Christine Milne (Tasmania, Australian Greens) Share this | Hansard source

I rise today to indicate that the Greens will be supporting the Tax Laws Amendment (2009 Measures No. 4) Bill 2009 but we will be moving some amendments. Senator Brown has some amendments that will be moved in the Committee of the Whole and I wish to now foreshadow an amendment that I will be moving in the Committee of the Whole in conjunction with Senator Joyce, the Leader of the Nationals in the Senate. I welcome the fact that Senator Joyce is joining me and that the Greens and the Nationals are again working together on the issue of carbon sink forests.

I remind the Senate that when the government determined to provide a 100 per cent upfront tax deduction for the planting of carbon sink forests in Australia I mounted a considerable campaign against that, as did the Nationals at the time. I indicated that the managed investment schemes had been a disaster for rural Australia and that carbon sink forests would essentially be managed investment schemes on steroids. Unfortunately, at the time the government and the Liberal Party combined to argue that the managed investment scheme and carbon sink tax deductions were warranted, in spite of the evidence to the contrary.

I alerted the Senate to the fact that every time a tax bill came before the Senate henceforth I would stand up and move the same amendment until such time as the parliament recognised the disaster that is happening in rural Australia because of the tax rorts that have been set up by successive governments. It was the coalition that brought in the managed investment scheme tax deduction and it is the Labor government that has brought in the carbon sink forest tax deduction. Together they continue to support what is effectively a completely failed scheme.

The reality is that plantation managed investment schemes have quadrupled the cost of growing wood in Australia. They are an unnecessary drain on the public purse. Plantation managed investment schemes are boom and bust by nature, because the investment in wood is driven by the demand for tax minimisation, not wood market realities. The combination of investment driven by demand for tax minimisation and highly profitable MIS plantation companies receiving their income upfront has generated a hardwood chip glut.

An investigation of late 1990s hardwood plantation prospectus documents—and this is according to Dr Judith Ajani—revealed a wide chasm between chip and paper market expectations and actual market realities. With prospectus company profits not pinned primarily to revenue from wood sales, there is little commercial motivation for them to invest in rigorous market research or to respond to wood market realities. Dr Ajani points out that, if the Commonwealth government decides to engage in tackling the woodchip glut and acknowledging its substantial hand in creating the arrangements that generated the glut, it will need to attend to the entrenched alliance between the bureaucracy and the forest lobby groups. In particular, it must rise above a handful of lobbyists who peddle perceptions of wood shortages, including on the domestic front, through misrepresenting the wood and wood products trade deficit despite the hardwood chip glut.

What she recommends is that the Commonwealth government terminate immediately the arrangements enabling plantation managed investment schemes. Further, she recommends that the Commonwealth terminates its policy of tripling Australia’s plantation estates by 2020, that the Commonwealth should engage in tackling the woodchip glut by stopping the logging of native forests in Australia, that plantation managed investment schemes should be investigated more deeply than has occurred in the parliamentary committees and that the carbon sink forest legislation be revisited in the light of the plantation MIS corporate and system failure.

That is what I am doing today. I am revisiting in this Senate the fact that the MIS schemes failed and that from one end of Australia to another—from the Queensland sugar fields to the Tasmanian dairy industry—there is ample evidence that agricultural land prices go up, water scarcity occurs with higher water prices in the water market, there is a loss of viability in rural towns and there is a loss of land to food production. And instead of addressing it and stopping it, we now have a Senate report saying that the 100 per cent tax deduction for managed investment schemes should stay and the carbon sink forests investment should say.

People might wonder why the Greens would be opposed to carbon sink forests. They are not carbon sink forests; they are plantations. There is no requirement for these forests to be biodiverse in nature—none at all. The regulatory framework is that of the states, and we have seen a complete failure of the states to regulate. We still do not have groundwater assessments in a state like Tasmania. We still do not know what the implications for groundwater are. We have seen catchments cleared of native forest and planted with plantations. Now, under the government’s Carbon Pollution Reduction Scheme, not only would you be able to get a 100 per cent tax deduction for planting a carbon sink forest but you would also be rewarded under the CPRS in terms of the credits that you would get—never mind what that might do to water in the community, food production, the viability of those rural communities or the whole ecosystem.

