Victorian government’s timber mill bailout has bad whiff of pork

The Victorian government’s decision to appropriate a large undisclosed sum of taxpayers’ money to buy a struggling timber mill nobody else wanted to acquire appears more driven by dubious politics than by rigorous public policy.

The government has not revealed how much it has agreed to pay Australian Sustainable Hardwood for the mill in Heyfield, Gippsland, but reports place the price as high as $50 million, 20 per more than an estimate earlier this year. With 250 staff, the mill is the biggest employer in a town of 2000 in a region that has been hit by the decline of coal as the economy transitions to renewable energy.

Perhaps the government is feeling some responsibility. The reason the mill owners were set to close the business is a cut by the government in the allocation of timber. This had been announced by VicForests, a statutory body running the logging and commercial sale of native forests, and is part of the ongoing response to the 2009 Black Saturday bushfires, which destroyed a quarter of the state’s harvestable ash forest. There is some conjecture that protecting habitat for an endangered species of possum might have contributed marginally to the timber shortage.

Another political element of the decision is that although Heyfield is in a safe conservative seat, the downstream effects of the mill closure would have hurt businesses and jobs in three marginal Labor seats. The Construction, Forestry, Mining and Energy Union intervened, campaigning hard – including a barrage of automated phone calls – for the retention of the Heyfield mill jobs.

So the political pressure on Premier Daniel Andrews is evident. He describes the mill purchase as unconventional but states he would do similar things in the future to save jobs. There is nothing wrong with a degree of unconventionality in public policy formulation. But the tenets of good public policy should always apply.

Mr Andrews appears to have paid too little heed to those tenets – transparency, accountability, effectiveness and efficiency. How can anyone assess this use of scarce public funds? The government has a duty of full disclosure to the community. Yet we do not know what price was paid, what conditions might apply or why the government thinks the business can survive the cuts in timber supply.

Supporting communities through difficulties is a valid role for government, but unless and until the government demonstrates the validity of spending so much to take over the mill, the public will have reason to suspect the Heyfield manoeuvre reeks of pork-barrelling.

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