The Rise and Fall of Gunns Ltd
For a state whose economic prospects are so clearly tied to its natural endowments, Tasmania has long seemed devoted to destroying its future. As this book explains, the war on nature recently extended to native vegetation, including the majestic mountain ash (the tallest flowering tree on the planet).
Old-growth forests and fisheries in Bass Strait were to be collateral damage to the state’s latest industrialisation push, a $1 billion wood pulp mill proposed by a local corporate giant, Gunns. In this “world’s best practice” project, swaths of native bush − the precise area was kept vague by complicit state forestry authorities − would be cut to feed the mill; 73 million litres of dioxin-infused effluent would empty into nearby scallop and other fishing grounds each day; gas emissions with a rotten-egg smell would waft over the wineries and tourist havens of the Tamar Valley.
That it could get approval and come so close to construction is explained partly by the curious politics and sociology of our smallest state, in which the silvertails and working class combine dreams of large-scale industry and blue-collar jobs to oppose environmentalists. The worst literacy and numeracy outcomes in the federation sustain this nexus, Quentin Beresford posits: too much education and the kids disappear to other states.
Then there’s the exploitation of Tasmanian fears by federal politicos, taken to a baleful masterstroke in 2004 when John Howard wedged Mark Latham by promising to protect timber industry jobs and promote the pulp mill, after Latham had offered $800 million to phase out cutting of old-growth native forests. In this effort, Howard was aligned with the Construction, Forestry, Mining and Energy Union, usually the Darth Vader of rampant trade unionism for the Coalition.
In earlier decades the then Hydro-Electric Commission had grown more powerful than the state government itself. It only met its nemesis when the Hawke government blocked the Franklin River dam. The state, whether in Liberal or Labor hands, was then captured by the foresters. But the anti-Franklin protests had spawned a vigorous Green movement that became the only true opposition.
Their conflict saw on one side the woodchip and plantation company Gunns, taken to ASX 200 ranking by a working-class upstart in Launceston, John Gay. Backing him were state premiers, the Liberals’ Robin Gray and Labor’s Jim Bacon and Paul Lennon – and after the Latham debacle, the major federal parties. For a long time, it seemed an unwinnable fight for opponents of the pulp mill. Gay wielded expensive legal firepower through defamation and damage suits against individual critics. Premiers gave the police extra powers to block protests.
But the Gunns juggernaut lost its wheels when the ultimate powers of capitalism, shareholders and consumers, were turned against it. Beresford, a Tasmanian who started as a reporter with the Hobart Mercury and morphed into professor of politics at Perth’s Edith Cowan University, has produced a case study of how these powers were mobilised.
At times, the reader will wish the journo overpowered the academic in Beresford. The book often seems an assembly of references from written sources. It seldom gets into the heads of Gay and the premiers, or produces insider accounts from their side of the action. His stock description of nearly all state premiers is “authoritarian” but populist in Hobart and Launceston’s small-city contexts, where those who should be the monitors of political power all hobnob together, seems a better description.
Gunns came unstuck just when it seemed close to success. In 2007 it had arrogantly pulled out of a project assessment by the state’s Resource Planning and Development Commission. Paul Lennon, the premier, had then rammed through legislation for a new “fast-track” process that handed assessment to a private consultant, which turned out to be a company close to the Finnish designer of the pulp mill.
In that year’s federal election, Howard played his old game, visiting the Tamar region five times in the previous six months to sway the marginal northern seats of Bass and Braddon. His environment minister, Malcolm Turnbull, obediently signed off on the pulp mill, and Peter Garrett, the “shadow minister without a shadow” kept shtum.
Yet entering stage right came businessman Geoffrey Cousins, a mate of Howard’s placed on the Telstra board. He had walked the Franklin wilderness. Other conservative mill opponents included Tony Whish-Wilson, former RAAF squadron leader and Rio Tinto executive, who could see his Tamar Valley vineyard ruined. They found themselves in alliance with figures such as ABC garden-show host Peter Cundall, a one-time communist, and the writer Richard Flanagan.
By May 2008, Cousins had worked on Gunns’ main financier, ANZ bank, to the point where its new imported chief, Mike Smith, pulled the plug on further lending. The global financial crisis then led to the collapse of forestry-managed investment schemes, a Ponzi-like tax avoidance industry that had provided half of Gunns’ revenue. Japanese paper mills cut back the woodchip orders that had provided the other half.
Cousins also worked on institutional investors: they forced Gay to resign as chief executive and from the board chairmanship. By then Gay was heading for an insider-trading conviction for selling down his Gunns shares ahead of a profit-fall announcement. In September 2012, after Gunns announced a $900 million loss for 2011-12 and debts of $3 billion, ANZ called in the receivers.
Has Tasmania learned? Maybe not. Paul Lennon’s Labor successors David Bartlett and Lara Giddings were quickly won over by the pro-Gunns lobby. Even now, with the Liberals’ Will Hodgman in power since last year, the permit to build the mill remains an asset the Gunns’ receivers might sell; one of Hodgman’s first acts allows 400,000 hectares of native forests to be cut over six years. And Tony Abbott tried to delist 70,000 hectares of Tasmanian forest in the UNESCO World Heritage area, saying, “We have quite enough locked-up forests already.” JF
NewSouth, 448pp, $32.99
This article was first published in the print edition of The Saturday Paper on Feb 21, 2015 as "Quentin Beresford, The Rise and Fall of Gunns Ltd". Subscribe here.