Nature Conservation Council of NSW v Department of Trade and Investment, Regional Infrastructure and Services

Professor Walker's evidence 92The Applicant relies on the evidence of Professor Robert Walker. Professor Walker provided a statement concerning the commercial sensitivity of the redacted information and also attended the hearing, gave oral evidence and was cross-examined. 93He disputes much of the argument presented by the Respondents in regard to the consequences that they asserted would follow from release of the information. It is his opinion: a. Regarding price, that the cost of certain inputs may assist prospective customers to understand why suppliers may seek to vary prices, but would not in itself adversely affect a supplier's negotiating position. That is, it would not affect the sawmill companies when seeking to negotiate prices for their finished products. b. Regarding the allocation of timber, that it is highly likely that competitors would already have a good idea of the volume and mix of species available at different sites in NSW. This is consistent with the fact that volumes have been released by government agencies and Ministers from time to time. Professor Walker also points out that tenders by the First Respondent currently disclose information about volumes. 94In regard to the issue of asserted commercial-in-confidence provisions of the redacted information he referred to the definition of commercial-in-confidence in Schedule 4 to the GIPA Act which provides: commercial-in-confidence provisions of a contract means any provisions of the contract that disclose: (a) the contractor's financing arrangements, or (b) the contractor's cost structure or profit margins, or (c) the contractor's full base case financial model, or (d) any intellectual property in which the contractor has an interest, or (e) any matter the disclosure of which would place the contractor at a substantial commercial disadvantage in relation to other contractors or potential contractors, whether at present or in the future. 95In his opinion none of the types of redacted information falls within that definition. 96In his opinion the redacted information does not relate to the contractor's financing arrangements, or its cost structure or profit margins. He says that the base case financial model is commonly incorporated in a set of contracts and deeds for a public private partnership. In regard to intellectual property he says that the design of contracts for the harvesting and haulage of timber may be intellectual property of the First Respondent, not the counterparty, and in any event details of such contracts are already in the public domain. 97With respect to the issue of whether disclosure of any or all of the redacted information, would place any or all of the contractors at a substantial commercial disadvantage in relation to other contractors or potential contractors, whether at present or in the future, Professor Walker stated: my assessment is that: i. there may be some commercial disadvantage to those contractors who (for example) had been the beneficiary of 'sweetheart' deals in which the price was less than that charged for equivalent products to other participants in the timber industry, and less than that which might emerge in a free and open market, or which were the subject of generous conditions. The commercial disadvantage would arise if those contractors found themselves subject to competition when later seeking access to sources of supply when existing contracts expire. Alternatively, there may be adverse scrutiny of existing contracts when prices were subject to review; ii. on the other hand, it is likely that existing operators already have a reasonable understanding of the volume of timber of different species in particular forestry management areas, and of the size of timber that could be harvested - if for no other reason than because of the movement of staff between firms (taking with them some knowledge of the operations of previous employers), or conversations with trucking contractors, and so forth. Similarly it is likely that information about the pricing of timber is also quickly disseminated within the industry; iii. given that information about volume, price and the terms of some timber supply agreements has already been placed in the public domain, it is difficult to see how further disclosures could be construed as particularly 'commercial sensitive; iv. on balance, it is difficult to conclude that any commercial disadvantage would be substantial, in the sense that it would lead those contractors to incur substantial economic loss as the result of disclosure; v. rather, disclosure is likely to contribute to the establishment of a 'level playing field' for competing operators in future contract negotiations; vi. there does not seem to be any basis for asserting that an objective of the 2009 GIPA Act was to protect firms that may have enjoyed economic benefits from favourable contracts (in the absence of open tenders) from disclosures that may give rise to critical scrutiny from other stakeholders. 98Professor Walker noted that Mr Taylor had adopted many of Mr. Davidson's assertions in his determination and Professor Walker disputed many of those assertions. In particular he commented on the following elements of Mr. Davidson's evidence:

