Matthew Denholm
June 25, 2009

TAXPAYERS appear certain to fund a multi-million-dollar bailout of the pulp and paper industry, with the controversial Gunns Ltd Tasmanian pulp mill a likely beneficiary.

Forestry Minister Tony Burke yesterday endorsed the $2 billion Gunns project, which has yet to receive final federal environmental clearance, and pledged help to “secure investment and jobs” for the industry.

The timing of his comments will help Gunns shore up investment for the mill, which has struggled to find finance, while aiding the company’s current negotiations with prospective joint venture partners.

Adding to a new review of the industry that clearly flags subsidies, Mr Burke announced a new forest industry leaders ministerial roundtable that also raises the prospect of handouts.

“This will include the heads of Australia’s major forestry and timber companies and will focus on government-industry collaboration to secure industry investment and jobs at a time of global recession,” Mr Burke said.

The apparent positioning towards an industry bailout, with the Gunns mill as a centrepiece, follows intense lobbying from the Construction Forestry Mining and Energy Union.

Mr Burke used a ministerial statement to spruik economic benefits from the Gunns mill, in the clearest sign yet that the Rudd government has decided to back the project.

“As the Minister for Forestry, let me state quite clearly that I want to see the Gunns Bell Bay mill built — provided the requirements of federal environmental law are met,” he said.

Even before the statement, a review of the pulp and paper manufacturing industry announced by Industry Minister Kim Carr last week flagged subsidies for the mill and the industry. The Carr review group includes Gunns chairman John Gay, while its terms of reference appear to neatly fit elements of the proposed mill.

“We welcome the minister’s support for this important project,” a Gunns spokesman said.

However, conservationists are concerned. “It would be a tragic waste of public resources if all we get is the pulp and paper industry looking for handouts to continue business as usual — or worse seeking to lower environmental standards,” said Wilderness Society spokesman Paul Oosting.

Greens leader Bob Brown said the Rudd government had given “an effective go ahead for the pulp mill, with consequent taxpayer subsidies”.

“The minister promises millions more to the industry — he is diverting taxpayer dollars to pay forest-destroying corporations to lobby himself,” Senator Brown said.