hansard 92-93 strzelecki

1. (30-10-92) HouseASSEMBLY ActivityQuestions without Notice
MembersPERRIN; COLEMAN Date 30 October 1992 Page286

VICTORIAN SOFTWOODS

Mr PERRIN (Bulleen) -- I ask the Minister for Natural Resources to outline the government's policies on the
management of the State's softwoods.

Mr COLEMAN (Minister for Natural Resources) -- I thank the honourable member for Bulleen for his question and forhis interest in this topic. Some days ago the government obtained from the Department of Conservation and NaturalResources a briefing on the state of Victoria's softwoods. It was informed that the outgoing Labor government had been in the process of preparing legislation for the corporatisation of softwood plantations. Of course, that move is entirely consistent with the new government's policy. The process had reached the point where the outgoing government was offering staff the opportunity to join that corporation.

Today the question of policy has become a matter of some contention and it will be instructive for the opposition to know why a complication has occurred concerning the expectations of the government's policy. In opposition, the Labor Party will learn that it must take whatever offers are made available to it for the production of policy material.

In the production of the former opposition's forest policy an offer was made to the then Liberal opposition at 104 Exhibition Street, and of course it accepted the offer. A number of copies of that report were produced at a press conference on the Wednesday before the election. My office also produced a number of copies of the policy and they were directed to a wide range of organisations and community interest groups.

Unfortunately, the policy produced at Exhibition Street contained only 13 pages.

On the day the press conference was held here, my office forwarded a 15-page policy document to a range of interest groups. It is interesting that today it has been discovered that a number of people have copies of the policy that have two pages missing.

I have raised this issue in this way so as to be instructive to the opposition because these sorts of things can happen when a new party takes office.

The two issues dealt with in the two missing pages of the report are the matter of the softwood corporation -- which the government will proceed with, as was the intention of the previous government -- and native vegetation. The government's position on native vegetation was well and truly argued in the other House during debate on the native vegetation control legislation.

2. (6-4-93)
House ASSEMBLY ActivityAdjournment
MembersNAPTHINE Date6 April 1993 Page 727

Victorian Plantations Corporation

Dr NAPTHINE (Portland) -- I direct to the attention of the Minister for Natural Resources the proposed location anddesign of the office for the south-west zone of the proposed Victorian Plantations Corporation, the corporation being established by the government to manage Victoria's plantation resources in Victoria, which is an excellent initiative.

There are large plantations, particularly softwood plantations, throughout south-west Victoria. A document produced by the Department of Conservation and Natural Resources proposes that the office of the south-west zone be located at
Rennick and that a depot be located between Rennick and Dartmoor. A number of people in the Portland electorate,particularly those in the Dartmoor area, have made strong representations to me suggesting that the better location for the
zone office is Dartmoor rather than Rennick.

Rennick is right at the border of South Australia and Victoria, and it is at the very edge of the plantations the officers would have to service. There are in-built inefficiencies if officers are located at the edge of the plantations because they will have to travel long distances to service them, and in most cases they will have to travel through Dartmoor. Rennick isextremely close to the South Australian border. It is not an actual township, and many of the officers stationed there live in Mount Gambier. Victoria is paying those officers to spend their money in Mount Gambier.
Dartmoor has existing departmental offices for which the Sirex program runs. It is a significant township with a primaryschool, a kindergarten, shops, sporting complexes and social facilities. It has a large sawmill run by CSR Ltd. Dartmooris centrally located in the softwood plantation area.Will the Minister reconsider the wishes of the people of Dartmoor and the long-term interests of the management of thesoftwood plantations? Dartmoor would be a more appropriate and efficient location for the south-west zone than thatproposed by the department.

3. (6-4-93) Response House ASSEMBLY
Date 6 April 1993 Page 729 - 730

Mr COLEMAN (Minister for Natural Resources)
The honourable member for Portland referred to the establishment of an office for the Victorian Plantations Corporation in either Dartmoor or Rennick. Information has been circulated to staff in preparation for the corporation coming into existence, and it wasproposed that both communities have some continuing role in the management of softwoods in that part of the State. Thecritical issue so far as the honourable member is concerned is that the economic activities should also be part of Victoria'sgain in the structuring of the corporation.
A major facility at Portland will be established to handle some additional material emanating from the plantations. It isentirely appropriate that there be a review of the location of the zone office in that part of the State.

4. (5-5-93) VICTORIAN PLANTATIONS CORPORATION BILL
HouseASSEMBLY Activity Members COLEMAN
Date5 May 1993 Page1585 -1586 - -

Introduction and first reading

Mr COLEMAN (Minister for Natural Resources) introduced a Bill to confer additional functions and powers on theVictorian Plantations Corporation, a State body established under the State Owned Enterprises Act 1992, to make further
provision for the management of plantations, to make consequential amendments to certain Acts and for other purposes.

Mr COLEMAN (Minister for Natural Resources) -- I move: That this Bill be now read a first time.

Dr NAPTHINE (Portland) - Will the Minister for Natural Resources outline the details of this important Bill?

Mr COLEMAN (Minister for Natural Resources) (By leave) -- The Bill is part of a process to bring Victorian plantationsunder the administration of a corporation set up under the State Owned Enterprises Act. Victoria has some 106 000 hectares of softwood plantations and approximately 10 000 hectares of hardwood plantations, which are currently being managed by the Department of Conservation and Natural Resources.
The government has decided -- and it was also the aspiration of the previous government -- to bring the management of those plantations into some corporate structure.
The previous government attempted to do that through a process of valuing them for sale, which was eventually the subject of considerable public controversy. The passage of time has resulted in few of those issues being dealt with, andit is now realised what those plantations are worth.

The State Owned Enterprises Act, which was passed before Christmas, enabled the Governor in Council to approve thesetting up of a State-owned corporation. That corporation has appointed directors, and its powers and functions are determined.

This Bill proceeds from that point and deals with the legislative agreements that will provide security of supply for theparties to the agreement. Those parties will be able to assign their entitlements to produce from those plantations. ThisBill will give the government the opportunity to assign its obligations and agreements to the corporation.

Further, the Bill will allow a considerable number of plantations around the State to be transferred to the administration ofthe corporation.

Mr Leigh interjected.

Mr COLEMAN -- There are 180 plans nominated in the schedule to the Bill, which designates the locations of those plantations. They range from Rennick on the South Australian border, in the electorate of the honourable member for Portland, through the Western District and into north-eastern Victoria and Gippsland.
A feature of the plan is that a large number of former school plantations, which had special significance, are in rural areas. The legislative agreements will become the responsibility of the plantation corporation and the quantities, which are secured by agreement.

There are also a number of licences, which are held by individuals for up to 15 years. The legislation will also allow licences to be transferred.

The board, which has already been selected, comprises people who have been on the interim board as well as other people with specific expertise. The board will have transitional powers and will provide substantial advice to the new corporation. It will ensure that plantations get onto a commercial footing.

The definition of plantation includes those areas that are nurseries. The corporation will have the power to regenerate areas under its administration. The nurseries, which are an integral part of regeneration, are maintained and operated by the Department of Conservation and Natural Resources and will be transferred to the corporation.

A main obligation of the corporation will be to undertake the same fire protection and control measures as apply to theDepartment of Conservation and Natural Resources. The Department of Conservation and Natural Resources and the corporation will have the opportunity to strike an agreement in that regard. The corporation is a single shareholder corporation and, together with the Department of Conservation and Natural Resources, will manage public land inVictoria. There needs to be a strong relationship between the two entities to ensure that the best management practices are put in place.

The Bill will also ensure that the corporation uses the code of practice for the forestry industry. I hope that during the second-reading stage honourable members will have enough time to debate the Bill in full. It should enjoy the support of all parties.

Motion agreed to.
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5.    (7-5-93)        VICTORIAN PLANTATIONS CORPORATION BILL
House ASSEMBLY Activity        Second Reading
Members        COLEMAN        Date        7 May 1993      Page1759 -
Mr COLEMAN (Minister for Natural Resources) -- I move: That this Bill be now read a second time.

In establishing the Victorian Plantations Corporation, the State Owned Enterprises Act 1992 has been used as the overarching legislation.

Under section 14 of the State Owned Enterprises Act, the corporation was declared a State body by Order in Council on 4 May 1993. A subsequent order under section 17 of that Act will be used to declare the corporation as a State business corporation.

Passage of the legislation is essential to resource the corporation and to achieve an operating capability consistent with private sector competitors. In short, the legislation enables the corporatisation of State-owned plantation management.

It is necessary to separate State-owned plantation management from the Department of Conservation and Natural Resources in order to provide a clear commercial focus.

It also fulfils two key commitments of the coalition government: firstly, the undertaking in the forests policy that a Victorian Softwood Corporation will be established to manage and improve the financial viability of State-owned plantations; and secondly, to further the government's broader corporatisation agenda, aimed at improving the efficiency and financial performance of public sector trading activities.

Today these goals have largely been fulfilled, with the softwood timber industry characterised by a number of large, vertically integrated producers with privately owned plantations providing an important adjunct to State-owned timber supplies.

The Department of Conservation and Natural Resources currently manages the 106 100 hectares of State-owned softwood plantation, and 7400 hectares of State-owned hardwood plantation in the Strzelecki Ranges. It is those resources that are the subject of the legislation.

Large areas of planting between the 1960s and 1980s mean there will be a progressive increase in timber availability from those plantations, from around 1.3 million cubic metres at present to about 1.9 million cubic metres in 2001-2002.

Most of the future sawlog production is already committed to industry, via long-term licences or legislated agreements between the Secretary to the Department of Conservation and Natural Resources on behalf of the government and the relevant company.

The challenge for domestic timber producers in the 1990s and beyond will be to maintain price and quality
competitiveness in the face of increased competition from imported sawn timber, wood panels, pulp and paper products.

In this environment, State-owned plantation operations run the risk of being priced out of local markets or requiring some form of financial subsidy unless they are put on a competitive footing.

According to the National Working Group on Corporate Reforms, originally formed under the auspices of the special Premiers Conferences, the key attributes of a fully corporatised body are clarity of objectives, managerial autonomy, accountability for outcomes, appropriate rewards and sanctions and competitive neutrality. Under the present administrative arrangements the achievement of such goals is not possible.
It is also imperative that Victoria keep its raw material costs under control if it is to compete against suppliers from other countries like New Zealand, where formerly publicly owned plantations have already been converted to commercial management.

The process of commercialising and corporatising State-owned plantations in Victoria follows a thorough examination by government of the commercial operating environment for plantation enterprises and the necessary legislative changes.

Creating the Victorian Plantations Corporation as a State body under the State Owned Enterprises Act ensures the corporation performs its functions and exercises its powers in a manner consistent with the public interest by operating as efficiently as possible, consistent with prudent commercial practice and maximising its contribution to the economy and wellbeing of the State.

