❓ A parliamentary question addresses the Forest Products Commission's potential liability for breach of contract with Lignor Ltd regarding native forest timber supply, viability considerations, and alternative karri sources. The Minister's response outlines the contractual obligations and potential government policy impacts.
AnsweredQoN 892Legislative Council
QuestionView source ↗
FOREST PRODUCTS COMMISSION-LIGNOR LTD - NATIVE FOREST TIMBER SUPPLY AGREEMENT
Some notice of this question has been given, although part of the question is without notice. I refer to the Forest Products Commission’s production agreement 2899 with Lignor Ltd to supply native forest timber. (1) Should the FPC fail to supply forest products under this agreement, what amount has the FPC calculated it would be potentially liable for under a breach of contract? (2) What matters would be considered and taken into account in determining the liability? (3) Has the FPC entered into any negotiations with Lignor to supply karri from plantations grown on cleared farm land? Hon KIM CHANCE
Some notice of this question has been given, although part of the question is without notice. I refer to the Forest Products Commission’s production agreement 2899 with Lignor Ltd to supply native forest timber. (1) Should the FPC fail to supply forest products under this agreement, what amount has the FPC calculated it would be potentially liable for under a breach of contract? (2) What matters would be considered and taken into account in determining the liability? (3) Has the FPC entered into any negotiations with Lignor to supply karri from plantations grown on cleared farm land? Hon KIM CHANCE
AnswerView source ↗
I thank Hon Paul Llewellyn for both his question without notice of which some notice was given and his question without notice. (1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
(1) Should the FPC fail to supply forest products under this agreement, what amount has the FPC calculated it would be potentially liable for under a breach of contract? (2) What matters would be considered and taken into account in determining the liability? (3) Has the FPC entered into any negotiations with Lignor to supply karri from plantations grown on cleared farm land? Hon KIM CHANCE replied: I thank Hon Paul Llewellyn for both his question without notice of which some notice was given and his question without notice. (1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
(2) What matters would be considered and taken into account in determining the liability? (3) Has the FPC entered into any negotiations with Lignor to supply karri from plantations grown on cleared farm land? Hon KIM CHANCE replied: I thank Hon Paul Llewellyn for both his question without notice of which some notice was given and his question without notice. (1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
(3) Has the FPC entered into any negotiations with Lignor to supply karri from plantations grown on cleared farm land? Hon KIM CHANCE replied: I thank Hon Paul Llewellyn for both his question without notice of which some notice was given and his question without notice. (1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
Hon KIM CHANCE replied: I thank Hon Paul Llewellyn for both his question without notice of which some notice was given and his question without notice. (1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
I thank Hon Paul Llewellyn for both his question without notice of which some notice was given and his question without notice. (1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
(1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
(2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
(1) Should the FPC fail to supply forest products under this agreement, what amount has the FPC calculated it would be potentially liable for under a breach of contract? (2) What matters would be considered and taken into account in determining the liability? (3) Has the FPC entered into any negotiations with Lignor to supply karri from plantations grown on cleared farm land? Hon KIM CHANCE replied: I thank Hon Paul Llewellyn for both his question without notice of which some notice was given and his question without notice. (1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
(2) What matters would be considered and taken into account in determining the liability? (3) Has the FPC entered into any negotiations with Lignor to supply karri from plantations grown on cleared farm land? Hon KIM CHANCE replied: I thank Hon Paul Llewellyn for both his question without notice of which some notice was given and his question without notice. (1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
(3) Has the FPC entered into any negotiations with Lignor to supply karri from plantations grown on cleared farm land? Hon KIM CHANCE replied: I thank Hon Paul Llewellyn for both his question without notice of which some notice was given and his question without notice. (1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
Hon KIM CHANCE replied: I thank Hon Paul Llewellyn for both his question without notice of which some notice was given and his question without notice. (1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
I thank Hon Paul Llewellyn for both his question without notice of which some notice was given and his question without notice. (1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
(1) The amount that the Forest Products Commission would potentially be liable for under a breach of contract 2899 would depend on the circumstances, but the risk is no different from that involved in any other contract for forest products. It is the same form of contract. In the event that the FPC found itself unable to supply the agreed annual quantity of logs to Lignor under contract 2899, and if a dispute ensued, the parties to the contract would be obliged to follow the dispute resolution steps stipulated in the contract. If the log resource for Lignor were to be made unavailable by way of a change of government policy - I recognise that this was not part of the question, but I think it is necessary for me to state this so that the member has the answer in its entirety - the investment security guarantee that complements the contract with Lignor would be invoked, if such a guarantee existed. (2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
(2)-(3) The member also asked what matters determine viability and whether consideration has been given to providing logs from plantation karri on private land. The matters that determine viability from the FPC side - I presume that the question did not relate to the proponent’s side - are the capacity of the holder of a contract to pay a price for the logs that meets the requirements of the FPC in its management obligations under the Forest Products Act - that is, in the form of stumpage; that an adequate return is made to the shareholder, the Western Australian public; and, above that, that all operational costs - that is, the logging contract and the roading contract - are covered. The question of whether consideration has been given is essentially a private matter, although it is possible that through agencies such as the Strategic Tree Farming initiative, there is a role for the FPC, along with private landholders, to do that. I do not know whether any consideration has been given to that possibility, but I would certainly be interested in the opportunities that that might present from such a cooperation.
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