2015-08-02
MS DUNN — To ask the Special Minister of State (for the Treasurer): In relation to the method of calculation of the reduction in value of regenerated forest, given that —
(a) in 2011-12 and 2012-13 VicForests reported that 3824 hectares of forests had been submitted for planned logging, and would be expected to reduce the biological timber assets by $6.3 million, implying a value of $1647 per hectare of regenerated forest; and
(b) the VicForests annual report of 2013-14 reported that a reduction of 23 546.8 hectares of standing timber would result in a reduction in value of $2 455 000 of regenerated forest, which equates to a value of $104 per hectare —
there appears to have been a change in the method of calculation of the reduced value of regenerated forest, please provide detail on:
(1) the current method for calculating the reduction in value of regenerated forest.
(2) the previous method for calculating the reduction in value of regenerated forest.
(3) the reason or rationale for the change in the calculation method.
ANSWER:
The timber available for harvest by VicForests is on its balance sheet as biological assets. This includes capitalised regeneration costs. The method for calculating biological assets is listed in note 1 (I) of the VicForests annual report.
There have been two relevant changes to the method for calculating biological assets. Firstly, from 1 July 2009, VicForests started capitalising regeneration costs onto its balance sheet. Prior to this, VicForests expensed regeneration costs in its operating statement in the year they occurred. The capitalised regeneration costs do not include costs incurred before 1 July 2009. This change reflects the fact that regeneration costs generate an asset (timber that will be available for harvest in the future) and is consistent with accounting standard AASB 141 Agriculture. Secondly, since and including the 2013-14 Annual Report, all timber resources available for harvesting are reported on VicForests' balance sheet. Prior to this, the timber estate was split between VicForests and the then Department of Environment and Primary Industries (DEPI). Regenerated coupes were transferred from VicForests to DEPI, once DEPI accepted the coupes. There is no longer transfer of regenerated coupes from VicForests to a department. This change was required by the 2013 changes to the Sustainable Forests (Timber) Act 2004.
In relation to comment (a), page 13 of the VicForests 2010-11 Annual Report refers to 3824 hectares of regenerated coupes submitted by VicForests for acceptance by DSE. The $6.3 million was an estimate of associated regeneration costs. A portion of these costs were expensed prior to 1 July 2009.
In relation to comment (b), page 57 of the VicForests 2012-13 Annual Report refers to DEPI accepting 23 546.8 hectares of forest from VicForests. Only a portion of this forest was the return of regenerated forest. It also included other coupes returned to the Department, such as thinned coupes and road line coupes. And of the regenerated forest returned to the Department, only a portion of the regeneration costs occurred after 1 July 2009. The $2 454 869 refers to the capitalised regeneration costs that were incurred after 1 July 2009 and transferred to DEPI with the return of the forest.