Senate debates

Tuesday, 27 February 2007


Rural and Regional Affairs and Transport Committee; Reference

4:46 pm

Photo of Kerry O'BrienKerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | | Hansard source

I move:

That the following matter be referred to the Rural and Regional Affairs and Transport Committee for inquiry and report by the first sitting day in June 2007:

An examination of the effect on regional and rural Australia of the Government’s February 2007 decision to phase-out Non-Forestry Managed Investment Schemes, including:

the effect on jobs and investment in rural and regional Australia;
the identity of agricultural industries which will be most affected;
the regional and rural communities which will be most affected;
the effect on exports; and
the merits of maintaining Non-Forestry Managed Investment Schemes and alternatives to the Government’s decision.

This motion proposes that the Senate Rural and Regional Affairs and Transport Committee conduct an inquiry into the effect on rural and regional Australia of the government’s recent decision to abolish non-forestry managed investment schemes. The government may try to dress that decision up as a decision of another body, but I will demonstrate that it was in fact the government’s decision to allow that to occur.

The effect of the government’s decision is that non-forestry managed investment schemes will no longer have access to product rulings from the Australian Taxation Office after 30 June this year. This will remove their capacity to raise capital to make investments in rural and regional communities. The motion proposes a Senate inquiry which will examine all the aspects of the decision, including the effect on jobs and investment in rural Australia, the impact on rural exports and the effect on rural and regional communities. The motion also proposes that the inquiry examine the merits of non-forestry managed investment schemes and any alternatives to the government’s decision.

Before I discuss the detail of the motion, I want to explore the government’s handling of this affair in more detail and expose the true intentions of the Minister for Agriculture, Fisheries and Forestry, Mr McGauran, who has been the government’s and the National Party’s champion for the destruction of this scheme. I want to spend some time exposing the government’s ducking and weaving on this issue—everything from blaming investors for the political fallout to its pathetic attempt to pass the buck to the ATO.

First, let us look at the government’s sneaky attempt to bury the story earlier this month. The Assistant Treasurer, Mr Dutton, issued a press release announcing the government’s decision at eight minutes to seven on the evening of Tuesday, 6 February 2007. If the government was comfortable with this decision on this matter, why would it attempt to hide it by sneakily issuing the announcement at eight minutes to seven on a Tuesday night? Maybe the government was hoping that no-one would notice and that it could sneak this one through without any fuss. Maybe the government just did not fully appreciate the impact of its decision.

Since announcing the decision earlier in February, rural communities and the investment community have expressed widespread concern over both the substance and the process of the government’s handling of this issue. The government, frankly, even ambushed its own backbench. It is well known that the coalition is in disarray over this matter. Government backbenchers are aware of the concerns raised by their own constituents about how deeply this decision will impact on jobs and investment in their own communities. After several weeks of passing the buck onto the ATO, this week the cat was let out of the bag. Yesterday in question time, Senator Abetz admitted that the government had:

... determined that it was—and I think the language I am about to use is correct—‘not disposed to intervene’.

So the question is: why then did the government have no problem intervening on exactly the same issue when it came to forestry managed investment schemes? In forestry managed investment schemes the government handled the matter quite differently. For example, in that case the government held in-depth consultations with industry. The government developed a plan that increased accountability on how money would be invested. That plan provides long-term certainty to the forestry industry.

Compare that decision with the government’s handling of the non-forestry managed investment schemes. First, the government made the decision without warning. It gave the industry less than five months before it would effectively be out of business. Secondly, it took no consultation with industry, and in fact discouraged those who sought consultation, saying ‘it was not time’. It undertook no consultation with affected communities. Thirdly, in Senate estimates two weeks ago it was revealed that the minister’s own department, the Department of Agriculture, Fisheries and Forestry, has undertaken no research on the issue and has provided no advice to the minister.

In response to questions I asked on the research undertaken by his department on agricultural MISs, the department’s corporate policy chief, Mr Allen Grant, said:

I am not aware that we have done any specific research on that.

…     …         …

Partly because ... up until recent times that has not been seen to be a high priority issue.

So not even the department knew this decision was coming. I am sure the department, if they appreciated the foolishness of the government’s decision-making process, would have forewarned the minister of the impact. They did not because they were given no notice that this was likely to happen.

