Tuesday, 16 June 2015

FT's coming of age?

In a few weeks Forestry Tasmania will celebrate its 21st birthday.

It’s likely to be a subdued coming-of-age bash as the future looks murky. That it has lasted this long may be the only reason for merriment for some.

Liabilities now exceed assets. It can’t pay its way. If it was liquidated, the Tasmanian Government would be faced with a shortfall it would meet by taking over the unfunded superannuation liability.

Adjusting for the way we now value trees, $566 million in net assets were transferred in 1994 to establish Forestry Tasmania. Since then Forestry Tasmania has received $340 million in cash grants from governments and has spent $400 million on new assets, roads and plantations.

Roughly $140 million of grants have been for operating, funds to reimburse community service obligations, and funding to cover recent trading deficits.

The balance of $200 million of grants has been to establish plantations to build an asset base to provide future revenue.

About $20 million is yet to be spent as intended, the cash went to pay other expenses.

Despite all the grants, net assets are now zero.