NURTURE
Annual Report 2004-05 Forests NSW is a public trading enterprise within the NSW Department of Primary Industries CONTENTS WHO WE ARE
Who we are Forests NSW is a public trading These objectives encompass ensuring Letter to Minister 01 enterprise within the NSW Department the supply of timber to processing of Primary Industries. industries, protecting the biodiversity of Our Structure 02 State forests and providing community Five Year Comparison 03 The role of Forests NSW is to amenities, all within the framework of sustainably manage up to 2.8 million Highlights for the Year 04 running a profitable business for the hectares of native State forests and people of New South Wales. Overview 05 plantations to achieve a range of Annual Financial Statements 08 economic, environmental and social Forests NSW is also engaged in objectives. developing new business services Statutory Information 40 related to its primary role as forest Index 73 Forests NSW Statement of Affairs manager, such as private forestry and identifies our management objectives plantation management services, as: carbon sinks and carbon trading, • Sustain our financial performance salinity mitigation, eco-tourism, land repair and mine site rehabilitation. • Deliver ecologically sustainable management of natural resources Forests NSW plays a pivotal role in the • Provide accountability to the economic development of regional NSW, community with the timber industry contributing nearly $1 billion to our State economy • Support our people each year and supporting over 7,000 jobs in regional towns across NSW.
This Annual Report is prepared to meet the specific statutory requirements of Forests NSW as a public trading enterprise. Narrative information about Forests NSW achievements is included in the NSW Department of Primary Industries (DPI) Annual Report. This year for the first time, Forests NSW has produced the Annual Report, Seeing Report and Facts and Figures as an integrated series of documents, linked around the themes of nurture, interact and prosper. All of these reports, including the Annual Report of the DPI are available in hard copy, CD or on-line at www.dpi.nsw.gov.au The Hon. Ian Macdonald, MLC Minister for Primary Industries
The Hon Ian Macdonald, MLC Minister for Primary Industries Minister for Natural Resources Minister for Mineral Resources Level 33 Governor Macquarie Tower 1 Farrer Place SYDNEY NSW 2000
Dear Minister
I present the 2004/2005 Annual Report of Forests NSW.
The report complies with the requirements of the Annual Reports (Statutory Bodies) Act 1984. A system of internal control was in place and operated successfully during 2004/2005.
Copies have been made available for tabling in Parliament.
Yours sincerely
Peter Duncan Chief Executive
Bldg 2 423 Pennant Hills Road (Locked Bag 23) Pennant Hills NSW 2120 T 02 9980 4100 F 02 9484 1310 www.dpi.nsw.gov.au/forests Forests NSW is a public trading enterprise within the NSW Department of Primary Industries
ANNUAL REPORT 2004-2005 1 OUR STRUCTURE
MINISTER FOR PRIMARY INDUSTRIES The Hon Ian Macdonald, MLC
DIRECTOR-GENERAL DEPARTMENT OF PRIMARY INDUSTRIES COMMISSIONER FOR FORESTS Barry Buffier
CHIEF EXECUTIVE OFFICER BUSINESS REVIEW FORESTS NSW AUDIT UNIT Peter Duncan
FINANCIAL AND PLANTED FORESTS NATIVE FORESTS COMMERCIAL LAND MANAGEMENT OPERATIONAL OPERATIONS OPERATIONS SERVICES AND TECHNICAL BUSINESS SERVICES Peter Crowe Michael Bullen Gary Keating SERVICES Malcolm Clinch Alastair Howard
REGIONS REGIONS Softwood Sales PTE Finance Resources Hume (Tumut) North East (Coffs Harbour) • Sales • Statutory accounts • GIS North/Future Forests (Walcha) Mid-North Coast (Wauchope) • Pricing • Credit control • Resource modelling Macquarie (Bathurst) Hunter (Maitland) • Taxation • Tenure Monaro (Bombala) Southern (Batemans Bay) Hardwood Sales • Inventory Western (Dubbo) • Sales Human Resources Asset Protection & Common regional Riverina (Deniliquin) • Pricing • Training programmes • Timber acquisition • Workers compensation Technical Services • Civil engineering • Plantation establishment Common regional • OH&S Logistics & Products • Fire management • Log supply and wood flow programmes • Industrial relations • Harvest & haul • Helicopter • Harvest, operational, • Log supply and wood flow • Regional HR advice • Market & product • Mechanical engineering environment planning • Community partnerships analysis Information Technology & vehicle services • Resource & protection • Harvest, operational, • Wan/Lan • Radio services • Infrastructure and environment planning Timber Inspection • Help desk • Buildings road construction • Resource & protection • Timber Marketing Act • Systems support • Compliance & • Infrastructure and • GIS support Sustainability regulatory road construction Investment Services & New Business • Ecology • Compliance PTE Business Services Forest Management • Investment • Sales • Ecology • Business management • Environmental management • Carbon trading • Harvesting • Sales • Business performance systems • Forestry services • Client liaison • Harvesting • Business systems • Certification • Cultural heritage • Client liaison development • Regulatory liaison • Cultural heritage • Sales systems • Codes of practice • Silviculture • Permit licence systems • Forest management planning • Procurement & reporting • Soil & water Business Support • Water quality monitoring • Accounts payable • Accounts receivable Tree Improvement • Payroll • Tree breeding • Records management • Seed production Nurseries • Amenity & production nurseries Plantation Improvement • Establishment techniques • Management • Wood properties
2 ANNUAL REPORT 2004-2005 5 YEAR COMPARISON
5 YEAR COMPARISON AS AT 30 JUNE 2005 2005 2004 2003 2002 2001 $'000 $'000 $'000 $'000 $'000 Revenue* 264,424 240,634 219,515 181,929 161,972 Profit Trading Profit* 36,819 37,860 23,959 27,772 6,659 Significant Items and SGARA revaluation** (29,161) 17,392 (11,805) 30,131 (75,458) Profit/(Loss) from ordinary activities (before tax) 7,658 55,252 12,154 57,903 (68,799)
Distribution to Government Distribution payable 32,544 13,096 4,162 4,717 -
Capital Expenditure 31,531 36,315 32,235 35,384 46,363
Balance Sheet Value of SGARA Assets*** 1,594,934 1,609,389 1,573,389 1,493,273 1,430,806 Total Assets 2,591,814 2,588,164 2,360,725 2,358,594 2,309,106 Borrowings 138,062 121,273 135,576 133,341 138,415 Capital and reserves 2,102,919 2,127,270 1,903,624 1,949,580 1,911,273 Ratios % (excl Abnormals & MVI) Return on Equity* 1.75% 1.78% 1.26% 1.42% 0.35% Return on Assets* 1.47% 1.53% 1.02% 1.19% 0.38% Debt to Equity 6.57% 5.70% 7.12% 6.84% 7.24% Return on Equity (including MVI) (0.15%) 2.20% 4.26% 3.18% 3.76% Sawlogs ('000 of cubic metres) Native Forest Hardwood Sawlogs 639 707 683 696 664 Plantation Hardwood Sawlogs 74 80 71 37 34 Plantation Softwood Sawlogs 1,829 1,859 1,578 1,450 1,307 Cypress Pine Sawlogs 94 101 110 108 96 Other Products 90 93 169 192 164 TOTAL 2,726 2,840 2,611 2,483 2,265
Pulp (tonnes) Native Forest Hardwood 468 491 541 391 533 Plantation Hardwood Pulpwood 36 35 41 43 66 Plantation Softwood Pulpwood 1,042 1,045 940 1,026 729 TOTAL 1,546 1,571 1,522 1,460 1,328
* exclusive of forest revaluation, capital grants and superannuation fund interest and significant items ** inclusive of forest revaluations, capital grants and superannuation fund interest *** SGARA Assets represent the commercial value of Forest NSW timber resources (previous year's figures altered accordingly)
ANNUAL REPORT 2004-2005 3 HIGHLIGHTS FOR THE YEAR
Safety (Frequency Rate) FORESTS NSW 20.0 • trading profit (before tax), (see page 3) of $36.819 million. This is exclusive of forest revaluation, capital grants and 16.0 superannuation fund interest and significant items; 12.0 • delivered the ‘2004 mini budget’ distribution of $32.5 million to Government; 8.0
• established 8020 hectares of planted forests (hardwood 4.0 1,164 hectares, softwood 6,856 hectares); 2000/01 2001/02 2002/03 2003/04 2004/05 • finalised the process of developing Wood Supply Agreements with native hardwood customers on the north Frequency rate is lost time injuries per million work hours and south coasts resulting in long-term resource security for the industry. The first two rounds have been executed Timber to Industry Volumes/Employee (m3) with a final round nearing completion; 5000 • continued the rollout of delivered sales (log merchandising) 4000 throughout the State. With softwood harvesting approaching 100% delivered sales, the combined revenue 3000 from hardwood and softwood delivered sales reached $150 million in 2004/05; 2000 1000 • became the first body in the world to trade carbon credits arising from sequestration in forests in an approved greenhouse gas abatement scheme. The revenue from 2000/01 2001/02 2002/03 2003/04 2004/05 the trade of more than $1.5 million made an important Cubic Meters contribution to the achievement of our financial targets;
• completed the preparation of draft Ecologically Sustainable Percentage of Total Native Forest Harvested Forest Management plans for all regional areas for the next five years. The plans, which were put on public exhibition, 2,500,000 set out broad strategies, performance indicators and 2,000,000 measurable outcomes for forest management; 1,500,000 • completed the review of safety systems, documentation and communication and developed a new comprehensive 1,000,000 Safety Management System. Some 800 staff members of 500,000 Forests NSW attended training in the new system; and
• developed the ‘Living, working, playing… forests’ recreation 2000/01 2001/02 2002/03 2003/04 2004/05 strategy to encourage safe and responsible use of State forests for recreational purposes. Total Native Forest (ha) Native Forest available for harvesting (ha) Actual area of native forest harvested (ha) Native Forest not available for harvesting (ha)
4 ANNUAL REPORT 2004-2005 OVERVIEW Barry Buffier, Commissioner for Barry Buffier, Duncan, (left) and Peter Forests Chief Executive
Forests NSW is the new trading name of the Forestry OVERVIEW Commission of NSW, used since its integration into the NSW Department of Primary Industries (DPI) on 1 July 2004.
Operating as a public trading enterprise within DPI, Forests NSW has focused on its core business of sustainable supply of timber now and into the future, and on strategies to achieve the additional $20 million dividend target set by the NSW Government.
Many initiatives have been implemented to realise the efficiencies and benefits of the creation of DPI. Initiatives such as co-location and shared services and facilities are outlined in the DPI Annual Report. Such initiatives are based on commercial partnership arrangements that offer cost savings to both DPI and Forests NSW.
This Annual Report covers the specific statutory requirements of Forests NSW as a public trading enterprise. More information about the activities and achievements of Forests NSW can be found in the companion social, economic and environmental (Seeing) report, which is the sustainability report of Forests NSW, and the Annual Report of the NSW Department of Primary Industries.
ANNUAL REPORT 2004-2005 5 OVERVIEW
COMMERCIAL PERFORMANCE Major Achievements: The year has seen many milestones achieved right across A major focus for the year has been implementing changes the organisation. Some of the significant achievements are: and new initiatives to enhance operations and business • Forests NSW became the first body in the world to trade processes and establishing the framework for ongoing carbon credits arising from sequestration in forests in improvements in sustainability, safety and commercial an approved greenhouse gas abatement scheme. performance. The revenue of more than $1.5 million from the trade A key part of this process was the establishment of a made an important contribution to the achievement of Business Review Unit. The unit works with the Senior financial targets. Management Team to support and consolidate work already This was made possible when, in February 2005, commenced on improved financial systems and controls Forests NSW received full accreditation and authorisation throughout the organisation. The unit developed a formal to register NSW Greenhouse Abatement Certificates review and approval process for major operating and capital (NGACs) under the NSW Greenhouse Gas Abatement expenditure and identified business improvement strategies Scheme following an independent audit of its carbon to help ensure that an additional $20 million per annum accounting system. This was the result of years of work dividend target can be met on an ongoing basis. involving innovative technology, scientific research programs, the development of carbon accounting The efficiencies gained from integration into DPI, together methods and the development of rules to enable with the realignment of the organisation, disposal of non-core trading in carbon sequestration. assets, the first major sale of carbon credits and a voluntary redundancy program, have also contributed to the operating Sale of NGACs is a potentially significant new revenue results of the business. stream for Forests NSW. • A comprehensive review of safety systems, documentation The downturn in the housing market resulted in reduced and communication was completed during the year. timber sales in the latter part of the financial year, however, as The review resulted in the development of a new safety a result of achieving targeted operational improvements and management system, implemented under the banner, efficiencies, Forests NSW was able to mitigate the emerging ‘Think Safe, Act Safe, Stay Safe’. Training in the new safety adverse market affects and deliver a significant profit on management system was provided to staff throughout the trading activities. state to ensure the highest possible level of safety The strength of the underlying trading result ($36.819M) has awareness across the organisation. enabled the organisation to deliver a significantly increased • The development of a Forest Technology Centre in distribution to Government of $32.5 million, achieving the Grafton is a major step forward for the Forests NSW tree target set for this year by the NSW Government. improvement program which is gaining worldwide attention.
The statutory accounts include a revaluation decrement of $39.95 million, largely driven by changes in Softwood plantation values, which substantially reduced the reported profit in the Statutory Financial reports.
6 ANNUAL REPORT 2004-2005 OVERVIEW
The Centre will showcase expertise developed in over FUTURE OUTLOOK 40 years of tree improvement research and plantation establishment. It will open in August 2005. Forests NSW, as part of the NSW Department of Primary Currently, a major focus of the tree improvement program Industries, will continue to focus on its core business of is development of superior breeds of Eucalyptus pilularis sustainable forest management and timber supply while (blackbutt), which produces more than 70 percent of high actively pursuing new business opportunities and strategies quality logs from native forests. The Grafton Forest to improve financial performance. This focus is essential Technology Centre will be a commercial development given the outlook of a slow housing market for the with the potential for benefits to the plantation hardwood forseeable future. timber industry. The current concentrated effort on performance and • The predicted severe bushfire risk over the summer period continuous improvement of all systems, including safety, was reduced due to rain through spring and into early will be maintained. summer. Although conditions became dangerous in the southern part of NSW in January, no major outbreaks Following feedback from the public consultation process, occurred and the bushfire season turned out to be one of Forests NSW will finalise the Ecologically Sustainable Forest average levels of fire activity. Significant hazard reduction Management Plans for all regional areas for the next five burns and other preparations have been made for the 2005 years and focus on achieving certification during 2006. season which again has the potential to be severe. Forests NSW is now working to extend the ‘Fit to Fight’ voluntary The dedication and commitment of all staff to the processes fire fighting training program across DPI which will be of change and improvement has placed Forests NSW in an beneficial during times of extreme fire conditions. excellent position to deliver sustainable improved financial performance in future years. • The launch by our Minister of Forests NSW new sustainable recreation policy and strategy for 2005-2009 marked the As the Commissioner for Forests and the CEO of Forests completion of a two year review and extensive consultation NSW, we would like to acknowledge the efforts of staff during with stakeholders. The ‘Living, working, playing...forests’ the last year. It has been an opportunity to focus on issues strategy encourages safe and responsible use of State which will drive and strengthen the organisation in the forests for recreational purposes. It integrates management years ahead. of the forests for recreation, sport, tourism and training with the primary objectives of providing a sustainable timber supply to NSW and forest management for environmental values.
Peter Duncan CEO Forests NSW
Barry Buffier Commissioner for Forests
ANNUAL REPORT 2004-2005 7 FINANCIAL STATEMENTS
For the year ended 30 June 2005
Statement of Financial Performance 9 Statement of Financial Position 10 Statement of Cash Flows 11 Notes to the Financial Statements 12 Summary of Significant Account Policies 12 Statement by Commissioner 38 Auditor-General's Opinion 39
8 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL PERFORMANCE for the year ended 30 June 2005
Notes 2005/$’000 2004/$’000 Revenue from ordinary activities From sales of timber and related activities 2a 206,552 199,304 From other operating activities 2b 57,872 45,287 From the increment in net market value of SGARA 11(a),(c) - 8,993 Total Revenue 264,424 253,584 Less: Expenses on ordinary activities Contract harvest & haulage 76,893 65,236 Contractors 12,143 14,424 Depreciation 3a 10,148 9,420 Employee & related 72,523 70,246 Superannuation (6,244) (876) Materials 18,176 15,352 Fees 9,339 12,512 From the decrement in net market value of SGARA 11(a),(c) 39,992 - Other 23,798 12,018 Total Expenses from ordinary activities 256,768 198,332 Profit/(Loss) from ordinary activities before income tax expense 7,656 55,252 Income tax equivalent expense 4 (4,753) (18,246) Profit/(Loss) from ordinary activities after income tax expense 2,903 37,006 Non-owner Transaction Changes in Equity Net increase/(decrease) in Property, Plant & Equipment Revaluation Reserve 17 - 214,196 Total Revenues, Expenses and Valuation adjustments recognised directly in Equity - 214,196 Total changes in equity – other than those resulting from transactions with owners as owners 2,903 251,202 The above Statement of Financial Performance should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2004-2005 9 FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION as at 30 June, 2005
Notes 2005/$’000 2004/$’000 Current assets Cash 5 6,117 3,481 Other financial assets 7 2,260 271 Receivables 8 52,750 30,707 Inventories 6 6,951 8,052 Other 9 9,712 2,311 Total current assets 77,790 44,822 Non-current assets Property, plant and equipment 10 906,181 921,532 Self generating & regenerating assets 11 1,594,934 1,609,389 Deferred income tax asset 4 12,908 12,421 Total non-current assets 2,514,023 2,543,342 Total assets 2,591,813 2,588,164 Current liabilities Payables 12 33,702 30,379 Interest bearing liabilities 13 29,365 5,613 Dividend provided 14 27,254 13,096 Provisions 15 7,475 7,076 Current Tax Liability 4 855 1,815 Other Liabilities 16 - 5,021 Total current liabilities 98,651 63,000 Non-current liabilities Interest bearing Liabilities 13 108,697 115,660 Provisions 15 25,465 26,104 Deferred income tax liability 4 256,081 256,130 Total non-current liabilities 390,243 397,894 Total liabilities 488,894 460,894 Net Assets 2,102,919 2,127,270 Equity Capital 17 421,706 421,706 Asset Revaluation Reserve 17 718,452 738,841 Retained profits 17 962,761 966,723 Total Equity 17 2,102,919 2,127,270 The above Statement of Financial Position should be read in conjunction with the accompanying notes.
10 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
STATEMENT OF CASHFLOWS for the year ended 30 June 2005
Notes 2005/$’000 2004/$’000 Cash flows from operating activities Receipts from customers 267,658 262,963 Payments to suppliers and employees (214,916) (201,524) 52,742 61,439 Goods and Services Tax (9,667) (8,801) Interest received 400 355 Income Taxes Paid (6,249) - Net cash inflow from operating activities 26 37,226 52,993 Cash flows from investing activities Payments for property, plant and equipment (11,968) (15,501) Payments for SGARAs (plantation establishment) (19,563) (20,814) Capitalised Interest on Borrowings (7,232) (8,511) Proceeds from sale of property, plant and equipment 2,469 4,398 Proceeds from NSW Government contribution to capital program 2(ii) - 3,957 Net cash outflow from investing activities (36,294) (36,471) Cash flows from financing activities Proceeds from borrowings 29,789 26,297 Repayment of borrowings (13,000) (40,600) Dividends paid 14 (13,096) (4,162) Net cash inflow (outflow) from financing activities 3,693 (18,465) Net increase (decrease) in cash held 4,625 (1,943) Cash at the beginning of the financial year 3,752 5,695 Cash at the end of the financial year 5,7 8,377 3,752 The above Statement of Cash flows should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2004-2005 11 FINANCIAL STATEMENTS Notes to and forming part of the Financial Statements for year ended 30 June 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, the Public Finance and Audit Act 1983, the Public Finance and Audit (General) Regulation 2000, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and relevant NSW Government reporting directives.