• his claim that supply arrangements determine the product categories and market segments with which contractors operate, and the customers they choose to supply;
• his confusion of the concepts of 'price' and 'cost' (e.g. Mr. Davidson's assertion that 'the price of timber supplied to Boral represents a significant ... component of the price of finished timber products);
• his claim that disclosure of information regarding the price paid by Boral for timber would enable competitors to estimate Boral's cost structure, and allow them to more effectively compete;
• his claim that disclosure of the price of wood fibre would enable competitors to calculate pricing/cost structures and to identify and target the areas of most commercial benefit in which to compete; and to more effectively compete for customers' business. 99Professor Walker stated: Boral is the dominant operator in the NSW timber industry, and is in a position to exercise considerable market power both in dealing with suppliers (notably Forests NSW), and with customers for its products. In that context, it is difficult to accept Mr. Davidson's claims that serious commercial damage might ensue if any of the remaining 150 companies in the hardwood industry were in an improved position to compete for supplies of timber. 100In regard to Mr Taylor's statement that he had received advice that the volume and species of wood supplied under the Agreements was pivotal to the business strategy of the third parties in that it determines the product categories and market segments they will operate in and customers they will supply, Professor Walker expressed the following opinion: [I]n my opinion (from a business or commercial perspective) the substance of that advice is disingenuous, or at best, overstated. Supply arrangements may well be a factor taken into consideration in the formulation of a business strategy, but would not be the only or pivotal consideration, except in highly unusual circumstances (such as in the case of short-term shortages - an even then, would only apply to short-term strategies). It is plainly an overstatement to suggest that the volume and supply of species of wood (one of several 'inputs' to a timber processing business) would determine the product categories and market segments in which a firm would operate i.e. that there is a causal relationship between the availability of supplies of timber, and a firm's business strategy. Business strategies necessarily have regard not only to what goods or services can be produced, but also to what can be sold. A firm can only sell a product at a nominated price if there is a demand for that product at that price. 101Professor Walker disputed the assertion that disclosure of this information would unfairly enable competitors to pre-empt strategic decisions and calculate pricing/cost structures by geographical location to identify and target the areas of most commercial benefit in which to compete. Professor Walker stated: [I]t is hard to see how the kind of information that has been withheld (available volumes of different species of timber) would in itself enable any assessment to be made by competitors of 'pricing/cost structures'. Indeed, it seems highly likely that current or potential competitors, on the basis of their own experience (or other information in the public domain), would already have a good idea of the volume and mix of species available at different sites in NSW, and of the costs of harvesting and transporting logs from different locations. In any event, the register of Forests NSW tenders currently discloses information about volumes ... the key piece of information that would supposedly lead to the 'unfair' treatment of successful bidders for access to forestry resources would be disclosure of the price paid for those resources (and possibly any associated conditions which may relate to such matters as construction of access roads or site rehabilitation). One interpretation of Mr. Taylor's observations is that they assume that disclosure of the details of awarded contracts would lead to more vigorous and informed competition from new entrants or from other firms currently engaged in the timber industry, and that this would be a bad thing. In particular, his suggestion that disclosures would lead competitors to 'target the areas of most commercial benefit in which to compete' seems ill considered: competitors in a free and open market will always seek to identify areas that may produce commercial benefits. Mr. Taylor's suggestion that this would be unwelcome could be construed as reflecting a wish to protect existing customers of Forests NSW from the threat of competition. Such an interpretation must lead to the question, bad for whom? What may be bad for current customers of Forests NSW may be good for the public purse. 102In relation to 'take or pay' provisions Professor Walker expressed the view that any payments to be made for untaken timber in a given period in terms of a typical take or pay contract could give rise to a 'credit' towards payment of future timber deliveries, and would be treated for accounting purposes as a prepayment (an asset) rather than as an expense. He suggested that any effect on the overall cash flows and financial position of the Second and Third Respondents that might arise from release of the redacted information would be minimal. 103In contrast, Professor Walker expressed the view that there are a number of public policy reasons for disclosure of the contents of these commercial contracts: i. since Forests NSW is selling publicly-owned natural resources to a private sector firm, it would be in the public interest for efforts to be made to secure an optimal economic return to taxpayers. Possibly Forests NSW makes such efforts. Possibly it has entered into generous arrangements with some contractors in an effort to foster or maintain employment in regional areas of the State. Whatever the history of past deals, disclosure of relevant contracts would ensure that Forests NSW was accountable to Parliament, stakeholders, and the wider community; ii. the case for disclosure is particularly compelling if past tenders for the purchase of timber were not open tenders; iii. the case for disclosure is also compelling given that there is a possibility that the manner in which Forests NSW reports on its financial performance may not properly reflect the full costs of maintaining forestry operations in NSW (since certain costs, such as fire protection, maintenance of access roads and bridges) may be incurred by other agencies or by local governments; iv. Boral, as the dominant operator in the NSW timber industry, has considerable market power and near-monopoly status in certain markets. If (as suggested by Boral representatives) disclosure would foster competition, disclosure would be good public policy per se; v. the harvesting of native forests (and plantations) can have serious detrimental effects on the natural environment. Disclosure of the particulars of contracts would ensure that stakeholders can subject such arrangements to critical scrutiny; vi. reports from the NSW Auditor-General to the effect that Forests NSW has entered into long-term agreements to sell more timber than would be produced within that period suggest that there are risks associated with the maintenance of supply. In that context, the community risks incurring economic loss if existing arrangements are rolled over without being subjected to a careful and fair review of pricing arrangements. Again, enabling stakeholders to scrutinise existing contracts could assist this outcome.

