Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

I present two government responses to committee reports, as listed at item 13 on today’s Order of Business. In accordance with the usual practice, I seek leave to have the documents incorporated in Hansard.

Leave granted.

The documents read as follows—

Senate Committee on Legal and Constitutional Affairs

Personal Property Securities Bill 2008

Government Response

Recommendation 1

4.19         The committee strongly recommends that the Department reconsiders the balance between certainty of the law and the accessibility of the provisions with a view to:

• simplifying the language of the exposure draft bill – for example, wording provisions clearly and limiting them to deal only with common circumstances;
• simplifying the structure of the exposure draft bill – to minimise the cross-referencing needed;
• simplifying the terms used - for example instead of ‘tangible goods’ use the term ‘goods’ appropriately defined to ensure the full meaning needed for the reform is ascribed to the term; and
• using overseas provisions as often as possible to allow overseas experience to provide guidance for the Australian model.

Government response:

Accepted. The Government will review the structure and language of the Bill.

Recommendation 2

4.27         The committee recommends that the commencement date for the scheme be extended by at least 12 months to May 2011 for the committee’s recommendations to be implemented and for advice from stakeholders to be taken into account before the content of the bill is finalised.

Government response:

Consider further. The Government will consider revising the timeframe for commencement of the PPS scheme in consultation with the States and Territories and, following these consultations, make an announcement about the timing of commencement.

Recommendation 3

4.35         The committee recommends that the bill include a requirement that the operation of the bill be reviewed three years after it commences in a process that includes extensive consultation with industry, governments, lawyers, consumers and academics.

Government response:

Accepted.

Recommendation 4

5.27 The committee recommends that the primary legislation for the personal property securities reform include the key privacy protections for individuals, including a prohibition on making the address details of any individual public.

Government response:

Accepted in substance. The Bill will be amended to clarify the information about individuals that may be included on the register and to better describe the key privacy protections provided to individuals. The Bill will make it clear that address details of individual grantors will not be included on the register. Accordingly, a prohibition on making address details public is not required.

Recommendation 5

5.33 The committee recommends that either:

(a)

a Privacy Impact Assessment be undertaken by a person or organisation that is independent from the government and who has experience in undertaking such assessments and the results of the assessment are made public, or

(b)

the Department’s Privacy Impact Assessment is reviewed by a person or organisation that is independent from the government and who has experience in undertaking such assessments, and the results of the review are made public.

Government response:

Accepted. A Privacy Impact Assessment will be undertaken by an appropriately qualified independent person or organisation. The assessment will be published on the Department’s website. Having regard to recommendation 4 of the minority report, this will occur within two months of the completion of the assessment.

Recommendation 6

5.34         The committee recommends that if any issues raised by the Office of the Privacy Commission in its submission are not considered as part of the Privacy Impact Assessment then these matters should be separately considered by the Attorney-General’s Department and a response to the issue be provided to the Office of the Privacy Commission in writing or made public.

Government response:

Accepted. The Privacy Impact Assessment will consider all issues raised by the Office of the Privacy Commissioner in its submission to the Committee.

Recommendation 7

5.44         The committee recommends retaining the requirement for rights and duties to be exercised honestly and in a commercially reasonable manner. The intended scope of these requirements should be explained in detail in the bill’s explanatory memorandum.

5.45         The explanatory memorandum should particularly explain that the requirement to act in a commercially reasonable manner should not fetter or undermine the ability of parties with similar bargaining power to contractually agree about what constitutes commercially reasonable behaviour.

Government response:

Accepted. This Bill will be amended to make clear that the duty to act in a reasonably commercial manner applies only in relation to Chapter 4 of the Bill concerning the enforcement of security interests. The duty to act in a reasonably commercial manner will not apply to the extent that the parties have contracted out of the enforcement provisions of the Bill under section 154 of the Bill.

Recommendation 8

5.55         The committee recommends that the bill adopt existing international personal property security conflict of laws provisions, such as the New Zealand conflict of laws model, unless there is a particular reason to depart from those provisions.

Government response:

Accepted. The Government accepts that the Bill should include conflict of laws provisions. The New Zealand conflict of laws provisions have been criticised as being uncertain. To avoid uncertainty in the Bill, the Government will include conflict of laws provisions in the Bill based on the provisions at Appendix A to the Department’s submission to the Committee (the revised commentary to the Bill).