So it is abundantly clear that the minister sought no advice on the impact of his government’s decision on jobs or investments in rural and regional communities, the very communities that this government and this minister claim to have concerns about. He did nothing. He did not consult them. He did nothing to alert them to a matter which would have a drastic effect on their communities. He slipped the decision through late on a business day, to avoid news coverage that day, no doubt. But, frankly, it has caused great consternation.

What do we also know? The minister does not know how many jobs will be affected. He has no idea. He does not know how many businesses will be shut down. The minister does not know the impact of his decision on Australia’s rural exports. The truth is that the minister for agriculture and this government have no idea what will occur as a result of this decision. It has been motivated not by a concern for the prosperity of rural Australian towns and communities but by a desperate need to respond to pressure from within the minister’s own party.

Minister McGauran has been campaigning on behalf of the National Party to close down non-forestry managed investment schemes. He has had, I must say, the single purpose of shutting down these investments in rural and regional Australia without any knowledge as to the impact his actions would have. At best, I would have to say, the minister’s actions have been grossly irresponsible and self-interested and the government’s handling of this affair has been arbitrary and condescending. It is little wonder that the coalition is in utter disarray over the minister’s handling of this matter, and the government’s handling of it, for that matter.

I want to have a closer look now at the managed investment schemes and outline some of these specific examples of businesses and communities that will be impacted by the government’s decision. Managed investment schemes require several years—in some cases fewer—to be prepared and established. This lead time involves the employment of many subcontractors who prepare the necessary plant and equipment in anticipation of the managed investment scheme coming into effect. As well, there are all the legal preparations for the investment, in the prospectus and the like.

Labor is aware that there were dozens of managed investment schemes due to start in the upcoming years. These schemes would have employed hundreds of contractors and employees in various projects right around regional Australia. Labor would like to know—and I am sure that these people and their communities would like to know—where the government’s decision leaves the projects. What is the impact of the government’s decision on the companies involved in these planned managed investment schemes and on their employees and contractors? Frankly, the government has ignored these companies and individuals.

But worse than that, the uncertainty created by the government has already caused job losses even before 1 July 2007. Take the case of the olive producer Boundary Bend in Victoria. It has already laid off 30 permanent staff from its operation in the community of Lara.

Photo of Bill HeffernanBill Heffernan (NSW, Liberal Party) Share this | | Hansard source

It was the lack of water!

Photo of Kerry O'BrienKerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | | Hansard source

Frankly, the suggestion that Senator Heffernan makes that it was the lack of water does not accord with what is stated by the company. Boundary Bend has already laid off 30 permanent staff on the basis that it cannot guarantee the continuation of projects which involve the preparation of olive trees and land for planting. This is a direct result of the government’s decision, and you would think that the government members would get their lines right. Minister McGauran is suggesting that it is some scheme by the investors to cause pain in rural communities where they are withdrawing their funds. Senator Heffernan says that it is a lack of water. Perhaps when the government can get its lines right it might have a little bit more credibility on this matter.

Labor is aware of numerous project proposals due to be started in the coming financial year that are now under threat of being halted. These include: organic olives in Brookton, Western Australia; truffles in Manjimup, Western Australia; almonds in Robinvale, Victoria; abalone in Elliston, South Australia; mangoes in Mataranka, Northern Territory; as well as walnut, olive, avocado, wine grape and almond projects in the states of Victoria, New South Wales, South Australia, Queensland and Tasmania. How many real jobs would have been created by these projects? How many of these real jobs have now been axed as a result of the government’s decision? Do not ask the minister because we know that he does not know. He has not sought advice. He just does not want to know.

In the Weekly Times last week the minister even had the gall to blame investors for the uncertainty and job losses arising from his government’s own inept decision. In truth, the blame for all this uncertainty and the job losses rests with Minister McGauran, his National Party colleagues and the Howard government. Agricultural industries and communities across Australia have been left in a state of limbo as they await the next move by the government. This whole process has been a shambles from start to finish, and the government backbench knows it too.