Ms Flint's evidence 104With respect to the take or pay provisions, the Applicant relies on the evidence of Ms Carmel Flint, an environmental consultant, regarding the impact of releasing such provisions. 105Ms Flint's evidence is that she is aware of information, made available to the public, recording the total volume of timber supplied by the First Respondent to each industry participant; the volume of particular products supplied by the First Respondent to each industry participant; the volume of particular species supplied by the First Respondent to each industry participant; and the price paid for timber. She said that information of that kind has been made available to the public on a number of occasions, without any apparent detriment to the commercial outcomes of the timber companies involved. 106Ms Flint's evidence is that as part of a Freedom of Information request submitted by the National Parks Association in 2006 to Forests NSW, the National Parks Association received information on the total volume of quota timber supplied by Forests NSW to each industry participant, annually over a ten year period, without any apparent detrimental impact to those participants. She also stated that data was released under a Freedom of Information request about volumes of timber supplied by the First Respondent to other companies. She further stated that in 2006 the NSW Government made public details of the wood supply agreements, including term and volume, with Pauls Timbers at Baradine and Gunnedah. 107Ms Flint considers that it is unlikely that competitors would withhold orders for on-sell logs if they know about the take or pay obligations. She pointed out that the Applicant is not seeking access to a running log of volumes harvested by Boral, and nor is such information likely to be available to any customer under any circumstances. Unless a customer had access to such information, it would not be in a position to assess whether or not Boral was close to meeting the take or pay provisions. 108Ms Flint noted that native forest logging operations on state forests in NSW are running at a loss. In her opinion this fact substantially increases the public interest in access to detailed information on wood supply contracts and pricing. She says that the community has a direct financial interest in understanding why such an important public resource is not returning a profit. 109I note that some doubt was raised in regard to the accuracy Ms Flint's observation that there has been an apparent financial loss from native forest logging operations on public lands that are managed by the First Respondent; however the evidence was not conclusive. In her opinion it is important that the community can obtain detailed information on wood supply contracts and pricing to better understand why native forest operations are not profitable and what options are available to either reduce environmental impacts or improve profits. 110She says that the price being charged by the First Respondent for the publicly owned timber resource ought to be made available for this purpose. Ms Flint observes that pricing is highly likely to be one of the fundamental drivers of the financial loss. She noted that the setting of log prices occurs through administered processes as against market-based systems in NSW. There is some suggestion from a report by URS, to which Ms Flint refers, that this is not necessarily the best means of capturing a resource rent by the government on behalf of the community. She contends that the assessment of whether an appropriate resource rent is being obtained from the use of a public resource in all cases is a further matter that supports the release, in the public interest, of the contract price terms. 111Ms Flint also points out the level of subsidy to the timber industry and the apparent compensation risk that has been imposed on taxpayers, given the Auditor-General's advice that there is no allowance for a non-compensable reduction in commitment following a review of available timber resources and the ensuing litigation. The community ought to be able to assess the scale of risk and the opportunities for reduction of that risk and this can only come about if the contracts are released in full. 112Comments made in the Auditor-General's report are discussed below. 113The Applicant submitted that the adversarial nature of business would not be likely, and in the absence of that and specific information about how much timber a sawmill company was taking at any one time, it contends that the release of the redacted information could not prejudice the affairs of those companies. 114Ms Flint referred to the poor environmental record of the First Respondent and in particular to comments made in proceedings in the NSW Land and Environment Court. In the matter of Director-General, Department of Environment, Climate Change and Water v Forestry Commission of New South Wales [2011] NSWLEC 102, Justice Pepper stated at paragraph [103]: "the Forestry Commission's conduct manifests a reckless attitude towards compliance with its environmental obligations" 115In the same judgement, at paragraph [100], Justice Pepper also stated in relation to the Forestry Commission that "[I]n my view, the number of convictions suggests either a pattern of continuing disobedience in respect of environmental laws generally or, at the very least, a cavalier attitude to compliance with such laws" 116In Ms Flint's opinion, the poor environmental record of the First Respondent identified by Justice Pepper and revealed by community groups in recent years is the direct result of timber allocations that are set at unsustainable levels. 117Ms Flint referred to the case of Allen Taylor & Co Ltd & Anor v Forestry Commission of NSW & Anor (SCA, 291263 of 2010) ("the Boral Case"). In 2011 the North East Forest Alliance obtained the Supreme Court summons in the Boral Case. The summons refers to a Wood Supply Agreement between the plaintiffs and the defendants dated 26th August 2003. The summons included the following information in relation to the Agreement:

• The term of the Agreement, including the start and end dates
• The annual volume of timber required to be supplied under the Agreement to the plaintiffs by the defendants for each year from 2004 to 2010
• The annual volume of timber supplied by the defendants to the plaintiffs for each year from 2004 to 2010.
• The allowable level of substitution of small sawlogs for quota quality logs within the baseline allocation contained in the Agreement
• The volume by major species requirements specified in the Agreement for Blackbutt, Spotted Gum and Brushbox
• The volume of Blackbutt supplied for each year from 2005 to 2010
• The volume of Spotted Gum supplied for each year from 2008-2010
• The volume of Brushbox supplied for each year from 2005 to 2009
• The average delivery charges (as $/m3) imposed on the plaintiff, by plant and price zone, for each year from 2004 to 2011. 118Ms Flint said that the Summons has been uploaded in full to the website of the North East Forest Alliance and has been publicly available there for several months without any apparent detriment to Boral. 119Ms Flint also referred to comments by Sir Laurence Street, in 2002, when appointed as the independent legal arbiter to rule on a disputed claim of privilege on documents related to the Mogo Charcoal Plant. One of the most important documents was the Timber Supply Agreement that had been signed by State Forests and Australian Silicon Operations Pty Ltd. Both State Forests and the company claimed privilege on the Agreement and sought to have it withheld from release. Sir Laurence Street considered the matter at length and reached the following finding: "In the claim for privilege, State Forests describe the Agreement thus: The Agreement is for the regular supply of up to 200,000 tonnes of timber per year from State Forests' South Coast region. Subject to the ASO meeting their conditions precedent the Agreement will operate until 31 December 2020. The claim for privilege quotes clause 47 (the confidentiality clause) and continues: It is submitted that the release for public inspection of the documents in respect of which privilege is claimed on the grounds of commercial in confidence will have serious adverse commercial implications for the State, State Forests and ASO including: Disclosure to competitors of commercial sensitive matters such as the prices payable by ASO for raw materials used in the manufacture of silicon Breach of contractual promises of confidentiality Prejudice current and future contractual relationships between the Crown and the private sector Cause loss of commercial advantage and competitiveness with the private sector. ...In my view, the considerations in favour of disclosure convincingly outweigh the claim for privilege. The description of the magnitude in quantity and in time of the Agreement by State Forests that I have quoted above is eloquent of its importance to the public interest. Principles of transparency and accountability plainly outweigh the commercial in confidence considerations and the admittedly prospectively serious implications put forward by State Forests and ASO when considering a contract for a sale by the State of this magnitude. The administration of the timber resources of the State involves political, ecological and economic considerations of significant public interest and, I repeat, the magnitude of this transaction is such as to expose it to a clearly recognisable obligation of disclosure. The claim for privilege is denied." 120Ms Flint said that the magnitude of the timber supply agreements that are being sought in this instance are in some cases individually, and in all cases, collectively, far greater than those that were released in 2002. She is of the opinion that there is a significant basis for disclosure, particularly given the increasingly severe ecological impacts of the logging contracted for by those agreements and the very poor economic outcomes resulting from such logging. 121She says that the public would be able to use the redacted information to participate in Government policy development on forest management in NSW. This is important information that enables the public to participate on equal terms with company interests when debating the costs and benefits of forest policy in NSW. The public could use this information to develop alternatives for future management of the forests, to assess more sustainable and profitable options for forest management, and to better cost those options. It would enable the public to make a more informed assessment of the legal and financial impediments to better forest management in NSW. 122She said that in the short-term, it would enable the public to provide detailed input into such processes as the reviews of Forest Agreements, Regional Forest Agreements and Integrated Forestry Operations Approvals in NSW.