The accounts of Forests NSW have been prepared on an accrual basis utilising conventional historical cost bases except for certain forest and non-forest assets which, as indicated separately in the notes and financial statements, are at valuation. Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year.
In June 2004, Forests NSW was aligned with the Department of Primary Industries (DPI) but continues to operate as a self funded Public Trading Enterprise (PTE). (refer Note 25)
As a PTE, Forests NSW continues to be responsible for making use of its employees and resources at its own cost, and must meet all expenses, taxes, duties and Government dividends from revenues earned from the commercial business activities it undertakes. Separate financial statements continue to be prepared for Forests NSW as required by the Public Finance and Audit Act 1983.
(a) Taxation Income Tax (Tax equivalents regime) (refer Note 4) As of 1 July 2001, Forests NSW is subject to the National Tax Equivalents Regime (NTER) which requires Government Trading Enterprises to be subject to the same taxes, including income tax and goods and services tax, as private sector organisations. Prior to this date Forests NSW were subject to the state based Tax Equivalents Regime.
Tax effect accounting procedures are followed whereby the income tax expense in the statement of financial performance is matched with the accounting profit after allowing for permanent differences. The future tax benefit relating to tax losses is carried forward as an asset as this benefit has largely arisen from the deductibility of plantation establishment activity. Whilst recognising the significant period involved (to maturity of these plantation assets), as these activities constitute Forests NSW core business, there is high likelihood the benefit will be fully realised in future periods. Income tax on cumulative timing differences is set aside to the deferred income tax or the future income tax benefit accounts at the rates which are expected to apply when those timing differences reverse.
Goods & services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except:
- the amount of GST incurred by Forests NSW as a purchaser that is not recoverable from the Australian Taxation Office is recognised as part of the cost of acquisition of an asset or as part of an item of expense.
- receivables and payables are stated with the amount of GST included.
(b) Receivables (refer Note 8) Receivables are recognised and carried at cost, based on the original invoice amount less a provision for any uncollectible debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.
12 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
(c) Provision for Doubtful Debts The following table summarises the rates used to estimate the provision.
Age of debts Percentage Between 31 – 60 days 2% Between 61 – 90 days 10% Over 90 days 50% Insolvent/Administration 100%
(d) Inventories and Work in Progress (refer Note 6) Inventories and Work in Progress (WIP) are stated at the lower of cost or net realisable value. In the case of materials and parts, cost comprises purchase price and incidental expenses. The valuation of WIP and finished goods is based on direct costs plus an appropriate proportion of production overheads.
(e) Non-Current Asset Valuations (i) Property, Plant & Equipment (refer Note 10) Land All land, being Crown Land and Forests NSW owned land, under forests and plantations and under administrative buildings, offices, mechanical workshops and other non-forest installations were revalued by the State Valuation Office (SVO) on 30 June 2004. The carrying value as at 30 June 2005 approximates to the fair value. Fair value is based on current market buying price representing value in use. The SVO supported this basis of valuation by recognising that Forests NSW land was held for continued use and would be replaced if Forests NSW was deprived of them.
The valuation recognised areas that were currently utilised for timber producing purposes and other areas such as reserves and exclusion zones where no commercial activities are carried out by Forests NSW.
Independent valuations will be performed at least triennially for Land, or earlier if significant market movements are detected, with purchases in the intervening periods taken to account at cost.
Roads & Bridges Major Roads and Bridges have been independently revalued by the SVO at 30 June 2003 on the basis of written down replacement cost, which approximates fair value. The carrying value as at 30 June 2005 approximates to the fair value.
Costs of building or significantly upgrading primary access roads (Class A) and secondary access roads (Class B) are capitalised as incurred. Maintenance costs on these higher classification roads are expensed as incurred. All other costs of maintaining and developing the rest of the roading infrastructure are expensed as incurred.
Independent valuations will be performed at least triennially for Roads and Bridges with purchases in the intervening periods taken to account at cost.
Motor Vehicles and Mobile Plant Motor vehicles and Mobile Plant were revalued at 30 June 2003 by management. The carrying value as at 30 June 2005 approximates to the fair value. Revaluations will be performed at least triennially for motor vehicles, or earlier if significant market movements are detected, with purchases in the intervening periods taken to account at cost.
ANNUAL REPORT 2004-2005 13 FINANCIAL STATEMENTS
Other Assets Radio Equipment was revalued at 30 June 2003 by management. The carrying value as at 30 June 2005 approximates to the fair value. Aircraft were revalued by Melream Pty Ltd at 30 June 2003. Other assets are stated at written down value as at 30 June 2004, which approximates fair value.
(ii) Self generating and Regenerating Assets (refer Note 11) Softwood Plantation Timber The value of the Softwood Pine Plantation Growing Stock has been assessed utilising a Net Market Value model, which is based upon standing volumes and current prices less the direct costs of disposing of the timber.
The present valuation model differentiates between the following components of the plantation: Non commercial plantations are defined as those plantations which are less than 15 years of age and which have not yet undergone a commercial operation. As market prices cannot be readily determined for these plantations, they are valued on the basis of historical costs incurred in their establishment. Commercial plantations are defined as those plantations between 12 and 15 years of age which have experienced a commercial operation, and all plantations 15 years of age or greater. A commercial operation is defined as a thinning or clear felling which produces marketable quantities of forest products for sale.
Volume increments are determined both by periodic re-measurement of samples of plantations and by modelling growth from the date of most recent measurement to the valuation date. The modelled growth estimates are generally checked to physical data at five yearly intervals. The market valuation is prepared by qualified foresters, employed by Forests NSW using techniques/methods published in scientific journals and accepted by the forestry industry. The current product proportionment models, used to determine the component product volumes on which the valuations are based, were first implemented in 2002. To better reflect the effects of recent growth conditions and the usage of more genetically advanced seedling stock in more recent years, Forests NSW has recently commenced processes to test and validate the modelling projections to recent actual harvested volumes of various timber products. Until these validation processes are completed, there may be some variation between reported modelled volumes and actual standing volumes. Recalibration of the inventory models will then be made to ensure models closely align to current actual harvest records. Should any amendment to the valuation become necessary as a result of this testing, any resulting financial effects will be incorporated into future valuations.
The net change in market value (resulting from price and volume movements) from the beginning, to the end of the year is recognised as revenue or an expense in the Statement of Financial Performance.
Costs capitalised in relation to plantations comprise the direct costs of establishment and development attributable to a new plantation of specific age class and species, and indirect costs attributable to the growing stock establishment activity. These indirect costs include fire prevention and suppression, road maintenance, forest management and planning, research, and administration and management. Other ongoing maintenance and management costs in relation to commercial pine plantations are expensed as incurred, with the exception of major post thinning fertilising and pruning programs. Where these programs are designed specifically to improve stand quality, the costs are capitalised.
Hardwood Plantation Timber These plantations are less than 15 years of age and have yet to undergo a commercial operation. As market prices cannot be readily determined for these plantations and as the quality of inventory and growth data has not developed to a suitable standard to support a detailed growth model for these plantations at this time, this resource is valued on the basis of historical costs incurred in their establishment. As Hardwood plantations undergo a commercial operation or reach age 15, Forests NSW intends to move to market value for this resource. Land under these plantations and integral infrastructures have been independently valued and disclosed separately in these accounts.
14 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
Native Forest Timber The value of the Native Forest timber resource, currently available for harvesting, has been assessed utilising a Net Market Value model, which is based upon standing volumes and current prices less direct costs of disposing of the timber.
Standing volume information has been sourced from the most recently available resource data. Only the standing volume of native forests that are available in a single harvest cycle is valued. Harvesting cycles vary between native forest types with a cycle of 25-30 years for native forest and 35-40 years for cypress. Where possible standing volume information has been grown forward to 30 June 2005 and reduced by volumes sold since the inventory date. Forests covered by the South East and South Coast Regional Forest Agreements (RFA’s) have used the RFA data as the basis for valuation.
Standing volume is calculated based on data obtained from sample inventory plots. Inventory data for forests within the Upper and Lower North East RFA’s have been updated in the current financial year. As part of a comprehensive improvement of inventory procedures a new sampling regime has been introduced and a substantial number of new inventory plots have been created to replace those lost to harvesting. Implementation of this regime has resulted in a significant shift in available sawlog volumes between species, an increase in volumes of saleable species, and a reduction in available pulpwood. Forests NSW proposes to apply the new inventorying regime to other RFA areas. At this stage, it is not known if similar changes might result in inventory for those other areas.
A new approach has also been developed for estimating harvestable area. New biometric equations are being developed for purposes of measurement, estimating growth, estimating standing volume and for estimating product yields. In some cases interim models have been developed that will only apply to the current valuation. The modelling process is ongoing and the new inventory regime has been operating since 1 January 2004 and it will be continually reviewed and improved. The current estimate of volume is the best estimate available based on a sampling and modelling regime that was designed to improve the previous methodology used in 1998 for Regional Forestry Agreement assessment. In these localities the updated inventory and resource modelling tools have been used to calculate volume.
The NSW Government announced in May 2005 that 348,000 hectares of woodlands between Dubbo and the Queensland border will be conserved under new forest and reserve categories, including permanent conservation zones. The effect on commercially harvestable timber volumes from these areas is still being calculated in detail. As the Government decision has still not been gazetted, Forests NSW reports for the 30 June 2005 continue to include values of both affected land areas and commercial timber on those land areas. Upon gazettal of the Government decision (expected by the end of calendar 2005), values of land areas to be transferred to other agencies, and any reduction to the value of timber inventories in these areas, will be recognised in Forests NSW financial reports. Comprehensive Resource Assessments (CRA’s) completed in prior years for the Brigalow Belt South and Nandewar bioregions permit the use of similar resource volumation methodologies as those used in the RFA processes. It is assumed that yields are sustainable for forests which are not covered by an RFA or a CRA. In this case no adjustment was made for volumes harvested.
In determining the standing volume, the gross area of native forests is reduced by the extent where logging is excluded in certain areas. A net harvest area modifier is then applied to reflect the impact of other logging exclusions prescribed by licences that are not area specific. A further strike rate reduction factor is used to reduce the net harvest area for unmapped flora and fauna exclusions. After adjusting the gross standing volume for the above exclusions, only 30% of the standing volume is valued, reflecting restrictions on the intensity of harvesting allowed for a native forest resource.
The market value for products by species was sourced from current years actual price data adjusted for marketing and selling costs.
Forests NSW older hardwood plantation resource has presently been valued as native forest until the plantations are accredited.
ANNUAL REPORT 2004-2005 15 FINANCIAL STATEMENTS
Forests NSW manages available native forest areas on a sustainable yield basis. Sustainable yield means that the volume harvested will approximate, over long-term harvest cycles, annual forest growth of the harvestable native forest areas. As a result, all costs incurred in managing, maintaining and developing the Native Forests timber resources are expensed as incurred on the basis that all relevant costs are incurred in maintaining a constant forest resource.
Carbon Credits During the 2004/05 year, Forests NSW participated in an inaugural sale of New South Wales Greenhouse Abatement Credits recognising the potential for carbon sequestration values to be derived from certain plantation areas. Whilst Forests NSW is actively contributing to development of identification and management procedures associated with the emergence of the carbon sequestration credit concept, for financial accounting purposes, at this stage it is difficult to determine a reliable measurement of the potential carbon sequestration capacity of certain plantation areas. As a result, Forests NSW accounts do not yet recognise a valuation for this potential SGARA asset.
Cost of Goods Sold Australian Accounting Standard AAS 1 Statement of Financial Performance requires the disclosure of the cost of goods sold. In accordance with AAS 35 Self Generating and Regenerating Assets, the cost of timber sold is deemed to be its net market value immediately after harvest, determined by reference to the most likely market for the harvested timber.
(f) Depreciation of Property, Plant & Equipment Depreciation is charged on Property (other than land), and Plant & Equipment at rates which provide for the original cost or valuation to be written down over the expected useful life of the asset. Depreciation commences when the asset is brought into commercial operation.
Type of Asset Depreciation Method Useful Life Property (other than Land) Straight Line 10 and 50 years Aircraft Straight Line 10 years Other Plant and Equipment Straight Lne 3 to 50 years Roads and Bridges - earthworks Straight Line 100 Years - paving (gravel) Straight Line 30 Years - paving (bitumen) Straight Line 50 Years
(g) Maintenance and Repairs Forests NSW policy is to maintain property, plant and equipment in good order and condition requiring ongoing maintenance and repair. The costs of maintenance and repairs are generally charged as expenses when incurred, except where they relate to the replacement of a significant component of an asset or a major upgrade of an asset, in which cases the costs are capitalised and depreciated (refer Note 1(e)). Other routine operating maintenance, repair and minor renewal costs are also expensed as incurred.
(h) Disposal of Assets Any gain or loss on the sale of property, plant and/or equipment has been taken into account in determining the profit for the year.
16 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
(i) Other Financial Assets (refer Note 7) Investments are valued at cost plus accumulated returns. Investment income is recognised in the period in which it is earned.
(j) Interest bearing liabilities (refer Note 13) Loans are carried at current capital value, which represent the present value of future cash flows associated with servicing the debt. Interest is accrued over the period it becomes due and is recorded as part of other creditors.
(k) Guarantee Fee Forests NSW is required to pay an annual Government Guarantee Fee to the NSW Treasury relative to the amount of loans at balance date based upon the differential between an independently assessed, stand alone, credit rating for Forests NSW and the NSW Government’s AAA rating. The actual fee payable is calculated using factors provided by the NSW Treasury each year. Due to the continuation of the Plantations Review study NSW Treasury deemed that an assessment was not required in the 2004/2005 year with reference remaining to the previous rating of BBB-. Forests NSW has been assigned a qualified rating indication of ‘BBB-’ by Standard & Poor’s Ratings Services. This is not necessarily the unqualified corporate credit rating that would otherwise apply to Forests NSW.
(l) Employee Benefits (refer Note 15) Annual leave Liability for Annual Leave is recognised and measured in respect of employees’ services up to the reporting date at nominal amounts based on the amounts expected to be paid when the liabilities are settled.
Long Service Leave A liability for Long Service Leave is recognised, and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using interest rates on notional government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outflows.
Long Service Leave liability is actuarily assessed triennially with the last assessment completed at the 30th June 2003.
Sick Leave Sick leave is non-vesting and is expensed as incurred. In line with past results, sick leave taken in future periods is expected to be well below entitlements in those periods.
Superannuation Calculation of the total liability for superannuation is based on actuarial advice provided by Pillar Administration.
The superannuation liability in the Statement of Financial Performance is the difference between the gross liabilities and the stake in the funds at reporting date in respect of Forests NSW employees (referNote 16).
Workers Compensation Insurance Forests NSW is a licensed self insurer under the provisions of the Workers Compensation Act 1987. In accordance with regulations that govern the operations of Workers Compensation, an independent actuary has determined the value of the outstanding claims liability as at 30th June 2005. In addition separate insurance cover is held with private insurance companies for excess total incident and total claims costs.
ANNUAL REPORT 2004-2005 17 FINANCIAL STATEMENTS
(m) Financial Instruments (refer Note 18)
Recognised Financial Instuments Accounting Policies Terms and Conditions
i) Financial Assets Cash Short-term deposits are stated at net Cash is deposited at call. realisable value. Interest is recognised in the Statement of Financial Performance when earned. Receivables Trade receivables are carried at nominal Credit sales are generally on 7, 14 or amounts due less any provision for 30 days settlement terms. doubtful debts. A provision is recognised when the collection of the amount is no longer probable. Investment Investments are stated at net realisable All Investments during the year were value. Interest and movements in market at call. value are recognised in the income and expenditure statement when earned. ii) Financial Liabilities
Accounts Payable Liabilities are recognised for amounts to Trade liabilities are settled within 30 days and Other Creditors be paid in the future for goods and of the month in which they are incurred in services received. line with NSW Government policy. A liquidity risk policy has been adopted Interest Bearing Liabilities Liabilities for loans are recognised at the by which no more than 25% of the total time of entering into the arrangement. debt matures in any one year. All borrowings are sourced from the NSW Treasury Corporation.
(n) Cash For purposes of the statement of cash flows, cash includes deposits at call which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.
(o) Borrowing Costs Borrowing costs are recognised as expenses in the period in which they are incurred, except where they are included in the costs of qualifying assets (where valid).
Borrowing costs include: • interest on bank overdrafts and short-term and long-term borrowings • amortisation of discounts or premiums relating to borrowings
18 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
Capitalisation of Borrowing Costs: Borrowing costs are capitalised as these funds have been utilised for the acquisition of land and for the establishment and development of new plantations which by their nature take a substantial period of time to become commercially productive.
(p) Financial Reporting by Segments Forests NSW operates solely in the forestry industry. The principal activities of Forests NSW are the management and development of pine plantations, native hardwood plantations, and broadleaf native and cypress pine forests and the sale of timber and related products to the timber and paper processing industries. Forests NSW also provides various community services, the cost of which is primarily funded by the State Government (refer Note 2(i)). Forests NSW operates solely in one geographical area, namely New South Wales.
(q) Rounding of Amounts The amounts in the Financial Statements have been rounded off to the nearest thousand dollars unless specifically stated to be otherwise.
(r) Dividend (refer Note 14) The amount of Dividend payable to the NSW Treasury was set as part of the 2004 Mini Budget at $32.544 million less the provision for income tax (Note 4) The Dividend provided is payable to Treasury in the following financial year.
(s) Revenue Recognition Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) payable to the taxation authority.
Sale of Timber and Related Activities Revenue from the sale of timber and related activities is recognised (net of returns, discounts and allowances) when control of the goods passes to the customer.
Grants Grants of a non-reciprocal nature are recognised on receipt of funds. Grants of a reciprocal nature are recognised as a liability and recognised as revenue in proportion to the stage of completion of the project for which the grant funds were provided.
(t) Impact of Adopting Australian Equivalents to International Financial Reporting Standards (AEIFRS) Forests NSW will apply the Australian equivalents to International Financial Reporting Standards (AEIFRS) from 2005-06.
The following strategy is being implemented to manage the transition to AEIFRS. The transition to the new standards is being managed by allocating internal resources and engaging consultants to analyse the pending standards and Urgent Issues Group Abstracts to identify key areas regarding policies, procedures, systems and financial impacts affected by the transition.
ANNUAL REPORT 2004-2005 19 FINANCIAL STATEMENTS
As a result of this exercise, the following steps to manage the transition to the new standards has been undertaken: • The following phases that need to be undertaken have been identified: - Phase 1 – Diagnostic - Phase 2 – Design and Planning - Phase 3 – Solution Development - Phase 4 – Implementation - Phase 5 – Post Implementation Review • Phases 1 – 4 have been implemented to date with the development and implementation of new accounting to policies to recognise the introduction of the new standards. This was undertaken after Phase 1 Diagnostic had been completed which entailed a review of current accounting policies and the likely impact of IFRS conversion on the business.
Forests NSW has determined the key areas where changes in accounting policies are likely to impact the financial report. Some of these impacts arise because AEIFRS requirements are different from the existing AASB requirements (AGAAP). Other impacts are likely to arise from options in AEIFRS. To ensure consistency at the whole of government level, NSW Treasury has advised agencies of options it is likely to mandate for the NSW Public Sector. The impacts disclosed below reflect Treasury’s likely mandates (referred to as “indicative mandates“).
