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Cost cutting and full year result detailed at LegCo inquiry

DATE 06/07/2011

I was pleased this week to be given a further opportunity to appear before the Legislative Council’s inquiry into Forestry Tasmania’s financial performance.  

The work of this Committee is enormously important, as it has allowed in-depth scrutiny of not only Forestry Tasmania’s finances, but of the positions held by stakeholders about our business.
I previously appeared before the inquiry to provide further detail on our half-yearly financial result.

This week’s hearing provided me with the opportunity to further detail the cost saving measures we have implemented, and to outline the effect that the industry downturn will have on our bottom line this year.

Many of our cost savings won’t be seen until next year’s financials are released, but they are significant. They include:

• $7 million in payroll cuts, achieved through District mergers and voluntary redundancies
• $1 million in reduced vehicle expenditure, through leasing our fleet
• $100,000 in reduced phone expenditure, by transferring our old analog telephone system to a VOIP (voice over internet protocol) service

Unfortunately, the downturn will nonetheless cause FT to record its second operating loss since corporatisation, currently predicted to be $6 million.

Media reports this week quoted me as saying the current industry situation was comparable to a car smash. That may be so, but I’m also optimistic that FT can emerge from the current situation to take full advantage of the industry changes created by Gunns’ restructuring.

I can assure our stakeholders that we are continuing in our efforts to find new export markets for our wood products, and to attract investment in domestic processing. I personally believe the future is bright if the industry can move beyond the stagnation of the past and foster innovation in new products.

In light of our predicted result, it’s also worth noting the findings of the Auditor General, whose report into our financial performance was tabled in Parliament this week. Following a detailed investigation into our business, he confirmed we have made $201 million in operating profits and paid $99 million in government taxes and dividends since corporatisation.