There is no doubt that there are parts of Australia that should be planted with biodiverse plantings for the longer term. But there are no specifications in these carbon sink forests provisions that the trees have to be in the ground for anything like 100 years, that they have to be diverse or that they have to be on marginal land. We hear the government say, ‘Oh, it’s not going to be very much in terms of hectares, therefore you’re worrying unnecessarily.’ Wrong—absolutely wrong. There is no restriction. What we know is that the best land with the best rainfall grows the best trees. If you want to maximise the carbon that you store in a carbon sink forest for the purposes of carbon trading then you will be putting those carbon sink forests on the land where you bulk up the carbon fastest. That is the reality. Just like with managed investment schemes, you will get a whole lot of sharks operating as middlemen in this market. You will see people operating in the carbon market and growing the trees for the carbon and not being in the least bit interested in what the ramifications are for the rural communities in which they operate.

I cannot emphasise enough that the government refused to negotiate on these matters and in relation to biodiversity in particular. Since the legislation came in, we have now had a whole analysis of greenhouse gas mitigation and carbon biosequestration opportunities for rural land use. It sounds great. But when you go into it you find that the estimates of area that could be covered in carbon sink forests are huge. If you look at this report, you see a figure of 20 million or 30 million hectares that they are proposing will be used for carbon sink forests. Where in Australia are you going to have the rainfall to cover 20 million hectares of land, that is not currently in some form of agricultural production, with these so-called carbon sink forests? And why would I assume for a moment that these plantings would be biodiverse? There is no substance at all in this claim. Yet again, the plantation industry companies have another rort coming. You would have thought that this parliament might have learnt something from the collapse of Timbercorp and of Great Southern. But, no, apparently we have learnt nothing and want to continue with 100 per cent tax deductions for planting more plantations while at the same time adding this on top of it.

The government says that it cannot be rorted like the managed investment schemes. Yes, it can, because it allows the aggregation upfront of all of the costs associated with establishing a carbon sink forest. Just as with managed investment schemes, you can include all of the costs, including water licences and land. The government says, ‘No, you can’t include land’, but, as the Senate will recall, I brought in advice from a senior tax barrister in Australia saying that the capital cost of land is included, plus the cost of water, plus the establishment costs—all of the costs associated can be put together and claimed upfront as a 100 per cent tax deduction. That is why I said that you will get exactly the same rorts appearing, along with the middlemen and the commissions being paid. All the costs will be aggregated upfront so that the 100 per cent tax deduction is there and so on and so forth. I cannot emphasise to the Senate enough what a terrible idea this is. I find it extraordinary. There is no rational explanation out there at all as to why this parliament is continuing with the 100 per cent tax deduction for MIS plantations and adding this on the back of it.

I note in today’s Financial Review that there is a push on from the Victorian and New South Wales governments to include offsets for a voluntary carbon trading system and offsets for agricultural land in terms of carbon stores. I say to these people: watch what you ask for, because you might get it—and, if you do, you are going to be in real trouble because a voluntary carbon market that allows people to opt in is going to continue to exacerbate this problem. And it is only going to be for a small amount of time because you will have to account for your emissions. It is all very well to say, ‘We will get a credit for the carbon sink forest upfront’, but you will also be given the cost of your emissions, and when there is a drought rural Australia releases huge amounts of carbon emissions. If people think that you can just get credit for the carbon you take up but you are not penalised for the carbon you release, think again because any accounting system that has any integrity has to have both sides of the equation. So be careful here because, if you want to rush in with half of it, you might get governments to be supportive of you in the short term but you will find that full carbon accounting is what is required. Therefore, you have to add up what your net emissions are likely to be in that balance and go out and get some assessment done of the real emissions coming out of rural Australia in the midst of a drought.

I think there are some very great issues to be considered here. That is why the Greens have said all along that we think agriculture should be out and there should be a parallel mechanism for green carbon, which is a fully autonomous system that rewards the right things and penalises emissions. It will actually provide some internal consistency and not just allow the opting in of plantations, which will drive investment in plantations in these carbon sink forests. Because the current accounting system does not account for the logging of forests you are going to end up with the plantations being grown for wood production ending up as carbon stores and the native forests, which ought to be carbon stores, are going to have logging driven deeper and deeper into them because the accounting system does not require you to account for the emissions from that logging. That is completely the reverse of what was supposedly talked about with this plantation vision. The whole idea behind it was that Australia would get its wood products from plantations and not from native forests—we would get out of native forests. That has not happened and this is going to drive a further complete distortion in the market.