Shown below are management’s best estimates as at the date of preparing the 30 June 2005 financial report of the estimated financial impacts of AEIFRS on Forests NSW equity and profit/loss. Forests NSW does not anticipate any material impacts on its cash flows. The actual effects of the transition may differ from the estimated figures below because of pending changes to the AEIFRS, including the UIG Interpretations and / or emerging accepted practice in their interpretation and application. Forests NSW accounting policies may also be affected by a proposed standard to harmonise accounting standards with Government Finance Statistics (GFS). However, the impact is uncertain because it depends on when this standard is finalised and whether it can be adopted in 2005-06.
(a) Reconciliation of key aggregates
Reconciliation of equity under existing Standards (AGAAP) to equity under AEIFRS: 30 June 2005 1 July 2004 Notes $’000** $’000* Total Equity Under AGAAP 2,102,919 2,127,270 Adjustments to accumulated funds Effect of valuing individually rather than by class 1 10,676 10,676 Derecognition of Provisions [AASB 137] 2 1,383 1,234 Write back asset revaluation reserve for investment properties 3 3,574 3,393 Defined benefit superannuation adjustment for change in discount rate 4 (39,761) (20,855) Effect of discounting long-term annual leave 5 135 141 Tax effect adjustment 6 2,650 10,834 Adjustments to other reserves Effect of valuing individually rather than by class 1 (10,676) (10,676) Write back asset revaluation reserve for investment properties 3 (3,393) (3,393) Tax effect adjustment 6 (211,315) (217,431) Total equity under AEIFRS 1,856,192 1,901,193 * adjustments as at the date of transition ** cumulative adjustments as at the date of transition plus the year ended 30 June 2005
20 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
Reconciliation of surplus/(deficit) under AGAAP to surplus/(deficit) under AEIFRS: Year ended 30 June 05:
Notes $’000 Surplus / (deficit) under AGAAP 2,903 Derecognition of provisions 2 149 Investment Properties 3 181 Defined benefit superannuation 4 (18,906) Long term annual leave 5 (5) Income tax expense 6 (8,184) Surplus / (deficit) under AEIFRS (23,862)
Notes to tables above 1. AASB 116 Property, Plant and Equipment require for-profit entities to recognise revaluation increments and decrements on an individual asset basis, rather than a class basis. This change will decrease accumulated funds and increase the asset revaluation reserve.
2. AASB 116 requires the cost and fair value of property, plant and equipment to be increased to include the estimated restoration costs, where restoration provisions are recognised under AASB 137 Provisions, Contingent Liabilities and Contingent Assets. These restoration costs must be depreciated and the unwinding of the restoration provision must be recognised as a finance expense. This treatment is not required under current AGAAP.
3. Under AASB 140 Investment Property and Treasury’s indicative mandates, investment property will be recognised at fair value. In contrast to their current treatment as property, plant and equipment, investment property recognised at fair value will not be depreciated and changes in fair value will be recognised in the operating statement rather than the asset revaluation reserve. This means any asset revaluation reserve balances relating to such property will be written back to accumulated funds.
4. AASB 119 Employee Benefits requires the defined benefit superannuation obligation to be discounted using the government bond rate as at each reporting date, rather than the long-term expected rate of return on plan assets. Where the superannuation obligation is not assumed by the Crown, this will increase the defined benefit superannuation liability (or decrease the asset for those agencies in an overfunded position) and change the quantum of the superannuation expense.
5. AASB 119 requires present value measurement for all long-term employee benefits. Current AGAAP provides that wages, salaries, annual leave and sick leave are measured at nominal value in all circumstances. Forests NSW has long-term annual leave benefits and accordingly will measure these benefits at present value rather than nominal value, thereby decreasing the employee benefits liability and changing the quantum of the annual leave expense.
6. AASB Income Taxes uses a balance sheet approach which requires the differences between the accounting and tax value of assets and liabilities to be recognised as deferred tax assets or liabilities. Current AGAAP uses an operating statement method that accounts for tax by adjusting accounting profit for temporary and permanent differences to derive taxable income. The AASB 112 approach alters the quantum and timing of tax assets and liabilities recognised. In particular, the balance sheet approach results in the recognition of a deferred tax liability in relation to revalued assets that are generally not recognised under current AGAAP. This also changes the quantum and timing of the tax expense.
ANNUAL REPORT 2004-2005 21 FINANCIAL STATEMENTS
(b) Financial Instruments In accordance with NSW Treasury’s indicative mandates, Forests NSW will apply the exemption provided in AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards not to apply the requirements of AASB 132 Financial Instruments: Presentation and Disclosures and AASB 139 Financial Instruments: Recognition and Measurement for the financial year ended 30 June 2005. These Standards will apply from 1 July 2005. None of the information provided above includes any impacts for financial instruments. However, when these standards are applied, they are likely to impact on retained earnings (on first adoption) and the amount and volatility of profit / loss. Further, the impact of these Standards will in part depend on whether the fair value option can or will be mandated consistent with Government Finance Statistics.
2. REVENUE
Revenue Notes 2005/$’000 2004/$’000 a) from timber related operating activities Royalties from sale of timber and related products 128,188 130,782 Contract Harvest and Haulage 78,364 68,522 206,552 199,304 b) from other operating activities Community Service Obligations 9,557 9,455 Other Services Rendered 18,101 19,661 Interest received 400 355 Rental of premises 2,954 2,702 Sale of non-current assets 20,071 4,398 State Government Capital Grants - 3,957 Other State Government Grants 6,789 4,759 57,872 45,287 Total Revenue 264,424 244,591
Community Services and Government Grants Forests NSW Community Service and Government Grants totalled $16,346,000 (2004: $18,171,000). Grants included capital and revenue components, which are detailed in the following notes:
(i) Community Service Obligations The State Government contributed $9,557,000 (2004: $9,455,000) towards the cost of providing Community Services. This contribution was included in the accounts as revenue. In 2004/05, these services, which include provision of recreation facilities, education and advisory services, government liaison and regulatory services, community fire protection and research cost Forests NSW $10,193,000 (2004: $10,792,000). These costs are included in operating expenditure.
(ii) State Government Capital Grants The State Government contributed $0 (2004: $2,968,000) toward the Hardwood Plantation Establishment Program which includes establishment of hardwood plantations on both private and Forests NSW land holdings. The State Government contributed a further $0 (2004: $989,000) for the purchase of private property under the Regional Forest Agreements.
(iii) Other Government Grants The State Government also paid Forests NSW $6,789,000 (2004: $4,759,000) for the performance of specific services including tasks associated with the Interim Assessment Process and related Comprehensive Resource Assessments, and for cost of redundancy payments resulting from initiatives to better align Forests NSW structures and functions to current trading conditions, $3,594,000 (2004: $0). 22 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
3. OPERATING PROFIT
Notes 2005/$’000 2004/$’000 (a) Net gains and expenses Operating profit before income tax includes the following specific net gains and expenses: i) Expenses Borrowing costs Interest and finance charges 7,224 8,313 Less: Amount capitalised (7,224) (8,313) Borrowing costs expensed - - Written down value of property, plant and equipment disposed 16,878 6,763 Depreciation Buildings 1,648 1,382 Roads & bridges 3,553 3,411 Plant and equipment 4,947 4,627 Total depreciation 10,148 9,420 Other charges against assets Bad debts written off – trade debtors 20 18 Provisions (expense) Doubtful debts 23 (414) Employee entitlements 12,237 10,047 Workers compensation (50) (1,230) Dividend 27,334 13,096 Total other provisions 39,544 21,499 ii) Cost of Goods Sold Deemed Cost of Goods Sold 1(e)(ii) 128,188 130,782 (b) Individually Significant Items Operating profit after income tax includes the following individually significant items: Expenses Net gain/(loss) from staff superannuation fund 11,578 6,564 Applicable income tax credit (3,473) (1,969) 8,105 4,595 Net Movement in Staff Superannuation Fund 8,105 4,595 Net Increment/(decrement) in net market value of timber (refer Note 11) (39,992) 8,994 Write off of failed hardwood plantations (refer Note 11) (647) (1,791) Redundancy Payments (3,926) (464) Total of significant items (36,460) 11,334
ANNUAL REPORT 2004-2005 23 FINANCIAL STATEMENTS
4. INCOME TAX EQUIVALENTS The aggregate amount of income tax attributable to the financial year differs from the amount calculated on the operating profit. The differences are reconciled as follows:
Notes 2005/$’000 2004/$’000 Profit/(Loss) from ordinary activities before income tax expense 7,656 55,252 Income tax calculated @ 30 % 2,297 16,576 Tax effect of permanent differences which: Increase tax payable: Amortisation of plantation stock sold 2,811 2,474 Non-deductible depreciation from revaluations of fixed assets 608 696 Non-deductible building depreciation 295 126 Non-deductible losses from assets disposed 1,569 100 Non-deductible expenditure of a capital nature 240 15 Non Deductible Charges – Disposal of Roads - 228 Non Deductible Land Disposal 215 - Capital Gains on Asset Disposal 68 - Sundry items 27 5 Decrease tax payable: Capital profit from assets disposed - (5) Employee superannuation fund gains (3,377) (1,969) Income tax adjusted for permanent differences 4,753 18,246 Adjustment to opening balances of deferred income tax liability - - Adjustment to opening balances of deferred income tax asset - - Income tax attributable to operating profit 4,753 18,246 Income tax attributable to operating profit: Provision for income tax 5,290 1,815 Deferred income tax liability (50) 12,886 Deferred income tax asset (487) 3,545 4,753 18,246
24 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
5. CASH
Notes 2005/$’000 2004/$’000 Cash at bank 6,054 3,426 Cash on hand 63 55 6,117 3,481 The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows as follows: Balances as above 6,117 3,481 Other Financial Assets 7 2,260 271 Balances per statement of cash flows 8,377 3,752
6. INVENTORIES The basis for valuation of Inventories is set out in Note 1(d).
Notes 2005/$’000 2004/$’000 Materials and parts – at cost 4,541 4,901 Work in progress and finished goods – at cost 2,423 3,522 6,964 8,423 Provision for stock losses (13) (371) Total Inventories 6,951 8,052
7. OTHER FINANCIAL ASSETS
Notes 2005/$’000 2004/$’000 NSW Treasury Corporation Hourglass Investments 2,018 60 Other Financial Assets 242 211 Total 2,260 271
Investments at call The NSW Treasury Corporation Hourglass Investments have been subject to floating interest rates between 5.30% and 6.17% (2004: 4.69% and 6.03%).
8. RECEIVABLES
Notes 2005/$’000 2004/$’000 Trade debtors 34,761 31,241 Less: Provision for doubtful debts (609) (591) 34,152 30,650 Other debtors 18,598 57 Total 52,750 30,707 During the year bad debts amounting to $21,000 (2004: $20,000) were written off. An amount of $500 (2004: $1,500) was recovered being debts previously written off.
ANNUAL REPORT 2004-2005 25 FINANCIAL STATEMENTS
9. OTHER CURRENT ASSETS
Notes 2005/$’000 2004/$’000 Prepayments 3,155 2,311 Superannuation Fund 6,557 - Total 9,712 2,311
(i) Employee Superannuation Funds The Employee Benefits liability was determined by the Fund’s actuary at 30 June, 2005 based upon membership information as at 31 March, 2005.
SASS/$’000 SANCS/$’000 SSS/$’000 2005/$’000 2004/$’000 Estimated Reserve Account balance 32,314 9,074 116,895 158,282 141,151 Accrued Employees Benefits Liability (32,689) (8,788) (110,248) (151,725) (146,172) (375) 286 6,647 6,557 (5,021) SASS State Authorities Superannuation Scheme SANCS State Authorities Non-Contributory Superannuation Scheme SSSState Superannuation Scheme
The Employee Benefits was assessed by the Fund’s actuary based on the following financial assumptions:
2005/2006 2006/2007 2007/2008 & thereafter %%% Rate of investment return 7.0 7.0 7.0 Rate of salary increase 4.0 4.0 4.0 Rate of increase in Consumer Price Index 2.5 2.5 2.5
26 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
10. PROPERTY, PLANT & EQUIPMENT
Notes 2005/$’000 2004/$’000 PROPERTY Freehold land At fair value (a) 3,479 5,094 3,479 5,094 Crown land At fair value (a) 742,850 743,433 742,850 743,433 Buildings At fair value (b) 27,053 38,373 Less Accumulated Depreciation (1,357) - 25,696 38,373 Roads & Bridges At fair value (c) 191,023 187,016 Less Accumulated Depreciation (97,862) (94,310) 93,161 92,706 Total Property 865,186 879,606 PLANT & EQUIPMENT Motor Vehicles & Mobile Plant At fair value (d) 33,797 33,524 Less Accumulated Depreciation (4,988) (2,500) 28,809 31,024 Aircraft At fair value (e) 1,318 1,439 Less Accumulated Depreciation (264) (144) 1,054 1,295 Other Plant & Equipment At fair value (f) 8,812 7,803 Less Accumulated Depreciation (3,748) (1,882) 5,064 5,921 Total Plant & Equipment 34,927 38,240 Property, Plant & Equipment in the course of construction 6,068 3,686 Total Property, Plant & Equipment 906,181 921,532 (a) independent valuation by State Valuation Office as at 30/06/04. (b) Building includes: at cost $973,000 and accumulated depreciation $(10,000) at valuation $26,080,000 and accumulated depreciation $(1,347,000) completed by State Valuation Office as at 30/06/04. (c) Roads and bridges includes: at cost $9,869,000 and accumulated depreciation $(238,000) at valuation $181,154,000 and accumulated depreciation $(97,624,000) completed by State Valuation Office as at 30/06/03. (d) Motor Vehicles and Heavy Plant includes: at cost $11,842,000 and accumulated depreciation $(1,464,000) at valuation $21,955,000 and accumulated depreciation $(3,524,000) as management valuation at 30/06/03. (e) Independent valuation of $1,302,000 by Melream Pty Ltd and management valuation of $16,000 and accumulated depreciation $(264,000 at 30/06/03). (f) Other plant and equipment includes: at cost $3,156,000 and accumulated depreciation $(841,000) at valuation $5,656,000 and accumulated depreciation $(2,907,000) at management valuation 30/06/03.
ANNUAL REPORT 2004-2005 27 FINANCIAL STATEMENTS
Reconciliation Reconciliations of the carrying amounts of each class of Property, Plant and Equipment at the beginning and end of the current and previous financial year are set out below.
$’000 Notes Crown Freehold Buildings Roads & All Plant & PPE Total Land Land Bridges Equipment WIP 2005 Carrying amount at 1 July 2004 743,433 5,094 38,373 92,706 38,240 3,686 921,532 Additions 329 - 973 4,007 4,277 2,382 11,968 Asset Dedications 1 -----1 Disposals (407) (1,650) (11,794) - (2,556) - (16,407) Asset Revocation (471) -----(471) Depreciation/amort’n expense * 3(a) - - (1,856) (3,552) (5,034) - (10,442) Group Reclassification (35) 35 ----- Revaluation Increments (Decrements) ------Carrying amount at 30 June 2005 742,850 3,479 25,696 93,161 34,927 6,068 906,181
*NOTE: Depreciation expense differs from Statement of Financial Performance by $294,000 (2004 $276,000). This amount represents depreciation held in inventories work in progress as a cost of production of nursery seedlings.
$’000 Notes Crown Freehold Buildings Roads & All Plant & PPE Total Land Land Bridges Equipment WIP 2004 Carrying amount at 1 July 2003 555,619 4,203 30,022 91,022 36,514 4,874 722,254 Additions - - 565 5,861 10,766 (1,188) 16,004 Asset Dedications 164 -----164 Disposals - (127) (362) (766) (4,279) - (5,534) Asset Revocation (8,537) -----(8,537) Depreciation/amort’n expense * 3(a) - - (1,524) (3,411) (4,761) - (9,696) Revaluation Increments (Decrements) 196,187 1,018 9,672 - - - 206,877 Carrying amount at 30 June 2004 743,433 5,094 38,373 92,706 38,240 3,686 921,532
*NOTE: Depreciation expense differs from Statement of Financial Performance by $276,000 (2002/2003 ($243,000). This amount represents depreciation held in inventories work in progress as a cost of production of nursery seedlings.
28 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
11. SELF GENERATING AND REGENERATING ASSETS (a) Softwood Plantation Timber (i) Valuation
Notes 2005/$’000 2004/$’000 Net market value of timber at beginning of reporting period 1,178,350 1,171,568 Capital expenditure – plantation establishment & development 17,458 17,365 Capitalisation of borrowing costs 1(o) 7,724 8,313 Write-off of growing stock &/or establishment costs (102) (331) Sale of Plantations (972) - Carrying amount as at the reporting date (prior to adjusting for changes in net market value) 1,202,458 1,196,915 Net market value at reporting date 1,132,909 1,178,350 Net increment/(decrement) in the net market value of timber (69,549) (18,565) ii) Plantation area by species and age class
Notes 2005 2004 Hectares Hectares Pinus radiata 0–14 years 58,276 59,554 15–30 years 100,259 101,659 31 years and over 30,101 29,483 Total 188,636 190,696 Southern Pine 0–14 years 3,765 3,761 15–30 years 3,687 3,417 31 years and over 1,844 2,280 Total 9,296 9,458 Other major species 0–14 years 57 63 15–30 years 170 171 31 years and over 3,027 3,325 Total 3,254 3,559 Total Area of Softwood Plantation 201,186 203,713
ANNUAL REPORT 2004-2005 29 FINANCIAL STATEMENTS
I1. SELF GENERATING AND REGENERATING ASSETS continued
iii) Softwood Plantation – standing volumes by major species
Species Commercial Standing Volume (m3) 2005 2004 Pinus radiata 40,394,398 39,744,781 Southern Pine 983,684 1,047,624 Other Major 560,139 610,384 Other Species 227,462 279,527
(b) Hardwood Plantation Timber (i) Valuation
Notes 2005/$’000 2004/$’000 Carrying amount of timber at beginning of reporting period – at fair value 58,665 57,007 Capital expenditure – plantation establishment & development 2,105 3,449 Sale of Plantations (29) - Write off of failed plantations (647) (1,791) Carrying amount as at the reporting date – at fair value Note 1(e)(ii) 60,094 58,665
ii) Plantation area by species (all less than 15 years old)
Notes 2005 2004 Hectares Hectares Eucalyptus dunni 8,384 8,498 Corymbia macaluta 4,320 4,312 Eucalyptus pilularis 4,807 4,478 Other Hardwood Plantation Species 9,405 8,837 Total Area of Hardwood Plantation 26,916 26,125
30 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
11. SELF GENERATING AND REGENERATING ASSETS continued (c) Native Forest Timber (i) Valuation
Notes 2005/$’000 2004/$’000 Net market value of timber at beginning of reporting period 372,374 344,815 Net market value at reporting date 401,931 372,374 Net increment in the net market value of timber 29,557 27,559 ii) Species Mix of Native Forest areas
Notes 2005 2004 Hectares* Hectares* Productive forest areas: Alpine Ash 16,916 16,917 Blackbutt 84,155 80,306 Blue Gum 66,185 65,619 Messmate 171,136 136,231 Mixed Coastal Eucalypt 109,586 101,115 Other Inland Eucalypt types 245,087 180,572 Rainforest 6,673 1,692 River Red Gum 93,300 96,963 Snow Gum 19,049 19,325 Spotted Gum 136,185 107,325 Stringybark 170,032 129,584 Un-classified 53,369 154,487 White Cypress Pine 234,232 231,754 Total 1,405,905 1,321,890 Total non productive forest areas 886,281 970,296 Total Area of Native Forest 2,292,186 2,292,186 * Native Forests are not homogenous by species. A total hectare by species is a proportional measure rather than representing discreet forests by species type.