Replacing the existing management approach with a more commercially focussed board and corporate organisation will bring about the necessary cultural and operational changes, ensure increased accountability and efficiency and provide a basis for evaluating the corporation's performance relative to other public and private sector timber producers.

Accountability to the State as owner will be effected through approval of the corporate plan by the Treasurer and the Minister for Natural Resources, with provision for the government to define community service obligations to be performed by the corporation.

Accountability mechanisms relating to dividend payments and financial statements are also in accordance with the State Owned Enterprises Act.

Under that Act, a levy on all new borrowings is payable to the State to reflect explicit and implicit guarantees enjoyed by the corporation and to impose additional financial discipline on borrowing decisions.

To the extent that the corporation continues to be exempt from the payment of Commonwealth taxes, the Treasurer may require the payment of amounts determined to be equivalent to the Commonwealth tax liabilities that the corporation would face if it were a public company.

Most of the necessary powers and functions of directors of the corporation will be conferred by the State Owned Enterprises Act.

The Bill provides complementary power and functions, and other measures necessary to ensure the appropriate operating environment for the corporation.

The Bill provides for the transfer from the Secretary to the Department of Conservation and Natural Resources to the corporation, of management responsibility for land and forest vested in, leased by, or otherwise managed by the corporation as provided for in the Bill.

The legislation will amend the National Parks Act 1975 to vest two small areas of land in the corporation. In both cases boundaries between parks and the plantation estate will be rationalised to benefit on-ground management.

The current boundaries were appropriate when all the land was managed by one agency. However, with the
establishment of the corporation as a separate body to manage plantations, it is appropriate to vest the plantation firebreak and the small area of pines in the corporation. Responsibilities for land management and fire prevention costs will then be clearly defined.

Ownership by the corporation of forest produce on freehold land and vested land is provided for in the Bill. An exception is hardwood sawlogs located in native forest inliers, which are required to meet existing long-term licence commitments and are to remain the responsibility of the Secretary to the Department of Conservation and Natural Resources.

The responsibility for existing long-term licences and legislated wood supply agreements currently held by the Secretary to the Department of Conservation and Natural Resources has been assigned to the corporation.

Provision has been made for the transfer of appropriate assets and liabilities to the corporation. Transfer of the plantation estate, including trees, is achieved by the legislation. Other assets will be transferred by Order in Council on recommendation of the Minister. Transfer of monetary assets will be authorised by the Treasurer.

In respect of liabilities, provision has been made in the legislation for supply agreements and farm forestry agreements to transfer to the corporation. Other liabilities will be transferred where appropriate by Order in Council on the recommendation of the Minister.

Provision is made for delegation by the Secretary to the Department of Conservation and Natural Resources of certain powers and authorities under the Forests Act and the Conservation, Forests and Lands Acts to corporation officers.

Powers are also provided to open or close certain roads. The plantations being transferred will be protected public land under the Forests Act, and existing fire prevention and suppression responsibilities will remain with the Secretary to the Department of Conservation and Natural Resources. An agreement between the two organisations will ensure a coordinated use of all resources in fire prevention and suppression. Necessary consequential amendments have been included in the legislation.

I make the following statement under section 85(5) of the Constitution Act 1975 of the reasons why clause 34 of the Bill alters or varies that section.

Clause 34 of the Bill provides that it is intended to alter or vary the Constitution Act 1975 to the extent necessary to prevent the Supreme Court from awarding compensation in respect of the matters referred to in clause 28.

The reason for preventing the Supreme Court from awarding compensation is as follows.

To enable land to be vested in and divested from the corporation, to revoke reserves affecting vested land and to enable the closure of certain roads, it is necessary to ensure that the processes cannot be delayed or prevented by the bringing of actions for compensation and that any claim for compensation that may arise from use by the public of those reserves or roads cannot be successfully maintained.

I commend the Bill to the House. In so doing I indicate that the resources necessary to enable the opposition to process its thoughts on the Bill will be made
available.

Motion agreed to and debate adjourned until Tuesday, 18 May.

Passed remaining stages.

7.   (18-5-93)
House        ASSEMBLY Activity        Second Reading     Members        THOMSON
Date        18 May 1993   Page 2127-

Debate resumed from 7 May; motion of Mr COLEMAN (Minister for Natural Resources).

Mr THOMSON (Pascoe Vale) -- I appreciate the opportunity provided by the Minister for Natural Resources for the opposition to have a thorough briefing on the provisions of the Bill.

The opposition does not oppose the Bill; it supports both the establishment of a Victorian Plantations Corporation and plantations having the appropriate commercial focus.

Victoria should meet as much of its timber needs as it can from plantations. It would be absurd for Victoria and Australia to meet their timber needs from imported timber, especially with the terrain and geography of Australia. It is foolish in the extreme not to seek to meet our timber needs domestically. It is preferable to meet timber needs by harvesting plantations than to cut down native forests. Over time plantations will reduce the need for us to cut down our native forests. The
Victorian Plantations Corporation should have a commercial focus so that it can maximise the use of plantations to provide timber in effective competition to imported timber.

Some environmental groups have over the years expressed concern about the timber production in Victoria being subsidised by the government. If plantations are established on a commercial footing through the Victorian Plantations Corporation some questions will be able to be answered more readily and the community will be assured that timber production is not the subject of government subsidy.

The opposition does not oppose the Bill because it is consistent with steps taken by the former Labor government in August 1990. The previous government put forward a proposal that plantations be commercially developed -- indeed, that they be sold. At that time a consultancy was established with C S First Boston Australia for work on the sale.

During question time a government Minister referred to previous government consultancies as though the money had gone down the drain, but it is clear that the Victorian Plantations Corporation Bill and the development of the Victorian Plantations Corporation owe a considerable amount to the work of C S First Boston. That was clear to me from the briefing received. This government is benefiting from the work of consultancies undertaken during the life of the previous government.

C S First Boston essentially said to the then government that there were three major difficulties in the path of a direct sale of the plantations. The first difficulty was that some 75 per cent of the land was reserved forest under the Forests Act. The Labor government was obliged either to provide alternatives to that land or to take away its reserve status. The second difficulty was that the Labor government had long-term agreements with companies. Therefore it either had to get agreement
with those companies or introduce fresh legislation.

The third difficulty was that only 25 per cent of the land base the legislation refers to had actually been purchased. Some 75 per cent was Crown land that had never been alienated. Therefore, in order to sell it, title would have to be created. That in itself would have been a major exercise.

The Labor government had to look at certain structured deals, and it was contemplating them throughout the first part of 1991. Through March and April the opposition of the time under its resurgent leader, Mr Kennett, indicated that all legislation would be blocked as part of an endeavour to generate an early election. That was an irresponsible path to take.

One of the responses by the Labor government to that state of affairs was to look at ways of proceeding that did not require legislation. At that stage the proposal to sell the plantations was abandoned and a process of making the plantations more commercial was determined.

The creation of a corporation similar to that in the Bill was considered. The shape of that entity was not entirely clear; it was the subject of a Cabinet submission and report in about July 1992. The Labor government expressly stated that it would set up a statutory authority rather than sell the plantations, and commenced work to that effect.

Not long after that there was a change of government. As was indicated in the second-reading speech, it was Liberal policy to establish a softwood corporation. That was part of the coalition's forests policy. The legislation can trace some of its roots to coalition policy, and to some extent it also has roots in the State Owned Enterprises Act, which was rushed through the House before Christmas. That legislation created a range of powers and potentially a range of flaws which are yet to be fully worked through and realised.

To some extent the Victorian Plantations Corporation is a guinea pig.

It is the first body established under the State-owned enterprises legislation. It is my understanding that the government desired to have this corporation as well as others operating under the State-owned enterprises legislation and so, to that end, not all the provisions relevant to the operation of the Victorian Plantations Corporation are in the legislation.

If we were considering only one body the government would have brought forward a Bill setting out how the Victorian Plantations Corporation was to operate in its entirety, but this Bill refers to an earlier Order in Council under the State-owned enterprises legislation which establishes the corporation. The government is indicating in the legislative framework it has established that it wants to have some consistent rules for State-owned enterprises. How practical this will turn out to be and how well it will work is unknown to both the government and the opposition.

The legislative scheme in front of members is based on the State Owned Enterprises Act being used to make an Order in Council -- the Victorian Plantations Corporation Order in Council. That Act sets up the corporation and this piece of legislation specifies various powers, transfer of land and so on.

One area of potential concern in a Bill of this kind is reference to revoking areas of national or State parks. I asked the government to indicate the nature of those changes. I have been advised that the area concerned in Moondarra State Park, a small mown boundary area that is already the subject of a State Electricity Commission easement, is certainly not integral to the operation of the Moondarra State Park. This has been the subject of consultation with environmental groups, as has been an area of the Lower Glenelg National Park. This area is a narrow strip on the eastern side of that park is presently planted with pines on one side of a firebreak.

It is suggested that two objectives will be achieved by moving the boundary: firstly, there will not be pines in the park, which is a legitimate objective; and, secondly, the corporation rather than the park should be paying for the maintenance of fire protection, which again is a legitimate objective. It is consistent with my earlier comments about making the Victorian Plantations Corporation a commercial body and keeping everyone honest about the economics of timber production.

I understand those two matters have been the subject of consultation and I therefore raise no objection to them. The proposed legislation will transfer 115 000-odd hectares of land. Some plantations will not be vested in the corporation but will be leased to the corporation by the Department of Conservation and Natural Resources. Once the softwood crop has been harvested the lease may be renegotiated. It is intended that in some cases the softwood plantation would become part of an existing national park.

The two examples cited to me were the Mount Alexander State Park and what is known as the Billywing plantation on the western side of the Grampians. My father, who grew up on the western side of the Grampians, was appalled that pines were planted in the Billywing area and will be pleased with that proposal.

The corporation now exists as a legal entity by virtue of Order in Council and under the legislation is to be established as a working body from 1 July this year. There are financial and budgetary reasons for establishing the body at that date and transitional arrangements are being negotiated with the department.
An intention that the new Victorian Plantations Corporation should contract out work performed in both white and blue-collar areas raises the question of the ongoing employment conditions of approximately 140 employees of the Department of Conservation and Natural Resources who will be transferred to the corporation. I am advised there is an existing draft work force plan concerning both white and blue-collar staff, who are covered by either the Australian Workers Union (AWU) or the State Public Services Federation.

It is important that employees' employment rights and conditions should not be prejudiced as a result of a change of this kind. I am concerned that, at least at the time the opposition was briefed on the matter, the conditions issue had not been resolved. I am informed that the government is developing a set of principles to cover those employees and that the AWU has served a log of claims on the corporation seeking award coverage.

On the assumption that that action is successful - there is no reason why it should not be - some Federal award protection would be available for those employees.

It is important to state as a matter of principle that the issue of the employment conditions of staff should be resolved before State-owned enterprises of this kind are set up. I ask the Minister to provide a response about where the department is heading on employment conditions for corporation employees. The opposition believes these things should be resolved before the corporation becomes a working body. As I understand the way Orders in Council operate, following proclamation of the legislation responsibility for employees will fall to the executive, and the Governor in Council will be able to do all sorts of things concerning employee relations. The issue needs to be clarified.