I return to the point that I was making at the beginning in terms of profitability here. Everyone is rushing around assuming that these plantations are going to be profitable, either in the carbon market or in the wood market, in terms of managed investment schemes, and that there is absolutely no justification, when you have a look at what is actually happening on the global market, to substantiate the claims in terms of hard cash realities and returns.

I think it is time we had a very good look at who the government is listening to. We have a greenhouse mafia in Australia where people go in a revolving door from the coal industry into ministerial offices, then become lobbyists and then go into the department for a while—and round and round they go, giving one another the same advice. We have exactly the same thing here: from government to forest lobbying. Alan Cummine, for example, used to be an adviser to environment minister Ros Kelly. He went across to the forest lobbies through Australian Forest Growers, Treefarm Investment Managers Australia, and Australian Plantation Products and Paper Industry Council. Allan Hansard went from ABARE and DAFF across to the National Association of Forest Industries. Miles Prosser went from state forests in New South Wales over to NAFI, Plantations Australia and A3P. Richard Stanton from DAFF and state forests in New South Wales went over to NAFI and then A3P, the Australian Plantation Products and Paper Industry Council. Phil Townsend went from DAFF across to NAFI, to Tree Plantations Australia and then to ANU—round and round the revolving door goes. And what a surprise that they all give one another the same advice! Not only do they go round and round but they spin off occasionally into the carbon fossil sector, where you have Robin Bain, who used to work for NAFI, for Timber Communities, which used to be called the Forest Protection Society or whatever. She has gone across to be the chief lobbyist for the cement industry. It is a beautiful thing—round and round they go, giving one another the advice they want to hear.

I think it is about time the government actually had a look at the real economies that are facing people in the plantation sector. Contrary to the idea that we need more plantations, we actually have a glut of plantations. Isn’t it time someone actually had a look at the realities of that? We do not want to complicate matters further by giving people a 100 per cent tax deduction to drive the investment for tax minimisation purposes and not because they are the least bit interested in doing anything about the climate or ecosystem resilience. No, just as we have managed investment schemes, the primary interest is going to be tax minimisation. Once you take away the investor from the outcome by putting tax minimisation in the middle, you end up with rorting of the system, and that is exactly what is going to happen here. So I implore the Senate to join the Greens and the National Party in using this opportunity in this tax bill to get rid of the 100 per cent tax deduction for carbon sink forests. I would be more than happy to take an amendment from the government or the Liberal Party to amend it further to get rid of the 100 per cent tax deduction for managed investment schemes, while I am at it. I would be very happy to accommodate that should anyone decide to assist me in this process and move that.

Nevertheless, this is just adding insult to injury. I urge the Senate to support the opportunity that is given here to the people of Australia through their parliament to stop this rort and go back and recognise that, if we are to deal with climate change, and deal with it sensibly in terms of land use, the first thing we would do is stop the logging of native forests around Australia and rehabilitate native forest areas that are degraded. The next thing we would do is stop land clearance of native vegetation. The next thing we would do is build resilience in those ecosystems by getting connectivity in the landscape and creating jobs in rural and regional Australia in those rehabilitation activities.

You could give people on the land a payment for their stewardship of dealing with weeds and feral animals and restoring native vegetation on their properties. That could be a mechanism. Anything to do with green carbon needs to support people doing the restoration work that is needed to be done in rural Australia. So many people are already doing this through Landcare and voluntary programs, but if they were supported in doing it then they would be able to do it in a more comprehensive way than they currently are able to.

You would plant out some biodiverse areas as carbon in the longer term to give you improvements in productivity on your property and to improve biodiversity, but this is not the way to do it. A tax rort will not guarantee any environmental, biodiversity or carbon outcomes; all it will guarantee is more land being taken out of food production, exacerbating the problems that are already out there because of MISs. We will see them on an even grander scale because this continues to stand.