ANNUAL REPORT 2004-2005 31 FINANCIAL STATEMENTS
12. PAYABLES
Notes 2005/$’000 2004/$’000 Current Trade 19,951 17,889 Receipts in Advance 12,498 9,079 Accrued Salaries, Wages & On-Costs 1,253 3,411 Total 33,702 30,379
13. INTEREST BEARING LIABILITIES (i) Forests NSW Interest Bearing Liabilities are recognised at Current Capital value and are made up of:
Notes 2005/$’000 2004/$’000 NSW Treasury Corporation Loans 18(b) 138,062 121,273 (ii) Repayment details of these loans shown on the Statement of Financial Position are as follows:
Notes 2005/$’000 2004/$’000 Not later than 1 year 29,365 5,613 Later than 1 year but not later than 5 years 26,624 51,797 Later than 5 years 82,073 63,863 Total borrowings 18(b) 138,062 121,273 NSW Treasury Corporation outstanding loan interest rates ranged between 5.08% and 6.73% (2004: 5.50% and 8.00%).
14. DIVIDEND
Notes 2005/$’000 2004/$’000 Provision for dividend at beginning of year 13,096 4,162 Dividend paid (13,096) (4,162) Dividend provided (27,254) (13,096) Provision for dividend at end of the year (27,254) (13,096)
32 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
15. PROVISIONS
Notes 2005/$’000 2004/$’000 Current Liabilities Employee Benefits 1(l) 6,150 5,830 Workers Compensation 1(l) 1,020 980 Redundancy - 9 Other 305 257 7,475 7,076 Non Current Liabilities Employee Benefits 1(l) 22,155 22,704 Workers Compensation 1(l) 3,310 3,400 25,465 26,104 Total Provisions 32,940 33,180 i) Aggregate Employee Benefits and Related Costs
Notes 2005/$’000 2004/$’000 Provisions – Current 6,150 5,830 Provisions – Non Current 1(l) 22,155 22,704 Accrued Salaries, Wages & On-costs 12 1,253 3,411 Total employee entitlements 29,558 31,945
16. OTHER LIABILITIES
Notes 2005/$’000 2004/$’000 Superannuation Fund - 5,021 Total - 5,021
ANNUAL REPORT 2004-2005 33 FINANCIAL STATEMENTS
17. RESERVES & RETAINED PROFITS Capital Accumulated PP&E Revaluation Total Funds Reserve Equity 2005 2004 2005 2004 2005 2004 2005 2004 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Balance at the beginning of the financial year 421,706 421,706 966,723 941,365 738,841 540,553 2,127,270 1,903,624 Changes in equity – transactions with owners as owners Revocations - - 1 164 (1) (14,624)* - (14,460) Dividend provided - - (27,254) (13,096) - - (27,254) (13,096) Total - - (27,253) (12,932) (1) (14,624) (27,254) (27,556) Changes in equity – other than transactions with owners as owners Surplus / (deficit) for the year - - 2,903 37,006 - - 2,903 37,006 Increment on revaluation of land transferred to NPWS - - - - - 7,319 - 7,319 Transfer from Asset Revaluation Reserve - - 20,388 1,284 (20,388) (1,284) - - Increment / decrement on revaluation of: Land - - - - - 197,205 - 197,205 Buildings & Installations - - - - - 9,672 - 9,672 Roads & Bridges ------Plant & Equipment ------Total - - 23,291 38,290 (20,388) 212,912 2,903 251,202 Balance at the end of the financial year 421,706 421,706 962,761 966,723 718,452 738,841 2,102,919 2,127,270
Nature and Purpose of Reserves i) PP&E Revaluation Reserve The PP&E revaluation reserve is used to record increments and decrements on the revaluation of non-current assets (Property, Plant and Equipment) as described in the Accounting Policy Note 1(e)(i).
* Revocations relate to land, roads and bridges transferred to the National Parks and Wildlife Service (NPWS) at their current use basis as per NSW Treasury Circular TC01/11.
34 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
18. FINANCIAL INSTRUMENTS REFER NOTE 1(m)
(a) Credit Risk Exposures The credit risk on the financial assets of Forests NSW have been recognised in the Statement of Financial Position at the carrying amount, net of any provision for Doubtful Debts.
Forests NSW has a Credit Policy which aims to mitigate the credit risk exposure to our sales customers. Customers are assessed with some required to lodge suitable security for the estimated maximum credit exposure based on average monthly sales. The policy requires stringent credit assessment of customers before the granting of any unsecured credit.
(b) Interest Rate Exposures Forests NSW exposure to interest rates is set out in notes 7 and 13. Exposures arise predominantly from assets and liabilities bearing variable interest rates as the Forests NSW intends to hold fixed interest assets and liabilities to maturity. Interest rate exposure is limited to interest rates available at the time of entering into arrangements with NSW Treasury Corporation. The assets or liabilities are held until maturity.
1 Year or Over 1 to 5 More than Non Interest Less Years 5 Years Bearing Total 2005 Notes $’000 $’000 $’000 $’000 $’000 Financial Assets Cash and Deposits 5 6,117 - - - 6,117 Receivables 8 - - - 52,750 52,750 Other financial assets 7 2,260 - - - 2,260 Total Financial Assets 8,377 - - 52,750 61,127 Financial Liabilities Bank Overdraft and Loans 13 29,365 26,624 82,073 - 138,062 Trade and Other Creditors 12 - - - 33,702 33,702 Total Financial Liabilities 29,365 26,624 82,073 33,702 171,764 Net Financial Liabilities (20,988) (26,624) (82,073) 19,048 (110,637)
1 Year or Over 1 to 5 More than Non Interest Less Years 5 Years Bearing Total 2004 Notes $’000 $’000 $’000 $’000 $’000 Financial Assets Cash and Deposits 5 3,481 - - - 3,481 Receivables 8 - - - 30,707 30,707 Other financial assets 7 271 - - - 271 Total Financial Assets 3,752 - - 30,707 34,459 Financial Liabilities Bank Overdraft and Loans 13 5,613 51,797 63,863 - 121,273 Trade and Other Creditors 12 - - - 30,379 30,379 Total Financial Liabilities 5,613 51,797 63,863 30,379 151,652 Net Financial Liabilities (1,861) (51,797) (63,863) 328 (117,193)
ANNUAL REPORT 2004-2005 35 FINANCIAL STATEMENTS
18. FINANCIAL INSTRUMENTS continued
(c) Net Fair Value of Financial Assets and Liabilities (i) On-Statement of Financial Position The net fair value of cash and cash equivalents, the non interest bearing monetary financial assets, and the financial liabilities of Forests NSW approximate their carrying value. Monetary dealing of the financial assets and liabilities are restricted to trading with and by the NSW Treasury Corporation.
All On-Statement of Financial Position assets are disclosed in the above table.
(ii) Off-Statement of Financial Position Forests NSW have potential financial liabilities which may arise from certain contingencies disclosed in Note 23 – Contingent Liabilities. As explained in the note some of the claims can not be quantified in terms of the likely impact on the carrying value of the Forests NSW assets. 19. LEASE AND HIRE PURCHASE
At balance date Forests NSW had lease/rental agreements totalling $3,370,000 (2004: $2,975,000). These agreements relate to occupancy of offices throughout the State. Forests NSW had no other material lease and hire purchase agreements.
Notes 2005/$’000 2004/$’000 Not later than one year 1,531 870 Later than one year and not later than five years 1,716 1,550 Later than five years 545 555 Total (including GST) 3,792 2,975
20. REMUNERATION OF ADVISORY BOARD
Notes 2005/$’000 2004/$’000 Payments to non-executives members of Forests NSW Advisory Board - 6
21. REMUNERATION OF EXTERNAL AUDITORS
Notes 2005/$’000 2004/$’000 Audit Office of NSW – audit of financial statements 247 235
22. CONSULTANTS
Forests NSW engaged consultants to undertake activities, which require specialist or independent skills. In 2005 the total cost for consultants was $634,000 (2004: $502,000).
36 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
23. CONTINGENT LIABILITIES
Forests NSW had several matters before the courts subject to due process under the law. These matters include amounts, which may or may not be incurred dependent on the court’s determination. At balance date, potential claims total approximately $153,000 (2004: $2,020,000).
During the year, the Victorian Supreme Court heard a damages claim arising from injuries sustained by an individual in a diving accident. Forests NSW was one of the defendants named in proceedings. The Supreme Court apportioned a minor share of damages to Forests NSW. The defendant parties lodged appeals, and the Victorian Court of Appeal subsequently heard these in May 2005. The Appeal Court determined Forests NSW had no responsibility for the injury sustained by the plaintiff, apportioning all blame to the other defendant. It is understood the other defendant has applied to the High Court requesting it consider certain legal aspects of the Court of Appeals ruling. At this stage, Forests NSW considers it has no liability associated with this case.
As at the 30th June 2005 various areas of state forest have been the subject of claims under the Native Title Act. The impact of these claims on the carrying value of assets cannot be quantified at this time.
24. COMMITMENTS
At balance date Forests NSW had capital commitments, primarily for growing stock establishment and Plant and Equipment purchases, amounting to $8,483,000 (2004: $3,289,000). Operating commitments at balance date mounted to $562,000 (2004: $458,000). All commitments are to be expended in the next financial year. Total Commitments of $9,044,000 includes input tax credits of $814,000 that are expected to be recoverable from the Australian Taxation Office.
25. RELATED ENTITIES
The Public Sector Employment & Management (Department of Primary Industries) Order 2004, made on 23rd June 2004 established the NSW Department of Primary Industries (DPI). The Department comprises the former NSW Agriculture, Mineral Resources NSW, NSW Fisheries and Forests NSW. Forests NSW continues to operate as a self funding Public Trading Enterprise (PTE) aligned with DPI’s Primary Industries trading division which has responsibility for identification and development of commercial trading activities and opportunities. Forests NSW is presently the only PTE or commercial activity contained within this section of DPI.
ANNUAL REPORT 2004-2005 37 FINANCIAL STATEMENTS
26. RECONCILIATION OF OPERATING PROFIT (after Income Tax) TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Notes 2005/$’000 2004/$’000 Operating profit/(loss) after income tax 2,903 37,006 Adjusted for NSW Government Capital Grant - (3,957) 2,903 33,049 Adjusted for non-cash items: Depreciation 10,442 9,420 Loss on disposal of non-current assets (3,192) 2,365 Write-down of plantation & Asset Revocations 1,750 2,093 Revaluation (Increment)/Decrement - Native Forests (29,557) (27,559) - Softwood Plantations 69,549 18,565 48,992 4,884 Change in operating assets and liabilities Movement in receivables (4,632) 2,374 Movement in inventories 609 (22) Movement in creditors 3,491 1,858 Movement in provisions (13,600) (7,396) Movement in net deferred tax payable (537) 18,246 (14,669) 15,060 Net cash inflow from operating activities 37,226 52,993 As at 30 June 2005, Forests NSW had $5,000,000 available in unused credit a ‘Come and Go’ Facility held with NSW TCorp.
End of Audited Financial Statements
STATEMENT BY COMMISSIONER
(as Corporation Sole Under Section 7 (1) of the Forestry Act 1916)
Pursuant to the Public Finance and Audit Act, 1983, the statements are signed and attested in the following terms:
In my opinion, the accompanying financial statements present a true and fair view of the financial position of the Forestry Commission of New South Wales (trading as Forests NSW) as at 30 June 2005 and the results of its operations and transactions for the year then ended.
The financial statements have been prepared in accordance with the provisions of the Public Finance and Audit Act, 1983, and accompanying regulations, and the Treasurer’s Directions.
I am not aware of any circumstances which would render any particulars included in the financial statements to be misleading or inaccurate.
B D Buffier Commissioner for Forests NSW 18 October 2005
38 ANNUAL REPORT 2004-2005 FINANCIAL STATEMENTS
ANNUAL REPORT 2004-2005 39 STATUTORY INFORMATION APPENDICES Charter 41 Ethnic Affairs Priority Statement 44 Major Works in Progress 54 Chief Executive’s Performance 41 External Groups 45 Objectives 54 Code of Conduct 42 Financial Information 48 Occupational Health & Safety 54 Committees 42 Fraud Control & Prevention Strategy 48 Overseas Visits 55 Consultants 43 Freedom of Information 48 Places of Business 58 Corporate Credit Cards 43 Human Resources 50 Privacy 60 Customer Response & Complaint 43 Insurance 52 Property Disposals 60 Disability Plan 43 Internal Control Process 52 Property Valuation 60 Energy Consumption 44 IT Update 53 Publications and Website 62 Equal Employment Opportunity 44 Legal Matters 53 Research & Development 63 Risk Management 65 Statement of Responsibility 69 Timber Customers 70 Timber Yield 71 Waste Management 72 Workers Compensation 72
40 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
under the Act, the Commission is required to take all practical CHARTER steps that it considers necessary or desirable to ensure Forests NSW is the registered business name of the Forestry the preservation and enhancement of the quality of the Commission of New South Wales. environment.
The Forestry Commission is constituted by the Forestry Act CHIEF EXECUTIVE’S PERFORMANCE 1916, and is subject to the direction of the responsible Minister. The Commission also administers the Timber Name Peter Duncan Marketing Act 1977, which provides for the control of the sale Position & Level Chief Executive and use of certain timbers. Primary Industries Trading incorporating Forests NSW Under its charter, the Commission’s operations span a wide SES Level 6 range including native forest management, plantation Remuneration $250,000 establishment and maintenance, fire protection, recreation, research, and marketing of forest products. Period in Position July 2004 to June 2005
The objects of the Commission are set out in the Forestry Act. The Chief Executive, Peter Duncan is accountable to me for The Commission is required to: performing a variety of functions as requested under the • conserve and utilise the timber on Crown-timber lands and Forestry Act 1916 and for implementing Government policy. land owned by the Commission or otherwise under its I am satisfied that Peter Duncan met the performance criteria control or management to the best advantage of the state; established for the position. Key tasks have been undertaken • provide adequate supplies of timber from Crown-timber to achieve operational requirements and leadership has been lands and land owned by the Commission or otherwise provided to deliver outcomes consistent with Government under its control or management for building, commercial, policy. industrial, agricultural, mining and domestic purposes; Achievements over the last 12 months include: • preserve and improve, in accordance with good forestry practice, the soil resources and water catchment • delivery of the ‘2004 mini budget’ distribution of $32.5M to capabilities of Crown-timber lands and land owned by the Government. Commission or otherwise under its control or management; • integration of Forests NSW as a trading enterprise within • encourage the use of timber derived from trees grown in the NSW Department of Primary Industries the state; • development and roll out of a new comprehensive safety • consistent with the use of State forests for the purposes of management system across the organisation forestry and of flora reserves for the preservation of the • establishment of a Business Review Unit (BRU) to native flora, promote and encourage their use as a consolidate and enhance work already commenced on recreation, and conserve birds and animals thereon; and improved financial systems and controls throughout the • provide natural resource environmental services (whether organisation. The BRU and Senior Management Team within or outside of New South Wales). have developed strategies to meet additional mini budget dividends, for the next four years. The Commission may make recommendations to the Minister • a revenue of more than $1.5 million from the world's first with respect to any of its objects, powers, authorities, duties trade of carbon credits arising from sequestration in forests or functions and shall, when requested by the Minister to do in an approved greenhouse gas abatement scheme so, make recommendations to the Minister with respect to any matter relating to its objects, powers, authorities, duties • establishment and reestablishment of 8,020 hectares of or functions. plantations. This includes 850 hectares through a Managed Investment Scheme with Australian Forest Management In the attainment of its objectives and the exercise and Pty Ltd, a subsidiary of Rothschild. performance of its powers, authorities, duties and functions
ANNUAL REPORT 2004-2005 41 STATUTORY INFORMATION
• finalisation of Wood Supply Agreements for high quality Commercial and Investment Services sawlogs on the North Coast following the 2003 National Peter Duncan (Chair) Parks decision Malcolm Clinch • development and public exhibition of draft Ecologically Gary Keating Sustainable Forest Management plans covering the next Rahmat Khaiami five years Michael Bullen • development of the ‘Living, working, playing … forests’ Allan Cook (External Advisor) recreation strategy to encourage safe and responsible use of State forests for recreational purposes. HR and Organisation Development Malcolm Clinch (Chair) Alastair Howard Andy Stirling Bryan Rowsthorne B D Buffier Manager, Human Resources Director-General Barry Heffernan NSW Department of Primary Industries Commissioner for Forests IT and Systems Development Michael Bullen (Chair) CODE OF CONDUCT Alastair Howard The Code for Forests NSW Employees was published in the Ian Cooper 1999/2000 Annual Report. The Code was reviewed and Mike Welch updated during the year. The new Code is expected to be Sally Arundell implemented in 2005/2006. Gary Keating Grant Michell
COMMITTEES Audit/Risk Management
Senior Management Team Malcolm Clinch (Chair) Alastair Howard Peter Duncan (Chair) Ken Robertson Peter Crowe Christine Di Bella Malcolm Clinch Steve Sullivan Alastair Howard Bob Germantse Gary Keating Representatives from the Audit Office of NSW Michael Bullen Rahmat Khaiami
Finance and Budget Committee Peter Duncan (Chair) Malcolm Clinch Bryan Rowsthorne Peter Crowe Paul Wells Allan Cook (External Advisor)
42 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
CONSULTANTS CUSTOMER RESPONSE AND COMPLAINT
$30,000 or more As a commercial operator, Forests NSW aims to provide a level of service that will generate ongoing business with Ecosurveys Pty Ltd Environmental $30,858.00 current and future customers. Ernst & Young Finance & Accounting/Tax $42,220.00 Individuals, customers, special interest and community NJ Papallo Management Services $46,010.41 groups may make representations on policy and other issues Gilbert & Tobin Legal $55,420.95 at any time. Comment is specifically invited on the provision Pacific Strategy (Investment Strategy/ of forest management plans and may be invited from time to Commercial Advice/ time on specific issues, particularly policy development. Business Analysis) $193,571.24 Whether as a commercial customer of Forests NSW or as a Total $368,080.60 member of the public using our community services people can expect: $30,000 or less • honest, courteous and friendly service; Engineering $3,895.60 • competent and conscientious assistance; Environmental $105,930.58 • to be treated fairly; Information Technology $10,563.78 • to be assisted without discrimination; Management Services $53,295.99 Training $57,279.85 • a reasonable turnaround time. Total $230,965.80 If a customer is not satisfied with the service we provide, the difficulty should be addressed to the local regional office. CORPORATE CREDIT CARDS Concerns regarding log product quality or in field operational and other relevant problems should be addressed on-site to Subject to meeting departmental requirements, eligible staff the Supervising Forest Officer. If there is a difficulty that are issued with corporate credit cards to facilitate travel, involves policy, the issue should be raised at the regional level. accommodation and limited purchases. The Office of the Ombudsman, Ph: (02) 9286 1000, is also The Department monitors use of these cards on a monthly available to further investigate and review any complaint. basis. The Finance Branch processes all payments and the Chief Executive or relevant senior manager approves all DISABILITY PLAN expenses associated with card use.
No late payment fees were incurred as a result of corporate On the advice of the Public Employment Office, Forests NSW card usage. has now incorporated a 3 year Disability Plan into the overall EEO Management plan. A ‘People With Disabilities Employment Plan’ has been included as a Key Result Area (KRA) and, as with the KRA mentioned above, it includes a number of strategies for implementation.
