Letter 7 from TAP to ANZ Bank re pulp mill

To Gavin Murray Head of Sustainability, 21/20 Martin Pl Sydney NSW 2000 From Robert McMahon Chairman TAP Inc. 7 November 2006 Dear Mr Murray, Re: Assessment of Tamar pulp mill proposal by Gunns Ltd Our organisation TAP, is an independent community group working towards a healthy, diverse and vibrant Tasmania. After reviewing the proposed Tamar pulp mill, we have been led to the conclusion that, as it stands, the project presents severe risks to all parties, including the proponents themselves. Our key areas of concern centre around hidden project risks that have been excluded from consideration and discussion, and their potential to be a considerable brake on the Tasmanian economy and its businesses. In evaluating a major industrial proposal in Tasmania, it is helpful to be cognisant of recent changes to Tasmanian legislation that have enshrined conflicts of interest in major State projects, and have also legitimised the exclusion of important considerations during statutory planning reviews. In making changes to Tasmanian planning laws as they relate to large projects (i.e. Projects of State Significance) the State government has caused the project proponent to control almost all information flows. Furthermore the project proponent defines the potential impacts of their project on the community and other businesses. The effect of these legislative changes is to leave from consideration all aspects of a proposal that could work against the proponent’s interests, mainly because the duties that Articles of Association impose on directors of public companies precludes them from revealing information that could be detrimental to them. The legislative changes might be a way to push a big proposal forward, but planning laws are not just tiresome impediments, they are there to protect communities and businesses that are already operating. In the case of the proposed pulp mill, all impacts of wood supply have been excluded from consideration. Given that the proposed tree clearance rate is one of the highest in the world, this is a serious omission. Potential impacts on the marine environment where effluent is to be discharged have also been minimised as Gunns’ consultants have defined the Bass Strait as an area with ‘comparatively minimal marine aquatic life’. This despite the fact that the Bass Strait fishing industry is worth over $150 million per year to Tasmania alone and supports hundreds of jobs. In areas of wood supply, which encompasses about one-third of Tasmania, scenic and recreational disruption, water catchment depletion and increased log truck traffic are likely to adversely impact Tasmania’s lucrative tourism business, worth around $1 billion per year to Tasmania. Also in wood supply areas, the conversion of farms to plantations, already well advanced in Tasmania, is set to accelerate to create a plantation estate that can feed a ‘world scale’ mill. Gunns’ plan of creating a further 50,000 ha of plantation is likely to eat further into our farms’ production. That area of conversion would create losses to agriculture and downstream processing of around $310 million per annum and devastate many rural communities where cash flow from farm activities is disrupted. These are typical impacts that could be expected when industries are using shared resources of water, land, sea and air. The problem for Tasmanians is that the government’s planning changes place all of these impacts into limbo when it comes to evaluating the mill proposal. These self-induced blind spots are reinforced because the proponent controls all information, including public consultation. The result is a biased decision environment that cannot assess all of the consequences of an approval decision because only project positive information is being reported and considered - like a loan applicant only supplying information about assets and nothing about liabilities. This bias is hidden behind the apparent scrutiny of State authorities but they are constrained by the same information distortions and omissions. The economic justification for the proposal demonstrates the tendency to bias, with no opportunity costs, a ‘black box’ computer model that cannot consider tourism, no sensitivity analyses of critical variables like water and timber prices, and a disclaimer of any responsibility by the consultants who prepared the economic report. The detrimental economic impacts are losses that we estimate to be between $15 and $20 billion over the 30 year mill ‘life’ and incurred as a direct result of a mill ‘investment’. Our figures are conservative as a ‘world scale’ pulp mill and chemical plant placed directly upwind of a community of 100,000 people engaged in mixed, sensitive industries, creates many new risks, to insurers and financiers. In order to evaluate what is happening, TAP has discussed potential impacts with a diverse range of community members and businesses, particularly in those areas excluded from consideration or minimised in importance. We have developed an integrated document in the form of an extensive and detailed diagram that demonstrates the impacts and that reveals multiple social, business, community and economic risks with the proposal. Should you, or your bank, wish to avail themselves of what we have learned, we are open to sharing that information with you. The impacts of a mill approval decision on small business in Northern Tasmania could be profound and highly detrimental. We contend that the only way to evaluate the proposal fairly is to include all of its aspects, and we believe that we can provide your bank with considerable new, and useful, information to help you reach a more balanced view of the proposal. Sincerely Robert McMahon, Chairman TAP Inc. Enclosures: Economic report re pulp mill IIS by N. Edwards Scenario Planning and economic report re pulp mill IIS by B. Lloyd