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December 21, 2004

Gunns v Greens#2

I'm reposting this comment by Rick Giles from an earlier Gunns versus the Greens post. These comments are too valuable to languish in the comments section of an old post. They represent a different perspective to my one, and so present the other side of a public debate.

Rick's post is more than a much needed corrective, to my own views. They are also more informed about current forestry practices than my own views which are that logging of old growth forests should stop, there should be a transition to plantations, and that Tasmania should shift away from a reliance on wood chips to a knowledge economy. This, if you like, is the other side of the debate.

Rick Giles

'Is there a difference in principle between making defamatory accusations against a person in order to cause them financial harm, and running a public campaign to destroy an industry? I would say they are two similar shades of grey.

The forests debate is founded upon the truism that logging is bad, and as Gary says, the forests debate will be decided in the court of public opinion. But surely there are good grounds to say that the forests debate should also be conducted on technical grounds. Logging is undeniably an ugly (as in lacking aesthetic values) practice, but is it the most destructive form of land use? In some instances it is very bad, but if logging is conducted properly and followed by successful regeneration, it is much less destructive than farming, where ecosystems are eradicated permanently.

In my home state, there is strident opposition to logging, but not a word of opposition from anyone about broad-scale strip-mining of the same forest, which involves logging, clearing and burning of the residue vegetation, removal of 3-4 metres of bauxite ore, replacement of 0.5m of topsoil and revegetation. The soil profile is substantially and irreversably changed by mining due to the removal of most of the well-structured soil, leaving a shallow topsoil on top of a kaolin clay. The fact that logging is not opposed when it is followed immediately by mining, but is opposed if followed by conventional forest regeneration, suggests to me that much of the forests debate is about emotive responses stimulated by some politicians and a number of unelected activits for their own personal benefit.

Perhaps Gunns will be able to force their opponents to have their assertions about the impacts of logging tested in court, or perhaps they are as you say, just forcing defendants to expend their resources in legal defence. I'm sure there will be a number of lawyers who have strong opinions about forestry, something that they know almost nothing about, who will provide a defence pro bono.

If the purpose is to force the matter to a head, it could be seen as a test case for the question, is it legal to conduct forestry in Australia? If the decision is no, or if as you say the court of public opinion decides no and overrules the legal court in any case, where should Australia gets its wood? Wood and wood products are already our third largest import, and much of it comes from forests being cleared to palm oil plantations in Asia. Substitute materials such as plastics and steel are heavy net emitters of carbon dioxide (construction wood sequesters more CO2 than it emits).

It is understood that forestry is perceived to be the worst form of land use known to man, but good forest practice is not. Let's see this tested in a court, where simple slogans and hysterical claims (from either side) can be exposed to some rigorous analysis.

If people elect to continually slander others for personal gain (whether the gain is in the form of a sense of self-worth, prestige, power, or political influence), then they must appreciate that at some point the subjects of their attack may seek to defend themselves. The reason why some argue that Gunns should not be permitted to defend themselves is that forestry is believed to be morally indefensible, even by the public who use the fibre it produces. Furthermore, it is assumed that Gunns' opponents are morally pure and not tainted by vested interest. This is a charmingly naive assumption.'

Rick Giles

Rick's position is supported by this op-piece by Greg Barnes who contest my own view that Gunns are using SLAPPS to silence debate. He says:

"In other words, there is a balance that needs to be achieved in any democracy between the right to freedom of speech, and potential harm done to others as a result of the exercise of that right. In the Gunns case, it is important to protect the right of the company to go about its lawful business, just as it is important to allow individuals and groups to protest against the company's business activities."

Barnes adds that if companies have no rights to seek legal redress to protect their rights and interests against what they regard as unlawful actions then the result will be anarchy.

Posted by Gary Sauer-Thompson at December 21, 2004 05:01 PM

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I'm reposting these comments from the earlier post. Your concerns are less about democracy and more about a business not making money, because of actions by environmental activists.

This is the similar point that Greg Barnes makes:

"These alleged actions include defamation, interference with contractual relations, trespass and property damage, all committed in the name of protest against the company and its practices."

Gunns says that it has suffered serious financial damage from environmenalists as a result.

Yet, as a shareholder says in the Australian Financial Review (Letters, 17 Dec. p.59), things are otherwise.