C
ANNUAL REPORT 2004-2005 43 STATUTORY INFORMATION
ENERGY CONSUMPTION EQUAL EMPLOYMENT OPPORTUNITY
Forests NSW continues to adopt the NSW Government Achievements: Energy Management Policy objectives as an integral part of • The Equity Advisory Committee met three times in the its business, although being a public trading enterprise, 2004-05 period and continued the commitment to and Forests NSW is not required to participate. promulgation of the Equity Program across the organisation, including ongoing operation of the strategic Significant benefits of contributing to broad environmental Equity Advisory Committee. This Committee regularly outcomes in NSW include achieving a reduction in greenhouse undertakes reviews of the Ethnic Affairs Priority Statement, gas emissions and comprehensive cost savings. Equity Policy and Equity Program and Reasonable Adjustment Policy, all have been revised and signed off The specific target in the Government Energy Management by the CEO and published on the Intranet. The EEO Policy is to reduce the statewide energy consumption of Management Plan (2004 to 2007) has been completed government buildings where feasible, by 25% of the 1995 and reviewed. It will be published on the Intranet upon level by 2005. approval by the CEO. This Plan includes a number of initiatives to enhance both employment and promotional Forests NSW has achieved a reduction in electricity opportunities for EEO group members within Forests NSW. consumption of 17% on 1995 levels as at June 2005. • The percentage of Aboriginal/Torres Strait Islander The level of greenhouse gas emissions has been reduced by employees remains at 4.4% against total staff numbers 10% in Forests NSW over the last 12 months which shows which is in excess of the NSW Government’s target (2%). that the commitment to minimising energy usage is active in • The percentage of People with a Disability remains at 11%, the organisation. which is slightly lower than the NSW Governments target With the co-location of some offices into DPI and the closure of 12%. of some office sites, along with the constant monitoring of energy consumption within Forests NSW, it is envisaged the ETHNIC AFFAIRS PRIORITY STATEMENT results over the coming year will closely reflect those AND AGREEMENT achieved in 2005. The current EEO Management plan includes a ‘Racial, The purchase of green power in the Pennant Hills Office and Ethnic and Ethno-religious Employment Plan’ as a Key West Pennant Hills buildings in Sydney continues at 25% of Result Area. The Plan includes a number of strategies for total energy purchased at those centres. implementation to assist in incorporating the principles of cultural diversity into mainstream management, operational and human resource policies and programs.
44 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
EXTERNAL GROUPS Commonwealth Research Committees on Marsupials, Hydrology and Forest Erosion As a manager of natural resources, including land, Council of Heads of Australian Entomological Collections biodiversity, carbon and timber, Forests NSW is involved in CSIRO Division of Forestry Advisory Committee policy-making at local, state, national and international levels. The following list summarises the external working groups, CSIRO Softwoods Research Liaison Committee task force and committees on which the organisation is Crossarm Working Group of the Power Poles Committee represented, addressing the environment, land use, natural Forest and Wood Products Action Agenda resources, greenhouse, plantations and industry issues. Infrastructure Co-ordination Committee under Plantations and Reafforestation Act International groups Institute of Wood Science International Energy Agency Bioenergy Task 38 Joint Working Party on Use of Agricultural Chemicals in International Union of Forest Research Organisations. Forestry International Union for the Conservation of Nature and Mallee Natural Resources Liaison Committee Natural Resources. Murray-Darling Basin Commission Significant Ecological American Society for Testing and Materials Asset Management Committees Australian Pitch Canker Committee Murray-Darling Basin Commission Environmental Watering Group Montreal Implementation Group National or interstate natural resource policy groups National Ag Vet Chemical Policy Committee Forest and Wood Products Research and Development Corporation - Market Knowledge & Development National Association of Forest Industries Market Development Advisory Group Committee Australia Pesticide and Veterinary Medicines Authority National Carbon Accounting System Steering Committee Sub-Committee National Forest Inventory Australian Committee for the International Union for the National Sirex Co-ordination Committee (NSCC) Conservation of Nature National Weeds Strategy Ex. Committee Australian Forest Health Committee Private Forests Consultative Committee Australian Life Cycle Assessment Society Queensland Market Development Program Management AFS Limited Board Committee Australian Wood Preservation Committee Regent Honeyeater Recovery Team Standards Association of Australia Sub-Committee Research Priorities Co-ordination Committee (RPCC) (The Australian Standards Committee TM6 - Wood Preservation Radiata Pine Breeding Co is a fully incorporated NZ-based and Durability limited liability company) Standards Association of Australia Sub-Committee Research Priorities Co-ordination Committee (RPCC) Research Working Group - RWG1 - Genetic Resources Australian Standards Committee EV5 - Life Cycle Analysis Research Priorities Co-ordination Committee (RPCC) Standards Association of Australia Sub-Committee Research Working Group - RWG2 - Forest Measurement and Life Cycle Assessment Data Documentation Format Information Co-operative Research Centre (CRC) for Greenhouse Research Priorities Co-ordination Committee (RPCC) Accounting Research Working Group - RWG3 - Land and Water Resources
ANNUAL REPORT 2004-2005 45 STATUTORY INFORMATION
Research Priorities Co-ordination Committee (RPCC) Interdepartmental Committee on Riverine Corridors Research Working Group - RWG4 - Native Forest Kurri Kurri Sand Swamp Woodland Recovery Team Management Ministerial Advisory Council on Shooting Clubs Research Priorities Co-ordination Committee (RPCC) Murray River Regional Development Board Research Working Group - RWG5 - Plantation Management Murray Farm Forestry Research & Development Research Priorities Co-ordination Committee (RPCC) Subcommittee Research Working Group - RWG7 - Forest Health Murray Wetlands Working Group Sirex Technical Committee National Corroboree Frog Recovery Team Standards Association of Australia Sub-Committees - TM7, TM6, TM3, CS005, FP020 (Timber Services Branch) Natural Resource Management Strategy - State Research Panel Forestry and Forest Products Committee (FFPC) of the Ministerial Council on Primary Industries (PIMC) Natural Resources Programs Co-ordinating Committee Primary Industries Standing Committees (PISC) of PIMC NSW Biosolids Taskforce Timber Standards Co-ordination Group (TSCG) NSW Carbon Sequestration Working Group World Forestry Congress Interim Organising Committee New South Wales Remote Sensing Committee Noxious Animal Advisory Council NRIMS Meladata Working Group State natural resource policy groups NSW Forest Health Advisory Group NSW Cypress Industry Strategic Plan NSW Interagency Heritage Committee Red Gum Working Group NSW National Heritage Trust Farm Forestry Steering ACEM Environment Committee Committee Animal Care and Ethics Committee NSW Premiers Regional Co-Ordination Program Basincare NSW Technical Committee NSW Noxious Weeds Advisory Committee Biodiversity Strategy Implementation Group (BSIG) NSW Ramsar Managers Network Cessnock Natural Resources Working Group NSW Tree Forum Decade of Landcare Working Group Pest Advisory Council Emissions Trading Working Group Pest Animal Council of NSW Eden Logging and Investigation Training Team (ELITT) Board Research Scientist Classification Committee Government Paint Committee Research Unit for Biodiversity and Bioresources Great North Walk Management Committee River Redgum Water Management Interdepartmental Greening Australia Committee Hasting River Mouse Recovery Committee Salinity Research and Development Co-Ordination Committee Interagency Integrated Property Management Committee Softwoods Harvesting Committee Interagency Native Title Committee Softwood Advisory Group - FWPRDC Interdepartmental Biosolids Committee South East Integrated Logging Committee Interdepartmental Committee for Trees on Farms South East Regional Development Board Interdepartmental Committee on Climate Change
46 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
State Assessment Panel of the National Soil Research Working Group 6 (of the Forestry and Forest Conservation Program Products Committee of the Primary Industries Ministerial State Emergency Management Committee’s Agriculture Council) Services Subcommittee and Engineering Services Interagency Aircraft Working Group Subcommittee ASTM Committee E05 on fire test methods State Greenhouse Network State Mapping Advisory Committee State Water Monitoring Co-Ordinating Committee Local groups State Wetlands Advisory Committee Community Consultation Group - The Ourimbah Protocol 2 Water Management Committee Officers in our regional and district offices are involved in a wide range of local groups covering: effluent re-use; Industry and professional groups environmental education; Australasian Emissions Trading Forum emergency services; Bee Industry Consultative Committee fire management; Bioenergy Australia industry development, promotion, safety and training; Forest Industry Council land management and trusts; National Association of Testing Authorities landcare; NSW Forest Industries Training Board noxious weed and feral animal control; Technical Committee of the Radiata Pine Breeding Company recreation and tourism; Softwood Industry Round table regional plantation committees The Institute of Foresters of Australia Inc. trees on farms, afforestation, land rehabilitation and other tree Timber Development Association promotion; TDA Flooring Committee wildlife conservation Timber Preservers of Australia - Technical Committee Australian Hardwood Network Timber and Building Merchants Association (TABMA) Sydney Timber Industry Club Fire management groups Australian Fire Authorities Council Bushfire Co-operative Research Centre Stakeholders Council and Steering Committees Bush Fire Co-ordinating Committee Fire Fire Management Group (of the Forestry and Forest Products Committee of the Primary Industries Ministerial Council
ANNUAL REPORT 2004-2005 47 STATUTORY INFORMATION
FINANCIAL INFORMATION FRAUD CONTROL AND CORRUPTION PREVENTION STRATEGY Liability Management Performance Clause 13(1) of the Annual Reports (Statutory Bodies) The Strategy was published in the 1999/2000 Annual Report. Regulation 1995 is not applicable to Forests NSW as the The Strategy was reviewed and updated during the year. The level of debt servicing costs as at 30 June 2005 is below the new Strategy is expected to be implemented in 2005/2006. limit determined by the Treasurer. FREEDOM OF INFORMATION Investment Management Performance Forests NSW received interest on cash investments in Forests NSW satisfied the requirements of the Freedom of 2004/2005 of $400,000 (2003/2004 - $355,000). The amount Information (FOI) Act in 2004/2005 in that a Summary of was received entirely from Treasury Corporation on amounts Affairs was published in the New South Wales Government lodged on their 24-hour call facility. Gazette (six monthly basis) and an annual Statement of Affairs was available to members of the public in our offices Payment of Account throughout the State. No interest has been paid under Clause 2AB of the Public Finance and Audit Regulation 1984. The number of applications received in 2004/2005 (13) was five up on the previous year (8). Nine applications were Supplier Payments granted in full. Four applicants failed to respond when The following schedule outlines the accounts payable and requested to pay a deposit. creditor balances in each quarter for 2004/2005 Total time devoted to FOI applications was 32 hours. Fees Quarter Accounts Creditor received totalled $810. There were four requests for reduction Ending Payable ($m) Balance ($m) of fees which were all granted. 30/09/04 12.0 8.3 30/12/04 9.7 6.7 31/03/05 11.0 9.4 30/06/05 11.9 9.3
Forests NSW has in place financial procedures which ensure that all accounts are paid within the statutory requirements.
Subsidiary Companies Forests NSW did not control any entity of the kind referred to in Section 39(1A) of the Public Finance and Audit Act, 1983 as at 30 June 2005.
Grants to Non-Government Community Organisations Forests NSW did not make any grants to non-Government community organisations during 2004/2005.
48 ANNUAL REPORT 2004-2005 Results areasfollows: FOI ApplicationsReceivedSince1990/91
number of applications No. ofOmbudsman’sreviews Internal reviewsfinalised Internal reviewsrequested Over 20hours 10 -20hours 0 -10hours Processing hours Over 35days 22 to35days Completed in0-21days Discounts allowed Requiring formalconsultation Deferred Refused No recordsfound Granted inpart Granted infull No responsefromapplicant Unfinished Withdrawn Transferred Completed Brought forward FOI Requests 12 16 20 0 4 8
1990/91
1991/92
1992/93
1993/94 03/04 ------Personal 1994/95
1995/96 04/05 ------
1996/97
1997/98 03/04 1 2 1 2 1 5 5 2 2 4 2 6 8 8 ------
1998/99 Other 04/05 10 12 1999/2000 13 13 4 4 3 1 9 4 ------
2000/2001 03/04 2 49 24 1 2 8 1 54 24 2 13 5 8 6 ------2001/2002 - - NULRPR 2004-2005 REPORT ANNUAL Total 2002/2003 04/05 13 10 13 12 1 - 2003/2004 -
2004/2005
49 STATUTORY INFORMATION STATUTORY INFORMATION
Chief Executive Service (CES)/Senior Executive Service (SES) HUMAN RESOURCES Positions/Senior Officer (Public Servant)
As at 30 June 2005, Forests NSW effectively employed a total Grade/ 30 June Grade/ 30 June of 1,039 employees. This figure comprises 558 employees Structure 2004 Structure 2005 under the Public Sector Employment and Management Act, (SES) 6 1 (SES) 6 1 2002, and 481 employees under the Forestry Act, 1916. Employees under the Public Sector Employment and (SES) 4 0 (SES) 4 0 Management Act are involved in management, administration (SES) 3 5 (SES) 3 5 and technical roles. Employees under the Forestry Act are (SES) 2 1 (SES) 2 0 primarily engaged in timber marketing, road construction (SES) 1 1 (SES) 1 1* and maintenance, tree planting and pruning, nursery work, forest conservation and fire protection. Total SES 8 Total SES 7 * SES1 position now located as a joint position within the Department of Employee Numbers - Ten Year Trend Primary Industries.
Year Ended Public Sector Forestry Act Total Employment Status 30th June Management Employees Other Permanent Act Employees 300 1995 680 929 1609 250 1996 697 855 1552 200
1997 686 809 1495 150
1998 668 755 1423 100 Staff numbers 1999 694 698 1392 50 2000* 647 549 1196 0 2001 637 532 1169 12345678
2002 630 509 1139 1 = $0 - $30,145 4 = $46,036 - 58,253 7 = > $94,165 (Non SES) 2003 634 512 1146 2 = $31,352 - 41,177 5 = $58,254 - 75,331 8 = > $94,165 (SES) 3 = $41,178 - $46,035 6 = $75,332 - 94,165 2004 620 492 1112 2005 558 481 1039 Salary Level *These are adjusted figures to those published in the 2000 Annual Report. Men Women Temporary employees were incorrectly excluded from the figures. 300
Salary and Wage Movement 250 Negotiated increases in salaries and wages during the year 200 were as follows: 150 The Crown Employees Fieldwork and Other Staff Award is 100 Staff numbers in the process of being re-negotiated. 50
There were no major industrial disputes during the year, 0 however negotiation continued with the public sector unions 1 234 5678 regarding the proposed restructure of Forests NSW 1 = $0 - $30,145 4 = $46,036 - 58,253 7 = > $94,165 (Non SES) administrative and clerical functions. Industrial relations 2 = $31,352 - 41,177 5 = $58,254 - 75,331 8 = > $94,165 (SES) 3 = $41,178 - $46,035 6 = $75,332 - 94,165 policies and practices are determined either by the Public Employment Office, the Department of Primary Industries via award negotiations with relevant unions.
50 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
Table 3 – Numbers and levels of SES staff as at 30 June 2005
SES Levels 1 2 3 4 5 6 7 8 Total No. of SES Staff 1* 0 5 0 0 1 0 0 7 No. of female SES Staff 0 0 0 0 0 0 0 0 0 * SES1 position now located as a joint posiition within the Department of Primary Industries
Table 6 – Percent of total staff by level
SUBGROUP AS PERCENT OF SUBGROUP AS ESTIMATED PERCENT TOTAL STAFF AT EACH LEVEL OF TOTAL STAFF AT EACH LEVEL LEVEL Total Respondents Men Women Aboriginal People People People People Staff People & Torres from Racial, Whose with a with a Disability (Number) Strait Islanders Ethnic, Ethno- First Language Disability Requiring Work Religious not English Related Adjustment Minority Groups < $31,352 11 45% 73% 27% 20% $31,352 - $41,177 184 24% 89% 11% 11.1% 20% $41,178 - $46,035 104 34% 75% 25% 8.6% 3% 6% 2.0% $46,036 - $58,253 156 55% 62% 38% 2.3% 7% 3% 10% $58,254 - $75,331 195 63% 81% 19% 0.8% 15% 5% 8% $75,332 - $94,165 68 62% 87% 13% 19% 7% 5% > $94,165 (non SES) 69 87% 96% 4% 5% 5% > $94,165 (SES) 6 TOTAL 793 50% 80% 20% 4.4% 8% 3% 11% 1.1% Estimate Range (95% confidence level)
Table 37 – Percent of total staff by employment basis
SUBGROUP AS PERCENT OF SUBGROUP AS ESTIMATED PERCENT TOTAL STAFF AT EACH LEVEL OF TOTAL STAFF AT EACH LEVEL EMPLOYMENT Total Respondents Men Women Aboriginal People People People People BASIS Staff People & Torres from Racial, Whose with a with a Disability (Number) Strait Islanders Ethnic, Ethno- First Language Disability Requiring Work Religious not English Related Adjustment Minority Groups Permanent Full-time 746 51% 81% 19% 2.7% 9% 3% 9% Permanent Part-time 11 73% 27% 73% 13% 13% 2.0% Temporary Full-time 22 32% 59% 41% 14.3% 14% 14% Temporary Part-time 2 50% 50% 50% Contract - SES 6 Contract - Non SES Training Positions 6 50% 100% Retained Staff Casual 115 17% 46% 54% 5% 5% TOTAL 908 46% 75% 25% 2.5% 9% 3% 8% Estimate Range (95% confidence level)
ANNUAL REPORT 2004-2005 51 STATUTORY INFORMATION
Training INSURANCE The priority for training this year has been predominantly in areas of health and safety. Over 800 staff from across the After the significant increases in premiums payable on state participated in the Corporate Safety Management insurance policies for the prior year, Forests NSW was able to System and Risk Assessment Training Program. A number negotiate premium reductions for almost all insurance of training initiatives have been implemented throughout policies renewed late in the 2004/05 financial year. Compared the year. with the prior year, these recent renewals reflected an 8.1% reduction in total premium costs. Cultural Heritage Awareness training programs were conducted and the ‘Driving Smarter’ training and assessment Continuing efforts to improve safety and increase focus on programs continue to be implemented. the positive management of workers compensation cases and processes resulted in substantial savings in the Excess A number of fire training courses were conducted including Workers Compensation premium, which is required under Forest Fire Fighter training course and assessment Forests NSW Workcover approved self-insured status. Ongoing programs, for new staff, Fire Ground Manager, and Fire good performance in terms of public liability claims, and more Weather courses and a joint agency Fire Incident stable conditions in this sector of the insurance market, also Management workshop with the Rural Fire Service. produced savings on the tiered Public Liability coverage. Two employees graduated from Southern Cross University Forests NSW utilises a large fleet of light and heavy vehicles under the Forests NSW Undergraduate Study Assistance in supporting and performing its forestry operations. Some Program (USAP) with a Bachelor of Applied Science, accidental minor vehicle damage changed the risk profile for Forestry. One field worker is expected to graduate by the the relevant coverage, resulting in the only premium increase end of the year and another field worker enrolled for the mid incurred for the coming year. This will be an area to receive year intake for 2005. management focus during the coming year. Three field workers graduated this year in the Advanced Diploma in Forestry Management at the University of INTERNAL CONTROL PROCESS Melbourne, Creswick Campus. One graduate was awarded the Department of Sustainability and Environment Forest Management Audit and Review Unit conducted internal audits Service Prize for Silviculture and the another graduate was into Forest NSW systems, processes and activities to assess awarded the Willmott Forests Award and the Hancocks the adequacy of internal controls. Reporting responsibility is award for highest average across all subjects. direct to the Chief Executive and the Audit/Risk Management Committee to ensure independence and objectivity for this role. One field worker commenced the Advanced Diploma this year. There are eleven field workers currently undertaking The program of review conducted included financial/ the Advanced Diploma course. management audit, environmental/operational audit, investigation and special projects as required. The Unit Under the Graduate Study Assistance Program (GSAP) one coordinates protected disclosures and maintains a fraud and staff member has completed a Masters Course. corruption hotline to enable prompt inquiry into allegations of fraud, corruption, maladministration and/or serious or Professional Development continues to have high priority significant waste of public resources. within Forests NSW. Training actual costs for the year were $2.9 million or 3.7% of the annual payroll.