Recommendation 9

5.62         The committee recommends that the scope and content of the enforcement provisions of the exposure draft bill be reviewed by the Department with particular attention to ensuring that the provisions are comprehensive and adequate.

Government response:

Accepted. The Bill will be amended to provide enhanced sanctions for improper use of the register and to ensure the registrar can monitor and investigate suspicious register activity. Further consideration will be given to appropriate sanctions for misusing the register which may include civil and criminal penalties.

Recommendation 10

5.70         The committee recommends that consideration be given to improving the priority of an unperfected lessor as against unsecured or other unperfected interests in the goods.

Government response:

Accepted. The Government will, in consultation with stakeholders, consider the appropriate priority outcomes for unperfected lessors as against unsecured or other unperfected interests.

Recommendation 11

5.78         The committee recommends that the explanatory memorandum and the proposed education campaign adequately explain the purpose and effect of the draft intellectual property provisions, including disseminating the information to appropriately targeted international industries, organisations and stakeholders.

Government response:

Accepted.

Liberal Senators’ Dissenting Report

Liberal Senators wholly support recommendations 1, 2, 3 and 10 of the majority report.

Liberal Senators support in principle the majority recommendations except recommendation 7 (in relation to the commercially reasonable manner test).

Recommendation 1

1.10         In relation to consultation and education Liberal senators recommend that:

(a)

the government uses the committee report and the Liberal senators’ additional recommendations to undertake new consultation about the proposed reform;

(b)

the government should particularly identify stakeholders who are not yet engaged with the reform and educate them about the scope and significance of the proposals;

(c)

a considerably revised draft bill should be publicly released within six months of the date of this report;

(d)

stakeholders should be extensively educated and consulted about the revised exposure draft for three months from the release of the draft; and

(e)

a final exposure draft bill should be referred to the Senate within six months of the release of the revised draft bill requesting that the final exposure draft is referred to this committee for consideration accompanied by:

(i)

the proposed draft regulations; and

(ii)

a report that outlines the key concerns raised with the government by stakeholders and the government’s response to those concerns and that identifies the differences between the newly referred bill and the November 2008 exposure draft bill.

Government response:

Accepted in part. The Government will carry out targeted consultation with stakeholders about changes to the Bill raised in the Committee’s report. However, further examination of the revised Bill by the Committee would not be consistent with ensuring the final text of the Bill is settled in time to allow stakeholders an adequate period to prepare to transition to the new PPS system. In order to provide certainty to stakeholders, the Government will progress development of the PPS Bill with a view to its passage through Parliament by the end of 2009 and will develop the new PPS register so that its main functionality is complete by May 2010.

Recommendation 2

1.12         Liberal senators recommend that the government table a report in Parliament on the first year of operation of the reform within 15 months of the commencement of the Act. The report should include the views of stakeholders, including representatives of industry, governments, lawyers, consumers and academics and the government’s response to these views.

Government response:

Not accepted. Reviewing the operation of the reform after only 12 months of operation would not provide useful data about the new PPS system. The Bill will be amended to require that the Government review the Bill after the new PPS system has been operating for three years.

Recommendation 3

1.15         Liberal senators recommend that the Privacy Impact Assessment identify key privacy protections which should be contained in the primary legislation.

Government response:

Accepted.

Recommendation 4

1.19         Liberal senators recommend that:

(a)

a Privacy Impact Assessment be undertaken by a person or organisation that is independent from the government and who has experience in undertaking such assessments; and

(b)

the Privacy Impact Assessment and the government’s response to it should be tabled in Parliament within 2 months of the date the Assessment is completed.

Government response:

Accepted in part. A Privacy Impact Assessment will be undertaken by an appropriately qualified independent person or organisation. The assessment will be made public within two months of its completion.

Recommendation 5

1.20         Liberal senators recommend that any issues considered in accordance with majority recommendation 6 and the government’s response to them should be tabled in a report to Parliament within 2 months of the date that the Privacy Impact Assessment is completed.

Government response:

Accepted in part. The Privacy Impact Assessment will consider all issues raised by the Office of the Privacy Commissioner in its submission to the Committee. The assessment will be published on the Department’s website within two months of its completion.

Recommendation 6

1.27         Liberal senators recommend that the requirement to act in a

commercially reasonable manner be removed from proposed section 235 of the bill and be excluded from any future version of the reform.

