Wednesday, 13 September 2006
Matters of Public Interest
Cluster Bombs; Gunns Ltd
I first draw the Senate’s attention, following Senator Boswell’s criticism of Senator Nettle, to the vote in the Senate just last week on a motion I moved on cluster bombs, which read:
That the Senate deplores the manufacture, sale and use of cluster bombs like those now deployed in Lebanon.
We all know of the carnage there, particularly the carnage of civilians, including children, after the war. I simply did need to draw attention to the Hansard, which recorded that the government used its majority, including the vote of Senator Boswell, to vote that motion down.
I want to talk today about managed investment schemes, particularly those relating to plantation forestry in Australia. There is a lot of coverage of this issue in today’s press, and particularly contributions from the proposers of a mega pulp mill in Tasmania, Gunns Pty Ltd. The first thing I need to say here is that plantations have all sorts of breaks. For example, if you are planting a vineyard in Victoria, you need planning approval. If you are putting in a blue gum plantation, you do not. Unlike many other forms of investment in the land, plantations siphon off more than money from the taxpayers. They siphon off water and they can deliver chemicals downstream to otherwise pristine water catchments. When I talk about siphoning off water, it is 25 per cent for land that has plantations on it over the first couple of decades, and yet it is not costed. Everybody else pays for water but the plantation investors get it free of charge.
This is basically six big corporations in Australia. I am not talking about farmers here but six big investment corporations. They move in on farmland, they can bulldoze the farm and they can bulldoze the bails, if it is a dairy farm. They can bulldoze the house, the dam, the lot and end up with an unimproved capital value gain in terms of paying rates. But what the federal government has done is to hand a multimillion-dollar subsidy to the explosion of plantations across the nation.
Most people will have heard Senator Abetz talking about the fact that we pay twice as much for imported timber as we get for the export of timber. What he does not add is that we export twice as much timber as we import. The fact is that Australia is losing out here. The other fact that needs to be stated at the outset is that Australia has over 1.5 million hectares of plantations, much of it mature at the moment, and can meet all its basic wood needs—paper and housing timbers included—from that plantation estate. So we are not planting plantations for this nation’s need; they are being planted to be exploited for profit and export. For Gunns, that export involves a proposed pulp mill to ratchet up its profits at the expense of the taxpayer.
I need to shorthand this by saying that in 2005-06 the Tasmanian native forest logging industry got some $296 million in taxpayers’ subsidies from the Howard government. Think what other industries could do with that. Included in that is $60 million which Senator Abetz announced in this chamber would be allocated for an improvement to the road to the pulp mill for Gunns in Tasmania. What a windfall for Gunns Pty Ltd.
Yet we have in today’s press, in the Australian, the CEO of Gunns, John Gay, who is a multimillionaire, complaining that if there is not to be a continuation of the tax rip-off which these managed investment schemes involve then Gunns will not go ahead with the pulp mill—which I can tell you vast numbers of Tasmanians, particularly those in the region, do not want, because it is going to pollute not only the air and the local environment but Bass Strait as well. If that does not go ahead then Gunns will want to maraud Tasmania’s native forests at a greater rate, and you can read into that ‘at even lower royalties’. They are being hugely subsidised compared with royalties of just 15 years ago—millions of dollars a year—by the Tasmanian taxpayers through failure to levy royalties on the native forest estate.
Mr Gay’s statement today exemplifies that there will be an impact—an impending impact—on the native forest estate in Tasmania through the Gunns pulp mill. There are two things here. Firstly, the Resources Planning and Development Commission must change its purview in its assessment of the pulp mill to take into account that impact on the forest or its failing to do a proper impact assessment. Secondly, the minister for the environment, who I am glad to note is with us at the moment, must assess the impact of this pulp mill on Tasmania’s native forests and their wildlife under the requirements of the Environment Protection and Biodiversity Conservation Act.
It is high time now. It would be irresponsible if the government did not move to get an independent audit of these managed investment schemes. A minimum $300 million of taxpayers’ money each year is poured into them, money which is therefore not going to hospitals, schools or housing. It is going, largely, to six big investment companies like Timbercorp and Gunns, and there is no audit. There absolutely must be an audit. Can you imagine superannuation schemes getting such largesse without an audit?
