from individual families to large corporates sponsored by the taxpayer. Costs of subsidies were not modelled (or mentioned) in Gunns economic models with their IIS therefore they must be operating on the assumption that subsidies will continue for the life of the mill.

The socio-economic issues alone would have stopped the proposal dead in its tracks except for the gross corruptions of process and representation that have characterised the entire episode. The State method of leaving out all costs, impacts and risks and only portraying the positives is an absurd methodology that normal people wouldn’t even apply to the purchase of a car, let alone a massive industry. It exposes everyone to far too many risks.

We can answer queries and supply further information should you require it.

Sincerely,

A Better Australia