In moving this motion to propose that the Senate committee undertake an inquiry into managed investment schemes, I am offering the minister and the government a chance to give rural and regional Australians a say—to give them a voice. They have not had one to date in this matter. Labor’s proposed inquiry is the right thing to do by rural and regional Australia and the thousands of people who stand to be impacted by the government’s decision. Frankly, it is a ‘get out of jail’ option for the government. A Senate inquiry would allow the government to have a full investigation of the benefits of non-forestry managed investment schemes in rural Australia and the potential impacts which may arise if the government decides to proceed with its decision. It would allow affected industries and communities to put their views to the parliament. A Senate inquiry would allow the parliament to hear from the shopkeepers, the contractors, the business owners, the rural industry and the mums and dads who may be affected by this decision. It would allow investors to share their views with the parliament. It would allow the parliament to deal with the claim that these schemes are just tax rorts and a drain on the budget. It would allow the parliament to assess the alternative claim that, whilst there is an up-front tax deduction, there is also a substantial gain to the budget out of these initiatives, a substantial saving to the budget as a result of jobs being created and a reduction of unemployment and social welfare payments. There would also be an increase in tax collections from the employees and contractors involved. All of these matters would offset the initial tax cost to the budget of the schemes.

Most importantly, Labor’s Senate inquiry would restore the principles of good governance and allow the government to properly assess the impacts arising from the decision on MISs on the Australian economy and rural communities. But, frankly, there is only one reason the government will not support Labor’s proposed Senate inquiry, and that is that the government, the minister and those who proposed this action do not want the truth revealed—that they are afraid an inquiry will show that the proposition they have been carrying forward in their party room and the community is baloney. That is the only reason that senators in this place will not be prepared to stand behind and defend their proposition and allow it to go to a Senate inquiry. It is quite cowardly, in my submission. It means that they have no courage of conviction in the proposition that they put forward.

I am calling on the government not to allow the prejudices of the minister and his government colleagues to stand in the way of well-informed, fair decision making. I call on the government to restore the principles of good governance and support Labor’s motion for a Senate inquiry into these managed investment schemes. If this inquiry does not go ahead, something might happen or it might not. If nothing changes in relation to the non-forestry managed investment schemes and they are closed down, not only will there be an impact in the communities affected but moneys that might have gone into those schemes will go into the forestry managed investment schemes. The savings to the budget will not be realised—indeed, they cannot be realised because the decision, in all likelihood, will be the subject of legal challenge. So ultimate savings to the budget are hypothetical.

We will see an immediate impact on schemes. We will see jobs disappearing in rural and regional Australia. Senator Heffernan clearly does not care about that. We will see a lot of businesses broken. We will see bankruptcy on a significant scale. We will see missed opportunity. I was speaking to someone from an abalone operation who was talking about a very significant opportunity with significant returns which can only get up with managed investment schemes but which ultimately will pay back manyfold, in returns over a period of time, the amount of money that it would cost the government. This is quite an exciting proposition, one that does not use water, does not buy land, uses Australian technology and will add to Australian exports of seafood products—seafood products that, frankly, we need to produce and we are not producing sustainably at the moment. That is just one example of the many examples of disaster that this decision is causing. I urge government senators to reconsider the government’s position, not to support the minister’s proposition on this matter and to vote for Labor’s inquiry.

5:02 pm

Photo of Bill HeffernanBill Heffernan (NSW, Liberal Party) Share this | | Hansard source

This is the greatest display of hypocrisy that I have ever seen, I think. The guys over there do not have the guts to have a position on whether Australia ought to enter into the complete alteration of Australia’s farming culture to one of lurk farming. I will come to what they propose in a minute. Their Mr Bowen has been going around saying what they propose. They do not need an inquiry to work that out. The proposition is that in the same capital market you can have people farming with what I call tax minimisation farming methods—lurk farmers. On Landline on Sunday a developer owned up and said: ‘Yeah, we can make a profit without any production. We can make a profit from our management fees, with no regard at all to the market and supply and demand.’ Why the hell would you want people putting in more grapes now, when the grape market is glutted? Tell me that.

So you have people competing in the same capital market that can make a profit without any production. I will give almonds as an example. The almond guys are charging $40,000 a hectare for something that costs $10. So they are competing in the same capital market as farmers who have to make a profit from production with full regard to the market and supply and demand. It totally corrupts both the water market and the land market.

