Litigation sees VicForests lose $52m

VICTORIA’S state-owned logging agency has blamed legal headaches for a large monetary loss last financial year.

VicForests said in its annual report it did not meet supply targets in large part because of legal injunctions that rendered planned harvesting of many coupes unviable or prohibited, leading, in part to a $52.4 million deficit.

More than half of approved harvests were halted by litigation during planning or after they had begun, creating $10.4 million in direct legal costs.

A further $6.2 million was paid to logging contractors who were stood down and another $7.5 million in compensation to customers for failing to meet contracted supply volumes.

“In turn, these significant additional expenses have led to a substantial impairment of the value of the timber resources allocated to VicForests, further impacting the balance sheet,” CEO Monique Dawson said in the report.

“Despite our best efforts the comprehensive result for the year ended 30 June 2022 was a loss of $54.2 million.”

There is no real prospect of VicForests recovering any of the costs due to the financial position of the plaintiffs, she said.

The state-owned business posted losses of $4.73 million in 2020/21 and $10.1 million in 2019/20, after netting minor profits in the two previous financial years.

The ballooning deficit has pushed up the agency’s net debt from $1.91 million to $17.38 million over the past 12 months.

“Liabilities increased by $24.4 million overall primarily due to increased borrowings with the Treasury Corporation of Victoria of $19.9 million,” the report said.

“The borrowings represent the Government’s support to enable VicForests to meet its financial obligations in light of the complex regulatory environment and its effect on sustainable cashflow generation from operations.”

Timber product sales for VicForests have fallen from 1.21 million cubic metres to 954,997 over the past five years.

The Victorian government has committed to ban logging native timber by 2030 under a $120 million transition plan.

A Greens policy to bring forward its end to the start of 2023 next year was independently estimated to save the state $205 million from 2022/23 to 2032/33.

Western Australia is banning native forest logging from 2024.

– BY CALLUM GODDE/AAP