Mr Milledge's evidence 123The Applicant relies on the evidence of Mr David Milledge, a wildlife ecologist whose primary research focus in NSW has been on the forests of the North Coast. Mr Milledge gave evidence with respect to the ecological values of New South Wales' public hardwood forests, as managed by the First Respondent and on the effects of current management practices on these values. As part of the brief provided to him by the Applicant, two questions were posed. i) what is the ecological value of the public hardwood forest estate, as managed by the First Respondent, in NSW? ii) is the management of these public forests occurring in a manner that protects these values?, and if not, what are the main reasons for this? 124Mr Milledge's evidence is that the hardwood forest estate in NSW has exceptionally high ecological values. It provides important habitat for endemic species, sensitive species and species that are otherwise in decline and preserving old-growth stands, which comprises indicators of national significance for the assessment of natural areas for listing on the Register of the National Estate. The hardwood estate supports an exceptionally rich and diverse range of plants and animals and provides core habitat for many of the continent's major flora and fauna groups. A high number of forest-dependent species occurring in these forests are listed as threatened under State and Commonwealth legislation. The hardwood forests are of national significance in providing food resources for certain bird species and major importance to other migratory bird species and fruit-bats. 125Mr Milledge's evidence is that the use of the hardwood forest estate involves a balance between timber production and other purposes including the provision of ecosystem services and wildlife conservation. He stated that recent independent audits of logging operations in various State hardwood forests in North East NSW indicate that current management of public hardwood timber production forests, in this area at least, is not being undertaken in a manner that protects their ecological values. The audits indicate that the ecologically sustainable forest management principles had been comprehensively ignored. 126Mr Milledge stated that the manner in which prescriptions for protection of habitat attributes of the forests had been abandoned included logging of stands of trees that should have been protected, failures to properly mark up trees to be retained prior to logging, damaging snig track construction and failures to protect exclusion zones. He stated that It appeared that application of these prescriptions had been abandoned because management intent was on maximum economic utilisation of the available timber resource. 127Mr Milledge identified impacts of this approach that he considered to have significantly affected the forest structure and regeneration potential of the hardwood stands and that in his opinion regeneration would be retarded and harvesting would be unlikely to be economic in the area for many decades.

The NSW Auditor-General's Report 128The Applicant relies on an April 2009 report of the NSW Auditor-General titled "Sustaining Native Forest Operations Forests NSW". Specifically, I have been referred to comments made in that report which the Applicant contends raises concerns about the First Respondent's management of a publicly owned asset. The executive summary of the Auditor-General's report states: ... Forests NSW faces difficulties managing supply especially for large, high quality sawlogs. This is due in part to the actions of Government in negotiating a new wood supply agreement for the north coast in 2003 and the loss of forest estate. In this new agreement, the Government waived its rights to reduce commitments without compensating industry for any loss. This removed Forests NSW's ability to better manage supply risks by adjusting commitments. In addition, timber volumes were more or less maintained despite the loss of forest estate to national park and reserves. To meet wood supply commitments, the native forest managed by Forests NSW on the north coast is being cut faster than it is growing back. This is especially the case for the blackbutt species. This does not mean that the forest will not regrow but there will be a reduction in yield in the future. After the current agreements cease, Forests NSW plans to fill the shortfall on the north coast with plantation hardwood. However, we found it is currently sourcing significantly more from plantations than anticipated to meet its commitments, which may place this strategy at risk. Forests NSW continue to look for new sources of hardwood timber to meet existing commitments including private property and leasehold land. As timber haulage distances increase and yields decrease, the overall cost of production will rise. These additional costs will have to be borne by both Forest NSW and the industry. Given that native forest operations ran at loss of $14.4 million in 2007-08, this raises concerns about how much worse this financial burden may get.

Consideration 129The Tribunal's function on review under section 63 of the Administrative Decisions Tribunal Act 1997 is to make the correct and preferable decisions having regard to the material before it before it, and any applicable written or unwritten law. It is well established that in considering an application for review the Tribunal is not constrained to have regard only to the material that was before the agency, but may have regard to any relevant material before it at the time of the review: Drake v Minister for Immigration and Ethnic Affairs [1979] AATA 179; (1979) 46 FLR 409. 130In this case the Tribunal was provided with unredacted copies of the Agreements of the TEFA document. Each of the parties and the Information Commissioner has made submissions with respect to the issues to be determined. I have also been provided a copy of a letter to the First Respondent from Toomey Pegg, lawyers acting for Grants Holdings Co Pty Limited. That letter, dated 2 March 2012, is in the form of submissions with respect to its objection to access being given to the Western Region Wood Supply Agreement between Grants Holdings Co Pty Limited, Forests NSW and the State of New South. 131Grants Holdings Co Pty Limited is not a party to these proceedings and I do not propose to give weight to those submissions. I note however, that the content of those submissions appears to have been addressed in the submissions by the Respondents. 132The Tribunal's task is to determine whether there is an overriding public interest against disclosure of the information in the Agreements in accordance with the Act, paying due regard to the principles in section 15 of the GIPA Act. This requires that the public interest consideration both in favour and against disclosure be identified, so that the question of whether, on balance, the public interest considerations against disclosure outweigh those in favour of disclosure can be determined. Unless there is an overriding public interest against disclosure the presumption in favour of disclosure applies.