Senator O’Brien, you want to have an inquiry into all this because you do not have the guts to have a position. Your leader does not have a position and you do not have a position, because you want to go to the election saying: ‘We’ll have an inquiry. We’ll look into it.’ You will not take a position because either way you might have a political downside. Guess what: Mr Bowen, your shadow Assistant Treasurer, has been going around to the promoters of MISs—and I hope everyone is listening to this—saying, ‘If we get into government, we’ll reverse this and open the market again to the lurk farmers unfettered.’ That is what he is saying. You probably do not even know that, but that is what he is saying.

Photo of Kerry O'BrienKerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | | Hansard source

Is that right?

Photo of Bill HeffernanBill Heffernan (NSW, Liberal Party) Share this | | Hansard source

That is exactly right.

Photo of Kerry O'BrienKerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | | Hansard source

You’re not verballing him, are you?

Photo of Bill HeffernanBill Heffernan (NSW, Liberal Party) Share this | | Hansard source

No, I certainly am not. Obviously the promoters have been telling me, because they have been trying to pressure me. If you want a capital market that is dependent for its viability on the generosity of Australia’s taxpayers—and the graph on the take-up of these things is vertical—it is a $1.3 billion drain on the budget.

Photo of Kerry O'BrienKerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | | Hansard source

Senator O’Brien interjecting

Photo of Bill HeffernanBill Heffernan (NSW, Liberal Party) Share this | | Hansard source

If it is all about 20/20 vision and forestry, then why are all the foresters getting into everything else? They are getting into everything else because it is a great lurk. This is lurk farming. Great Southern Plantations are still about 70 per cent forest and 30 per cent out in the other lurk world. They will go back to forestry, as you said. Timbercorp are about 70-30 the other way. But, if you want to compete, it is buyer beware. If you want to go into tax minimisation, driven by profit from a tax loss, and farm on that, then it is buyer beware.

The test—and there is no need to have a Senate inquiry about this—is whether these people are passive investors or not. That is something that the Commissioner of Taxation will have to sort out. We do not need a Senate inquiry; we need a test case. The idea that somehow the Labor Party can weasel its way through by not having a position on this, by having an inquiry, when the shadow minister is running around saying, ‘She’ll be right, brother; just vote for us and in the meantime publicly we’ll say we’ll have an inquiry,’ is garbage. It is gutless and garbage.

You cannot have a proposition that the rest of the world—the United States, Europe and England—has rejected; that is, the viability of a farming industry based on a tax subsidy. It is complete hogwash. There is absolutely no need for a Senate inquiry. There will be a tax office ruling and a test case. You ought to have the guts to say how you are going to pay for pensions and health care if you are going to have a drain on finance of these proportions. This will build to become bigger as a tax lurk than the bottom of the harbour scheme. This is a deadset tax lurk.

The government recognises that some transitional arrangements will need to be sorted out in the aftermath, but the proposition that you can build an agricultural industry that relies for its viability on a tax lurk is garbage. What about the subsidy rate that will eventually come out of this, if it is allowed to build? While we are arguing in the World Trade Organisation about the devil of the European Union and the US farm subsidy program, per head of population and per dollar of production this will make their schemes look like paltry schemes.

It is an absolute fraud to propose an inquiry into this matter. You blokes are going around saying, ‘Vote for us and we’ll put you back where you were.’ All of these lurk agents are being told: ‘We’ll put you back in business. In the meantime we’ll cover ourselves politically.’ You might ask your leader, Mr Rudd, what his position is. Maybe the media could ask, ‘Are you for or against?’ But you don’t have a position and instead you say, ‘We’ll have an inquiry.’ You are trying to have two bob each way, and your Mr Bowen has put his cards on the table. It is an absolute fraud of a proposition to want to hold an inquiry into the matter.

5:09 pm

Photo of Andrew MurrayAndrew Murray (WA, Australian Democrats) Share this | | Hansard source

I support the rationalising and reduction of managed investment scheme tax concessions, and I do not oppose their being phased out altogether. With that position, you would have to ask: why would I support this reference to a committee? I want to explain those reasons.