52 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
Business risks including probity issues arising in the Information Security Management System regulatory and operational environment are routinely As required by the Premier's Department outlined in Circular identified and addressed through operational and business No. 2001-46 "Security of Electronic Information", over the last plans of Forests NSW Branches and through strict and twelve months, Forests NSW commenced the development transparent contract administration. and implementation of an Information Security Management System (ISMS). This system will assist Forests NSW in applying Overall, internal controls over financial and related operations the most appropriate level of security to different types of during the year were adequate for their purpose and objectives. information stored and managed within the organisation.
IT UPDATE To ensure that the ISMS is effective and aspires towards ‘best practice’, it has been developed to comply with the During the last year, two major systems were developed and Australian Standard AS/NZS 7799:2.2003 Information Security implemented to assist customers and contractors in entering Management. Accredited external auditors were engaged to and viewing Forests NSW sales related information. assess the ISMS for compliance to this AS/NZS Standard. The auditors raised only minor issues in their report and 1 Electronic Delivery Docketing (EDD) provided advice that Forests NSW could proceed towards Over the last eighteen months, corporate and regional staff accreditation. The project is in the implementation phase have been working with local contractors and customers, in which includes awareness training for staff. the development and implementation of an EDD system to record royalty sales data electronically rather than by paper LEGAL MATTERS docket. EDD is expected to deliver major improvements in the timeliness and accuracy of log sales and stock data and The Forestry Regulation was reviewed and re-made with minor substantially reduce the administration involved with manual amendments in September 2004. The five-yearly review of the entry and handling of paper delivery dockets. Timber Marketing Regulation is due for completion in August 2005. Once completed, this Regulation requires Parliamentary During the year this system was extensively tested, piloted in Counsel’s endorsement before proceeding for enactment. a few locations, and implemented fully in three regions and partly in two regions. Further implementation to other regions The main work undertaken by Legal Services during the year is expected in 2006. included, litigation, advice and contract preparation.
2 Web Access System A significant issue during 2004/05 was the judgement of the A Web based system has been developed that allows Victorian Court of Appeal that set aside a damages award Forests NSW customers and contractors to view sales against Forests NSW arising out of personal injuries sustained information,for the current month, so that they can monitor when an individual dived from a log into a swimming hole in production data prior to accounts being issued. Commercial Barooga State Forest. One of the defendants has since Services has assisted in introducing this system to customers applied for special leave to appeal to the High Court. Forests and contractors during the roll out of the EDD system. NSW considers it has no liability associated with this case.
The Web system provides secured access that allows clients to view only their data and obtain downloads, if required, for analysis. The Web system will allow both customers and contractors to download tax invoices and related support documentation for previous month's sales.
ANNUAL REPORT 2004-2005 53 STATUTORY INFORMATION
MAJOR WORKS IN PROGRESS Reporting on our objectives is included in our social, economic and environmental (Seeing) report, the Department of Primary Major works primarily comprised normal plantation Industries Annual Report and this Annual Report. development and re-establishment activity, some of which Reports on our operational performance are prepared and was not yet completed at the end of the year. There were submitted to Treasury on a quarterly basis. no individual construction or development projects of significance undertaken during the year. OCCUPATIONAL HEALTH, SAFETY AND REHABILITATION Growing Stock $6,990,957 Others $1,491,568 Workplace Safety Total $8,482,525 Incident Statistics • Number of Lost Time Incidents (LTI’s) 30 OBJECTIVES • Days lost due to workplace incidents (due to Incidents occurring in F2004) 223.6 Forests NSW Statement of Affairs identifies our management objectives as to: • Lost Time Frequency Rate 14.6 • Sustain our financial performance Safety Awards • Deliver ecologically sustainable management of Chief Executive Awards recognise Forests NSW workplaces natural resources that work a full year without recording a Lost Time Incident. This • Provide accountability to the community year, two regions recorded a year free of Lost Time Incidents:
• Support our people Monaro Region (27 staff) These objectives encompass ensuring the supply of timber Macquarie Region (65 staff) to processing industries, protection of bio-diversity of State It is the third consecutive year that Monaro Region has forests, achievement of environmental benefits and providing achieved this standard of safety management performance. community amenities, all within the framework of running a profitable business for the people of New South Wales.
Combined Workplace Incident Statistics - past 5 years
F2005 F2004 F2003 F2002 F2001 Frequency Rate 14.6 13.9 18.1 16.4 18.6 Incidence Rate 2.9 2.8 3.4 3.1 3.5 Average Lost Time Rate 7.8 7.0 23.1 27.0 28.7 No. Lost Time Incidents (LTI) 30 31 40 36 42 No. Days Lost Due to LTI’s 223.6 216.9 925 971 1203 Lost Time Severity Rate 113.7 97.2 418.6 441.6 534.4
54 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
OVERSEAS VISITS
FORESTS NEW SOUTH WALES OVERSEAS VISITS 1 July 2004 - 30 June 2005
Name/Position City/Country/Date Purpose Cost/Funding
Dr Huiquan Bi Beijing, Chengdu, Aba To assist Aust Centre for International Agricultural Nil Principal Research Scientist China Research (ACIAR) on project to assess suitability of Funded by ACIAR R & D Division 18/6/04-7/7/04 Pinus radiata in catchment restoration
Mr Robert Eldridge Beijing, Chengdu, Aba To assist Aust Centre for International Agricultural Nil Deputy General Manager China Research (ACIAR) on project to assess suitability of Funded by ACIAR R & D Division 18/6/04-7/7/04 Pinus radiata in catchment restoration
Mr Jack Simpson Beijing, Chengdu, Aba To assist Aust Centre for International Agricultural Nil Senior Forest Pathologist China Research (ACIAR) on project to assess suitability of Funded by ACIAR R & D Division 18/6/04-7/7/04 Pinus radiata in catchment restoration
Mr Stephen Sullivan Beijing, Chengdu, Aba To assist Aust Centre for International Agricultural Nil Operations & Business China Research (ACIAR) on project to assess suitability of Funded by ACIAR Development Manager 18/6/04-7/7/04 Pinus radiata in catchment restoration R & D Division
Ms Sally Arundell Colorado, Wyoming, North Attend the 20th International Seminar on Forest & $11,985 Strategic Project Manager Carolina, Washington DC, Natural Resources Administration & Management Forest Policy & Resources USA 22/8/04-9/9/04
Ms Penny Baalman Buenos Aires Participate as expert (carbon accounting specialist) in 6th $4,228 Carbon Investment Analyst Argentina meeting of ISO/TC207/WG5 (Climate Change) to finalise ($2,000 funded by Investment Services Division 26/8/04-7/9/04 development of an International Standard in greenhouse Standards gas accounting Australia)
Mr Peter Crowe Rotorua, Nelson Attend Radiata Pine Tree Breeding Company Technical $3,567 Director New Zealand Cttee & Board meetings. Attend the Forest Industry Planted Forests 6-10/9/04 Engineering Assn Annual Conference on Pruned Pine
Dr Annette Cowie Vancouver, Victoria Attend International Energy Agency Bioenergy Research $317 Research Officer Canada Program on Greenhouse Gas Balances of Biomass & (Remainder funded R & D Division 11-20/9/04 Bioenergy Systems, meeting by CRC Green house Accounting & Bioenergy Australia)
Dr Angus Carnegie Bangkok Present paper at & attend International Workshop on Nil Research Scientist Thailand Development of an Asia pacific Regional Strategy for Funded by ACIAR R & D Division 17-21/10/04 Eucalyptus rust
ANNUAL REPORT 2004-2005 55 STATUTORY INFORMATION
Name/Position City/Country/Date Purpose Cost/Funding
Mr Paul de Mar San Jose Attend International Liaison Cttee meeting for Nil - Funded by US A/Manager Costa Rica organisation of 4th International Wildfire Conference Forest Service Asset Protection & Technical 20-25/10/04 Services
Mr Michael Henson Charleston Present papers & attend the International Union of $3,110 Tree Improvement Manager South Carolina Forest Research Organisations conference on Forests (Remainder funded R & D Division 31/10/04-7/11/04 Genetics & Tree Breeding in the Age of Genomics: by CRC for Progress & Future Sustainable Forest M'ment)
Mr Michael Henson Christchurch Attend Radiata Pine Breeding Company Technical $2,251 Tree Improvement Manager New Zealand Committee meeting R & D Division 15-18/11/04
Ms Kathryn Jones Reims, Toulouse Attend compulsory overseas residency, subject 'Global $4,767 Timber Merchandising Manager France Strategic Thinking' as part of MBA Mid North Coast 27/11/04-7/12/04
Mr William Gardner Lake Toya Attend & make presentation at the Third Intercontinental Nil - Funded by Research Officer Japan Landfill Research Symposium CRC for R&D Division 28/11/04-4/12/04 Greenhouse Gas Accounting
Mr Fabiano Ximenes Lake Toya Attend & make presentation at the Third Intercontinental Nil - Funded by Research Officer Japan Landfill Research Symposium CRC for R&D Division 28/11/04-4/12/04 Greenhouse Gas Accounting
Mr Simon Nettleton Auckland, Rotorua Benchmarking system development & deployment. Nil - Funded by Resource Systems Development New Zealand Participate in technical workshops at Forest Forest Research LM & TS 6-10/12/04 Research NZ NZ
Dr Christine Stone Tsukuba Attend & present paper at an International Workshop on Nil - Funded Principal Research Scientist & Japan Monteal Process Criteria & Indicators by Japanese Forest Program Leader Forest Health 17-22/01/05 & Forest Products M'ment Research Institute R & D Division
Mr Peter Crowe Rotorua Attend Radiata Pine Breeding Company Board meeting $3,118 Director New Zealand Planted Forests 8-11/03/05
Mr Peter Crowe Rotorua Attend Radiata Pine Breeding Company Board meeting $3,523 Director New Zealand Planted Forests 10-15/04/05
56 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
Name/Position City/Country/Date Purpose Cost/Funding
Mr Steve Boyton Nelspruit, Sabie, Tzaneen Attendance at course on Tree Improvement Strategy & Nil - Funded by Senior Technical Officer Limpopo Analysis, conduct research re E.grandis & investigate ACIAR R & D Division South Africa silvicultural m'ment of Sth African plantations 14/04/05-01/05/05
Dr Annette Cowie Dublin, Ireland Attend international workshops on Bioenergy, Nil - Funded Research Officer Graz, Austria greenhouse accounting methodology & policy by CRC R & D Division 23/04/05-08/05/05 Greenhouse Accounting & Bioenergy Australia
Dr Huiquan Bi Beijing, Chengdu, Aba To assist Aust Centre for International Agricultural Nil - Funded by Principal Research Scientist China Research (ACIAR) on project to assess suitability of ACIAR DPI Science & Research 29/4/05-28/5/05 Pinus radiata in catchment restoration
Mr Nicholas Cameron Rome, Milan, Madrid To seek new investors & promote NSW as leader in $5,040 Manager Italy, Spain carbon sequestration legislation & foster international Investor Relations, Commercial 7-15/05/05 investment interest in NSW plantations for carbon sinks Services
Mr Michael Henson Rotorua Attend Radiata Pine Breeding Company Technical $1,496 Tree Improvement Manager New Zealand Committee meeting R & D Division 16-18/05/05
Dr Craig Barton Flakaliden Obtain training in running whole tree chambers & assist Nil - Funded by Research Officer Sweden in their shipment to Australia to address need for Australian DPI Science & Research 16-30/05/05 information on long term impact of climate change on Greenhouse Office Australian forests
Mr William Gardner Raleigh Attend workshop on “Strategies for studying the Nil - Funded by Research Officer USA decomposition of wood & paper products in American CRC for R&D Division 22-30/05/05 & Australian landfills” Greenhouse Gas Accounting
Mr Fabiano Ximenes Raleigh Attend workshop on “Strategies for studying the Nil - Funded by Research Officer USA decomposition of wood & paper products in American CRC for R&D Division 22-30/05/05 & Australian landfills” Greenhouse Gas Accounting
Mr Francis Lemckert Cape Town Attend & present papers at the 5th World Congress of $3,500 Research Scientist South Africa Herpetology (Remainder DPI Science & Research 16-28/06/05 funded by Newcastle University)
ANNUAL REPORT 2004-2005 57 STATUTORY INFORMATION
PLACES OF BUSINESS
Business hours Native Forests Operations Branch South Coast 8:30 am-4:30 pm (Mon - Fri) PO Box J19, Coffs Harbour Jetty 2450 PO Box 42, Batemans Bay 2536 Cnr High & Hood Streets Crown Street, Batemans Bay Forests NSW offices can provide: Coffs Harbour Jetty Ph (02) 4472 6211 Fax (02) 4472 6557 • information on forestry subjects, wood or Ph (02) 6656 8800 Fax (02) 6651 2909 South East trees; PO Box 273, Eden 2551 • advice on wood supplies; REGIONAL OFFICES 13B Bass Street, Eden Ph (02) 6496 1500 Fax (02) 6496 3258 • advice on tree planting and diseases; Planted Forests Riverina • advice on timber uses, timber identification Hume PO Box 610, Deniliquin 2710 and wood technology PO Box 291, Tumut 2720 315 Victoria Street, Deniliquin TRCC Building • a timber inspection service; Ph (03) 5881 2266 Fax (03) 5881 4200 76 Capper Street, Tumut Western • educational services for schools and Ph (02) 6947 3911 Fax (02) 6947 2865 community groups; PO Box 865, Dubbo 2830 Macquarie Cnr Monash & Chelmsford Streets, Dubbo • books, audio-visual material and research PO Box 143, Bathurst 2795 Ph (02) 6841 4288 Fax (02) 6884 4771 notes on forestry, and Cnr Browning & William Streets, Bathurst Ph (02) 6331 2044 Fax (02) 6331 5528 • information on sales of native and exotic FOREST CENTRES plants. Monaro Many of these services and materials are free PO Box 83, Bombala 2632 Baradine Forest Centre of charge. Enquiries can be made at all Jonas Street, Bombala PO Box 63, Baradine 2396 Forests NSW offices. If a request is beyond Ph (02) 6458 3177 Fax (02) 6458 3624 Cnr Lachlan & Darling Streets, Baradine the resources of the local office, it will be Northern Region (Future Forests) Ph (02) 6843 1607 Fax (02) 6843 1639 answered by mail. PO Box 71, Walcha 2354 Bulahdelah Forest Centre Corporate Office 19E Hill Street, Walcha PO Box 20, Bulahdelah 2423 Locked Bag 23, Pennant Hills 2120 Ph (02) 6777 2511 Fax (02) 6777 2179 Cnr Meade & McKenzie Streets, Bulahdelah Building 2 Trenayr Road, Junction Hill 2460 Ph (02) 4997 4206 Fax (02) 4997 4812 423 Pennant Hills Road, Pennant Hills Ph(02) 6640 1660 Fax (02) 6640 1650 Casino Forest Centre Ph (02) 9980 4100 Fax (02) 9484 1310 PO Box 688, Casino 2470 DX 4713 P/HILLS Native Forests Cnr Canterbury & Walker Sts, Casino Cumberland State Forest Hunter Ph (02) 6662 0900 Fax (02) 6662 5826 PO Box 344 PO Box 100, Beecroft 2119 Forbes Forest Centre Hunter Region Mail Centre NSW 2310 95 Castle Hill Road PO Box 369, Forbes 2871 516 High Street, Maitland NSW 2320 West Pennant Hills 2125 NSW Government Offices Ph (02) 4931 6666 Fax (02) 4933 0772 Ph (02) 9871 3377 Fax (02) 9872 6447 Camp Street, Forbes Nursery Business Unit Mid-North Coast Ph (02) 6662 0900 Fax (02) 6852 3998 PO Box 168, Wauchope 2446 PO Box 100, Beecroft 2119 Inverell Forest Centre Maher Street, Wauchope 95 Castle Hill Road PO Box 448, Inverell 2360 Ph (02) 6585 3744 Fax (02) 6585 2392 West Pennant Hills 2125 Warialda Road, Inverell Ph (02) 9871 3399 Fax (02) 9871 3456 North East Ph (02) 6722 4200 Fax (02) 6722 5428 (For Nurseries, see list) PO Box 535, Coffs Harbour NSW 2450 Planted Forests Operations Branch 130 West High Street PO Box 915, Albury 2640 Coffs Harbour NSW 2450 Ellis Street (off Thurgoona Drive) Ph (02) 6652 0111 Fax (02) 6651 9891 Thurgoona, via Albury Ph (02) 6043 1007 Fax (02) 6043 1051
58 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
Moss Vale Forest Centre Gunnedah Nursery Batlow Workshop (No public enquiries) PO Box 542, Gunnedah 2380 PO Box 117, Batlow 2730 PO Box 208, Moss Vale 2577 Soil Conservation Research Centre, Memorial Avenue, Batlow Belanglo Cottage, Bennett Road, Gunnedah 2380 Ph (02) 6949 1008 Fax (02) 6949 1185 Belanglo State Forest Ph (02) 6742 3126 Fax (02) 6742 0618 Bombala Annex Fax only: (02) 4877 1939 Inverell Nursery Jonas Street, Bombala 2632 Supervisor's Mobile: 0407 701 299 PO Box 448, Inverell 2360 Ph (02) 6458 3690 Fax (02) 6458 3516 All enquiries for this Centre to: Warialda Road, Inverell Casino Annex Bombala: Ph (02)6458 3177 Ph (02) 6721 0103 Fax (02) 6721 1164 Fax (02) 6458 3624 PO Box 376, Casino 2470 Muswellbrook Nursery 57-65 Dyraaba Street, Casino Mildura Forest Centre PO Box 219, Muswellbrook 2333 Ph (02) 6662 3103 Fax (02) 6662 4991 PO Box 62, Dareton 2717 New England Highway, Muswellbrook Coffs Harbour Workshop Silver City Highway, Dareton (02) 6543 2622 Fax (02) 6543 1154 Ph (03) 5019 8414 Fax (03) 5019 8460 Cnr Pacific Highway & Beryl Street Narrandera Nursery Coffs Harbour 2450 Narrandera Forest Centre PO Box 33, Narrandera 2700 Ph (02) 6652 1644 Fax (02) 6652 6700 PO Box 417, Narrandera 2700 Lake Drive, Narrandera Eden Workshop NSW Government Offices Ph (02) 6959 1223 Fax (02) 6959 2460 22-26 Twynam Street, Narrandera PO Box 702, Eden 2551 Tumut Nursery Ph (02) 6959 1233 Fax (02) 6959 1596 Government Road, Eden PO Box 347 Tumut 2720 Ph (02) 6496 1555 Fax (02) 6496 3257 Taree Forest Centre Blowering Nursery PO Box 692 Taree 2430 Toronto Workshop Cnr Snowy Mountains Hwy & Suite 1, 57-61 Albert St Taree 2430 PO Box 101, Toronto 2283 Blowering Road, Tumut Ph (02) 6551 0074 Fax (02) 6551 2326 Awaba & High Streets, Toronto Ph (02) 6947 6210 Fax (02) 6947 4890 Ph (02) 4959 3957 Fax (02) 4959 6950 Tumbarumba Forest Centre (No public enquiries) PO Box 90, Tumbarumba 2653 Tumut Radio Workshop Wagga Wagga Nursery Lot 7, Winton Street, Tumbarumba Sydney Street, PO Box 5336, Wagga Wagga 2650 Ph (02) 6948 2400 Fax (02) 6948 2773 Tumut State Forest,Tumut 2720 DL & W Conservation Research Centre Ph (02) 6947 3904 Fax (02) 6947 4416 Olympic Way, Wagga Wagga Wauchope Annex NURSERIES Ph (02) 6931 2600 Fax (02) 6931 3201 Off Cameron Street, Wauchope 2446 Cumberland Nursery (02) 6585 1609 Fax (02) 6585 3868 WORKSHOPS PO Box 100, Beecroft 2119 95 Castle Hill Road, West Pennant Hills Baradine Annex Ph (02) 9871 3222 Fax (02) 9871 3456 PO Box 63, Baradine 2396 Dubbo Nursery Cnr Lachlan & Darling Streets, Baradine PO Box 2047, Dubbo 2830 Ph (02) 6843 1971 Fax (02) 6843 1555 Wellington Road, Dubbo Batemans Bay Annex Ph (02) 6884 5319 Fax (02) 6884 7487 PO Box 42, Batemans Bay 2536 Forbes Nursery Princes Highway, Batemans Bay PO Box 717, Forbes 2871 Ph (02) 4472 6571 Fax (02) 4472 4531 67 Reymond Street, Forbes Bathurst Workshop Ph (02) 6852 1924 Fax (02) 6851 1443 PO Box 143, Bathurst 2795 Grafton Nursery Kelso Industrial Estate PO Box 1535 Grafton 2460 Toronto Street, Bathurst Cnr Trenayr Road, Grafton 2460 Ph (02) 6332 4775 Fax (02) 6332 4595 Ph (02) 6644 7001 Fax (02) 6644 7041
ANNUAL REPORT 2004-2005 59 STATUTORY INFORMATION