I take this opportunity of raising some other concerns about this novel piece of legislation. It would seem that the Victorian Plantations Corporation will need to obtain capital. Sources for that capital could include an appropriation or grant, a loan from the government or a commercial loan from a financial institution. I understand that that matter is under negotiation and the opposition would like to know what course the government intends to follow.

On establishment of the corporation, revenue from plantations will go to the corporation rather than to consolidated revenue. The opposition wishes to know what impact that will have on the Budget and what the dividend provisions are. Although action to make plantations more commercially viable is welcome, a situation in which the financial success of the corporation leads to a doubling of executive salaries would clearly be undesirable. There is a need to have the government's approach on this issue -- for example, a dividends policy -- spelt out during the debate on the legislation.

A transfer of staff from the Department of Conservation and Natural Resources to the Victorian Plantations Corporation will remove staff from the books of the department. As a result of a juggling of figures it could be claimed that the size of the Public Service has been reduced. That would be an artificial approach.

Under the Bill the Minister has the power to administratively change the number of board members. I am concerned that a deadlock on the board could lead to a stacking of the board through the appointment of additional board members. Research I conducted on whether that power exists in relation to other boards has revealed a mixed picture. A corporation such as the Victorian Plantations Corporation should have a set number of board members.

It would be unacceptable for the corporation to function as a State body for a substantial period with its structure and powers being determined solely by Order in Council, as that would leave it open to constant interference from the executive. Although it is intended that the corporation operate as an independent entity from 1 July there is no provision in the legislation to require that to happen. It may be appropriate for the Order in Council to be revoked as of 1 July to enable the corporation to operate exclusively under the legislation and so avoid interference from the executive.

This is the first time that the State Owned Enterprises Act is being used in relation to a Budget agency. The only other area of which I am aware is the Transport Accident Commission. he government does not have clear guidelines for the application of the State Owned Enterprises Act to Budget agencies, and it may be difficult for the Minister to respond because he does not have the carriage of that Act.

The opposition queries how it will apply to Budget agencies and whether this Bill is the model that the government intends to use.

The Victorian Plantations Corporation will require a capital base and the State Owned Enterprises Act provides for a dividend which can be taken from State business corporations. Does the Minister anticipate a dividend or a tax-equivalent payment? I understand at present the Victorian Plantations Corporation receives an appropriation of $18 million plus overheads. Fire protection and other support services generate revenue of approximately $23 million a year. Has the Minister proposed any financial outcomes from the corporation in future years?

The Order in Council establishing the corporation states that: the Chairman is entitled to be paid remuneration at the rate of $27 000 per annum; ... each of the other directors is entitled to be paid remuneration at the rate of $20 000 per annum; ... A director who is a member of the publicservice is not entitled to be paid remuneration under this Order.

The question of the board of directors should be subject to more certainty than is currently the case. What are the reporting provisions in relation to the legislation? I have not seen anything in the legislation, the second-reading speech or the briefing on how the Victorian Plantations Corporation will report to Parliament.

Corporatisation has become increasingly fashionable in government circles.

Some weeks ago there was a significant report in the Australian Financial Review about the Queensland government committing itself to corporatising major public entities, including Queensland's electricity supply industry, its Industry Development Corporation and other bodies, and suggesting that they could become more effective public bodies. That is typical of movements in other States and other countries towards the corporatising of public sector bodies. As I have indicated in other debates, that is not without risk in terms of certain public interest considerations, the needs of low-income and disadvantaged people, environmental considerations and the like. Nevertheless there are some advantages to it.

A number of benefits are to be gained from having plantations set up on a commercial basis. The opposition does not object to the thrust of the legislation but is concerned about how it will operate in practice and seeks assurances from the Minister about employee conditions, dividends and the like.

Those concerns should be addressed by the Minister. The opposition does not oppose the legislation as a whole; it currently relates to some 106 000 hectares of State-owned softwood plantations and 7400 hectares of State-owned hardwood plantations, the latter being in the Strzelecki Ranges. There will be a progressive increase in timber availability from those plantations, from around 1.3 million cubic metres at present to about 1.9 million cubic metres in the years 2001 and 2002. By any yardstick they are substantial resources. It is important that they be managed commercially and in the most effective fashion for Victoria's timber needs, but also with concern to protect our environment, especially where plantations are adjacent to national parks and significant areas of public open space. The opposition seeks responses from the Minister to the concerns raised.

Ms MARPLE (Altona) -- The honourable member for Pascoe Vale has set out the concerns of the opposition.

He also stated that the opposition supports the Bill. When in government the Labor rarty was moving towards corporatisation because of the need to conduct business on a commercial basis, particularly with large resources. However, there are dangers in corporatisation. How many people are aware of the changes that are about to take place? I believe the industry knows about it, but the public does not. The same problem exists with other State-owned enterprises. The pine plantations are being made the guinea pigs as the government moves towards commercialisation. The next step will be privatisation and the selling off of our resources.

Although the opposition does not oppose the move to corporatisation in this case, one area about which I am concerned iswhat will happen to government employees under this legislation. It is important that all timber industry employees are looked after and that their existing award conditions remain.

Although some employees are seeking a Federal award, it is important that everyone be aware of the guidelines covering the corporatisation of State plantations. I understand a Cabinet subcommittee is examining the issue, but at present we do not know what the guidelines are. I call on the government to advise the opposition and the community of the guidelines and the changes that will occur. The government must let the opposition and timber workers know what will happen.

The public servants who may find they may not be needed in the future must know what the guidelines will be when the changeover takes place. The opposition urges the government to ensure that workers do not lose their rights to reasonable wages and conditions -- if possible, they should be improved.

The profit earned from the changes will flow to the new corporatised body. What will that mean to the government's Budget?
How will it affect the way salaries and wages are controlled? In private enterprise it is common for those at the top to receive significant increases while those doing the manual work are left to languish. Government members often suggest that private enterprise knows how to manage organisations properly, but Australia has had enough recent examples of poor company management to demonstrate that our record is not good -- we are inclined to let the side down a little in the management area. Several large companies that provided employment across the State in the 1980s are not now in such good positions, predominantly as a result of poor management decisions. Many of them increased the salaries of their so-called managers and held down the wages of the people who were delivering the goods. That is not the best way of building up either a company or morale. The opposition does not want that to happen in the timber industry, which has
such a good natural resource.

The former government introduced a timber industry strategy, a strategy that has been continued by this government in moving towards the provision of more plantations, which will protect our native forests. The opposition hopes that will continue. The Bill proposes to remove pine forests from some areas of national parks and to make the boundaries more acceptable. Although in this case that may be a good move, various sections of the community have expressed concern that it sets a precedent. We must move carefully in that direction; any change must be justified, as it has been in the Bill, and it must not happen too often. Now that a precedent has been set, many people are worried that further down the track the principle will be pushed even harder so that more areas are lost from national parks.

The honourable member for Pascoe Vale clearly outlined the areas of concern about funding and the conditions of employees.

Honourable members who have observed the conditions of timber workers will be aware that some of them are not good, but I hope with new and improved technology the plantations will be placed on a better commercial footing and that the workers will gain significant benefits.

I emphasise that this is the first area of change, and it will be monitored closely. People who are interested in what happens when there is a change from a State-run enterprise to a commercial enterprise will be watching to ascertain not only how the changes will affect State and budgetary concerns but also what they will mean to people who work in an industry when State resources are used in a commercial organisation.

The word commercial does not always mean that everyone will benefit. The opposition knows that change is in the air and that in some cases there is no option, but sometimes the changes are bigger than anyone expects.

That does not apply in this case. The proposed changes have been discussed by interested parties and many groups will be monitoring the situation to ensure that the issues raised by the honourable member for Pascoe Vale are complied with as we move towards the industry being run on a corporate basis.

Mr HAMILTON (Morwell) -- I join in debate on the Victorian llantations Corporation Bill because the timber industry is extremely important in my electorate. The Bill will have a significant effect on the Central Gippsland area, where there are many large plantations.

The number of people working in the various sections of the timber industry, as defined by the Australian Bureau of Statistics, has decreased from 15 000 in 1981 to just under 7500 in 1991 -- over 10 years there has been a 50 per cent reduction in the number of timber industry workers. That reduction has a number of causes, one of the major causes being the recession.

The timber industry is the first stage in the supply of materials to the housing sector, which is very susceptible to economic change. In Morwell the work force has reduced significantly due to the mechanisation and automation of the timber industry, and especially the harvesting and processing of softwood timbers.

Many Victorians rely on the timber industry for employment. I refer to the log trucks which are used and classed as part of the timber industry. Those trucks have to be serviced, they need tyres and fuel and their owners must pay substantial registration charges to the government. Many logging contractors have complained about the $10 000 registration fee for logging vehicles. I have taken this matter up with the Minister in charge of that part of the industry.

The Victorian government is the major supplier of wood to the timber industry. In 1991-92 the government sold approximately 1.6 million cubic metres of hardwood and about half that amount of softwood.

That is explained by the fact that softwood plantations are owned by the government. Indeed there is almost an equal number of hectares in private plantations as there are in government plantations. The figure is 108 000 hectares in private ownership and 106 000 hectares in government ownership.

The Bill is a natural consequence of the Victoria Timber Industry Strategy, which was introduced after the Ferguson report in 1985. The strategy was adopted by the Labor government in 1986. I pay tribute to the Minister for Conservation and Lands at the time, the honourable member for Williamstown, who worked through that difficult time.

Honourable members will be aware of the conflict between the timber industry and the community about conservation and environmental values.
One of the saddest things for the industry was the conflict that reduced greens to a derogatory term; that unfortunate conflict has created unnecessary divisiveness in the community.

In the Latrobe Valley over recent years the Victorian Forest Industries Association, an industry-based organisation, has spent much time getting off the backs of the greens and a lot more time taking positive action by educating the community so that people understand how the industry works.

The key factor in the forest industry is that a lead time is necessary. APM Forests Pty Ltd, which is a large user of hardwoods and softwoods, needs a lead time of at least 20 years so that it can plan its requirements and the input of resources for its operations.

The Victoria Timber Industry Strategy contains four important sets of principles, which I hope the current government will maintain and build on. Challenges face the government, but it is self-evident that the industry must be economically viable. If the industry is not economically viable, it will die. We are at a time when no government, regardless of itscolour, can afford to subsidise any industry. Industry should be environmentally sensitive, and we are all aware of that. Great progress has been made in managing the forest industry to make it environmentally sensitive.

The forest industry must be sustainable. One of the problems that existed before the timber industry strategy was released was that the industry was doing itself out of a job; it was cutting down trees faster than it could grow them, which was the reason for the plantation implementation program. The timber plantation program has achieved about 88 per cent of the target set for 1996, and the way things are going that target may well be achieved.