As a member of the Senate economics committee, I had the unfortunate experience of spending several years examining the issue of all those people who had been affected and hurt by the tax-effective managed investment schemes that had to be closed down because they were essentially tax lurks, to use the language of Senator Heffernan; they were being promoted by dodgy promoters, spiv lawyers and spiv accountants and they were making victims of innocent and unsophisticated Australians.

I have never forgotten going to Kalgoorlie to hear from these people and holding the hands of weeping men and women—working men and women; ordinary folk who had, by the sweat of their brow, made a few bob—who had lost their savings in these schemes which had been perverted for purely tax benefit reasons and were not productive enterprises in the sense of commercial enterprises. Of course, that was not true of every managed investment scheme but it was true of the abuse of those schemes.

If we fast-forward to now, my own belief has long been that the tax office and the government need to be far stricter and stronger about the rules as to when a tax concession should be allowed, and should be based on the commercial operation that is in play. I am concerned that what has happened in the latest exercise is that the tax office has acted properly and the government has acted improperly, because I see a false distinction between the forestry managed investment schemes and the non-forestry managed investment schemes. There is not a distinction between trees. I fail to see, from a greenhouse and environmental point of view, why a gum tree is any different from a walnut tree, but I am not a biologist; maybe some scientist can explain it to me. I am a tax man and I cannot explain it. It sounds very odd.

The reason I welcome the proposal for an inquiry is that it could sort out these issues. It could try to develop a policy which would show some consistency and which would attack this issue on the basis of policy principles rather than political principles. I think, as a person who deals with tax and finance all the time, that we have to continue to strive to make sure that policy principles are rational and transparent. For instance, if the community, the parliament and the government decide that trees are good—and I use ‘good’ in the sense of an economic good—environmentally and economically then all trees, not just some trees, should be supported with tax concessions.

To my mind—and I might have designed these terms of reference a little differently but I still think these issues would flow—the principles surrounding such tax concessions need to be explored and examined. I think, in terms of my own tax philosophy, that tax concessions are indeed appropriate for infant industries but should be time limited and phased out on a set timetable, unless an industry is of national strategic significance or of national economic or national environmental significance. For instance, if we want to ensure a better water supply in this country, we might decide to subsidise water pipelines by way of a tax concession. That is perfectly reasonable; it is an environmental argument, not an economic argument.

But any industry that is not viable, profitable or sustainable without tax concessions should not be given tax concessions in the first place. It is as simple as that. You have to have a good, sound, consistent policy reason for giving tax concessions. I think the proposed committee would need to examine the history, nature, extent and cost of managed investment schemes; the arguments for and against them; the economic, social and environmental consequences of managed investment scheme tax concessions; the dangers for the current government; ATO decisions; the fact that there is no transition period; and proposed remedies and policies.

The matter of a transition period is quite important. If you go back full circle to my opening remarks, when I described to the chamber what was going on with the tax-effective managed investment schemes that the Senate Standing Committee on Economics examined, you will recall that I said they were pushed by dodgy promoters and so on. The point behind that is that many investors would have entered those schemes in good faith, trusting the tax advice and the legal advice that they got. The fact that they might have been conned or gulled or taken advantage of to get them into these schemes needs to be recognised, and that is why you need a transition period—to ensure that such persons can get out with some of their financial skin intact.

In conclusion, I will say again that I support the rationalisation and reduction of these tax concessions and do not oppose them being phased out altogether. That is my policy position. But I support the Labor Party’s initiative in wishing to have this matter properly and forensically examined so that a better policy picture can emerge. It is for that reason that I would suggest that the chamber support Senator O’Brien’s motion.

5:16 pm

Photo of Rachel SiewertRachel Siewert (WA, Australian Greens) Share this | | Hansard source

The Greens also support a reference of this type to the Senate Standing Committee on Rural and Regional Affairs and Transport but not for the reasons that Senator O’Brien outlined. We have concerns similar to Senator Murray’s in that we fail to see why the government has taken action on non-forestry activities but not forestry activities. We would like to examine that for a start. We would also like to look at the impact that managed investment schemes have had on the agricultural economy and on decision making in agricultural areas, and how MISs at present are in fact affecting and distorting prices for water and land—and I will come back to the issue of water in a minute.

