2015-12-08
Ms DUNN — My question is for the Minister for Agriculture and is in regard to the VicForests annual report for 2015. This report indicates that VicForests has poor profitability and its financial results are volatile and have been for a long time. The financial accounts do not include calculations for the loss of biological assets, their value as carbon storage or their value to water supply, and as they are not properly taken into account they are therefore massively undervalued and under-represented. In 2015 the profitability, the return for every dollar expended, was 2.8 cents for every dollar. The minister said in this house on 12 November that the 2015 annual report shows a very strong financial result. Does 2.8 cents in the dollar fall within the minister’s profitability goals for VicForests?
Ms PULFORD (Minister for Agriculture) — I thank Ms Dunn for her question and for her ongoing interest in VicForests and indeed in the annual report. I wonder if Ms Dunn has read a different VicForests annual report to the one that I received and in fact that was tabled in the Parliament, because VicForests has had another profitable year with net profits after tax of $4.7 million, its highest in over a decade. The Auditor-General’s office independent audit of VicForests annual report is positive, with no financial irregularities reported and with ongoing scrutiny as we would expect of any public entity. Since being established VicForests has achieved over $20 million net profit, generated over $1 billion in timber sales and returned dividends to the state in excess of $6 million, so I think we are working off different premises here.
Supplementary question:
Ms DUNN — I thank the minister for her answer. For the benefit of the house, if you get the profit figure and divide it by the expenses figure, you come up with 2.8 cents profitability, which is a standard accounting practice. However, my supplementary question is: in relation to calculating the losses on the VicForests balance sheet and to the state of Victoria when will those calculations include losses for carbon storage and water supply?
Ms PULFORD (Minister for Agriculture) — This is a pretty wide-ranging supplementary question and invites all sorts of commentary on different accounting treatments, including federal government schemes as well, including some that do not exist — those in various states of review by the federal government and on and on we go. If you do not mind, President, I might have a go at taking that question on notice, because I think Ms Dunn’s question is based on a very unusual interpretation of the information that is provided in the annual report.
Response to supplementary question:
VicForests Annual Report and Financial Statements are fully compliant with the relevant legislation, Treasury directions and Australian Accounting Standards. The Acting Victorian Auditor-General found that VicForests' 2014-15 financial report was compliant with these strict standards. Under these strict accounting conditions VicForests is not required to report on carbon or water values.
The question suggests that VicForests' timber harvesting activities result only in losses in environmental values. However, VicForests harvesting activities are not deforestation or permanent land clearing. VicForests is obliged to regenerate all areas that it harvests to the original forest cover. VicForests obligation to regenerate harvested areas is independently audited and publicly reported.
Harvested timber is converted to products that provide for the long-term storage of carbon. Their replacement, regeneration forests, rapidly absorb carbon from the atmosphere. Mature and old growth forests store substantial amounts of carbon but there remains the ever present risk to all forests from bushfires.
Two significant United Nations bodies, the Food and Agriculture Organisation and the Intergovernmental Panel on Climate Change have investigated the role of sustainable forest management and carbon. Both are of the view that sustainable forest management for wood products may actually be one of the most effective ways to sustainable offset carbon emissions.