Barnaby Joyce (Queensland, National Party) Share this | Hansard source

One thing that needs to be pointed out is the conjecture that surrounds this, especially with regard to capital expenditure. As you know, Temporary Chairman Bernardi, things can be either a debit or a credit. They can be either capital in nature or income in nature. There are no other forms in accountancy. It is what this legislation actually says, if we go through it—and the interpretation by the court will be on what is written in this legislation. It says that you can deduct amounts for capital expenditure incurred for establishing trees that meets the requirements for constituting carbon sink forests. The purchase of land is most definitely a capital expenditure—without a shadow of a doubt. Any 100-1 accountancy student if asked, ‘Is the purchase of land capital in nature or income in nature?’ Would answer, ‘It is capital in nature.’ This legislation says that expenditure that is capital in nature is deductable upfront. If you go to 40-1005(1) it says:

(a) you incur capital expenditure that is covered under section 40-1010 in relation to particular trees established in the income year; and ...

It goes on later to say in subsequent and previous income years for the establishment income for a carbon sink forest. At section 40-1005(4)(b) it says:

(b) you incur capital expenditure in the next income year for establishing other trees;

in determining whether you can deduct an amount under subsection (1)...

On and on it goes. In fact, what becomes very interesting in the reading of this legislation, is that it actually does go to capital expenditure that is not acceptable. The only two things that are not acceptable are noted in section 40-1020—certain expenditure disregarded—and that is in draining swamps or low-lying land or clearing land. So that says that all the rest of the capital expenditure is obviously allowable. All it requires is someone to wander off into court and say: ‘This is the legislation. This is what it says.’ The legislation even has the opportunity and goes to the process of precluding certain amounts of capital expenditure and in that preclusion it leaves out, or is silent, on the purchase of land. So quite obviously and evidently land is in. Therefore, one person on one side of the fence gets an upfront tax deduction for the purchase of land as they live happily ever after in inner suburban metropolitan Australia or overseas while the farmer on the other side does not get it.

Why? There is the carbon argument and a belief that if we sequestrate more carbon the world will change. That is an argument for another day and that is fair enough. Obviously if you vote for this, it is an endorsement of that principle, and people should be aware of that. We are saying here that you will get an upfront tax deduction for capital expenditure for everything bar the draining of swamps and low-lying land and the clearing of land because you choose to plant a scrub and then wander away. Actually, you cannot plant a scrub—it has to be over two metres high—so it is going to be trees. And where are you going to find trees? You will find them in prime agricultural land. That is where you will find them. Does it go to a section of precluding prime agricultural land? No, it does not. That is what is so wrong about this legislation.

So we are giving people an upfront tax deduction to take out of production the capacity to grow food. I just find that fantastic. I think that is the most peculiar thing that has ever been designed—an upfront tax deduction to remove agricultural land from production. Who becomes the beneficiary of that? Obviously it is not the person living on the land. The beneficiaries are those living in a metropolitan area. So even the benefit of that tax deduction and the income stream from the carbon credit that will be distributed is taken out of the district. It is removed from the district.

This is the irony, the parody of justice: you are removing the means of production from a certain regional area and then giving a benefit to another area away from that land, and you are giving a benefit to a unit holder, or whatever, living in a metropolitan area or overseas. The land is left destitute from the removal of that means of production which was the support of that district, and the benefit is given to a person in a metropolitan area. And the methodology behind the benefit: obviously this is a mechanism to cool the planet; that is what we are doing. They believe that and that is what this is all about, and that is a fair enough argument.

But I think that it is completely unjust to compromise the food potential of an area. We have asked over and over and over again for someone to direct us to where in the legislation it says that capital expenditure for the purchase of land is not included. But it never made it into the legislation. It was a fast and furious debate. This issue was brought up over and over and over again: why don’t you exclude the purchase of land? It reminded me of a former Premier of my state, a good bloke, saying, ‘Don’t you worry about that. That is not an issue. Don’t you worry about that.’ Well, I am worried about it. This legislation specifically says that the purchase of land is included.

So what is wrong with it? You are giving an upfront capital expense deduction to some people while other people cannot get it. You have allowed the clumsy hand of government to come into the marketplace and pick winners and losers. You have allowed the definition of those winners and losers to be decided by a fence line. You have allowed a deduction for the removal of a productive component that does the decent thing of putting food on the table and feeding our nation and giving affordable food to our Australian people and to the world to be replaced by a carbon sink, which is an issue that you cannot touch—it cannot be milled and you cannot do anything with it.

I live next door to a forest. It is not something to be joked about. It is a complete impost because it becomes the home of vermin and pests like pigs, kangaroos in abundance, rabbits and wild dogs. You might think that is hilarious. How would you like it in your backyard? How many feral pigs and wild dogs do you want in your backyard and how many other examples of vermin do you want before it is not a joke for you? There are some areas now where you certainly cannot have sheep and they are removing the capacity to have cattle as well because of the complete lack of management expertise.

But the core issue here is that you have made a moral statement. You have decided to remove the capacity to grow food and replaced it with an upfront tax deduction to grow a forest that will never actually deliver any sustainable outcome in export dollars or in food that will feed the masses, which I think is one of your primary jobs as a decent human being.

I know that on any TLAB they could bring this issue up and it can turn into a wedge. In the National Party we are not prepared to do that. We have stated our case. We might speak on the issue in the future but today we are prepared to vote in this direction as a measure of how important the National Party feels it is. We tried in the National Party over and over and over again to get to a point of agreement. The last thing we wanted to do was cross the floor on this. We tried and tried to get some mitigator to bring us to an area of agreement, but we did not get there. So at this point in time on this issue we will reflect our deepest concern, and in some instances disgust, with what the government has put forward, because of the statements it makes about how you value things in life. Apparently you value the scrub more than food. We will reflect our concern in the way we vote this time.

I thank Senator Milne for participation in the National Party’s co-sponsorship of this motion. We approach it from slightly different directions, but the intent is clearly spelt out. This was dreamt up by the only practising accountant in the whole of the parliament. It was dreamt up at a free-for-all dinner at which they worked out a great way to get a tax deduction for doing nothing. They have been particularly sneaky in staying silent on the key issue, which is a capital deduction for the purchase of land.