1. There is no mention of the loss in its half-yearly and its yearly reports of 2004.These refer to bouyant trading conditions and returns.

2. At the Annual General meeting on October Gay referred to excellent results. No mention was made of the damage caused by environmentalists.

3. For the finanical re year 2004 Gay reported a 42% increase in proft after tax and a 25% increase in dividends compared to 2003.

4. Gunns market capitalisation is now more than $1.5 billion, having more than tripled in the last year.

6. Gay did not disclose to the ASX and its shareholders any serious damage loss.

Seems like Gunns has a big credibility problem in suing the environmentalists and green groups for serious damage loss to its profits.

Posted by: Gary Sauer-Thompson at December 21, 2004 08:19 PM

Its a nice little shot to say Gunns failed to disclose this problem when reporting their performance for the investors and so either they dont really have a problem or they misled the stock market. But that is a bit simplistic.

A company may suffer real damage from malicious attacks and still remain profitable. A company is presumabley entitled to make as much profit as it can within the limits of the law.

Perhaps the damage to date has been modest in relation to the overall position of the company. However these attacks are not going to lessen, and do Gunns have to wait until they are an economic basket case before they can claim damage has been done?

Forestry has unusual economic parameters. The capital has be invested between one and many decades before returns come in. Planning has to be intergenerational. Apart from the risks associated with investing money for decades before returns, there is the risk that by the time harvest takes place, social attitudes may have moved and the investment is lost. Gunns must be concerned that the resource they are establishing now will be taken from them in the future. There are already examples of difficulties harvesting plantations on private property due to the aesthateic impact of the harvesting. How do we expect to provide for our future wood supplies when the future access to resources is uncertain. Who is going to invest in saw log plantations under the current social climate? Are Gunns trying to secure access to wood in the future by establishing in law that they have the right to operate?

So back to where does the wood come from? The uncertainty of public opinions in the future may drive the whole industry off-shore, where it is unregulated, loggers are plentiful and foresters are few. Some loggers are foresters but not all foresters are loggers. Commercial forestry is about growing trees; a 100 year old mountain ash that takes 15 minutes to fall takes three generations of foresters to grow.

Posted by: Rick at December 21, 2004 10:09 PM


All I said was that, given their financial results and the failure to report that loss to shareholders, Gunns have a public credibility problem about their claim to have suffered serious financial damage from environmental activism.

Nowhere did I say that Gunns should not use the law. Note that I also accept the right of the company to go about its lawful business.

But it is unclear that you accept the democratic right for individuals and groups to protest against a company's business activities because of its environmental consequences.

As I see it you try to separate business (making money) from politics (democracy). But that is not the case in Tasmania, which is a corporate state that closes down dissent in the island state with a heavy hand. So the issue is not just one about right of the company to go about its lawful business. It is also one about democracy. Senator Brown is quite right on this.

And what is the actual point of conflict here between these two principles? You do not provide one. You talk about "real damage from malicious attacks" and then say:

"...damage to date has been modest in relation to the overall position of the company. However these attacks are not going to lessen, and do Gunns have to wait until they are an economic basket case before they can claim damage has been done?"

No they don't. But that is not the issue. The issue is Gunn's claim that they have suffered serious financial damage from environmental activists.That is what they are contending.

So what does Greg Barnes say to justify this? This:

"... it is one thing for protesters to stand with banners at logging sites and shout slogans, and another for them to steal the keys of a piece of machinery, as Gunns alleges has happened to its workers."

It is. But we are still talking about principles.

You talk in terms of Gunns suffering "real damage from malicious attacks". Stealing keys is a hardly a malicious attack, surely?

Okay, Barnes is not giving a very good defence of Gunns once we move away from general principles. Greens stealing the keys to a piece of machinery does not establish the case of Gunns suffering serious financial damage.

So my contention that Gunns has a serious credibility problem in the court of public opinion stands. As you say the "damage to date has been modest in relation to the overall position of the company."

So Gunn's case for serious financial damage looks weak. Given that it still looks like SLAPPS to me.