Government response:

Accepted. The Government acknowledges the concerns expressed in the report about the operation of section 235 of the Bill as originally drafted. This Bill will be amended to make clear that the duty to act in a reasonably commercial manner applies only in relation to Chapter 4 of the Bill concerning the enforcement of security interests. The duty to act in a reasonably commercial manner will not apply to the extent that the parties have contracted out of the enforcement provisions of the Bill under section 154 of the Bill.

Recommendation 7

1.30         Liberal senators recommend that the government further considers the content of international conflict of laws provisions and incorporate into the bill either:

(a)

a simple and effective model of conflict of laws provisions based on an existing international model; or

(b)

the conflict of laws provisions at Appendix A to the Department’s submission.

Government response:

Accepted. The Government will include conflict of laws provisions in the Bill based on the provisions at Appendix A to the Department’s submission to the Committee (the revised commentary to the Bill).

Recommendation 8

1.33         Liberal senators recommend that the government strengthen the

proposed enforcement provisions with a focus on:

(a)

comprehensive and effective sanctions for improper use of theregister;

(b)

ensuring the registrar’s ability to inquire into suspect activity; and

(c)

the availability of civil and criminal action with appropriate penalties.

Government response:

Accepted. The Government will amend the Bill to provide enhanced sanctions for improper use of the register and to ensure the registrar can monitor and investigate suspicious register activity. Further consideration will be given to appropriate sanctions for misusing the register which may include civil and criminal penalties.

Recommendation 9

1.36         Liberal senators recommend that the government should identify any outstanding concerns about the intellectual property provisions of the draft bill and should outline the concerns and its response in its report to the Senate (as per Liberal senators’ recommendation 1(e)(ii)).

Government response:

Not accepted. See response to Liberal Senators’ recommendation 1. However, the Government will seek input from stakeholders about the intellectual property provisions in the Bill to address any outstanding concerns about the provisions.

GOVERNMENT RESPONSE TO THE RURAL AND REGIONAL AFFAIRS AND TRANSPORT SENATE COMMITTEE REPORT

Implementation, operation and administration of the legislation underpinning Carbon Sink Forests

On 26 June 2008, the Senate referred the following matter to the Senate Standing Committee on Rural and Regional Affairs and Transport for inquiry and report:

The implementation, operation and administration of the legislation underpinning Carbon Sink Forests and any related matters.

On 23 September 2008 the Senate Committee report, which included dissenting reports, was tabled in the Senate.

The Government has prepared a response to the Senate Committee report, including dissenting reports, in accordance with the Department of the Prime Minister and Cabinet Guidelines for the presentation of Government documents to the Parliament.

The Senate Committee report made nine conclusions:

(1)

The committee considers that the tax deductions for carbon sink forests under the Income Tax Assessment Act (1997)  represent a valuable policy addition that will promote greenhouse gas reductions.  The structures and processes outlined in the Act provide for a sensible legislative and administrative framework relating to the tax treatment around the establishment of forest carbon sinks.

(2)

The committee notes that other forms of greenhouse gas emissions reduction activities by industries are tax deductible.  The change in the tax treatment of carbon sink forests addresses this anomaly in the tax system.

(3)

The committee believes that the tax deductions will provide incentives for corporate investment into greenhouse gas abatement activities which represents an ideal opportunity to direct necessary capital to achieve positive environmental outcomes.

(4)

The new tax arrangements provide a short-term incentive to encourage early establishment of carbon sink forests that will contribute to a medium-term emissions target, while other options for delivering significant emissions reductions are further developed.  Carbon sink forests also contribute to the achievement of national policy objectives for sustainable natural resource management.

(5)

The committee considers that if Australia is to meet its carbon pollution reduction goals at least cost, the support of a viable carbon sink industry is important.  Appropriate taxation arrangements are one part of a range of measures needed to encourage the role of carbon sink forests in Australia’s carbon pollution reduction effort.

(6)

The committee recognises the benefits of relying on existing state and territory regulatory structures for the management of the impacts of carbon sink forests on the environment.  The committee has some concerns that in certain key areas, such as land clearance legislation, natural resource management and water sharing, some states and regions may not currently have in place appropriate regulations or plans to manage the impacts of carbon sink forests.  The committee notes that through the National Water Initiative, states and territories are committed to completing comprehensive water planning arrangements by 2011 and that COAG is currently seeking to accelerate the pace of this planning.  The committee also notes that under this process steps have been taken to ensure that those water systems under the greatest pressure receive early attention.  The committee considers that it would be desirable if a similar focus could be directed to regulation of land clearance and natural resource management.