There are some concerns that the target will not be reached, but we must be hopeful.

Plantations are seen within the community and within industry, especially in the private sector, as a way of ensuring that industry can control its own destiny. Problems have cropped up with plantation programs. Those of us who live in country Victoria would have seen the conflict and tension of farmers who do not regard timber as a natural harvestable product. Those farmers are prepared to harvest wheat and whatever other crops are grown on an annual basis, but there is a deal of resentment among them towards setting up plantations, especially on private land, which is something we need to overcome by educating the community.

Victorians should be proud of this State. The Labor government adopted the timber industry strategy in 1986. Western Australia, another major timber producer, introduced its strategy in 1989.

New South Wales, being a little farther behind than Victoria in most instances, introduced its strategy in 1990, and Tasmania brought in its strategy in 1991.

It is fortuitous that the Auditor-General, in his special report No. 22, which was tabled in Parliament today, dealt with this matter. Paragraph 1.3 states:

SOFTWOOD PLANTATION MANAGEMENT

The creation of the Victorian Plantations Corporation from 1 July 1993 should provide the impetus for a more commercial focus on the management of the State's softwood plantations.

I commend that statement. I have no doubt that the Minister is again looking at the word should rather than the word will. I hope the Auditor-General's wish comes true and the Victorian Plantations Corporation will prove successful.

Another interesting aspect of the report that I have learned from my short reading of it is the difficulty the
Auditor-General found when he tried to get information about the industry, including the costs associated with it, which is unfortunate. The timber industry is important and complex, so if the Auditor-General has had difficulty in finding answers to all of his questions no doubt everyone will have the same difficulty.

Apart from developing the softwood plantations, another change has been not establishing softwood plantations on cleared areas of native hardwoods and allowing the native trees to regenerate. Some activity has been undertaken in what is known as agroforestry, which combines agriculture and forestry, but it has been slow. Resentment has been expressed about pine trees, with some people referring to them as weeds and creating all sorts of mischief when describing the effects of planting pines on land. The development of pine plantations in the Strzelecki Ranges has resulted in a vast improvement on what was there by way of weeds and other growth.

By way of an aside, I am amazed at how pine trees are planted on the sides of mountains that one can hardly walk up. People have come along and nurtured the trees and the work has been undertaken in country that was so harsh one would not believe the work could possibly be done. The harvesting of the pines at the end of the growth period is another amazing exercise.

Tremendous development has been undertaken in the industry. I shall be interested to hear what is happening in the Department of Conservation and Natural Resources.

I have always been upset that so much timber and timber product are imported into both Victoria and the country in general. Nothing makes me more angry than to see maranti and Western red cedar and other timbers being imported from overseas. One would think that with the climatic variations in this country we should be able to develop the softwoods that are important in house and furniture building. We may not be able to grow the particular species that are imported, but we should be able to grow others just as appropriate to our needs.

The hardwoods that grow in Australia are of high quality. Pinus radiata grows as well here as it does anywhere else in the world, except perhaps in New Zealand. One of the problems is that the pines are planted on poor quality land, so they do not grow as well as they might. If farmers could be convinced to plant the trees on better land the results would be a lot better. That battle has not yet been won and probably never will be. I shall be interested to hear what members of the National Party have to say about the matter.

Some time should be devoted to developing other species so that we do not grow trees just for chips for pulp.

I hope the Victorian Plantations Corporation works well. I have had some experience with corporatisation as it was undertaken in the State Electricity Commission. As I have only 6 minutes left, I will not start to make any comments on that exercise!

Dr VAUGHAN (Clayton) -- I am pleased to have the opportunity of taking part in the debate on the Victorian Plantations Corporation Bill. The timber industry is important to Victoria and the community is fortunate to have timber-based industries across the State. The industry provides a diversification of the State's industrial base, particularly out of the metropolitan area. It provides valuable diversity of opportunity of employment in rural Victoria. The Bill addresses an aspect of what is clearly an important industry.

The plantations section of the timber industry in the State has not always been well managed from either an economic or environmental point. The previous Labor government directed considerable attention to the impact of forest industries on the environment in general. As the honourable member for Morwell and other speakers said, the former Labor government introduced the timber industry strategy and a number of other initiatives to provide for the better and more environmentally sensitive management of the industry.

The economics of the industry have not always been managed in the public interest. Although some people became rich from the proceeds of the timber industry, the people of Victoria in general have not always gained the benefit they might have had because of inadequate royalties and inappropriate management of financial and all the other resources available to government. Over a long time the government has not maximised the opportunity available in the timber industry in particular and forestry in general.

Throughout my adult life I have been particularly concerned with one area of forestry policy, that is, the inappropriate placement of plantations. During my lifetime -- and I know for much longer -- extensive clearing of native forests was undertaken for the planting of pines. I have always been concerned at that development.

In recent years under the former Labor government the policy was turned around for the better and a much diminished rate of clearance of native forests, on privately held land and public land, was established. I hope that trend continues into the future.

When one drives around Victoria one can see the intrusion of previous plantings in inappropriate places. The landscape values of rural Victoria have been violated through insensitive plantation design and placement. Getting the fast buck was more important than considering a range of other issues.

I hope that in the 1990s the situation has been reached where plantations are designed with consideration for all the proper planning principles, principles that should always have been applied. Plantations should be designed with regard to the appropriate environmental safeguards and, of course, best use must be made of the land resources of the State in the design and placement of plantations.

The honourable member for Morwell mentioned in passing that for some members of the community Pinus radiata is a weed. If it is a weed, it has certainly been a valuable weed to the Victorian community. It is an important economic resource. Although some might refer to it as a weed, it is subject to some biological hazards. Considerable work has been done in Victoria in addressing those biological hazards. Much of the work has been undertaken by officers of what is now the Department of Conservation and Natural Resources into both the sirex wasp and pine needle blight.

Both are biological hazards to our softwood plantations. Such issues involving pinus radiata plantations need to be taken seriously, indeed, the Minister's department and its preceding bodies have taken those issues seriously for a long time and a great deal of good scientific work has been carried out.

The timber industry generally is subject to that greater hazard and act of God -- bushfires. One cannot consider an aspect of the forest industry in Victoria without the thought of bushfires crossing one's mind. They are an ever present danger and risk factor in that industry.

I mentioned in my remarks that the forest industries in Victoria have provided valuable employment across rural Victoria. However, owing largely to technological change, the employment opportunities in the forest industry in this State over the past 20 years have diminished greatly.

I quote from the 1991-92 annual report of the Department of Conservation and Environment Victoria where a figure of 6500 persons directly employed in the forestry industry is quoted. That is a fraction of the figure for the number of people who were employed in the industry 15 years ago, for example. It has been necessary for the industry to alter radically its work practices and investment policies. The industry has required major investment to make it internationally competitive.

Other honourable members have mentioned the fact that our home-grown timber resources are subject to competition in the marketplace from imported timbers. If that competition is to be met, our industry must be more competitive. It has become more competitive by investing in new technology, however, that has been at a cost to employment opportunities in rural Victoria where they were particularly needed.

The Bill is important because it addresses the management of Victoria's public sector plantation resources. It continues a policy that developed under the previous Labor government. In as much as the opposition is pleased to see the Bill before the House and to support it -- although not unquestionably -- members speaking in the debate have raised a number of concerns that need to be addressed. No doubt the Minister will take those on board when he speaks at the end of the second-reading debate on this Bill.

As I said when I commenced my remarks, the timber industry is important for the State because it generates wealth and employment and adds diversity to the manufacturing base in rural Victoria. It should be about good land management, good planning decisions and environmentally sensitive management. It should also be about good financial management and getting a good return for the people of Victoria on the significant investment they have in the plantation resources of this State.

I wish the Bill well and I wish the Victorian Plantations Corporation well. I look forward to hearing the Minister's comments in reply to the various matters that have been raised in the course of this debate.

Mr COLEMAN (Minister for Natural Resources) -- I thank honourable members who have participated in what I believe is an historic debate in the sense that it will be the first legislation to use as its base the State Owned Enterprises Act.

As the honourable member for Pascoe Vale has indicated, the Bill follows the State-owned enterprises process whereby a statutory body is created by an Order in Council. The Bill provides it the other support mechanisms to enable the Victorian Plantation Corporation to operate.
As I said, honourable members are participating in something new, and I thank the honourable members for Pascoe Vale, Altona, Morwell and Clayton for their contributions to the debate and their support of the legalisation.

As the honourable member for Pascoe Vale indicated, this process started in the previous administration. It has been characterised by a number of evaluation processes, such as trying to determine what the State's pine plantations may be worth and the best way to deal with them in terms of future management which may be undertaken.

It is useful to understand that the State has 1.3 million hectares of native forest area, and the Bill deals with 106 000 hectares of softwood plantation and a further 10 000 hectares of hardwood plantation. In terms of the overall area devoted to forestry in Victoria these plantations are reasonably small, but they have a demonstrated capacity to produce a substantial amount of product.

The report of the Auditor-General into forest operations was fortuitously tabled today, and it sets out clearly the aspirations of the previous government and the difficulties which I think we can start to anticipate given that those aspirations were not fully materialised.

At page 47 of the Auditor-General's report under the heading Softwood plantation management , the Auditor-Generalstates:

With the aim of providing a long-term sustainable supply of timber within the State, the department has set a target of expanding the State-owned softwood plantation area to a total of 120 000 hectares by 1996. Whilesignificant progress has been made towards achieving this target, the department has experienced difficulty inrecent times in obtaining and developing land for plantations through land purchase and share farming arrangements.

Some 120 000 hectares are needed to meet commitments by 1996, but that clearly cannot be achieved at present. There will be some capacity in the plantations to yield a higher capacity than was perhaps anticipated but it would have been far better to have the additional area planted. Clearly, one of the first requirements of the corporation will be to begin some further planning to ensure that the agreements entered into on behalf of the State are met.

The honourable member for Pascoe Vale posed, quite rightly, a number of questions the answers to which at this point are not clear. I can provide the honourable member with some responses and those issues to which I cannot respond can be dealt with when the Bill is between here and another place.

The issue of the national and State parks was raised. Skyline Road, which services the Lower Glenelg Park, traverses an area which also provides access to a CSR plantation.

It is entirely appropriate that the corporation manage that strip of land along that roadway, which is also a 50-metre firebreak. The corporation will manage that and relieve the department of the cost, given that the corporation also has an interest in the softwood plantation adjoining the CSR plantation.

Until this time it was not necessary to define the two areas quite as clearly as is required now because, as the honourable member for Pascoe Vale said, one of the aspirations of the previous government was to sell the plantations. There is now an opportunity to define clearly the boundaries of the plantations as a precursor to a potential sale being contemplated by the corporation.

For the benefit of interested honourable members or anyone else, maps of the plantations and these park changes are available in the Parliamentary Library. The park areas are relatively small but, as the honourable member for Altona said -- and I acknowledge it -- a precedent is being created.

