The Kennett Government may change its hardline position on how it spends privatisation proceeds, after announcing yesterday the sale of the state's forest plantations to an American insurance company for $550 million. A day after confirming a $4 billion privatisation of the gas network, the Treasurer, Mr Alan Stockdale, signalled the Government may not use all sale money to pay off debt.
The forest and gas sales will reduce debt to about $6 billion, from $32 billion in 1992. With the state's AAA credit rating restored, Mr Stockdale said the Government was now reconsidering the best way to spend the money. "It may well be that we simply continue to reduce debt, but we do think that there is now a case given the current level of debt, for looking at whether there are other priorities that need to be addressed," Mr Stockdale said. Proceeds could be used for "capital applications", but would not be spent on recurrent purposes.
The ALP said the privatisations were designed to fund "pre-election pork barrelling". "They may retire some debt but I've got no doubt they're selling off the state's assets in a fire-sale so they can get a war chest for the next election," Labor's finance spokesman, Mr Steve Bracks, said.
An auditor-general report recently tabled in Parliament found Treasury had retained $4.1 billion in cash and investment holdings from electricity privatisations which was "awaiting application by the Government". A spokesman for Mr Stockdale said the proceeds could be used to reduce unfunded superannuation liability, totalling almost $15 billion.
The Opposition says the privatisation of 170,000 hectares of forest including 115,000 hectares of plantations - will cost taxpayers an annual revenue stream of $32 million. Sixty per cent of the Victorian Plantations Corporation has been sold to the Hancock Timber Resource Group, with the remaining share purchased by three local superannuation companies.
Mr Stockdale described the $550 million sale as a major coup, and a good outcome from the VPC's book value of $352 million. Under the deal, the land will stay in public ownership but the trees and the right to harvest and replant timber will remain with the company in perpetuity. Public recreation areas have been excised from the contract to secure public access.
But Labor's environment spokeswoman, Ms Sherryl Garbuttt said the sale would fence off from the public 55,000 hectares of native hardwood forest and fern gullies used for generations for fishing, horse riding, walking and four-wheel-driving. This included a large section of the Strzelecki Ranges.
Mr Stockdale said native forests would be adequately protected by regulations,
and the managing director of the Hancock group, Mr Daniel Christensen,
said the company would seek alliances with environmental and conservation
groups. The forests cover about a fifth of the State's Crown land, from
Gippsland to the Otways Beechworth, in the north-east. Mr Stockdale
also ruled privatising water.