Public interest considerations in favour of disclosure 133Public interest considerations in favour of disclosure are set out in section 12. The section makes it clear that those considerations are not limited. In my opinion there are a series of public interest considerations in favour of disclosure of the Agreements. In addition to the general public interest in favour of disclosure of government information the Applicant's evidence identifies a number of considerations. 134In general terms most of the considerations can be described falling within the section 12 considerations that:

• disclosure of the information could reasonably be expected to promote open discussion of public affairs, enhance Government accountability or contribute to positive and informed debate on issues of public importance;
• Disclosure of the information could reasonably be expected to inform the public about the operations of agencies and, in particular, their policies and practices for dealing with members of the public, and
• Disclosure of the information could reasonably be expected to ensure effective oversight of the expenditure of public funds. 135Under cross-examination Professor Walker was argumentative and reluctant to concede all but the most obvious matters. For the most part I nevertheless found his opinions to be soundly based. 136Professor Walker identified a number of public policy reasons for disclosure of the contents of Agreements. Those considerations are directed towards ensuring that the First Respondent is accountable to Parliament, stakeholders, and the wider community in relation to a publicly owned natural resource. He suggests that the manner in which the First Respondent reports on its financial performance may not properly reflect the full costs of maintaining forestry operations in NSW. I agree that the possibility that disclosure of the redacted information may assist in promoting open discussion on that issue is a consideration in favour of disclosure. 137I agree that the possibility that disclosure of the redacted information may result in critical scrutiny of the issue of the effect that the harvesting of native forests and plantations can have on the natural environment is a consideration in favour of disclosure. 138I agree that the possibility that disclosure of the redacted information may result in critical scrutiny of the issues highlighted by the NSW Auditor-General's report is a consideration in favour of disclosure. 139I agree that the possibility that disclosure of the redacted information may result in critical scrutiny of the issues highlighted by Justice Pepper in the Land and Environment Court matter is a consideration in favour of disclosure. 140I agree that the possibility that disclosure of the redacted information may result in a better community understanding as to whether or not an important public resource is returning a profit is a consideration in favour of disclosure. 141I agree with Ms Flint that the possibility that the public would be able to use this information to participate in Government policy development on forest management in NSW is a consideration in favour of disclosure. 142I do not agree that the issues raised in regard to the need for a level playing field and to promote competition are considerations in favour of disclosure. Nor do I consider that the relative size of the Second and Third Respondents and their competitors is a consideration in favour of disclosure.

Public interest considerations against disclosure 143The public interest considerations against disclosure are limited to those set out in the Table to section 14 of the GIPA Act. It is common ground that the Respondents bear the onus of justifying the decision to refuse access to the redacted information, and they also have the burden of establishing that the public interest considerations against disclosure apply. They also bear the burden of establishing that, on balance, they outweigh the public interest considerations in favour of disclosure. Consistent with the principles set out in R v Australian Broadcasting Tribunal; ex parte Hardiman (1980) 144 CLR 13, the Respondent's role was limited and the Second and Third Respondents accepted the major role in regard to these issues. 144The Respondents contend that the considerations against disclosure are found in clause 4 of the table to section 14. It is my understanding that none of the Respondents rely on clauses 4(a) or (e). Accordingly, the asserted considerations are those in clauses 4(b), (c) and (d). 145It must be shown that disclosure of the redacted information could reasonably be expected to have one or more of the effects set out in those sub-clauses.

Could reasonably be expected 146The meaning of the expression 'could reasonably be expected' was considered in the matter of Hurst. Judicial Member Molony stated at paragraphs [56] - [57] "56 Mention must be made of the requirement, common to all the public interest considerations against disclosure in the Table to s 14, that disclosure "could reasonably be expected to" have the nominated effect. The words "could reasonably be expected to" have been the subject of considerable judicial consideration with respect to their use in the Freedom of Information Act 1989 and the Freedom of Information Act 1982 (Cth). They are to be given their ordinary meaning: Attorney-General's Department v Cockcroft (1986) 10 FCR 180. In that case, Bowen CJ and Beaumont J explained, at 190, that the words - "... require a judgment to be made by the decision-maker as to whether it is reasonable, as distinct from something that is irrational, absurd or ridiculous, to expect that those who would otherwise supply information of the prescribed kind to the agency would decline to do so if the document in question were disclosed under the Act. It is undesirable to attempt any paraphrase of these words. In particular it is undesirable to consider the operation of the provision in terms of probabilities or possibilities or the like." 57 Hayne J pointed out in McKinnon v Secretary, Department of Treasury [2006] HCA 45 that , at [61] - "... when their Honours said, as they did, that the words required a "judgment to be made by the decision-maker as to whether it is reasonable, as distinct from something that is irrational, absurd or ridiculous," to expect certain consequences, they are not to be understood as having used the latter expression as a paraphrase of the former. Rather, they are to be understood, and have since been understood, as doing no more than drawing an emphatic comparison. To do more would have been, as their Honours correctly said, "to place an unwarranted gloss upon the relatively plain words of the Act". And the same approach should be taken to the expression "reasonable grounds" when it is used in s 58(5) of the Act." See also XZ v Commissioner of Police, NSW Police Force [2009] NSWADTAP 2."