I hope those who understand what is occurring here realise the reasons for shifting the nominated national park land -- and the smaller piece of land adjoining -- in the way it has been done.

The other principal issue to be addressed concerns the staffing of the new corporation. The Victorian Plantations Corporation will shortly have advertisements placed on its behalf for the appointment of a chief executive officer. Already a board of four is in place, three of whom have been on the interim board; the fourth, Mr White, has had extensive experience with APPM and North Broken Hill Peko Ltd.

The State-owned body will transfer to a corporation as early as possible. The honourable member for Pascoe Vale said it would be preferable if the organisation did not stay in limbo for very long. I do not expect that that will be the case, but
this is a step in the process.

The board of the corporation and the chief executive officer will be appointed shortly.

As has been indicated, the conditions of employment of staff will accord with principles being developed for the transfer of staff from government bodies to the corporation. It is the intention of the government that the new entity will use its best endeavours to employ on comparable terms and conditions staff from the existing Department of Conservation and Natural Resources. Clearly, there is a pool of expertise there which has run the plantations for a number of years and understands the process.

Mr Hamilton -- Pretty good ones, too.

Mr COLEMAN -- As the honourable member says, in the first instance those to be transferred will be staff with the relevant expertise. They will provide the corporation with the necessary expertise and ability from the kick-off.

The principles to be established for conditions of employment in the corporation will include a continuity of employment for those who transfer. The conditions of employment will take into account such things as accrued long service leave, sick leave and annual leave. Those who have been in superannuation schemes will cease membership of the State superannuation scheme at the date of transfer and will become members of a scheme nominated by the new corporationafter they commence employment with the corporation.

While there is no specific entitlement for re-employment, as applied with the Rural Water Commission, there will be no barrier for entry to those who have taken enhanced resignation packages. Selection will be on the basis of external applications.

Guidelines are being developed and will be consistent with the program of advice offered to staff, which has been ongoing for some time. Shortly another newsletter will be circulated in which the process will be further detailed. I am sure some of the existing apprehensions of staff can be allayed.

The honourable member for Pascoe Vale asked about the dividend and the process by which the budget arrangements may be put in place. The State-owned enterprise legislation makes it clear that the dividend is determinable by the Treasurer. It is expected the corporation will pay a dividend. In the pursuit of its commercial activities it will be obliged topay equivalent company tax into the Consolidated Fund. The corporation will be fully exposed to those commercial
exigencies.

The report of the Auditor-General makes it clear that the softwood activities in 1990-91 returned a profit of about $4million while the native forests operations had a loss in that year of about $12 million. The corporation can be expected to be a viable entity. We expect the staff numbers required to run it may well be fewer than is now the case in the department because people will be expected to play more focused roles, whereas at present the staff are responsible for broader responsibilities.

The legislation will provide for contracting for things like fire services; at present the corporation and the department both have responsibilities for land throughout the State. In that context, the corporation and the department will have responsibilities as land managers. There will continue to be a relationship between the corporation and the department although the employment conditions and structure of the organisation will ensure a complete separation of activities. A contractual arrangement will be put in place.

The other issue referred to by the honourable member for Pascoe Vale concerned the viability of the organisation. The long-term projections indicate that the entity can be viable. The government wishes to retain and enhance the industry because it has previously supplied significant employment opportunities; nothing in the legislation hinders that objective.

Motion agreed to by absolute majority.
Read second time.
Committed.
Sitting suspended 6.30 p.m. until 8.2 p.m.
Committee
Clauses 1 and 2 agreed to.
Clause 3

Mr COLEMAN (Minister for Natural Resources) -- I move: Clause 3, line 11, omit 4 and insert 13 .

The honourable member for Pascoe Vale referred to reporting. Section 57 of the State Owned Enterprises Act sets out the reporting requirements for the corporation. The amendment relates to the establishment of the corporation as a State body by the Governor in Council. The amendment changes the establishment day from 4 May to 13 May, the date that this announcement appears in the Government Gazette.
Mr THOMSON (Pascoe Vale) -- I accept the Minister's explanation for the change. The opposition does not oppose the amendment.

Amendment agreed to; clause agreed to; clauses 4 to 37 agreed to; schedules 1 to 4 agreed to.
Reported to House with amendment.
Report adopted.
Third reading
Motion agreed to by absolute majority.
Read third time.

9. Date19 May 1993 Page1009
For Hon. M. A. BIRRELL (Minister for Conservation and Environment), Hon. R. I. Knowles (Minister for Housing) --I move: That this Bill be now read a second time.

In establishing the Victorian Plantations Corporation, the State Owned Enterprises Act 1992 has been utilised as theoverarching legislation. Under section 14 of the State Owned Enterprises Act, the corporation was declared a State body by Order in Council on 4 May 1993. A subsequent order under section 17 of that Act will be used to declare the corporation as a State business corporation.

The Bill provides complementary enabling legislation for the corporation, in that it confers additional functions andpowers and makes further provision for the management of plantations. Many of the functions and powers conferred onthe corporation are currently the responsibility of the Secretary to the Department of Conservation and Natural Resourcesand are additional to those functions and powers conferred by the State Owned Enterprises Act 1992. Passage of thelegislation is essential to resource the corporation and achieve an operating capability consistent with private sectorcompetitors. In short, the legislation enables the corporatisation of State-owned plantation management. It is necessary to separate State-owned plantation management from the Department of Conservation and Natural Resources in order to provide a clear commercial focus.

The Bill also fulfils two key commitments of the coalition government: firstly, the undertaking in the forests policy that a Victorian softwood corporation would be established to manage and improve the financial viability of State-owned plantations; and, secondly, to further the government's broader corporatisation agenda aimed at improving the efficiency and financial performance of public sector trading activities.

Historically, the motivation for government involvement in establishing softwood plantations has been the provision of alternative sources of supply to native and imported timbers, and to stimulate employment opportunities in rural areas. Today those goals have largely been fulfilled with the softwood timber industry characterised by a number of large, vertically integrated producers with privately owned plantations providing an important adjunct to State-owned timber supplies.

The Department of Conservation and Natural Resources currently manages the 106 100 hectares of State-owned softwood plantation and the 7400 hectares of State-owned hardwood plantation in the Strzelecki Ranges. Those resources are the subject of this legislation.

Large areas of planting between the 1960s and 1980s means that there will be a progressive increase in timber availability from those plantations from around 1.3 million cubic metres at present to about 1.9 million cubic metres in 2001-02. Most of the future sawlog production is already committed to industry, via long-term licences or legislated agreements between the Secretary to the Department of Conservation and Natural Resources on behalf of the government and the relevant company. The challenge for domestic timber producers in the 1990s and beyond will be to maintain price and quality competitiveness in the face of increased competition from imported sawn timber, wood panels, pulp and paper products. In this environment State-owned plantation operations run the risk of being priced out of local markets or requiring some form of financial subsidy unless they are put on a competitive footing.

According to the national working group on corporate reforms, originally formed under the auspices of the special Premiers Conferences, the key attributes of a fully corporatised body are clarity of objectives, managerial autonomy, accountability for outcomes, appropriate rewards and sanctions and competitive neutrality. Under the present administrative arrangements the achievement of such goals is not possible.

It is also imperative that Victoria keep its raw material costs under control if it is to compete against suppliers from other countries, such as New Zealand, where formerly publicly owned plantations have already been converted to commercial management.

Creating the Victorian Plantations Corporation as a State body under the State Owned Enterprises Act ensures the corporation performs its functions and exercises its powers in a manner consistent with the public interest by operating as efficiently as possible, consistent with prudent commercial practice, and maximising its contribution to the economy and wellbeing of the State.

Replacing the existing management approach with a more commercially focussed board and corporate organisation will bring about the necessary cultural and operational changes, ensure increased accountability and efficiency, and provide a basis for evaluating the corporation's performance relative to other public and private sector timber producers.

Accountability to the State as owner will be effected through approval of the corporate plan by the Treasurer and Minister for Natural Resources, with provision for the government to define community service obligations to be performed by the corporation.

Accountability mechanisms relating to dividend payments and financial statements are also in accordance with the State Owned Enterprises Act. Under that Act a levy on all new borrowings is payable to the State to reflect explicit and implicit guarantees enjoyed by the corporation and to impose additional financial discipline on borrowing decisions.

Most of the necessary powers and functions of directors of the corporation will be conferred by the State Owned Enterprises Act.

The Bill provides complementary power and functions and other measures necessary to ensure the appropriate operating environment for the corporation.

At the Kentbruck plantation, approximately 29 hectares of land currently in the Lower Glenelg National Park will be vested in the corporation. When the National Park was proclaimed, 6 hectares of pines and a ploughed plantation firebreak -- a long, 30-metre wide strip having a total area of approximately 23 hectares -- were included. The current boundaries were appropriate when all the land was managed by one agency. However, with the establishment of the corporation as a separate body to manage plantations, it is appropriate to vest the plantation firebreak and the small area ofpines in the corporation. Responsibilities for land management and fire prevention costs will then be clearly defined.

In respect to Moondarra State Park, approximately 2.5 hectares will be vested in the corporation. The land is essentially a fenced and grazed State Electricity Commission easement. The new park boundary will be consistent with an existing track around the plantation.
Ownership by the corporation of forest produce on freehold land and vested land is provided for in the Bill. An exception is hardwood sawlogs located in native forest inliers, which are required to meet existing long term licence commitments, which are to remain the responsibility of the Secretary to the Department of Conservation and Natural Resources. The responsibility for existing long-term licences and legislated wood supply agreements currently held by the Secretary to the Department of Conservation and Natural Resources has been assigned to the corporation.

In respect of liabilities, provision has been made in the legislation for supply agreements and sharefarming agreements to transfer to the corporation. Other liabilities will be transferred where appropriate by Order in Council on the recommendation of the Minister.

Provision is made for delegation by the Secretary to the Department of Conservation and Natural Resources of certain powers and authorities under the Forests Act and Conservation, Forests and Lands Acts to corporation officers.

Powers are also provided to open or close certain roads. The plantations being transferred will be protected public land under the Forests Act and existing fire prevention and suppression responsibilities will remain with the Secretary to the Department of Conservation and Natural Resources. An agreement between the secretary and the corporation will ensure a coordinated use of all resources in fire prevention and suppression.

Necessary consequential amendments have been included in the legislation.

I make the following statement under section 85(5) of the Constitution Act 1975 of the reasons why clause 33 of the Bill alters or varies that section.

The reason for preventing the Supreme Court from awarding compensation is as follows: to enable land to be vested in and divested from the corporation, to revoke reserves affecting vested land and to enable the closure of certain roads, it is necessary to ensure that the processes cannot be delayed or prevented by the bringing of actions for compensation and that any claim for compensation that may arise from use by the public of those reserves or roads cannot be successfullymaintained.

I commend the Bill to the House.
Debate adjourned until next day.