Posted by: Gary Sauer-Thompson at December 22, 2004 07:06 AM


In the court of public opinion, Im sure Gunns have a credibilty problem, but I am also sure that the public (at large, on average or whatever) doesnt know much about forestry, so the public is sitting in judgement in a state of ignorance. Lets have it out in a court of law. Public opinion still may be unconvinced, Gunns may be on a hiding to nothing, but there are a lot of unelected activists around who are working hard, for what they think are valid reasons, to destroy Gunns and push commercial forestry offshore. If they achieve this, it will be by stirring up public support based upon limited understanding of the global issues involved, so creating an economically unacceptable environment for commercial forestry. If this is the decision making process that we are going to apply to the administration of the nation, then we are, collectively, fools. I actually dont mind a whole lot which way it falls, PROVIDED the decision is rational, because if its rational I know it is more likely to be the best balance between economic security and environmental sustainability.

The democratic right to protest is absolutely fundamental; this doesnt have to be repeated much more here.

With the right to protest comes the responsibilities such as the need to observe other peoples lawful right to go about their lawful pursuits. If it is otherwise, anarchy. Between no protest and anarchy are many shades of gray, and which shade of gray we occupy is determined from time to time in the courts. Gunns have the right to a defense, just as others have the right to protest. You and I disagree about the shade of gray, not the principles involved.

The definition of a malicious attack. By malicious I mean intended to cause economic or physical harm. Stealing a single set of keys worth $200 does not directly threaten the net worth of the company and to imply so is bringing this debate down to a petty level.

My work life revolves around supply chains similar to the systems operating in the tall forests. The costs of a log or similar supply chain are heavily influenced by coordination between the several components, harvesters, haulage equipment, stockpiling, loaders, trucks, factory receivals systems and factory processing. Just in time deliveries are fundamantal to minimising costs. Apparently minor interuptions like throwing a set of keys into the bush would probably stop 5-10 employees and hold up perhaps 2-5 million dollars worth of field equipment. If this sort of interruption was weekly, the cost per tonne of material moved would probably about double. Costs of this nature, feeding into the bottom of an industrial process multiply as they move up through the system. It may seem trivial, but in no way is it comparable to your kids hiding the keys to your car when you are trying to leave for work. If you want to talk about this level of detail, you are obliged to get the full details of the specific incidents from Gunns, plus the cost estimates. Just throwing it up in the air like that to debase the argument is pointless.

Where should the wood come from?

Posted by: Rick at December 22, 2004 09:14 AM

you write:

"The definition of a malicious attack. By malicious I mean intended to cause economic or physical harm. Stealing a single set of keys worth $200 does not directly threaten the net worth of the company and to imply so is bringing this debate down to a petty level."

I didn't imply this.That was Greg Barnes. It was Barnes tossing it in. You are arguing against your own side. I was showing the poverty of his argument.And you agree with me. Barnes commentary is pretty simplistic.

I took on Barnes in order to defend my SLAPP argument.I see no reason that he offered to reject the SLAPP account.

So let us put Barnes to one side.

The second point. The court of law decision about the Gunn's SLAPP is not going to decide this issue. That is one episode in a battle that will be decided by politics.The actions of Gunns and the Tasmanian state Labor Government have ensured that, because they have played politics with forestry.

Consequently the issue is stalemated in Tasmania. They could not, and are unable, to decide to make the shift to sustainable forestry themselves. So the issue becomes a national one. That is the way our federal political system works.

The last federal election showed that it will be decided by public opinion on the mainland. Both political parties moved towards addressing this issue during the election. It is now bipartisan acceptance of its national importance. There is no going back.It is now a question of how quickly and how far it will be settled.

The third point. What is the issue Canberra is concerned with?

You keep on saying that this politics is about destroying Gunns. I don't say that? I have said that in all likelihood,Canberra is going to decide on how to make the transition from logging old growth native forests to plantations and to do so with compensation. How you turn that shift to sustainable forestry to destroying Gunns is beyond me.

So we do not agree on the issue at hand in the federal arena.

What you seem to be arguing is that the shift to sustainable forestry in Australia means going offshore: that there cannot be a sustainable forestry industry on the Australian content.My eyes glaze over on that.

You say:

"where should Australia gets its wood? Wood and wood products are already our third largest import, and much of it comes from forests being cleared to palm oil plantations in Asia. Substitute materials such as plastics and steel are heavy net emitters of carbon dioxide (construction wood sequesters more CO2 than it emits)."

I talk about the forestry industry logging plantations not logging old growth forests, and doing so in a sustainable manner. Yet you talk about the destruction of an industry.