Reveal commercial-in-confidence provisions of a government contract 147It is not in dispute that the Agreements are government contracts. In order to establish that this consideration applies it is necessary for the Respondents to establish that the information redacted from the Agreements comprises commercial-in-confidence provisions. 148Professor Walker has asserted that this is not the case. 149The Second and Third Respondents contend that the cost of timber is a significant component of the price of the finished timber products produced by the Second and Third Respondents. As a result, disclosure of those clauses of the Agreements relating to resource price would allow the cost structures of the Second and Third Respondents to be estimated with some accuracy. Moreover, the clauses relating to resource price would disclose the Second and Third Respondents' profit margin on unprocessed timber that they 'on-sell'. Accordingly, it is argued, disclosure of contractual clauses relating to resource price would tend to disclose the Second and Third Respondents' costs structures and profit margins. They contend that these clauses are therefore commercial-in-confidence clauses. 150In contrast, the Applicant submits that, factually, none of the types of redacted information comprise provisions of the contract that fall within the definition of commercial-in-confidence. It relies on the evidence of Professor Walker in support of that submission. He says that the redacted information does not relate to the contractor's financing arrangements, or its cost structure or profit margins. 151I agree with Professor Walker in this regard. In my view, the redacted information contains only elements of the relevant factors referred to sub-clauses (a) to (d) of the definition. I do not accept that release of that information of itself would disclose the Second and Third Respondents' financing arrangements, cost structure, profit margins or full base case financial model. At most it would disclose an element of those items. Without further information, a competitor would be unable to make more than an estimate of the relevant factors. 152The Second and Third Respondents contend that disclosure of clauses relating to resource price, resource allocation/description, the term of the Agreements and take-or-pay arrangements would place the Second and Third Respondents at a substantial disadvantage in relation to other contractors or potential contractors. 153They submitted that it is not necessary for them to establish that they will suffer prejudice as a matter of certainty. Rather it is sufficient that there is a reasonable risk of such prejudice occurring: Watt v Forests NSW. 154It is submitted that disclosure of information relating to resource price will have the effect of allowing the Second and Third Respondents' competitors to estimate their cost structure, giving their competitors an advantage in the market for timber sales. They contend that this prejudice is particularly acute in the case of the Pulplog Agreement. The Second Respondent's existing woodchip business is focused on a single export customer. As a result, the Second Respondent's woodchip business is particularly vulnerable to the disclosure of the information sought. 155It is also argued that disclosure of resource price would prejudice Boral's negotiating position with its customers because customers would be informed of the amount of a major input cost. In the case of the on-selling of unprocessed timber, customers would be informed of the 'cost price' of the product thereby significantly advantaging customers in price negotiations. 156The Second and Third Respondents also contend that they would suffer a significant commercial disadvantage if their competitors or customers became aware of the information in the Agreements regarding resource allocation/description. This is because their competitors would be in a position to predict their strategic decisions and their customers would be advantaged in price negotiations. 157In regard to the take-or-pay provisions, the Second and Third Respondents also contend that if the detail of these provisions were exposed there is a risk that competitors of the Second and Third Respondents could engage in tactical behaviour calculated to cause financial loss to the Second and Third Respondents. That is, the competitors could withhold orders for unprocessed 'on-sell' logs in the hope that the Second and Third Respondents would reduce their purchase of timber and consequently incur a penalty. 158I accept that there is a risk that the Second and Third Respondents could be placed at a commercial disadvantage in relation to other contractors or potential contractors if the redacted material is disclosed. However, in my view there is considerable doubt in regard to the extent of that risk. While I am not satisfied that the release would certainly result in a commercial disadvantage, or that if it did result in a commercial disadvantage that it would be a substantial disadvantage, I accept that there is a possibility that both might occur. In the circumstances I therefore accept that this is a consideration against disclosure.