10.     VICTORIAN PLANTATIONS CORPORATION BILL
House   COUNCIL Activity Second Reading
Members PULLEN Date 26 May 1993   Page        1348

Debate resumed from 19 May; motion of Hon. M. A. BIRRELL (Minister for Conservation and Environment).

Hon. B. T. PULLEN (Melbourne) -- The opposition supports the Victorian Plantations Corporation Bill. The Labor Party mwhen in government established a process whereby the management of softwood and, to a lesser extent, hardwood plantations in Victoria could be considered to enable them to be efficiently managed and commercially harvested and to respect the important public land and environmental consequences.

Timber production via plantations is thought by a number of people to have increased relevance to forestry and timber production in Victoria. Australia has seen a steady increase in the use of softwood timbers, particularly radiata pine; softwood is replacing hardwood for house framework construction. It has been taking an increasingly larger market share of traditional building markets, with a greater proportion of frames for houses being built out of softwood and hardwood being reserved for special purposes such as subframes and areas that require special strength or durability.

Part of the thrust of the timber industry strategy was to assist the industry to adjust to change, to move to value-adding in the use of hardwood and to use it increasingly for specialised and value-added purposes. In this way the quality of hardwood timbers is respected and they are better utilised. It is important that these plantations are run efficiently.

Australia imports from New Zealand and other countries, which impacts on the marketplace in Victoria and other States.It is important that Australia maintains an efficient and effective softwood plantation industry.

When I was the Minister for Conservation and Environment under the Labor government, discussions commencedbetween industry and conservation groups about issues that often divide a community. One of the areas where there wasroom for discussion and understanding was how plantations can ease the pressure on native forests.

It is not a situation that has resulted in total agreement; the debate still has a fair way to run, but it was possible under theauspices of the jobs council in the former Department of Conservation and Environment to have a setting where thepeople involved in production and development in the forest industry could sit down with the people concerned about the retention of forests -- particularly native forests and old forests -- to see if the development and use of plantations to meet community timber needs offered a way of easing the pressure by allowing a pathway through the issue that would still provide the necessary employment and economic development and yet remove some of the more difficult and divisive struggles. I understand those people are still meeting informally.

Some benefit is to be gained from everybody considering the merits and the proper running of plantations, and in particular softwood plantations; however, there is a place in the future for hardwood plantations.

The opportunity exists for farmers and land-holders who require revegetation for conservation to take measures through LandCare groups to prevent the degradation of their land. Although this issue is not covered in the Bill, those land-holders are looking to the planting of trees for profit and at the potential of economic return for timber harvesting to offset some of the costs involved in revegetating land which has been deforested or neglected, hence it has either been degraded or is at serious risk of being degraded. The farmers have also obtained some returns but often it has been in returns of firewood or a side issue and the expertise that might make that exercise more profitable has not always been brought to bear to improve production. In this area there seems to be a happy combination of interest between people
concerned about revegetation and people with expertise in the timber industry who would be prepared to work with them to their mutual benefit.

The general expertise and support that stem from knowing what to plant and how to grow it properly, and issues of marketing and value-adding are substantial reasons to nurture softwood and hardwood plantations in this State.

After all that has been said by others, I reiterate that the growing of trees is basically a sustainable and renewable undertaking if it is managed properly; it is a matter of maintaining the soil and the land in proper condition. Basically energy comes from the sun, and if trees are replanted and the whole operation is managed in a sustainable way equilibrium to an extent can be maintained. In that sense it is a benign activity in terms of impact on the land, yet it brings a renewable resource to the State.

The Bill sets out the powers of the State Owned Enterprises Act to be administered by Order in Council. The Bill gives the Victorian Plantations Corporation specific powers and arranges for the transfer of land.

It is the implementation of the corporation that has been set up under the State Owned Enterprises Act.

A number of issues need to be addressed in relation to the Bill. One is the ongoing employment of workers. A number of workers in the Department of Conservation and Natural Resources have expertise in managing pine plantations and the activities that go with it. Some members of the Australian Workers Union (AWU), the State Public Services Federation and others are anxious that their rights and conditions are protected. The AWU is seeking award coverage through a Federal award, and the Minister for Natural Resources in another place indicated in response to a question that he would expect them to be employed under comparable terms and conditions. That is important for the benefit of those who have spent a good part of their working lives working for the State in protecting and developing State forests. It is only proper
that their future be considered.

These workers have considerable expertise and knowledge which is often not found in documentation but only from the workers' knowledge of the history of the area, the appropriate types of plantings, local conditions, and why some areas succeed and others fail. There is a repository of important knowledge that is crucial for the success of future plantations.That collective memory is not always acknowledged. Many private firms have run into problems by thinking they can reorganise a production plant by computerising it or by making some technological advance, and in doing so shed the workers who had been employed there. They often find that production falls and quality suffers. Some firms have acknowledged that they underestimated the degree of expertise and knowledge that rested in the ordinary workers. There are many subtleties in running a plantation, and they are often not set out in manuals.

Apart from the important need to ensure that the rights and conditions of workers in plantation areas are preserved, expertise must also be maintained. That will be lost if people are put off. It is important that forests be maintained because they are an enormous investment. The shortest period for any real return on investment is about 30 years for softwood plantations, double that for hardwood plantations, and even longer for quality timber. Many factors have to be considered over time. Any management mistakes will have an enormous consequence -- not only losses by fire or damage but also through the way the trees grow, and so on. Infestations or the incorrect way tree limbs are growing may not be apparent to an unskilled observer, but at the end of the day it is the value of the timber that is reduced. If action is taken to overcome problems in the early growth period that value will not be lost. It is a matter of using the experience of people who know the localities and so on, because what works best in different locations is not always obvious.

In the 1930s and 1970s Victoria went through a time of softwood experimentation, particularly in the Otway Ranges where there are today some interesting remnants of those plantings. Because of the unemployment situation at the time forest areas were cleared, and pines and softwoods such as spruces, Californian redwood and other species were planted. There was an attempt to find out which softwoods would grow best in Victorian conditions. Most of them did not succeed; they are still growing. Although from an ecological and botanical point of view the forest area is confused, the native forest is growing back through those remnants. It is like a wild botanic park with a mixture of eucalypts, redwood and other trees. It has an unnatural ecology of its own. Today Pinus radiata has become the softwood of choice, and most plantations are planted with that species.

The Bill does not given enough emphasis to the ecologically sustainable manner in which plantations have to be managed.

This question has been raised by others. A media release from the Victorian National Parks Association dated 24 May 1993 under the heading Victorian Plantations Bill lacks important safeguards states:

The VNPA also criticised the lack of any requirements in the Bill for the VPC to operate in an ecologically
sustainable manner, to manage plantations for sustainable timber production, or to protect the nature
conservation values of the lands and forests for which it is responsible. Nor are these requirements referred to in the State Owned Enterprises Act.

That is an important point. The first point is in relation to flora and fauna generally. The commonly held view is that introduced pinus radiata plantations are a dead environment where the light is shut out and there is a dark desert underneath. That is not always the case. As the trees grow there is considerable growth of native species.

The forest floor is not necessarily devoid of interest. In gullies fingers of complex and interesting native vegetation run among what might appear at a casual glance to be monocultural vegetation. Gullies have ecologies of their own, but those ecologies are not natural. For example, there are good and bad ecologies in the management of farms, and many farmers are beginning to think about how their farms operate in conservation terms and how the trees they plant and the amount of vegetation they leave will interact with their farm operations. They are looking at the situation in an holistic way. It is important to look at it in economic terms and to have a monocultural approach to growing pines. The approach should be to aim towards an ecological criterion that fits in with the surrounding areas.

That leads to the consideration of the establishment of corridors or pathways for native animals and the of the
preservation of flora and fauna within ecologically designed monoculture systems.

Because responsibility for the pine plantations is being transferred from the Department of Conservation and Natural Resources to the Victorian Plantations Corporation, management practices may change.

The officers of the department who currently manage the plantations are in constant contact with scientists and others who stress values beyond the purely economic. Those values may not be given the same attention by the newly formed corporation unless they are written into legislation and included in a management charter. That will ensure that the corporation has responsibilities in addition to the efficient production of timber. Because the Victorian Plantations Corporation is operating on public land the government should require it to take those values into consideration.

Many issues must be taken into account when examining the notion of ecologically sustainable development.
Worldwide research on plantations shows that crop rotation yields can decrease despite what appear to be good commercial management practices. Pine plantation managers now realise that environmental factors are important to the success of their operations -- which is why the notion of biodiversity is important. The health of the surrounding flora and fauna is increasingly seen as the best indicator of the sustainability of pine plantations. That makes more sense than simply relying on nutrient regimes and other commercial management practices. If pine plantations are to be managed in ecologically sustainable ways, the environmental health of the area must be taken into account. It is important to adopt a holistic approach that recognises the importance of both economic and non-economic values.

The third major area of concern is that the Bill excises some areas of national parks. The press release issued by the Victorian National Parks Association states:

.........We deplore the precedent being established in excising portions of parks without community consultation. If these excisions are to proceed, at least equivalent areas of land with conservation values appropriate to the park'sstatus should be added to the parks from adjacent State forest or other public land to ensure that the national parkestate is not diminished in any way. The association believes the government should have regard to the conservation values of national parks. An argumentcan be made that the cost associated with the management and clearing of fire breaks should be the responsibility of the
corporation and that they should be not be costs incurred in the protection of the national parks affected. Consideration should be given to adding equivalent areas of land with appropriate status, so that the recreational and conservation values of national parks are not diminished. The Bill does not seem to take account of the reasonable concerns raised by the Victorian National Parks Association......

The areas of land involved are not large, and the matter could have been handled better than it has been.
Another concern is the protection of particular enclaves within plantation areas, which also goes to the concern I raised previously. Not all of those areas -- the 106 100 hectares of softwood plantations and the 7400 hectares of hardwood plantations -- are fully developed. The Parliamentary Library has 180 maps, some of which show the areas affected by --

Hon. R. I. Knowles -- Have you examined each one?

Hon. B. T. PULLEN -- It so happens that earlier this morning I had some time on my hands. Because I could no longer concentrate on my reading, I decided to examine the maps. Although they interested me a great deal, I did not manage to look at all of them.

The maps do not contain colour codes showing the location of flora and fauna. Nevertheless the maps show the location of wetlands, gullies and ridges. I shall hazard a guess and say that some of those enclaves may be in pine plantation areas. They should be preserved. It should not be a matter of turning over every hill and dale to the growing of pines. Those enclaves I have referred to should be examined and their preservation should be seen as part of the good management of the plantations.

Although the issue has been examined in a general sense by the Land Conservation Council, those enclaves have not been examined in detail. It may be appropriate if, without prejudicing the economic viability of the newly-formed corporation, the LCC were asked to examine the areas. Many LCC officers would be familiar with the areas I have mentioned and would be able to say whether further investigation is necessary.

I am not suggesting that the Land Conservation Council should be given a fully fledged reference to carry out an investigation or that it should drop the important work it is undertaking at present, such as the examination of the Victorian coastline, the report on which I look forward to reading.