(7)

More specifically, the committee notes the concerns raised in relation to the need to include ground water within water sharing plans.  The committee supports the inclusion of specific reference to ground water in the Guidelines.

(8)

The committee notes the significant support expressed during this inquiry for specific incentives to encourage the establishment of biodiverse forests.  The legislation as drafted does not distinguish between the type of forest planted and the committee is satisfied that it provides no disincentive for the plantation of biodiverse carbon sink forests.  The committee also notes that biodiversity considerations have been taken into account in the development of the Guidelines and that these should contribute to the establishment of carbon sink forests in conformity with good practice environmental and natural resource management frameworks.  The committee considers that any proposal to offer specific incentives for the establishment of biodiverse plantings must be considered within the context of existing environmentally focussed taxation incentives.

(9)

Finally, the committee welcomes the evidence received in relation to alternative options for terrestrial carbon stores, particularly in relation to perennial pasture cropping.  While there clearly is some work to be done to demonstrate the benefits of such as approach within a carbon trading scheme, the committee considers that the wider benefits of improved soil structures and the potential increases in productivity of such systems warrant further examination.  The committee considers that the government should request CSIRO to assess the data being accumulated from pasture cropping trials in Western Australia and New South Wales.

The dissenting report by Senators Milne, Joyce, Nash, Boswell and Heffernan made the following recommendations:

(1)

The guidelines should be mandatory regulations.

(2)

There should be incorporated into the regulation conditions which must be met before the tax deductions would apply, namely:

(a)

The carbon sink forests must be registered on the property title.

(b)

No native vegetation can be cleared for or converted to carbon sink forests.

(c)

Carbon sink forests should be biodiverse and cannot be harvested or cleared, and

(d)

No carbon sink forest can be established in the absence of a hydrological analysis including groundwater and interception, of the proposed area to be planted.

(3)

To avoid the destruction of rural communities and the displacement of food crops, prime agricultural land must be excluded from carbon sink plantings.

The dissenting report by Senator McGauran raised concerns including the potential for carbon sink forests to displace agriculture.

Government Response

The Government has considered the findings of the Senate Committee report and the concerns indicated in the dissenting reports.  In considering these matters, the Government has taken into account the nature of the issues raised, the objectives of the tax measure, implications for administration of the Income Tax Assessment Act (1997) and for taxpayers, and the extent to which the issues raised fall within the responsibilities of the Commonwealth.  The Government’s response to the issues raised is as follows.

The Government notes that the matters raised in the Senate Committee report were debated in the Senate on 1 December 2008.

(a)

Amendments to the Environmental and Natural Resource Management Guidelines       The Government has amended the Environmental and Natural Resource Management Guidelines to address a number of the issues raised.

• The guideline relating to establishing carbon sink forests based on regionally applicable best practice approaches for achieving multiple land and water environmental benefits has been amended to include specific reference to avoiding significant negative impacts on groundwater activity.  This addresses Conclusion 7 in the Senate Committee report.
• A new paragraph under the guideline relating to the recognition and adherence to all government regulatory requirements has been added to include a requirement to comply with applicable state and territory, and local government land use planning legislation regarding the establishment of alternative land uses on agricultural land.  This addresses concerns raised in the dissenting reports related to the displacement of prime agricultural land for carbon sink forest establishment (Dissenting Report (Milne, Joyce, Nash, Boswell and Heffernan) Recommendation 3; Dissenting Report (McGauran)).
• A new guideline has been added to include a requirement that legal rights concerning carbon sequestration in carbon sink forests be registered on the land title in accordance with applicable state government legislation.  This addresses concerns related to the registration of carbon sink forests on property title (Dissenting Report (Milne, Joyce, Nash, Boswell and Heffernan) Recommendation 2(a)).

Amended guidelines were registered on the Federal Register of Legislative Instruments on 10 December 2008, and took effect on 11 December 2008.

(b)   Other findings of the Senate Committee Report and the Dissenting Reports not addressed under (a)

• Senate Committee report Conclusions 1, 2, 3, 4, 5 and 8:

The Government agrees with these conclusions.

• Senate Committee report Conclusion 6:

There are existing national environmental policy frameworks in place which provide agreed objectives and management approaches for all jurisdictions to protect native vegetation, including regrowth and remnant habitats.  Such frameworks include the National Strategy for the Conservation of Australia’s Biological Diversity and the National Framework for the Management and Monitoring of Australia’s Native Vegetation (Native Vegetation Framework).  These national frameworks are agreed between all jurisdictions and are underpinned by specific policies, legislation and management approaches within each jurisdiction.