Diminish the competitive commercial value of any information to any person 159In order to establish that this consideration applies it is necessary for the Respondents to establish that the information redacted from the Agreements has a competitive commercial value and that if so, it would be diminished if the information were disclosed. These are questions of fact. 160The Applicant submits that the use of the descriptor "competitive" appears to imply that the information would need to provide the person with a competitive edge. I agree with that submission. 161The redacted information in this case will have a 'commercial value' if it is valuable for the purposes of carrying on the business of the Second and Third Respondents: Cannon and Australian Quality Egg Farms Limited. 162In addition, there must be some uniqueness attaching to the information that justifies treating it as exclusive, secret or confidential: Media Research Group Pty Ltd v Department of Premier and Cabinet [2011] NSWADTAP 7 at [48]. 163The Second and Third Respondents contend that the information in each of the Agreements as to resource price, resource allocation/description, take-or-pay arrangements and the term of the Agreement is unique and specific to their circumstances. It is also valuable to the operation of their business. This position is consistent with the decision in Watt v Forests NSW at [109] where I held that the current royalty rate for timber supplied by Forests NSW would be valuable commercial information. 164For the reasons set out above, the Second and Third Respondents say that they would be significantly prejudiced if customers and/or competitors came into possession of the information. 165The Second and Third Respondents also contend that the presence of confidentiality clauses suggests that the parties attach commercial value to that right. This in turn gives rise to the inference that the information contained in the contract, which is protected by the right of confidentiality, is itself of commercial value. 166From the perspective of the Second and Third Respondents, the commercial value of the information is tied to the fact that their competitors and customers are not aware of the information. They submit that there can be no doubt that public disclosure of the information would diminish (and probably destroy) the commercial value of the redacted information. 167The Applicant submits that information that has already been released into the public arena has lost any competitive commercial value that it might once have had. It says that this relates to the information released through the Boral Case and other information about volumes of timber referred to in prior media releases. 168The Second and Third Respondents have provided a schedule in relation to the extent of that released material from the Boral Case involves material in this matter. That schedule indicates a concession by the Respondents in relation to only minor parts of the Agreements. Nevertheless, it follows that the conceded content should be released. 169The term "Disclose" is defined in schedule 4 of the GIPA Act: disclose information includes make information available and release or provide access to information. 170The term "Reveal" is defined in clause 1 of Schedule 4 of the GIPA Act: reveal information means to disclose information that has not already been publicly disclosed (otherwise than by unlawful disclosure). 171There is some overlap between these definitions, in that the definition of "reveal" uses the word "disclose", which itself is not exhaustively defined. 172In R v Ritson; R v Stacey (2010) NSWDC 160 at [51] - [58] the Court adopted the meaning of "disclosure" for the purposes of the Privacy and Person Information Protection Act 1998 stated by Latham CJ of the High Court in Foster v Federal Commissioner of Taxation (1951) 82 CLR 606 at 614-615: ... it is not possible, according to the ordinary use of language, to 'disclose' to a person a fact of which he is, to the knowledge of the person making a statement as to the fact, already aware. 173In Richards v Commissioner, Department of Community Services (2011) NSWADT 98 [40] the Tribunal decided that the issue to be considered regarding whether release of information is likely to 'reveal' information, is whether the 'information' had been publicly disclosed. 174I agree with the view that if the information contained in a record has been disclosed, it cannot be "revealed" by giving access under the GIPA Act. 175With respect to the term of the Agreements, the Applicant submits that there is sufficient material already in the public arena that there would be no need to pay for that sort of information. . It submits that while the exact dates might not be known in all cases, estimates can easily be obtained regarding the likely timeframes for the contracts with the First Respondent. It submits that the suggestion that disclosure of the term would diminish its commercial value cannot be maintained. 176As to price, the Applicant relies on Professor Walker's observation that the cost of inputs may assist prospective customers to understand why suppliers seek to vary prices, but would not in itself adversely affect a supplier's negotiating position. Accordingly, the Applicant submits that the release of the information would not result in a diminution in its value. 177With respect to the volume and species, the Applicant submits that the information about Boral has effectively been placed on the public record through the Boral Case proceedings. To the extent that Mr Davidson's arguments purport to be reflective of the general sawmill company position, the Applicant relies on Professor Walker's to the effect that the volume and species of timber would generally be only one of several inputs into a timber processing business and therefore does not have the level of significance indicated. Further, Professor Walker also suggests that the volume and mix of species from different sites in NSW would generally be known within the industry such that this information would not be needed from other contractors in order to establish the areas that may produce commercial benefits. Accordingly, the Applicant submits that there is a mere concern about, or worry of a possibility of damage to any competitive commercial value rather than any real independent evidence. 178The Applicant submits that the evidence regarding the likelihood of diminution in the competitive commercial value of the take or pay/contract termination provisions is particularly speculative. It submits that there is no likelihood of the events suggested by Mr Davidson from occurring in fact. It submits that, in the absence of the running log of volumes, there would be little competitive value in a contractor having the take or pay provisions of another contractor. Accordingly, it is submitted that release of this information would not have the effect of diminishing their competitive commercial value. 179I accept that there is a degree of commercial value in some aspects of the redacted information. To the extent that the information in the Agreements is unique and specific to the Second and Third Respondents' circumstances, it is valuable to the operation of their business. I also accept that to the extent that the information has not been released there is some risk that the value would be diminished if the redacted material were disclosed. However, in my view there is also considerable doubt in regard to the extent of that risk. While I am not satisfied that the release would certainly result in a diminution of the value, I accept that there is a possibility that it might occur. In the circumstances I therefore accept that this is a consideration against disclosure.

Prejudice any person's legitimate business, commercial, professional or financial interests 180It is not in dispute that the redacted information concerns the Second and Third Respondents' business, commercial or financial interests. 181In order to satisfy the other element of this consideration, it is necessary for the Respondents to establish that those interests will suffer prejudice if the information redacted from the Agreements were disclosed. This is a question of fact. 182The Second and Third Respondents contend that in the circumstances of this case, there is no relevant distinction between their business, commercial or financial interests. 183They say that it is not necessary for them to establish that they will suffer prejudice as a matter of certainty. Rather it is sufficient that there is a reasonable risk of such prejudice occurring: Watt v Forests NSW at [120]-[125]. 184They submit that the prejudice which disclosure is likely to cause is that referred to above. 185Disclosure would allow the customers and competitors of the Second and Third Respondents to obtain information beyond that which they would usually be aware of in ordinary competitive market conditions. For example, they contend that purchasers of unprocessed timber would essentially be able to find out the cost price paid for the product by the Second Respondent. 186They submit that disclosure would subject persons who contract with the First Respondent to prejudice that they would not suffer if the Agreements had been entered into with a private sector competitor of the First Respondent. They contend that the GIPA Act incorporates and promotes the principles of competitive neutrality whereby a state entity should not be disadvantaged in comparison with its private sector competitors. In considering the commercial prejudice created by disclosure, it is therefore legitimate for the Tribunal to consider whether disclosure would create an additional burden to the purchasers of timber from the First Respondent, which would not be faced by persons who contracted with private sector timber suppliers. 187The Second and Third Respondents further contend that the commercial prejudice they suffer is no less significant because they are part of a large corporate group. 188The word "prejudice" has been found in cases decided under Freedom of Information legislation to have its ordinary meaning: "to cause detriment or disadvantage": Re: Maher and the Attorney General's Department (No 2) (1986) 4 AAR 266 or to "impede or derogate from": Sobh v Victoria Police (1994) 1 VR 41. In SOBH v Police Force of Victoria [1994] 1 VR 41, at 55, Nathan J stated: Prejudice is not a term of legal art. It means to impede or derogate from. Its content is governed by the matters which may be impeded or derogated from, which in this case is the administration of the law. 189I accept that this adequately summarises the decisions on the meaning of 'prejudice' under Freedom of Information legislation. In my view it is equally applicable in the context of the GIPA Act. 190The Applicant submits that release of the information could not reasonably be expected to prejudice the Second and Third Respondents' business, commercial or financial interests. 191Again, the Applicant submits that to the extent that information is already in the public arena, and is the sort of information placed in the public arena by the government, it is unlikely to be the sort of information that would prejudice legitimate business, commercial or financial interests. The Applicant relies on the evidence of Professor Walker in the following way: a. Regarding price, that the cost of certain inputs may assist prospective customers to understand why suppliers may seek to vary prices, but would not in itself adversely affect a supplier's negotiating position. That is, it would not affect the sawmill companies when seeking to negotiate prices for their finished products. b. Regarding the allocation of timber, Professor Walker is of the opinion that it is highly likely that competitors would already have a good idea of the volume and mix of species available at different sites in NSW. This is consistent with the fact that volumes have been released by government agencies and Ministers from time to time. Professor Walker also points out that tenders by the First Respondent currently disclose information about volumes. 192With respect to the take or pay provisions, the Applicant relies on the critique of Ms Flint regarding the impact of releasing such provisions. It is submitted that the adversarial nature of business suggested by Mr Davidson would not, in fact be likely, and in the absence of that and specific information about how much timber a sawmill company was taking at any one time, which would not be generally available information, the release of this information could not prejudice the affairs of those companies. 193With regard to the term of contracts, the Applicant notes that the prejudice suggested by Mr Davidson is very specific to the Pulpwood supply contract. Nevertheless, the general information about terms of contract, and the fact that they follow on from the signing of the Regional Forest Agreements would allow competitors to estimate when to time negotiations regarding new contracts (if that did happen to be part of their strategy), whether or not the exact date were known. In that regard, the Applicant submits that there is no more than a mere concern about or worry of prejudice to Boral's affairs. The Applicant submits that there would not be a reasonable likelihood of prejudice to the affairs of sawmill companies by release of the terms of agreement. 194The Applicant further submits that any prejudice to the First Respondent's affairs is not evident in the circumstances. In all the circumstances of this case, the Applicant submits that any prejudice to the First Respondent is speculative. 195I accept that the redacted material concerns the Second and Third Respondents' business, commercial or financial interests. I also accept that there is some risk that those interests might be prejudiced if the information has not been released already were disclosed. However, in my view there is also considerable doubt in regard to the extent of that risk. While I am not satisfied that the release would certainly result in prejudice to the Second and Third Respondents' business, commercial or financial interests, I accept that there is a possibility that it might occur. In the circumstances I therefore accept that this is a consideration against disclosure.