The professionalism of the LCC has been praised by honourable members on both sides of the House. An examination by the LCC would provide a safety net and would ensure that the value of those enclaves is not overlooked and therefore lost, which we may later regret. The preservation of those enclaves would only marginally affect the operations of the corporation.

In the main the opposition supports the Bill. Although I am sure the plantations can be well managed, I am concerned about the loss of the expertise of departmental officers. Because blue-collar workers rarely commit their knowledge to paper -- they rarely produce voluminous reports -- people sometimes do not take sufficient account of their skills.

Yet, as I said earlier, I know of examples of a manager who contributed to the loss of a $30 million business because he lost the expertise of the workers at that plant. The manager was brought in to handle the transitional areas, but he found it difficult to capture the expertise of the people who worked there. The company lost its production and quality because the new workers were not capable of adjusting quickly enough and were dumping lots of material unnecessarily. Perhaps I have drawn too long a bow with this, but the people working in the area have made a significant contribution, and I would hate to see them lose their jobs because of cost cutting or supposed efficiency moves that would result in the industry risking the valuable resource of softwood and hardwood plantations.

If we are creative that expertise can be kept and used it in different ways, such as in Landcare and programs such as trees for profit. Many of these programs require practical people who can plant the trees in the right way -- they know the species and the local environment, and they know the trees to plant that will not need much maintenance so that they do not become uneconomic.

The opposition supports the Bill. I look forward to the Minister's response to the concerns I raised, particularly with the people who are currently working in forestry and those who have the ability to use the conservation council to ensure that potential natural areas of land are not lost.

Hon. D. M. EVANS (North Eastern) -- I shall make a few comments on this important legislation and explain quickly what the forest industry means to Victoria and Australia. It is well known that Australia imports approximately $2.3 billion forest products with the net import at $1. 6 billion, approximately 10 per cent of Australia's devastating trade deficit.

Victoria has about 200 000 hectares of plantation forestry, half of which is privately owned; and the other half is owned by the State and the subject of the legislation. Victoria's forest industry is not providing all of the produce it needs, so there is significant opportunity to expand production, to get more efficient production, to become closer to self-sufficiency, and to develop export markets that will benefit employment and the economy. That is the direction we need to go.

The legislation is the first step in that direction. Victoria not only has plantation forestry but also has significant areas of native forest which are still open for timber harvesting and which are producing significant amounts of timber.

Some years ago legislation was passed guaranteeing 743 000 cubic metres of forest produce for sawmill production. Victoria has two classes of forest, native and plantation, and the community wants the industry to move to plantation forest. That takes a long period because of the long lead time to grow forests. It takes approximately 30 to 35 years to grow good quality saw log out of iinus radiata or similar softwoods and 60 to 80 years to grow mountain ash, alpine ash or similar hardwood species.

Mr Pullen raised concerns about the possible loss of expertise in the forest industry. One of the major problems occurred when the then Department of Conservation, Forests and Lands was established in 1982-83. It took over a range of responsibilities and, in so doing, lost significant focus.

Many people with specialist expertise, experience and qualifications, particularly in forestry areas, were scattered throughout departments with the consequence that they lost the cutting edge of their experience and expertise and the industry suffered significantly as a result.

The Bill will bring back the focus into forestry management by foresters. That does not mean that the other values will be ignored, particularly with native forests. The issues for plantation forests are good management, commercial understanding, the ability to predict the market in the future and entrepreneurial skill. That is best done by corporations that have specific focus, skills and objectives.

Victoria has legislation that establishes legal agreements with a number of different companies.

For example, the State has agreements with Australian Forest Industries, APM Ltd in Gippsland, Boral Ltd, which is the Dunstans agreement, and other agreements that have been signed recently. Generally they are based on plantation forestry, which is a relatively small area of forest. Victoria has about 8.8 million hectares of public land and about 22.4 million hectares in total, of which slightly less than 1 per cent is plantation forest.

I was in New Zealand some months ago and I inspected their forest industries. Slightly larger than Victoria, New Zealand has a total area of 28 million hectares, with 1.3 million hectares of plantation forestry, nearly all of which is operated under lease or licence by private entrepreneurs with at least two-thirds of the land ownership remaining with the government. The area is being managed by commercial organisations that have the marketing and entrepreneurial skills. The result of the shifting emphasis is reflected in issues such as tissue culture, a selection of better quality trees for specific purposes, for example, specific tree species for peeler logs, sawlog production or pulp production, where trees are selected and bred up quickly to produce specific types of timber designed for the particular market. New Zealand's forest culture and management practices are commercially oriented.

In Victoria about 200 stems are planted per hectare to create a straight and tall tree and to kill off by natural means the branches at the lower level to produce longer, straighter logs with fewer branches, and then they are thinned. In New Zealand, because of its entrepreneurial and commercial approach 400 to 600 stems are planted per hectare and significant pruning occurs rather than nature being allowed to take its course. That practice varied the type of production and led to a significant reduction in pulp wood timber being harvested and forests generally developed for sawlogs.

I have tried to draw a picture of a complex industry that requires entrepreneurial skill and a clear focus. I have also tried to draw a picture of a significant opportunity in Victoria, including a significant requirement over the long term of 60 to 80 years, to change from native forest production to a plantation forestry regime.

The fact is that the two approaches are different. We need to understand the two different approaches required if the initiative is to be successful and the establishment of the corporation is to proceed correctly. While the land will remain in the control of the Crown, and therefore with a significant ability for the government to control what actually happens, and while we have the discipline that was imposed by the legislative code of practice established by agreement of all parties in this House three or four years ago, we have significant controls.

The areas of land to be set aside for plantation forestry or indeed for managed native forests under certain conditions are under the control of the government. It is reasonable to have a proper process for determining which areas of land are set aside for that purpose, again with the discipline imposed by the Code of Forest Practices, with stream site reserves, particular areas set aside for particular purposes, and so on.

Along with this legislation we now have a broad range of legislative disciplines that will allow our forestry industries to continue to grow and will direct them in a proper and commercial manner to reduce the input bill, to create the resource to form the base of an export industry and to do so both under a business practice and in an environmentally sensitive manner.

The New Zealand experience points to the direction in which we are now moving.

It is not exactly the same, but in significant ways what we are doing is similar to what New Zealand is doing. They have proved themselves commercially as good foresters and proved they have the ability to compete on a world market, and in Australia. The way Victoria is going is not dissimilar to the situation in New Zealand.

I should also mention that it is a similar situation to that on the west coast of the United States of America and the west coast of Canada. That is the direction in which we should head. The Bill sets up a proper process, and I strongly support it.

Hon. R. S. IVES (Eumemmerring) -- I congratulate Mr Pullen for his address and his knowledge of conservation, the environment and forest management.

I also note that the opposition is in full agreement with Mr Evans when he mentions the importance of plantations and says it is a growth industry, albeit a slow one, that is anything from 30 to 50 years for softwoods, or 80 years in the case of hardwood.

We must concentrate more and more on plantation growth. Our forests will provide timber and timber products so that we will eventually avoid becoming dependent on imports. All parties generally agree that there is a greater community emphasis and trust on plantations for the production of forest goods and that the Bill is heading in the right direction.

The opposition supports the main thrust of the Bill, which is to establish the Victorian Plantations Corporation, to ensure that it has an appropriate commercial focus and that its products are properly managed and costed.

The Auditor-General has had significant difficulty in finding accurate figures about Victoria's plantations, and he said we have a long way to go. We appreciate the fact that the community must be assured that timber production will not be the subject of government subsidy.

My speech will be short compared with the two that preceded mine; I am not so much concerned with the actual management of plantations, but with the process by which the corporation is being set up. Although members of the opposition support the Bill we are very concerned that it has been set up under the State-owned enterprises legislation which, by its very nature, means that Parliament really gives the government a blank cheque.

I refer to certain areas of concern that I wish to have recorded in Hansard and available on the public record.
I invite the Minister handling the Bill in this place to give what assurances he can about the concerns of members of the opposition concerns.

Although we understand the final form of the corporation was largely due to the consulting work carried out by C S Boston Australia under the employ of the former government, we believe the money paid to that firm was certainly worth it because of its investigations when examining the ways in which forest product and plantations could be corporatised. But the fact remains that this is the first body to be established under the State Owned Enterprises Act.

The legislative framework contained in the Bill is based on the State Owned Enterprises Act, which has provided the mechanism for an Order in Council to establish the Victorian Plantations Corporation. This legislation specifies powers about the transfer of land, and so on.

The method of setting up the corporation by Order in Council is cumbersome, with the legislation now before the House being almost a subsidiary of the State Owned Enterprises Act.

As I said, the earlier legislation means that the government is virtually given a blank cheque and is allowed the flexibility to operate outside Parliament. The corporation, which will operate from 1 July next, will exist as a legal entity because of
the Order in Council.

Our particular concern is related to the reference in the legislation to the revocation of national or State land. I understand that particularly applies to the Moondarra State Park and the Lower Glenelg National Park and also affects firebreaks. In the briefings we have been given by the government these particular cases seem to be straightforward and acceptable.

But we would like an assurance from the government that there will not be any large-scale invoking of areas as national or State parks.

As mentioned by Mr Pullen, we are concerned about the livelihood of approximately 140 employees of the Department of Conservation and Natural Resources who will be transferred to the corporation. As Mr Pullen said, we see those people as possessing great skills, natural abilities and knowledge that should be used.

Hon. M. A. Birrell -- The only provisions are those in the Bill; there is no general power.

Hon. R. S. IVES -- Thank you; I appreciate that reassurance from the Minister. Members of the opposition do not regard the Order in Council as being a desirable instrument for dealing with industrial relations.

We understand a draft work force plan has been prepared and we would like an assurance from the Minister that the appropriate industrial relations procedures will be carried out with employees.

I understand capital will be raised by a number of methods. We would appreciate more information about how the capital will be raised. We understand and appreciate why the revenue from the plantations will go direct to the corporation, not to consolidated revenue. However, we are concerned about the dividend policy. Of course, it is hoped the revenue will be managed successfully and in the proper way and the investment will be ploughed back into the plantations, but we would like an assurance that the government has some overall parameters in which the profits of the organisation will be used.

The opposition appreciates that the Victorian Plantations Corporation may function as a State body for a substantial period under the Order in Council, but it does not believe that is an appropriate way to set up a State body. The opposition hopes it will receive some reassurance that the legislation will be prepared; otherwise the executive is given undue power over an unreasonable period in the running of a State body.

As was mentioned by Mr Pullen, the opposition is concerned that environmental and ecological concerns be properly fostered and that proper guidelines and parameters be set down for management. Provisions in the Bill will allow some land to be excised and sold, which is also a matter of concern to the Victorian National Parks Association. If that is done, perhaps the land should be independently surveyed by a body such as the Land Conservation Council.