PRIVACY AND PERSONAL INFORMATION PROPERTY VALUATION PROTECTION Location Present Use Valuation $ Compliance with the twelve principles has been observed Sydney throughout the year. An internal review was requested during Bankstown Hangar 175,000 the year. The review has commenced and the applicant will Prospect Depot 2,460,000 be notified of the outcome. West Pennant Hills Office, Nursery and Cottages 14,877,468 Planted Forest Division All Regional Offices have been audited and comply with the policy for storage and security of personal information. Albury Office 735,000 Monaro Region PROPERTY DISPOSALS Baeridge Fire Tower 60,000 Belanglo Cottage and State forest lands, which were disposed of during the year, Workshop 125,000 are listed hereunder: Bombala Cottage 95,000 Forestry Region and Reason for Disposal Bombala Cottage 105,000 Affected State Bombala Office, Depot and Nursery 580,000 forest/property Bombala Cottage 285,000 Mid North Coast Region Bondi Camp 413,000 Part Coopernook Required by Midcoast Water for Bondi Cottages 132,000 Coopernook Sewerage Treatment Plant Cairnlea Cottage 90,000 Part Kiwarrak Required by the Roads & Traffic Authority for Rest area/Lookout Ila Cottage 69,000 on Pacific Highway Pericoe Homestead 55,000 Riverina Region Woolinpubrah Inn 80,000 Part Barooga Required by the Roads & Traffic Hume Region Authority for approaches to new bridge Bago Cottages 267,000 over Murray River Batlow Workshop 502,000 Sydney Region Blowering Camp 104,000 Darling Mills Revoked for inclusion in the Bondo Cottages and Headquarters 1,063,000 Bidjigal Reserve Burngoogie Fire Tower 96,000 Pennant Hills Office Not a core asset. Planned transfer Carabost Cottages and Headquarters 113,000 of staff to Cumberland State Forest, West Pennant Hills. Green Hills Cottage and Shed 138,488 Western Region Kangaroo Fire Tower 50,000 Part Gillenbah Required by the Roads & Traffic Laurel Hill Camp 1,188,000 Authority for Rest Area on the Laurel Hill Cottages 138,000 Newell Highway Munderoo Fire Tower 126,000 Red Hill Cottage 93,000 Tumut Cottage 77,000 Tumut Nursery 1,380,000
60 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
Macquarie Riverina Region Bathurst Office 1,102,526 Barham Depot 65,000 Black Springs Shed and Headquarters 381,000 Deniliquin Office 272,000 Burraga Fire Tower 95,000 Mathoura Depot 151,200 Canobolas Cottages 259,000 Tumbarumba Office, Workshop, Garage 250,000 Canobolas Headquarters 185,000 North East Region Glenwood Cottage 64,000 Blackhole Fire Tower 64,000 Kelso Workshop 400,000 Bom Bom Shed 63,000 Kelso Vacant 65,000 Casino Workshop 335,000 Newnes Camp 270,000 Coffs Harbour Workshop 1,418,000 Pennsylvannia Fire Tower 128,000 Dorrigo Office 89,000 Shooters Hill Radio and Lookout Tower 118,000 Glen Innes Office 215,000 Sunny Corner Cottages and Mt Pikapene Fire Tower 122,000 Headquarters 221,000 Tenterfield Office and Workshop 112,000 Sunny Corner Fire Tower 116,722 Tooloom Fire Tower 78,000 Northern Urbenville Cottage 54,500 Walcha Cottage 80,000 Urbenville Cottage 54,500 Walcha Office and Shed 165,000 Urbenville Office 68,000 Native Forest Division Urbenville Park and Depot 98,000 Coffs Harbour Offices 1,268,156 Urunga Office 240,000 Western Region Woolgoolga Cottage 233,000 Baradine Cottage 54,000 Mid North Coast Baradine Cottage 84,000 Coopernook Cottage and Headquarter 78,000 Baradine Office, Workshop 436,300 Kendall Depot 270,000 Dubbo Nursery, Office, Cottage 1,334,000 Wauchope Office and Depot 1,263,000 Forbes Nursery, Cottage, Depot 210,000 West Kempsey Offices and Workshop 188,000 Inverell Office, Nursery 369,400 Hunter Region Narrabri Depot 83,000 Bulahdelah Office, cottages, workshop 509,000 Narrandera Nursery and Cottage 354,000 Dungog Office 202,000 South East Region Dungog Workshop 117,000 Eden Guest house and Limeburners Creek Cottage and shed 66,000 cabins 416,000 Mandalong Cottage and shed 196,000 Eden Workshop 386,000 Moonan Brook Camp, cottage 80,000 Eden Office, workshop Muswellbrook Office, cottage and nursery 551,400 and depot 176,000 Toronto Office and Workshop 670,000 South Coast Region Warramalong Fire Tower 80,000 Batemans Bay Offices 632,000 Batemans Bay Workshop and Depot 721,000 Narooma Office and workshop 514,000
ANNUAL REPORT 2004-2005 61 STATUTORY INFORMATION
Bush Telegraph magazine PUBLICATIONS AND WEBSITE The magazine was re-branded to reflect Forests NSW role in www.dpi.nsw.gov.au/forests the new Department of Primary Industries. 22,000 copies of the magazine are printed each quarter and distributed across Forests NSW provides up-to-date information about forestry; New South Wales, Australia and internationally (in addition to native forests, planted pine and hardwood forests, forest- being available on the website). based recreation and the role forests can play in addressing salinity and other land repairs issues. Information is available The 20-page full colour magazine details native forest in both hard copy and electronically via the internet. management, planted forests, Forests NSW people and partners, native flora and fauna, and timber and its many Our website and publications program supports the applications, in addition to topical subjects such as forests’ organisation’s efforts to promote its three main areas of role in greenhouse gas, salinity abatement and the business - native forests, hardwood planted forests and Department of Primary Industries. softwood planted forests. In recent years, the program has also focused on the recreational opportunities available in The magazine is distributed in hard copy free of charge. State forests, delivering information on key recreation areas Subscribers can ask to receive a hard copy or email and recreation activities undertaken in forests. notification of when the ‘e-version’ is on-line. Current and back issues of Bush Telegraph can be viewed in the current The main audiences for Forests NSW information include: affairs section of the website. To join the mailing list, simply fax your postal or email details to (02) 9980 7010 or email • Community and environmental groups; [email protected]. Please specify whether you would • Timber industry; like the magazine in hard copy or electronic format. • Rural landholders; • Recreational forest visitors; • Primary and high school students and teachers; New titles • Media outlets; A variety of new guidelines and materials were developed • Local councils; in 2004/05 to reflect the change to Forests NSW and its role • Other environmental agencies in NSW, Australia within the new Department of Primary Industries. A new logo, and overseas; usage guidelines and corporate materials such as signage • Investors; and stationery were also developed and produced. • Tertiary institutions and museums. Recreation Brochures And Maps Website A new brochure covering general recreation in State forests The site contains information on State forests under the and the use of recreational vehicles in State forests were following categories: printed during the year. Brochures covering the Central • About Forests NSW Coast, Lower North Coast, Mid North Coast, Southern • Current Affairs Highlands and South Coasts of NSW continue to be • Managing Forests distributed across NSW, with the South West Slopes, Western • Planting New Forests NSW and Riverina regions also added to the series. • Environmental Services The brochures have been developed to complement State • Recreation Forests’ Forest Map series which currently covers the Central • Education Coast, Lower North Coast, Mid North Coast, Central West • Contact details. and South Coast of the state.
In 2004/05, the website underwent subtle changes to reflect A brochure summarising Forests NSW new recreation and the change of organisation name and its role as a public tourism policy and guidelines for staging an event in State trading enterprise within the NSW Department of Primary forests was also produced during the year. Industries. A new look homepage and navigation was introduced to link to other DPI Divisions via tabs.
62 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
Ongoing guides to activities in Cumberland State Forest RESEARCH & DEVELOPMENT in Sydney’s north-western suburbs, outlining the recreation opportunities available, volunteer activity programs and Since the formation of NSW Department of Primary Industries also school holiday and community activities on offer were (DPI), our research and development objectives are delivered also published. through DPI Science and Research and the Plantation and Tree Improvement Units of Forests NSW Land Management Fact Sheets and Technical Services Branch. These groups provide A series of sheets is available on-line and in hard copy on a strategic research and technical support to the organisation’s variety of forest related topics including forests and forestry in operational and service branches. NSW, collecting firewood and craft timber from State forests DPI's Forest Science Centre of Excellence is located within and forests and the greenhouse effect. There are 25 sheets Cumberland Forest at West Pennant Hills. Tree Improvement currently in the series. is based at Tumut, Coffs Harbour and the newly established Forest Technology Centre at Grafton. Plantation Improvement Educational Publications has staff at Bathurst, Coffs Harbour, Tumut and West A new classroom poster, ‘Wood’, was produced as an insert Pennant Hills. in the Autumn 2005 edition of Bush Telegraph. The poster outlines the products that come from eucalypt and softwood We require innovative science based outcomes for forest trees, a timeline of forest management in NSW and a resource development and sustainability. Research which diagram illustrating the many values of forests. adds value to the planted forests, commercial services and native forests businesses remains a priority. Emphasis Primary School Activity Sheets - produced as an insert in Bush includes establishment, management and product quality of Telegraph and provided as a master sheets to school upon sustainable forests. Research on the benefits (timber, request. 2003-04 topics were ‘Wintry Warmers’, ‘Red gum sequestered carbon, bioenergy, enhanced biodiversity and ramble’, ‘Working as a forester’ and ‘Poet tree’. The sheets are salinity mitigation) of returning trees to the rural landscape is available for teachers to use as a classroom resource. also an important objective. Other Tree Improvement ‘Living, working, playing . . . forests’ large display poster. Aim: Improved softwood and hardwood genetic material A variety of large posters for events and displays. available and in use throughout planted forests. Hardwood tree improvement has focused on the Statistics And Reporting Documents development of an efficient clonal propagation system, using State Forests Annual Report mini-cuttings, to allow rapid deployment of improved material Sustaining the Forests - Social, Environmental and Economic into operational plantings. Clonal seed orchards are (seeing) Report 2003/04 established using grafted plants of selected superior individuals, to produce genetically improved seed for Copies of these publications are available from Forests NSW deployment as seedlings. information centre on (02) 9871 3377 or 1300 655 687, fax (02) 9872 6447 or email [email protected]. The key outcomes for softwood tree improvement were the Alternatively, order on-line at www.dpi.nsw.gov.au measurement of the 1992/93 series of progeny trials and the establishment of the next generation of progeny trials of material from the Radiata Pine Breeding Company. Results from both of these activities will allow Forests NSW to identify and capture genotypes best suited to its diverse operating environments and to meet wood quality fitness-for-purpose requirements.
ANNUAL REPORT 2004-2005 63 STATUTORY INFORMATION
New Forests without adverse effects on form or branching. Wider row Aim: A sound scientific basis established for the use of spacings can reduce establishment costs by up to 30%. planted forests to benefit the environment. A collaborative project with the University of Sydney, the The CRC for Greenhouse Accounting (CRCGA), the NSW Notaras hardwood mill and the North East Region will add Salinity Strategy and research into the rehabilitation of mine value to our plantation timber through development of sites through forestry and options for the targeted beneficial optimal drying conditions for the hardwood plantation use of wastes continue to provide the main drivers for the resource that meets market requirements. New Forests Program. Work has continued to improve and refine Reden (a forest The Carbon in Forests Project has developed rainfall zone resources management information and decision support specific root: shoot ratios for estimating root biomass carbon system). New components, to implement thinning and in woodland eucalypts and robust aboveground biomass thinning response models, provide yield tables for long-term prediction equations are now available for woodland strategic yield scheduling. eucalypts and related species. Life cycle analysis has demonstrated that wood products are a long-term store of Forest Health Management carbon. Changing the carbon trading accounting Aim: Integrated decision support and management systems methodology to include on-going carbon storage in wood developed which provide an acceptable level of forest health products could significantly increase the returns to Forests protection. NSW from carbon trading Surveys of our hardwood and softwood plantations identify Studies at the Baldry site, within the Little River catchment of and quantify important pests, diseases, weeds and nutrient the Macquarie River, will provide NSW DPI models that deficiencies that are limiting to growth and establishment and predict the impacts of tree planting on salt mobilisation, water that may need further action and study. Work continues yield and water quality in granitic catchments throughout the toward understanding of the mechanisms of resistance and central-west of NSW. providing material to the Tree Improvement program.
Research on mine sites directly addresses the top two key Airborne assessment of forest dieback in a 30,000ha priorities identified by the Upper Hunter Commercial Forests Richmond Range study site, North East Region, aims to Steering Committee: determining timber yields on a range of specify requirements for the acquisition and modelling of sites; site preparation using ameliorants (such as biosolids), cost-effective imagery to enable the accurate classification of ripping and mounding. canopy condition in native eucalypt forests.
Plantation Improvement Forest Biodiversity Aim: Forest management systems developed which meet Aim: A scientific basis for maximising biodiversity values in international benchmarks of productivity and sustainability. managed forests.
Characterisation of the pine resource is providing predictive Studies show that about 25% of vertebrate species recorded models for intrinsic wood properties and product quality of in north-eastern NSW responded to logging, either positively Pinus radiata as affected by silviculture, site and genetics or negatively while 40% appeared to be largely unaffected. A across the NSW softwood plantations estate. further 35% of species occur so rarely that it is impossible to assess their sensitivity to logging using standard fauna Data from commercially planted hardwood seedlings were survey techniques. A challenge for forest managers is the built into a decision support system to guide choices on need to implement species monitoring programs at the when to commence planting operations. Better regional scale to demonstrate the ecological sustainability of understanding the fertiliser requirements for hardwood management practices. plantation establishment was achieved. Hardwood spacing trials show row spacings of up to six metres can be used
64 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
The improving knowledge of forest bat ecology is allowing RISK MANAGEMENT predictions to be made about changes in bat communities resulting from changes in forest management practices and External - Significant Decline in Housing will be integral to demonstrating ecological sustainability. A & Construction Markets proposal was prepared for an alternative strategy that shifts emphasis away from many pre-logging surveys to more Assessment: Medium, increasing probability / Medium, intensive monitoring at fewer sites. to potentially high impact
Different species of threatened frogs have different habitat The main influence on demand for Forests NSW hardwood requirements and habitat use patterns and no one set of and softwood sawlogs is activity in the residential building protective prescriptions adequately covers all species. market, which includes both new dwellings, and alterations Populations of permanent pond breeding frogs appear to be and additions. Activity in these markets tends to follow highly resilient to drought and most are relatively stable. distinct cycles of 4-5 years between peaks and troughs. Monitoring of their numbers appears to be an effective Softwood timber demand is more closely related to the strategy to assess long term impacts of disturbances. residential building market. The framing timber supplied to The Eden Burning Study is providing: improved this market tends to be more commodity oriented in its understanding of the impacts of fire and logging on the demand characteristics. In the softwood sector, Forests NSW population dynamics of forest trees and understorey plant is aiming to increase its product diversification through species; likely effectiveness of current conservation protocols development of new value-added sawlog products, better and identification of appropriate methods for monitoring suited to increasing market share in the alteration and long-term changes in the regional status of rare and additions market. Additionally, new pulpwood markets and threatened plants. increased targeting of export products will further enhance the overall product diversification for softwood log products. Trees and shrubs are being planted for land rehabilitation and wood production on previously cleared agricultural land There have been a number of key factors emerge since the in Australia. Strong evidence is now available to show that end of 2004 that forecast a period of significant dampening eucalypt plantings improve the habitat matrix for many of demand in both the dwelling construction and alterations species in agricultural landscapes. and additions markets. The key factors influencing the reduction in market forecasts were:
• Uncertainty about residential property price growth dampening new house approvals; • significant oversupply of apartment stock in inner Sydney and Melbourne dragging down the other dwellings segment; • the Reserve Bank raising housing interest rates by 0.25 basis points early in the year; • 15% increase in fuel prices impacting consumer confidence and disposable incomes; and • lower than forecast net national immigration (ABS revised estimate down from 150K to 130K for 04/05).
ANNUAL REPORT 2004-2005 65 STATUTORY INFORMATION
Professional housing and construction market analysts (such The National Park Estate (Reservations) Act 2003 created as BIS Shrapnel and Westpac), have begun to further reduce additional areas of National Park and Nature Reserves for the their expectation for the markets over the next few years. north coast, plus State Conservation Areas. This latter Most recent outlooks from these analysts suggest the market reservation removed areas of State forest that were may slow further than earlier predictions, meaning that previously available for timber harvesting. Some additional Forests NSW annual timber revenues could be impacted by reserves have been identified for the South Coast. These $7to $9M in each of the next two years. new reserves will have no impact on timber volumes.