Balancing the public interest considerations 196I have found that there are public interest considerations both in favour of disclosure and against disclosure. The public interest considerations against disclosure are to be weighed against the public interest considerations in favour of disclosure. 197I consider that there is a strong public interest consideration favouring disclosure of the redacted information in order to increasing the financial accountability of the First Respondent. I agree with the Applicant that there is a clear public interest in an agency that is dealing with public assets being accountable for the manner in which it contracts to sell those assets. This interest is strengthened by the fact that the Agreements were entered under a system that did not involve an open tender. 198I also consider that there is a strong public interest consideration favouring disclosure of the redacted information in order to further public policy development around the management of the publicly owned hardwood forest estate in NSW. 199I also consider that there is a strong public interest consideration favouring disclosure of the redacted information in order to encourage community engagement with government about sustainability. 200I consider that there is a public interest consideration against disclosure of the redacted information because there is some risk that the Second and Third Respondents could be placed at a commercial disadvantage in relation to other contractors or potential contractors if the redacted material is disclosed. 201I consider that there is a public interest consideration against disclosure of the redacted information because there is some risk that the commercial value of some aspects of the redacted information could be diminished if the redacted material were disclosed. 202I consider that there is a public interest consideration against disclosure of the redacted information because there is some risk that the Second and Third Respondents' business, commercial or financial interests might be prejudiced if the information has not been released already were disclosed. 203As I have indicated above, it is my view that there is considerable doubt in regard to the extent of those risks. 204In my view, the public interest considerations in favour of disclosure outweigh those against disclosure. 205It follows, in my view, that the determination should be set aside insofar as it relates to the Agreements. In its place the decision should be made that the redacted information in the Agreements is to be released to the Applicant. That information should be released within 30 days of the publication of this decision.

The TEPCO document 206The Applicant submits that the whole of the TEPCO document ought to be released. It argues that while cost information may not be material that specifically comprises an estimate of the likely future timber yields, in the sense of the amounts of timber to be produced, it is nevertheless part of a "report on" that subject, inextricably linked to the overall yields and the materials therefore fall within the intent of the Applicant's request. 207In the absence of any other basis for refusal, the Applicant submits that it would be in accordance with the object of the GIPA Act to allow access to government information proactively and withholding it only when there is an overriding public interest against disclosure, for the entire TEPCO document to be released. 208In contrast, the First Respondent contends that the redacted information does not fall within the scope of the Applicant's request. 209The Oxford English dictionary provides several definitions of the word 'on'. For the purposes of these proceedings the most applicable definition is: In a state of knowledge or awareness regarding something. 210Other related meanings: .... having (the thing mentioned) as a topic; about ... having (the thing mentioned) as a basis ... having (the thing mentioned) as a target, aim, or focus ... 211I have considered both the Applicant's request and the entire TEPCO document. I agree with the First Respondent's position. In my view, the redacted material is not a report or documents 'on the estimation of the likely future timber yields'. It therefore falls outside the scope of the Applicant's request. 212Accordingly, that aspect of the determination should be affirmed. 213I note however, that there is no apparent basis on which I could conclude that the First Respondent could not nevertheless release the entire TEPCO document.

Orders

1. The decision under review is set aside insofar as it relates to the Agreements that are the subject of this application. In its place the decision is made that the redacted information in the Agreements is to be released to the Applicant within 30 days of the publication of this decision.
2. The decision under review is affirmed insofar as it relates to the TEPCO document.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 September 2012