With those brief comments, appreciating that the opposition has already received one reassurance across the Chamber, I
look forward to receiving whatever reassurances the government can give on other matters raised.

The PRESIDENT -- Order! I am of the opinion that the second and third readings of the Bill require to be passed by an
absolute majority. The clause that requires the absolute majority is clause 33, not clause 34 as stated in the
second-reading notes. As there is not an absolute majority present, I ask the Clerk to ring the bells.

Bells rung.

Members having assembled in the Chamber:

The PRESIDENT -- Order!

In order to ascertain whether the required majority exists, I ask those members in favour of the motion to rise in their
places.

Required number of members having risen:

Motion agreed to by absolute majority.

Read second time.

Third reading

Hon. R. I. KNOWLES (Minister for Housing) -- By leave, I move:

That this Bill be now read a third time.

I thank Mr Pullen, Mr Evans and Mr Ives for their support of the Bill and for their contributions to debate. Mr Pullen and
Mr Ives raised a number of matters about which they were concerned, and I will respond briefly to those concerns and
hopefully provide the reassurances they seek.

Mr Pullen raised three matters, the first being staffing. He sought an assurance that skilled staff with expertise would be
attracted to the corporation. It is the government's view that staff from the present Department of Conservation and
Natural Resources will be attracted to the corporation. Mr Pullen made a valid point: the success of the organisation will
depend upon the expertise it is able to attract. It is certainly the government's intention that that expertise be attracted to
the organisation.

In addition, Mr Ives made the point that if the organisation is to work well good staff relations are required.

There has been wide consultation with all employees on the draft work force plan. Structures have been developed at the
workplace level, which is an indication of the commitment of both the government and those that may be involved with
the corporation to make sure that the concerns that have been raised are not realised and that the corporation works well.

Mr Pullen raised the question of sustainability, both ecologically and economically. The proposed corporation will be
subject to the Flora and Fauna Guarantee Act and the Code of Forest Practices for Timber Production in Victoria,
particularly subsection 24(2).

In addition, the objectives and mission statement being developed for the corporation, which will be incorporated in the
corporate plan to be agreed to by the Minister for Natural Resources, the Treasurer and the board under the State Owned
Enterprises Act, will state that the corporation will be a profitable and efficient trading enterprise engaged in the growing
and marketing of plantation timbers of the highest standard on a sustainable basis and in an environmentally sound
manner . It is certainly the government's intention that the organisation be economically sustainable and that it should
pursue economically sustainable practices.

The second point Mr Pullen raised was his concern about the excision of two small areas from the national parks system.
His first concern was with the process. He was concerned that there had not been an examination of the proposed change
by the Land Conservation Council. That concern is similar to one expressed by the National Parks Association.

The Minister for Natural Resources has written to that organisation giving an assurance that the government is prepared
to request the LCC to review the maps of land vested in the corporation with a view to identifying areas of park or
reserves included in the land being vested. The Minister will consider the findings of the LCC and may direct the
divesting of certain areas of vested land where required.

The Land Conservation Council will also be asked to review the access requirements of the Victorian Plantations
Corporation through parks managed under the National Parks Act. If necessary, the government will make appropriate
legislative amendments in the next Parliamentary session. When the LCC has concluded its review and the total area to be
excised from parks and reserves and vested in the corporation is determined, the government will be prepared to discuss
the provision of replacement land for addition to the park estate.

Mr Pullen's third concern reflects concerns expressed by the National Parks Association. My colleague the Minister for
Natural Resources has written in detail and addressed each of the concerns. It may be appropriate, and it may provide that
added assurance, if I seek leave of the House to incorporate the letter in Hansard.

The PRESIDENT -- Order! The procedure for incorporation in Hansard is well known. A member must approach me
beforehand and also seek consent from the other parties. However, as it is just a letter in typescript form, it should not
pose a difficulty.

Hon. R. I. KNOWLES -- I apologise for not having shown you the letter, Mr President. I actually showed the letter to
the Acting President prior to your return to the chair. He generously conceded that it is just a letter. I am happy to show
you a copy, Mr President, and again I apologise.

The PRESIDENT -- Order! I apologise for my comments. I did not receive a message from my colleague. I will
speak to him.

Leave granted; letter as follows:
Minister for Natural Resources
26 May 1993

Mr Doug Humann Director Victorian National Parks Association Inc 10 Parliament Place EAST MELBOURNE VIC
3002

Dear Mr Humann

       I refer to our discussion on Monday, 24 May concerning the content of your letter of 19 May and the
       association's press release of 24 May, both of which raised issues in respect of the Victorian Plantations
       Corporation Bill.

Drawing from comments in the press release the issues fall broadly into five categories.

Firstly, land status. The plantations, both softwood and hardwood, are established on land classified as Crown
land and reserved forest with two exceptions being nominated in the Bill for vesting.

       The Land Conservation Council (LCC) process has previously classified these areas for timber production after
       examination of the areas or, alternatively, the land on which the plantations are established will have been
       previously cleared farm land reverting back to the Crown.

       The bulk of the land to vest in the corporation currently carries plantation (mostly Radiata pine) and areas of
       known sensitivity or without a long-term plantation future, are not being vested but will be leased by VPC for
       the current rotation only.

       The association seeks to have an assessment of the plantation land with its remnant native forest made to
       determine the presence of any important conservation values in those remnant areas prior to a sale proceeding. I
       reiterate that sale can only occur after my recommendation for divesting and issue of a Crown grant.

Secondly, sustainability. The Victorian Plantations Corporation (VPC) has been developed to manage the State's
plantations on a commercial basis.

       Given the existing legislative agreements and licences, obligations for which transfer from the Department of
       Conservation and Natural Resources (DCNR) to the VPC in the Bill, it will be imperative that the plantations be
       managed in a sustainable manner and for long-term timber production. The VPC would be in breach of the
       transferring contracts if they are unable to do so. The VPC will be obliged to conform with the Code of Forest
       Practices for Timber Production in respect to the protection of native conservation values. The objectives and
       mission statement which will be incorporated in the corporate plan to be agreed to by myself, the Treasurer and
       the board under the State Owned Enterprises Act, will state that VPC will be a profitable and efficient trading
       enterprise engaged in the growing and marketing of plantation timbers of the higher standard on a sustainable
       basis in an environmentally sound manner .

During our meeting the question of the management of native forest inliers was raised and I refer you to
comment in the second-reading speech on the matter.

       Thirdly, park excisions. Your association's objections to the excision of land from areas classified as national
       park is noted and are essentially boundary issues. The two areas proposed for excision in the Bill have modest
       claim to national park status and their removal does not materially impinge on any conservation values.

I note your suggestion for alternative areas to be added to the national park estate to compensate for any other
areas removed.

Fourthly, map review. As you indicate there are 180 maps which delineate boundaries of the plantations to be
vested in the corporation.

There are other plantation areas which will not be vested in the VPC but managed (leased) by them.

There has been a detailed consultation process within the DCNR for the past six months which has involved the
opportunity to provide input to the boundaries.

       It would now seem appropriate to refer these 180 maps to the LCC to establish beyond doubt whether there are
       any other areas, other than the two nominated in the Bill, which might be considered in the context of the third
       category mentioned in this letter.

Fifthly, Director of National Parks referral.

       Providing the suggested compensatory arrangement in the third category proceeds and the LCC map review does
       not reveal any other areas within the vested land to be land presently under the control of the Director of National
       Parks, then it would seem there would be no need for the Director of National Parks to be specifically brought
       into the access arrangements. Parliamentary Counsel advises that this is not necessary at this stage, but should
       subsequent park proclamation take place, amending legislation may be considered in the future if access through
       national parks is required.

       The government would be prepared to provide an undertaking in the Parliament to the fourth category map
       review being undertaken by the LCC. The result of this study will determine the response to the fifth category
       and also determine what total area would be required to compensate for any other excisions which might be
       required.

       The government would provide an undertaking to discuss the provision of replacement land after the total
       excised area is established by the foregoing process. Part of a DCNR purchased property in the Lower Crawford
       area to be vested in VPC has been identified as offering conservation values which would enhance the proposed
       park in that area.

Yours sincerely Geoff Coleman, MP Minister for Natural Resources

The PRESIDENT -- Order! I am of the opinion that the third reading of this Bill requires to be passed by an
absolute majority.
Motion agreed to by absolute majority.
Read third time.

Mr STOCKDALE (Treasurer) -- The honourable member for Benambra raised a matter for the Minister for Finance concerning the conversion of the land-holdings of the Victorian Plantations Corporation to freehold. In principle, the government believes accountability for the management of plantations will be enhanced if freehold is vested in the Victorian Plantations Corporation. The Minister for Finance and I share responsibility for those incidents of corporatisation. The department is working on those matters.
I understand the concerns the honourable member has expressed.

12
2o july
       Victorian Plantations Corporation Act 1993 -- Remaining provisions on 1 July 1993 (Gazette No. G24. 24 June
       1993).
13
11 july
Victorian Plantations Corporation Act 1993 - Remaining provisions - 1 July 1993 (Gazette No. G24, 24 June
       1993).
16
The government has never considered privatisation to be an end in itself -- and none of the reforms need necessarily involve
privatisation. A range of approaches has been adopted. For example, the Victorian Plantations Corporation has been made
subject to the Act and has been fundamentally reformed and given a commercial charter and a commercial board. It has
adopted commercial bases of employment and is in the process of offering employees the opportunity of transferring to the
corporation.

At some stage it may become appropriate to examine the sale of some or all of the assets of that corporation -- or the sale of
the corporation itself. The previous government proposed to sell the Victorian Plantations Corporation. If the government
were to embark on a similar course, one would expect the Labor Party to be consistent and to support the initiative. Yet the
speeches today suggest the Labor Party would oppose the sale of the pinewood plantations.

A range of policy initiatives to reform Melbourne Water have been adopted, not only under the coalition government but also
under the Labor government, to introduce the benefits of private enterprise competition into the operations of metropolitan
water authorities. Melbourne Water has privatised a number of non-core functions, such as procurement services, legal
services and catering, as well as a range of other administrative and support services. Since the coalition came to office
Melbourne Water has also contracted out some of its core services.

The maintenance of all its metropolitan pipe work is now being carried out by private enterprise under a series of contracts
let on competitive bases -- and in the future that will be subject to competition.

One of the most remarkable features of the process is the enthusiasm with which the work force and management embraced
the reforms once the corporation set about implementing them. Contrary to some of the more flamboyant rhetoric of the
opposition members, the people for whom they claim to speak -- in many cases union members -- are very enthusiastic
about recognising the opportunities offered by competitive free enterprise.

The same thing is true in the Latrobe Valley.

The Minister for Energy and Minerals and I frequently receive reports about the enthusiastic endorsement of the reforms of
the electricity industry from those in the valley who are transferring to work for contractors - or, in some cases, working for
the SEC in direct competition with contractors on jobs, parts of which have been contracted out.
END 16 go to Hansard VPC 2
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