Presently, Forests NSW is targeting initiatives such as the Integrated Forestry Operations Approvals (IFOAs) have been new Managed Investment Scheme that will produce amended to address the issue of ‘buffers on buffers’. Whilst supplementary sources of revenue to offset downturns in the access to some trees is regained, some trees remain traditional markets, should they eventuate. Additional unavailable due to operational factors. demand for supply is expected to generate from the new Hyne mill in Tumbarumba, which will also assist balance The Government advised industry in 2003 of its intention to slowing demand from other mill customers. meet Forest Agreement arrangements and honour Wood Supply Agreements (WSA). As part of these arrangements, As Forests operations and cost structures are not sales Boral and the Government signed an MOU to alter Boral’s volume driven, being derived from estate management WSA provisions. New WSA’s are now being finalised with all activities rather than delivery of product, any downturn in North Coast WSA holders revenue will fully flow directly through to profits. External - Requirements of Regulatory Bodies External - Changes in Government Policy Assessment: Low probability / Moderate impact Assessment: Low probability / high impact The regulatory requirements accompanying Regional Forest (Native Forests), low impact (Plantations) Agreement (RFA) decisions, provided additional certainty for The NSW Government has finalised its position regarding the planning but limited access to some timber due to the effect Regional Assessments for the Brigalow Belt South Bioregion of ‘buffers on buffers’. (which incorporates Pilliga and Goonoo State Forests) and Nandewar Bioregion. The longer term effects on industry are Forests NSW was involved in the review of IFOAs for still subject to resolution with key stakeholders. These northeast NSW. IFOAs were amended following coordinated assessments follow earlier Regional Forest Agreements negotiation with regulators by the Resource and Conservation covering Eden, Upper and Lower North East and Southern Division of the Department of Infrastructure, Planning and areas of the state. Natural Resources (DIPNR). The changed conditions are now being implemented. The National Park Estate (Reservations) Act 2002 created additional National Park and State Conservation Areas from The Plantations and Reafforestation Act 1999 provides an areas that were formally State forest and created Special integrated consent framework for the assessment of Management Zones on State forest where logging is plantation proposals. Regulatory requirements are integrated excluded. The implementation of this legislation applying to within a single approval issued by the DIPNR. The Code of Upper and Lower North East regions was designed to have Practice developed as a regulation to the Act, (Plantations no impact on timber availability. and Reafforestation Code) 2001 incorporates standards for soil and water protection, management of native vegetation, cultural heritage and threatened species.
The streamlining of consent provides added efficiencies to plantation establishment and greater incentive for plantation investment.
66 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
a) Native Forests Term Agreement Commitments b) Softwood Supply - General Term Agreements for hardwood supply on the north coast There are two main aspects of Forests NSW ability to achieve were granted at 50% of pre 1994/95 supply levels. its contracted softwood supply commitments: Government funded initiatives such as log haulage assistance and supplementation of supply from private The first is being able to make the committed timber lands, were implemented to assist industry adapt to changes available to the customer on time and to specification. from traditional supply sources. The 20-year supply • Forests NSW is currently close to being fully committed in agreements were subject to an interim resource review all four softwood regions. Fully committed means that scheduled for 2006. Forests NSW current softwood contractual commitments Following the additional reservations in 2003, Boral (that arise under contracts currently in place and from negotiated a revised Wood Supply Agreement which no contracts that are currently in negotiation) are equal to the longer includes the 2006 review, extends the term by five predicted long-term sustainable yield from the existing years, but reduces the committed volume. Similar Forests NSW plantation base. The majority of these arrangements have been negotiated with other Wood Supply contracts have options for renewal from which it would be Agreement holders on the north coast. expected follow on commitments of similar magnitude will eventuate. Forests NSW operates a comprehensive Three separate forms of wood supply agreements have been inventory and yield prediction system that accurately drawn up, ie. ‘A’, ‘B’ and ‘C’-type agreements. A-type predicts future timber flows into the future for the plantation agreements are a conversion of the 1999 agreements without estate. This system is the basis of determining the resource review and minor volume reduction and partial sustainable yield. Long-term timber allocations are made in substitution of small sawlogs. Compared with the 1999 light of the sustainable yield figures. arrangements, the ‘B’ type agreements increase the security The second is Forests NSW ability to actually deliver the of supply for companies obtaining high value products, such timber to the customers on time and to specification. Sales as poles, piles and girders; and likewise, ‘C’ type agreements have moved from a stumpage basis to mill door basis due increase security for companies seeking low quality (salvage) to Forests NSW taking the contractual responsibility for logs. These new WSAs commenced on 1 July 2004 and delivering the timber to our customers. Forests NSW apply until 31 December 2023. covers the potential exposure of non-performance by the Forests NSW has implemented strategies that aim to reduce following actions: risk of exposure and enable corrective actions, including: • Forests NSW has developed internal organisational skills in delivering timber (contract management and logistics). • Development of draft regional Ecologically Sustainable Forest Management (ESFM) Plans • Forests NSW has contracted the required contractor • Improvement to inventory information (additional plots capacity needed to deliver the required timber. established to replace plots now in National Park estate • Forests NSW continues to fund the required infrastructure plus updates from areas harvested). (roads) to support the delivered sales. • Increasing role of plantations in log supply and supplementation of timber supply from private property sources • Monitoring studies to indicate where management action needed as part of continuous improvement • Log merchandising to improve flexibility in timber supply to meet allocations.
ANNUAL REPORT 2004-2005 67 STATUTORY INFORMATION
External - Global Competitive Pressures Softwood Customers The internationalisation of ownership in the NSW softwood Assessment: Moderate probability / moderate impact industry over recent years has seemingly guaranteed that Traditional large importers of New Zealand radiata now collapse of one of the major processors is unlikely. The control substantial processing capacity within the domestic global owners of these facilities have huge financial resources market. This has reduced the trend to target the Australian and can survive the worst of the forest sector cycles. market as a destination for excess NZ sawn timber. Other import sources (such as Europe) however have increased At the next level, Forests NSW through its updated credit their market share and do not have the links described policy and improved financial management is vigilant in above, as a result will continue to target imports into Australia. maintaining required levels of security and constant monitoring of customers accounts, Forests NSW exposure, Due to lower wood density, some overseas softwood timber financial health and a company's creditworthiness. (New Zealand and Chile) is not ideally suited to the structural end uses in the Australian market. However, other sources of Hardwood Customers imported material competing in key timber product In the hardwood sector, approximately half of Forests NSW segments, such as increased flow of European softwood exposure lies with one major customer where we see no risk. structural timber, has impacted on both price and volume in This customer is a large national building products company the domestic market. with its hardwood timber production dominated by high value adding activity. The other customers are small to medium Overall, Forests NSW remains well positioned to retain its sawmilling operations which, since the advent of the NSW position in the local Australian market. The increasing volume Forest Policy Statement in 1996, have been in the process of of softwood sawlogs being processed in Australia will assist increasing their output of higher value added hardwood Australia’s ability to compete by increasing production timber products. efficiencies and achieving economies of scale (production and logistics). The hardwood sector is better insulated from the volatility in timber demand faced by softwood producers due to its lesser External - Collapse of a major customer reliance on the residential housing construction market.
Assessment: General - Natural Disaster Low probability / high impact (Plantation Softwood) Medium probability / moderate impact (Native Forests) Assessment: Low probability / high impact (Softwoods), low impact (Native Forests) While collection history is good, increased exposure arising from the progressive introduction of delivered sales has The most serious risk is to the Softwoods Plantation Estate made tight procedures even more important. arising from fire, pests and diseases, wind and snow storms. While overall risk from fire and pests and diseases are Forests NSW has recently revised its Credit Policy and considered relatively low based on historical context, effective Procedures to improve consistency of customer treatment protection plans and resources are in place to protect this and response to delayed payment of invoices. substantial resource as follows:
Fire Planted Forests Division continues to maintain high levels of planning, preparedness and suppression capacity. The whole of the plantation estate is served by the fire tower network and integrated fail-safe communication systems. These detection systems are backed up by fixed and rotary winged aircraft, a small but strategically deployed fleet of bulldozers and the associated transport, fire tankers and light 4 x 4 initial attack units complete the fire defence system.
68 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
Over recent years there has been special emphasis on the STATEMENT OF RESPONSIBILITY employment of casual, seasonal firefighters and training of silvicultural contractors in fire fighting techniques. Forests NSW senior management and other employees have effected an internal control process designed to provide Pests & Diseases reasonable assurance regarding the achievement of the Planted Forests Operations Branch utilises internationally- Agency’s objectives. These controls are evaluated through a accepted techniques for survey and detection of pests and program of review conducted by Management Audit and diseases in the plantation estate. These surveys are carried Review Unit. out on an annual basis and are followed by a comprehensive To the best of my knowledge, the systems of internal control report which outlines findings and recommends courses of have operated satisfactorily during the year. action. Good examples have been the timely and effective responses in the Sirex and Dothistroma control programs Improvements in internal control effected during the which have been mounted over many years. year included:
Timely thinning of plantation stands maintains plantation • Implementation of recommendations arising from financial, trees in a healthy condition averting susceptibility to insect management, environmental and operational reviews of and pathogen attack compared with stands experiencing Regional, Branch and process activity conducted in excessive competition or stress. accordance with a 3 year internal audit plan
Storm Damage • Testing an environmental management system for native This is largely beyond our control and is part of the plantation forest harvesting operations to meet international quality business worldwide. Thinning programs are designed to standards reduce susceptibility to wind-throw damage. Planted Forests • Development of systems to better accommodate expansion Operations Branch has demonstrated a capacity to salvage of timber merchandising and contract harvesting/haulage wind and storm damaged plantations over many years, quickly • Introduction of new occupational health and safety systems followed by establishment of new forest. and practices
Financial - Loss of Liquidity • Development of Senior Management Team sub-committees • Drafting and issuing Ecologically Sustainable Forests Assessment: Moderate probability / moderate impact Management plans for public comment The forecast financial position is heavily reliant on attainment • Development of information security management systems of sales targets, receipt of Community Service Obligation and practices as a precursor to accreditation income and Government Grants for Forest Agreement programs. Any shortfall in revenues would need to be offset Peter Duncan by reductions in operating or capital expenditure. Chief Executive
The organisation is currently reviewing its structure in an attempt to reduce operating expenditure where possible while still maintaining the same levels of service. Capital programs are also being reviewed and reduced where the expenditure is considered non-critical. However areas of strategic importance need to be maintained, otherwise expenditure reductions would impinge on future returns unless external investment in areas such as plantation establishment can be substantially increased through initiatives such as carbon credit based investment programs.
ANNUAL REPORT 2004-2005 69 STATUTORY INFORMATION
TIMBER CUSTOMERS
Customers who have purchased Pacpine P/L C J & A Woods Hallmark Oaks P/L timber from Forests NSW under Penrose Pine Products P/L Clarence Siding Sawmill P/L Hardwood Resources P/L contract, quota or parcel sale. Pentarch P/L Coffs Harbour Hardwoods Harris Entertainment P/L Queensland Commodity (Trading) P/L Hayden Timbers P/L SOFTWOOD FORESTS Exports P/L Colin Patrick Shea Honeyridge Timber P/L Riamukka Sawmill P/L D A & J A Stannard Hurfords Building Supplies P/L A A Summers & Sons P/L South East Fibre Exports P/L Daniel McGregor Jordan I E Bennett T/As Bennetts ACT Forests Hardwood & Cypress Tarn P/L D & K J Warner Allied Timber Products P/L Jack Mitchell Timber Enterprises The Loggery P/L D & P Timbers P/L Andre Flakus Jamie Martin O'Neill Unsworth Sawmills Darlington Point Investments P/L Ausply P/L Jamieson Bros P/L Visy Pulp & Paper P/L Dave Clapson Auswest Timbers P/L J & H Muss Posts and Strainers Weyerhaeuser P/L Davis and Herbert P/L Big River Timbers P/L J Hull Willmott Forests Products P/L Dent Timbers P/L Blayney Treated Pine (Receivers J L Goodsell Doug Schutz and Managers Appointed) P/L Willmott Timbers P/L J M O'Neill Douglass & Wilma Jones T/As Carter Holt Harvey Wood Woolbrook P/L Jones Sawmill J Notaras & Sons P/L Products (Myrtleford) P/L E & R J Hay & Co P/L John Edward Carroll Carter Holt Harvey Wood HARDWOOD FORESTS John Henry Batterson Products (Oberon) P/L Eslarn Holdings P/L Adams Sawmill P/L John Henry Gordon Carter Holt Harvey Wood Ford Timbers P/L Products (Tumut) P/L Adjungbilly Timbers P/L FT Shipman Timber Merchants P/L J T Burns P/L K B & C J Pollack Colenden P/L Albert Johnson P/L Gallagher Insultimber Corrective Services Industries Allen Taylor & Co P/L Partnership P/L Keighley Farm P/L D & R Henderson P/L Alpine Country Firewood G & B Timbers Kempsey Timbers P/L Highland Pine Products P/L Aquafern P/L G & P Interstate Transport and Kilmore (Nymboida) Holdings P/L Holbrook Timbers P/L Arbuthnot Sawmills P/L Timber Sales Koppers Timber Preservation P/L Leonard J Williams P/L Humula Timbers P/L A R & C J Hill Gary Edwards L M Hayter & Sons Hyne & Son (Holbrook) (ITI A S Nicholas & Sons P/L G J Hull P/L Sawmills) P/L Australian Hardboards Limited Gloucester Sawmill Logan Cypress P/L Hyne & Son (Tumbarumba) P/L Baradine Sawmilling P/L Graeme M & Denise A Bradley Lyle & Shirley Hughes Integrated Forest Products P/L Big River Timbers P/L Grafton Sawmills P/L Machins Sawmill J Slattery P/L Bingara Cypress Pine Grandchester Sawmill M & B Dyer P/L T/As Bowraville Sawmill Kelso Lumber P/L Blue Ridge Hardwoods (Eden) P/L Grants Timbers P/L Mark Anthony Thorley Koppers Wood Products P/L Bonum Sawmills P/L Greenlands Timber P/L Maurice Louis Colturi L M Hayter & Sons P/L Braidwood Sawmill Gregory John Mengel Mectec Cartage P/L Mesray (Richards Sawmilling) P/L Brennan Red Gum Industries P/L Gulargambone Cypress P/L Merbein Investments P/L Midway P/L Brimjamon P/L Gulpa Sawmill P/L Mesray P/L Neville Smith Timbers P/L Bruce Mathie & Sons P/L Gumm Bros P/L T/As Richards Milling Co Norske Skog P/L Bruce Perrin Gunnedah Timbers P/L Michael Rodney Cross & Paul North Coast Plywood P/L Christopher John & Dawn Crump Gwabegar Sawmill P/L Wesley McLeod
70 ANNUAL REPORT 2004-2005 STATUTORY INFORMATION STATUTORY
Midway P/L Roy Cross Timbers P/L TIMBER YIELD M J & D E McKenzie P/L Ryan and McNulty P/L M J & S Kroehnert S A Relf & Sons P/L Volume from State Forests M S & M L Shea Shane Lee Sawlogs and Veneer logs (m3) Murray River Sawmills South Coast Sundry Native Forest hardwood sawlogs 638,953 (Echuca) P/L South East Fibre Exports P/L Plantation hardwood sawlogs 73,933 Neville Smith Timber Industries Spot Pallet Supplies P/L Cypress pine sawlogs 93,876 Tableland Timbers P/L Newcastle Woodchipping P/L Plantation softwood sawlogs 1,828,938 Tarago Timbers P/L Newee Creek Sawmill P/L Plantation softwood veneer logs 76,806 Tawmar Timbers P/L Newells Creek Sawmilling Co P/L Native Forest hardwood veneer logs 9,653 Terry Shea Nimbin Mill Farm Hardware & Plantation hardwood veneer logs 3,061 Thirlmere Rural Timbers Gas Supplies TOTAL 2,725,220 Thomas Charles Osmond Noel Marsh Thomas Patrick O'Connor North Coast Hardwoods Poles, Piles and Girders (m3) Thora Sawmilling P/L North Coast Sawmills P/L Native Forest hardwood 23,245 Trevor Hollingshed O'Brien Sawmills P/L Plantation hardwood 8,636 T S Carson & Son Old Kareelah Timber Co TOTAL 31,881 Wayne Cooper Pambula Sawmills Weathertex P/L Paul Colebrook & Sons P/L Round Timber (m3) Winstons Timbers P/L Paul Herbert Timber P/L Preservation plantation softwood 34,895 W J Treseder P/L Peter Caban Preservation native forest hardwood Wootton Timber Trading Co P/L Peter Davies TOTAL 34.895 Wyong North Sawmill P/L Peter George & Beryl Y & J Shepheard Elizabeth Crane Pulpwood (t) Yates Bros Stratford Peter John Mather Native Forest hardwood pulpwood 467,810 Zar Saeck Peter Maxwell Brennan Plantation hardwood pulpwood 35,991 P J & C M Ducat P/L Plantation softwood pulpwood 1,042,458 P J & M J Convery TOTAL 1,546,259 P P Sharkey Quinsaw P/L Other Forest Products (t) 54,203 Ramiens Timber Co P/L R A Sweetman & Son P/L R Austin P/L R B & S L Slater R E & P C Richards P/L R G Grant & Co P/L R J Stephenson P/L Robb & Brown Ltd - Casino Romney Park Sawmill P/L Rowe's Timber Industries P/L
ANNUAL REPORT 2004-2005 71 STATUTORY INFORMATION
WASTE MANAGEMENT
The following figures identify the key performance areas Forest NSW adopts to measure how effective its waste management strategies are:
Waste currently recycled or reused 72% Product purchased through NSW Government Contract 81% Workplace conducting regular recycled product review 100% Product currently purchased that has a recycled content 22%
WORKERS COMPENSATION (SELF-INSURED)
Claims Under Litigation Claims finalised (settled/heard) during F2005 Claims 2 Total Cost of finalisation $97,338 Apportionment: FNSW $89,738 CGU Insurance Limited $8,000 Recoveries Claims 2 Recovery Amount $478,092 Hearing Loss Claims Claims 0 Application to Resolve a Dispute in the Workers Compensation Commission. For workers compensation benefits for; (a) Lump Sums Claims 7 (b) Loss of Wages Claims 0 Applications for Damages in the Workers Compensation Commission Claims 0
72 ANNUAL REPORT 2004-2005 enim tincidunt tortor, eu lobortis felis quam vestibulum risus. TIMBER MERCHANDISING INDEX Nulla sit amet orci quis velit vestibulum aliquet. Nunc consequat pellentesque tortor. Aenean eu dui vitae lectus This information is provided to facilitate identification of Forests IT update 53 NSW compliance with statutory disclosure requirements. Legal matters 53 Letter of Presentation to Minister 1 Page no. Liability Management Performance 48 Assets 10 Major works in progress 54 Charter 41 Objectives 54 Chief Executive Performance 41 Occupational Health and Safety and rehabilitation 54 Code of Conduct 42 Overseas visits 55 Committees (Internal) 42 Overview 5 Consultants 43 Payment of accounts 48 Corporate Credit Cards 43 Places of business 58 Costs of Annual Report 73 Privacy 60 Customer response/complaint 43 Property disposal 60 Disability Plan 43 Property valuations 60 Energy Consumption 44 Publications 62 Equal Employment Opportunity 44 Research and development 63 Ethnic Affairs Report 44 Risk management 65 External Groups 45 Statement of Responsibility 69 Fraud control and corruption prevention 48 Structure 2 Freedom of Information 48 Subsidiary Companies 48 Grants to non government community organisations 48 Supplier payments 48 Highlights for the Year 4 Timber customers 70 Human Resources 50 Timber Yield 71 Insurance 52 Waste Management 72 Internal control process 52 Who we are Inside front cover Investment management performance 48 Workers Compensation 72
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ANNUAL REPORT 2004-2005 73
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Social, Environmental and Economic Annual Report 2004-05 Facts and Figures 2004-05 (Seeing) Report 2004-05
Bldg 2 423 Pennant Hills Road (Locked Bag 23) Pennant Hills NSW 2120 T 02 9980 4100 F 02 9484 1310 www.dpi.nsw.gov.au/forests
Forests NSW is a Public Trading Enterprise within the NSW Department of Primary Industries