I do not see an argument from you that logging plantations in a sustainable manner will lead to the destruction of an industry, and it going offshore.You need to spell out the steps. The leaps are too great.

You just provide a series of rhetorical questions:

"Gunns must be concerned that the resource they are establishing now will be taken from them in the future. There are already examples of difficulties harvesting plantations on private property due to the aesthateic impact of the harvesting. How do we expect to provide for our future wood supplies when the future access to resources is uncertain. Who is going to invest in saw log plantations under the current social climate?"

On my understanding the current social climate is about stopping the logging of old growth forests and pushing the commercial foresty to make the shift to a sustainable harvesting of plantations.

That means destruction of the industry for you. We need an argument to show why that should be the issue, rather than making a shift from old growth to plantations.

Posted by: Gary Sauer-Thompson at December 22, 2004 12:14 PM


Many good points here. My apologies for making leaps in logic and not bringing the argument along with more detail. I will need to to write up a decent reply by tomorrow morning. Don't go away.



Posted by: Rick at December 22, 2004 03:12 PM

check out this earlier round of debate on Tasmanaian forests and forestry at public opinion
here and here
They may be of some use.

Posted by: Gary Sauer-Thompson at December 22, 2004 07:22 PM


The principal reasons why I am making your eyes glaze over, and we are now having two different conversations, are my leaps in logic. A bit more detail.

In very approximate proportions, the nations wood comes about one third each from plantations, native forests and imports. The main point here is that as native forests close down as sources, the proportion of imports increases. This shift is taking place now, and if the plantations had the capacity to pick up where the native forests leave off, I wouldnt be arguing with you now.

In terms of sawn wood, the plantations that are ready for harvest now were planted in the 60s, 70s and 80s. There is some wood coming from younger plantations, but this would be from highly productive sites, and thinnings, much of the latter being undersize, marketed as posts or chipped for particleboard and paper.

There is a belief around that we have enough plantation resource to supply everything we need, and there is even a resource economist, whose name escapes me, who has written a paper to this effect. Apparently there is a conspiracy to withhold plantation resources so that we can knock over more native forest. She is, in the opinion of the industry, wrong. I havent read the paper, but the fundamental gap in her argument to me is that plantations are expensive to establish, and the longer the interval between establishment and harvest, the worse the economics look. Private and government organisations that established plantations that are approaching final harvest now have been paying interest on those investments for decades. If you do the analysis of the present value of a future sum of money, youll see that the long period between establishment and financial return makes sawlog plantations a risky investment. The ever-accumulating interest (govt departments pay interest too) is the main burden. So in this situation, to argue that any plantation owner would deliberately delay harvest for long periods of time is to argue that money is free. Another particularly important point is that plantations reach a harvestable size and then wood production slows down without further thinning. Modern pine mills are also not built to saw large logs, so the cost of milling over mature logs begins to rise. There are many details glossed over here, such as early revenue from thinnings and silvicultural strategies, but this will be too long as it is. Basically, a plantation management timetable is determined by silviculture (agronomy for trees) and economics. Conspiracy theories about this are like most conspiracy theories; a shred of evidence and a lot of imagination.

It is normal to say they should have planted more plantations in the 70s and 80s. Back in those days, social attitudes were different, support for plantations was much less and hindsight has always been excellent.

More plantations should be established now, I dont think there is any disagreement between us on that. A few points:

1. New sawlog plantations will not come onto the market for many years, and we need to be discussing where our wood should come from in the interim decades. The current situation looks to me like we will import much/most of it from the rainforests of Asia because thats the cheapest source.

2. Long rotation sawlog plantations dont look very attractive compared to a pulpwood plantation harvested once at age 10. At present most of the private investment goes to pulpwood. Why? 10 years fits within a working life. Not many people early in their working life have the wealth to invest in longer rotation plantations. Consequently most of the sawlog investment comes from corporations, of which Gunns is one of the most prominent.

3. From the industry side, things look bleak. Our opponents may say they have brought it on themselves. But they must realise that an industry with an uncertain future doesnt attract finance readily for 20-40 year investments. As evidence, Wesfarmers, who bought Bunnings and have sold the timber production side of the business as quickly as possible. Meantime, the timber and hardware sales side of Bunnings is an economic flagship. We are collectively busy buying wood, but we dont understand what it takes to make it.

