Mills raise contract concerns

April 05, 2018

Three generations of McNulty's Des, Greg and Ryan at their Sawmill on Sydney Rd.

A group of six timber mills, including Benalla’s Ryan & McNulty, believes the state government has cancelled contract extensions to benefit the Heyfield Mill, which they acquired last year.

The issue has arisen following VicForest’s decision not to honour contract extensions with timber mills in Victoria.

The group of six sawmills, known as the G6, have come together to call on the government to honour their contract extensions in order to safeguard jobs, industry investment and peoples’ livelihoods.

Greg McNulty operates Ryan & McNulty, the company his grandfather started in 1942, and his son Ryan is the fourth generation of the family to work at the mill.

Throughout the years they have grown to the point that they employ more than 50 people from the Benalla area.

They have recently invested more than $5 million in their facility and sponsor both local football clubs, the Benalla Racing Club and a host of other local organisations and schools.

Mr McNulty said the company had signed a three-year extension to their current contract, but a loophole has allowed the state government to pull the deal out from under them.

‘‘We had an extension of three years and when they bought the mill down there (the Heyfield Mill) we got a letter to say they’re not going to honour the extensions. That’s what we’re really disappointed about,’’ Mr McNulty said.

‘‘There was a clause in there, which we thought was to do with bushfires and things like that, which gave them an out.

‘‘We didn’t think it was in there in case the government bought their own mill.’’

Mr McNulty said this raised concerns that the purchase of the Heyfield Mill represented a conflict of interest.

‘‘VicForests decide what we can buy and they are an agency of the Victorian State Government under the direction of the Minister of Agriculture,’’ Mr McNulty said.

‘‘The same government also owns the mill at Heyfield. That’s got to be a conflict of interest.

‘‘Heyfield Mill were given a number of contracts with no sales process.

‘‘It was non-competitive, they’ve just given the contracts to them.’’

While acknowledging the decision to bail out the Heyfield Mill was beneficial to the workers at that company, Mr McNulty was concerned that it might be at the expense of jobs in other mills in the state, including Ryan & McNulty.

‘‘I think they bailed them out and forgot about the rest of the industry,’’ Mr McNulty said.

‘‘If we lose the business from the contract extensions we may not be in a position to keep so many employees on.

‘‘They talk about jobs at Heyfield, but the G6 employ more than they do anyway. So what about our jobs?’’

Mr McNulty said the G6 was willing to play the long game and fight for the business they were promised.

That group of companies recently made a Freedom of Information (FOI) request to VicForests requesting to see details of the state government’s deal with the Heyfield Mill.

That FOI request was denied.

‘‘We think they’re hiding something. What’s the deal behind the deal? It might take time, but we will get that information,’’ Mr McNulty said.

‘‘They’re just making it hard for us, but we’ve got a bit of time to get that information. We’re not going away.’’

A spokesperson for the G6 group said since last year’s $60-million-plus government bailout of the Heyfield Mill, the Victorian timber industry had been operating in a sea of confusion and uncertainty, putting their businesses at risk and potentially threatening thousands of jobs and regional communities.

‘‘A major concern for our group, their millers and contractors is that VicForests is not tendering contracts for wood supply beyond 2021,’’ the spokesperson said.

‘‘As soon as the Heyfield deal was done, the government shut down extensions to our timber-supply agreements.

‘‘We want to know what the deal behind the deal really is with respect to Heyfield, and whether it is adversely impacting our business.

‘‘We need the same certainty that was given to Heyfield to ensure that our businesses and the people that rely on them have a future.

‘‘We just want to know whether we should be worried or not and what to tell our staff and their families.’’

Victorian Agriculture Minister Jaala Pulford was approached for comment and her office released the following statement:

‘‘VicForests entered into a three-year Timber Sales Agreement of 80000m³ per annum with the new owners of ASH (Australian Sustainable Hardwoods, Heyfield).

‘‘The Department of Economic Development, Jobs Transport and Resources has the protocols in place to ensure that there is proper governance and separation between ASH and VicForests.

‘‘VicForests made public its long-term forward forecasts of sustainable timber supply for ash sawlogs in its 2017 Resource Outlook. VicForests is guided by its 2017 Resource Outlook in its competitive offerings of ash timber to the market.’’

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