❓ Hon Christine Sharp questions the WA government's $46 million investment security guarantee for timber processors, querying its justification, changes, and legal basis, while Hon Tom Stephens provides answers relating to the Agriculture, Forestry and Fisheries portfolio.
AnsweredQoN 162Legislative Council
QuestionView source ↗
(1) How does the Government commercially justify its decision to offer a so-called investment security guarantee, which commits the State to paying up to $46 million to timber processors who have already been given contracts guaranteeing them a 10-year supply of timber from state forests if, for any reason, the State is unable or unwilling to continue the same level of supply after 10 years? (2) Why did the Government recently change its plan to guarantee the same level of supply for a further 10 years after the 10-year contract term, to a guarantee applying only to the eleventh year? (3) In what form can the Government provide a guarantee relating to supply of native timber for a period longer than the 10-year life of the forest management plan, which governs the supply of the resource in question? (4) Will the guarantee be legally binding? Hon TOM STEPHENS
AnswerView source ↗
The Minister for Agriculture, Forestry and Fisheries has left in his folder for us the following reply - The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(2) Why did the Government recently change its plan to guarantee the same level of supply for a further 10 years after the 10-year contract term, to a guarantee applying only to the eleventh year? (3) In what form can the Government provide a guarantee relating to supply of native timber for a period longer than the 10-year life of the forest management plan, which governs the supply of the resource in question? (4) Will the guarantee be legally binding? Hon TOM STEPHENS replied: The Minister for Agriculture, Forestry and Fisheries has left in his folder for us the following reply - The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(3) In what form can the Government provide a guarantee relating to supply of native timber for a period longer than the 10-year life of the forest management plan, which governs the supply of the resource in question? (4) Will the guarantee be legally binding? Hon TOM STEPHENS replied: The Minister for Agriculture, Forestry and Fisheries has left in his folder for us the following reply - The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(4) Will the guarantee be legally binding? Hon TOM STEPHENS replied: The Minister for Agriculture, Forestry and Fisheries has left in his folder for us the following reply - The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
Hon TOM STEPHENS replied: The Minister for Agriculture, Forestry and Fisheries has left in his folder for us the following reply - The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
The Minister for Agriculture, Forestry and Fisheries has left in his folder for us the following reply - The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(4) Yes.
(2) Why did the Government recently change its plan to guarantee the same level of supply for a further 10 years after the 10-year contract term, to a guarantee applying only to the eleventh year? (3) In what form can the Government provide a guarantee relating to supply of native timber for a period longer than the 10-year life of the forest management plan, which governs the supply of the resource in question? (4) Will the guarantee be legally binding? Hon TOM STEPHENS replied: The Minister for Agriculture, Forestry and Fisheries has left in his folder for us the following reply - The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(3) In what form can the Government provide a guarantee relating to supply of native timber for a period longer than the 10-year life of the forest management plan, which governs the supply of the resource in question? (4) Will the guarantee be legally binding? Hon TOM STEPHENS replied: The Minister for Agriculture, Forestry and Fisheries has left in his folder for us the following reply - The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(4) Will the guarantee be legally binding? Hon TOM STEPHENS replied: The Minister for Agriculture, Forestry and Fisheries has left in his folder for us the following reply - The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
Hon TOM STEPHENS replied: The Minister for Agriculture, Forestry and Fisheries has left in his folder for us the following reply - The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
The Minister for Agriculture, Forestry and Fisheries has left in his folder for us the following reply - The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
The honourable member should address this question to the Minister for State Development who has portfolio responsibility for investment security guarantees. However, he also states that he can advise the honourable member insofar as the question relates to his portfolio. (1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(1) The investment security guarantee is vital to ensuring that as the industry adapts to its new shape as a high value-adding stream, it is able to secure the necessary investment to put in place the equipment it needs to do that. Investors have either little or no faith in production contracts but do respect financial agreements as bankable documents when they consider lending propositions in the timber industry. The ISG is a form of financial agreement and I am confident that it is assisting in this improved certainty. (2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(2) The change from 20 years to 11 years was at the industry’s instigation. The 20-year proposition involved a step down in the later years and the industry believed that the step down sent the wrong message to lenders. (3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(3) The ISG does not provide a guarantee of supply beyond the term of the forest management plan. It provides a financial undertaking in the event of a reduction in resource supply in certain conditions. (4) Yes.
(4) Yes.
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