We have concerns about the impact MISs have had on family farms and the way agriculture is practised in Australia. It has become apparent that the people who develop these schemes and those who invest in them do so for the up-front tax deductions. These people do not seem to be interested in the longer term profitability of some of these schemes, which is why we have concerns about the schemes’ impact on agriculture. If you are investing in these schemes for their up-front tax deductibility, you may not be that interested in the sustainability of the scheme or of the particular agricultural enterprise. And I am deeply concerned that some of the crops being invested in are in fact unsustainable in particular areas. Growing olives, for example, where irrigation is needed, using large amounts of water, may be unsustainable in the longer term in certain areas.

Then you add in the fact that these large investment schemes are buying up water entitlements, water licences—many schemes, in fact. It was reported just yesterday that Macquarie Bank has acquired a great many of these licences with a view to planting higher security crops, thereby not only transferring water out of a good many of the districts but also transferring water entitlements to higher value crops. Now, that raises two questions for me. First, do they expect to be bought out through the $3 billion national water plan? Second, does that mean that they will try to secure that entitlement because it has now gone to higher security water applications? And they will secure that, whereas people running smaller family farms will not.

There is also the issue of the impact that these schemes are having on the price of water licences and the fact that they can aggressively enter the market. I am told, for example, that some large investors are actually going straight to brokerages before licences can even make it onto the market, thereby again, I believe, potentially distorting the water market. So, while we are looking at a process to reform and get better management of our water market, as we have already seen large investors could be buying up these allocations and distorting the market.

What I would like to know is how those water licences are going to be handled now that the changes have been made to the non-forestry managed investment schemes. How are we going to deal with those water licences? I believe that area needs reviewing. What are the implications now for rural communities, for better investments? How should we really be investing for the long term in agriculture in Australia? I do not for one minute believe that those organisations and people responsible for MISs are concerned about the long-term security and sustainability of the agricultural industry in Australia. I think they are largely focused on achieving tax deductibility for up-front initial investments. I believe an inquiry would enable us to determine how best to focus on the long-term sustainability of our agricultural industry. There is no doubt investment is required, but I do not believe that MISs, as they were, were the appropriate tool.

I would also like any inquiry to look at how many people were employed through these MISs in our regional centres and just what impact phasing the schemes out of regional communities would have. You have to balance that against the number of family farms that have been bought out, both for plantations and alternative crops in areas where—I will say it once again—we have deep concerns about their sustainability.

I was looking at a media release from the Australian Dairy Farmers. They actually supported the government’s change in the MIS process because they were concerned about the impact it is having on issues such as water—and land prices, in particular, where smaller landowners cannot afford to compete with the MIS and the impact that has. I think we should also be investigating what impact it is having on the commodities market. I definitely agree with my colleagues on looking at the transition process for moving from this investment scheme to supporting sustainable agriculture and rural communities. I think that is tremendously important. Therefore, the Greens would support this sort of inquiry but, as I said, not necessarily on the terms Senator O’Brien has articulated.

I think how we manage investment into an agricultural system undergoing change through dramatically reduced water security and climate change is the sort of issue that very strongly needs further investigation. And it needs to be looked at holistically. That is another reason for an inquiry of this sort. We should not necessarily be looking at how we go back to the present system. From everything I have seen, I do not believe this is for the good of the long-term sustainability of agriculture in Australia—and certainly not for family farms and a good deal of regional communities.

I think some of the managed investment schemes have favoured some regional communities and not others. I suspect that the negative impacts have far outweighed any positive impacts, and I would dearly like to see the figures for employment under the current schemes versus how many people have been lost to regional communities. I could reel off a number of communities in my home state of Western Australia which have suffered from tremendously reduced numbers in the community due to the impact of areas being bought up, taken out of traditional farm practices and moved into plantations, in particular, but also various other schemes under the MIS system.

So we would support this referral but we would seek to investigate a far broader set of issues, including the impacts the managed investment schemes have had by distorting our agricultural systems, land practices and land and water prices in Australia. We also need to look at how this is damaging our water market, particularly because big players have now bought up large numbers of water entitlements in the water market. I believe they are distorting those markets and will continue to. I would dearly love to know whether they will now expect government to buy out those allocations. They have driven up the price of water, so it will cost us even more to fix the overallocation, particularly in the Murray-Darling system. It is going to be vastly more expensive due to the impacts of the MIS process. I would like to know what these companies now intend to do with the entitlements that they have bought up if they are not intending to sell them. Where do they intend to invest? I believe all of these issues need very thorough investigation.