An example of some of the management problems which are beginning to emerge is Radiata Plantations Ltd. The public is now being given notice of its liquidation and wind-up. It has a portfolio of 5,000 hectares in south-east Australia—that is, New South Wales and Victoria. This was subsidised massively by taxpayers through the managed investment scheme tax deduction. The understanding I have is that there is virtually no marketable timber on its land—certainly nothing reflecting the prospectus of that company. It is to be noted here that the unsecured grower-investors, who were attracted by the prospectuses, will be last cab off the rank in the wind-up. This is a very worrying trend indeed and points again to the need to protect investors in these schemes.
Mr Acting Deputy President Forshaw, you will know that the prospectuses of the plantation investment companies offer the inducement of a 100 per cent tax deduction in the year of payment to the companies but the year prior to investment talk about a 12 to 15 per cent return. Dinkum? Is that really what will be seen with companies increasingly moving into low rainfall areas which simply cannot produce the volumes that would lead to a return like that? Many of these prospectuses—for example, for Gunns—are for investment in north-east Tasmania. Senator Milne has just pointed out to me that the scientific projections are for an eight per cent fall-off in rainfall for north-east Tasmania over the next 40 years. Has the impact of the loss of productivity been taken into account for those people investing in these tax attractive schemes? Many of these people think they are doing the environment a good turn. Not only is what happening of detriment to the environment—because, I reiterate, these plantations are not necessary to this nation’s future or to save native forests—but they are taking over rural land, which has other—
They are taking over other rural land which grows things. They are taking over dairy farms, potato farms, agricultural grazing land and so on—and prime land, at that. The farmers in many rural communities say that these managed investment schemes pervert the market—
The minister for the environment says I have lost it, Mr Acting Deputy President. I say to you that this minister is charged to ensure not just that the EPBC is respected in regard to the pulp mill and a proper assessment is done there—
The Acting Deputy President:
Order! Senator Campbell! You have been interjecting—
I take a point of order, Mr Acting Deputy President. Senator Brown is not directing his remarks to you—he is directing them across the chamber at me and he should be called to order.
I take a point of order, Mr Acting Deputy President. It is a point of order that goes to respect. I understand that the standing orders require that, when a senator has to withdraw a comment, he or she should stand in their place. Senator Campbell did not do that.
As you know, Mr Acting Deputy President, and as the minister will know, farmers in many rural communities are protesting—170 of them protested in north-west Tasmania just two weeks ago—about the way in which these managed investment schemes pervert the market, lay waste to valuable land and disrupt rural communities.
Victorian dairy farmers who have refused huge offers to sell their land—one can imagine the pressure this puts on people on family farms—have dubbed the scheme ‘tax subsidised social annihilation’. Mr Bob Loone, a highly respected councillor at Meander Valley, near Launceston, said that research showed that plantations created only one job for every seven displaced in farming. This government’s tax breaks are displacing people on the land. Mr Loone went on to say that, for every million in tree sales, $10 million was lost by no longer using the land for higher income activities such as dairying and cropping.
There are studies available which bear that out, and we should take note. Dairy farmers who need to expand to stay competitive cannot match the price that plantation companies can offer because of the tax breaks. The Australian Financial Review has reported that, in the town of Delegate, councillors and local farmers who at first welcomed the timber company Wilmott Forests now have signs up that say, ‘People not pines’, because they are being swamped by these forest pines. This is just removing locals off the land. Mr Chris Smith, a dairy farmer and Colac Otway Shire councillor said:
What annoys us is investors think they are doing something clean and green for the environment and feel warm and fuzzy and all they are contributing to is the decline of the rural sector and ultimately a pulp industry that’s going overseas.
Another dairy farmer, Rob Leishman, said that more than 60 farms in south-western Victoria had been bought up by the timber companies over the past two years, taking out more than $75 million to $100 million in income from the area. This is having a very serious impact on the ability of local communities right across southern Australia to survive, and they are up against it unfairly. The government is promoting those big companies—and I say again: there are six, in principle—by giving them hundreds of millions of dollars in undeserved tax breaks which the rest of the family farmers, some of whom have been on their farms for four or five generations, simply do not get.
He would do well to listen to the rural communities and take note of their heartfelt feelings at the way they are being cheated by this government’s process. I draw the attention of senators to a letter from Sam Paton and Associates to the Treasurer on this issue. The letter gives a very fair analysis of the situation, including the disproportionate amount of funds going to the corporations who put out the prospectuses for these management plans as against those to the investors. The situation does need an independent assessment. It is crying out for an independent assessment. (Time expired).