4. I have mentioned previously that there have been concerns expressed by Brown that too much prime farmland is being swallowed up by bluegums. The most vitriolic criticism of forestry is directed at woodchipping. The modern bluegum plantations are a deliberate strategy, initiated in the late 80s with levies on native forest woodchip exports in WA, to establish a plantation resource to supplement, and then perhaps even replace, the native forest resource. This is an example of industry financing, under government pressure, the development of a plantation wood resource for a particular market. The result is further criticism and the principal proponent of this strategy has been vilified as the worst thing to happen to WA forestry by the greens and he has been reskilled. The worst fallout from this is the implication that forestry will be attacked no matter what it does. Not a healthy social environment for long-term investment.

5. We already have plantations, even pine, that are impossible or difficult to log because of public concern about the aesthetic impact. This is not public belligerence, but it demonstrates the somewhat irrational nature of the human animal. We all like a sense of continuity and dramatic changes to the landscape cause concern. Hence there is usually strong opposition to the establishment of plantations if they are large scale and impact on the visual character of a district. The next generation of people grow up used to the plantations and then oppose the harvesting phase. Normal behaviour; Ive heard anecdotes along these lines from around the world.

6. The plantation industry is commonly criticised for using monocultures. This is a basic economic requirement for the production of wood and with the high cost of establishment of plantations on one side and the cheap resource in neighbouring Asian forests on the other, monocultures are here to stay. If you look at European forests, they are very largely monocultures and people there are very attached to their plantation forests as a place of recreation. (They also dont seem to have much trouble, to my knowledge in Sweden, Finland, France, Germany and Austria, with harvesting those forests in the full view of the public.) I have noticed anecdotally that there is mounting opposition from green people to the bluegum plantations in WA due to this monoculture concern.

7. There is discussion about, and some trials, growing mixed species of native trees in plantations. These will be more expensive to manage, but we could pay more for our wood, especially when the Asian forests run out in the future. But if there are instances of people becoming attached to their neighbourhood pine plantations, there is a strong possibility that todays mixed native species plantation will be tomorrows high conservation value forest. This happens virtually every time a regrowth native forest (argued by most people to be appropriate for timber harvesting) approaches final harvest. This point also demonstrates the irrationality of, or at least circular logic of, the belief that harvesting forests destroys the forest.

In general, you are arguing sensibly that there should be a move from native to plantation forests, and most people do the same. As individuals. But if you take the general form of public opinion, which is what influences political behaviour and policy, the situation is different. Public opinion sloshes around under the influence of many factors, but it is comparatively easy for a dissenting minority to stir up support AGAINST many issues. It is very difficult to harness such unified public support FOR a complex reasoned argument. When it comes to intergenerational resource production and management, we dont seem to be coping very well.

The RFAs were an attempt to develop a negotiated long-term strategy, with all parties at the table. I am not aware of the details nationally, but my understanding is that the major green groups refused to participate in this process because by standing aside from the negotiating table, they were free to then attack the Agreements as soon as they emerged. It must have been difficult for the greens to sit at the table with the industry if government and industry have responsibility for supplying the nation with the wood it consumes. There will always be a gulf between those with ideals and those with responsibilities. Politically, this has been a most successful green strategy and it even calls into question, are they about responsible resource management, a genuine practical balance between our consumption of resources on one hand and the protection the environment on the other, or are they just out for political influence? When your genuinely held fundamental aim is to save the world (who can oppose such an ideal?), almost any means could be justified by the end.

In terms of responsible long-term resource management, the RFA process seems have been a disaster. Decisions were made without the benefit of a stronger conservation influence. The situation is now more chaotic than it was before. Why are we surprised that there is inadequate plantation resource being established?

I consider it reasonable to conclude that the core of the green movement is indirectly working for the removal of commercial forestry from this country. They dont have that as a formal part of their platform, probably very few if any of them recognise what impact they are having. But the net real effect of their efforts is that commercial forestry in this country is too expensive and subject to too many wild swings in the public mood (measured over the length of a forest rotation). The industry here will diminish further and responsibility for our wood resource will move off shore, because there is a lot of cheap old growth forest over there, at the moment.

Posted by: Rick at December 23, 2004 08:53 AM

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