5:25 pm

Photo of Kerry O'BrienKerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | | Hansard source

I am happy to respond, if the government’s only defence is that put by Senator Heffernan. Frankly, we are seeing a disgraceful attitude to the scrutiny process of this parliament. Let us be absolutely clear on this. This is a decision the government took effectively in the dead of night without consultation. This is a decision which will have a substantial effect on the rural communities this government claims to champion. This is a decision which has been the subject of criticism by governments and coalition or Liberal Party oppositions in other states and territories around this country. This is a decision which will put people out of work and businesses out of business, subject to any transitional arrangements which are as yet unannounced.

This is a decision which will take millions of dollars out of country towns. It has been suggested to me that the olive industry puts $10 million a year into the town of Boort in Victoria. Although they were not non-forestry MISs, we saw on the Landline program that the forestry MISs caused a substantial change to the prosperity of the town of Bombala in southern New South Wales, not too far from here. These schemes have their benefits and indeed they may have their costs.

So what is the problem with having an inquiry to look at that? It cannot order the government to do anything. It cannot make the government change its position. But what it can do is get us the facts. When you boil down the government’s opposition, it comes down to this: the government does not want the facts known. The government does not want people to know the impact of its decision. It will come out. There will be people who will tell us over time what the effect will be. They just will not get the benefit senators get of saying what they think under parliamentary privilege.

It will come out. Eventually the numbers that lie behind the government’s decision will come out. Frankly, it would have been good to have them on the record by now, rather than the unauditable commentary from Senator Heffernan about the cost. Those sorts of matters will remain a bit of a mystery. No doubt we will tease them out over time. If Labor wins the next election then all will become clear. But, frankly, it is a bit hypocritical of the government to talk about what these schemes cost the budget. Senator Heffernan described them as rorts—tax rorts, he said. But why is this different to some of the government’s funding programs that have been otherwise described as rorts? The difference is that the government claims political patronage when it makes grants to regional communities. We do not oppose them all, but some of them have been absolute rubbish, utter rorts, an abuse of process and a waste of money.

The government has been guilty of rorting the public purse for electoral advantage, by its own direct decision. It is not frightened to do that. No doubt it is going to do it again this year. It has a lot of programs stored up. We are waiting to see the flood of announcements, the cheques being signed and the allocations. And that is all right, according to the government.

But what about initiatives that can create businesses in communities, can create real jobs in communities and can get the wealth flowing through the community? This is not just me talking; there are members of the coalition parties in state parliaments around this country pointing to this decision and saying it is an outrage. This includes Senator Parry’s state colleagues. You would not see a more dismissive release than that from his colleague the agriculture spokesman in the Tasmanian parliament, a member of the Liberal Party, castigating the federal government for the decision. So it is not just the Labor Party saying that this is an outrageous decision. If you read the papers, you know it is also members of the government’s own backbench, whether it is the outspoken member for O’Connor or others.

There are a number of people on the government’s backbench who are openly critical and some who are privately critical. It will be interesting to see how many of those have the courage of their conviction to take that short walk across and vote for the inquiry and pursue a better outcome, pursue their belief. But we will see what happens; we will see whether the government is able to get all of its members voting for it. We will see whether the courage of their conviction comes out in the vote.

Labor does not require any member to support any particular proposition. I am not surprised the Greens would prefer that this was an inquiry into all managed investment schemes, because they would want to attack the forestry managed investment schemes, which have been allowed to continue. We did not oppose that decision. What we do oppose is the hypocrisy of the approach that this government has taken to this. We would like the facts on the table. We are presenting the Senate with an opportunity to try and get those facts on the table and give people a say. The government may well scuttle across to this side of the chamber and vote no and prevent the inquiry and to silence the communities they claim to represent, but in the end they should not expect that those communities will forgive them for it.

Question put:

That the motion (Senator O’Brien’s) be agreed to.