The Government is conscious of the need for an effective national framework for tackling land clearing.  In April 2008 the Natural Resource Management Ministerial Council (NRMMC) agreed to finalise the review of the Native Vegetation Framework.  The NRMMC confirmed the importance of the Native Vegetation Framework as the national policy framework for achieving a reversal in the long-term decline of Australia’s native vegetation and improving the condition of existing native vegetation.  The Native Vegetation Framework provides a mechanism through which the native vegetation management commitments agreed to by all state and territory governments can be progressed in a consistent and coherent manner.

The Commonwealth, state and territory governments have also enacted legislation for environmental protection, including to regulate the broad scale clearing of native vegetation and to protect threatened species and ecological communities.  The Government protects certain specific and defined matters of National Environmental Significance under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), including listed threatened species and ecological communities.  Proposals that are likely to have a significant impact on those matters must be referred to the Commonwealth Environment Minister for assessment.  Land Clearance is listed as a Key Threatening Process under the EPBC Act.  On the advice of the Threatened Species Scientific Committee, the previous government decided not to establish a Threat Abatement Plan for this process primarily because such a plan would not contribute any threat mitigation over and above existing measures such as the Native Vegetation Framework and state and territory vegetation legislation.  In accordance with the requirements of the EPBC Act this decision is now under review by the Threatened Species Scientific Committee, which will advise the Government about whether this decision is still appropriate.

In addition, the Government will invest $2.25 billion from July 2008 to June 2013 through Caring for our Country to secure improved strategic natural resource management outcomes across six national priority areas:

• the National Reserve System
• biodiversity and natural icons
• coastal environments and critical aquatic habitats
• sustainable farm practices
• natural resource management in northern and remote Australia, and
• community skills, knowledge and engagement.

Caring for our Country will be delivered in partnership with regional natural resource management groups, local, state and territory governments, Indigenous groups, industry bodies, land managers, farmers, landcare groups and communities. 

• Senate Committee report Conclusion 9:

Better soil management, including carbon in soils, is being addressed as a priority under the $46.2 million Climate Change Research Program component of the Australia’s Farming Future Initiative.  The Minister for Agriculture, Fisheries and Forestry, the Hon Tony Burke MP announced on 3 March 2009 $20 million for soil carbon research under this Program. 

• Dissenting Report (Milne, Joyce, Nash, Boswell and Heffernan) Recommendation 1:

The Government notes that complying with the guidelines is a mandatory requirement of the legislation, however, the guidelines offer some flexibility in how taxpayers may comply.  Extending the guidelines to involve mandatory requirements or additional regulatory requirements would significantly increase the cost of compliance for forest growers, increase the cost of administering the tax deduction, and would raise issues about the bounds of Commonwealth jurisdiction.

• Dissenting Report (Milne, Joyce, Nash, Boswell and Heffernan) Recommendation 2(b):

Concerns regarding the potential for native vegetation to be cleared, or converted to, carbon sink forests are already addressed in the legislation.  Subsection 40-1010(2)(c) notes that to obtain the tax deduction the area occupied by the carbon sink forest must have been clear of trees on 1 January 1990.  In addition, the guidelines provide that all government regulatory requirements be adhered to in order to obtain the tax deduction, and this includes relevant state and territory land clearing regulations.

• Dissenting Report (Milne, Joyce, Nash, Boswell and Heffernan) Recommendatio

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

by leave—I wish to speak for a couple of moments on the Standing Committee on Rural and Regional Affairs and Transport report Implementation, operation and administration of the legislation underpinning carbon sink forests and the government’s response to it, and I move:

That the Senate take note of the document.

I have to say that the government’s response does not satisfy the concerns that I raised in the dissenting report from the majority report. In view of the collapse of managed investment schemes in recent times, I think the concerns that were put on the table by the Greens when this legislation was being debated are now more relevant than ever. At the time, the majority committee report said:

The committee notes that other forms of greenhouse gas emissions reduction activities … are tax deductible. The change in the tax treatment of carbon sink forests addresses this anomaly …

The committee believes that the tax deductions will provide incentives for corporate investment into greenhouse gas abatement activities which represents an ideal opportunity to direct necessary capital to achieve positive environmental outcomes.

That is exactly what they said about the managed investment schemes for forests. This was a fabulous idea to drive investment into rural Australia; what a good thing to do. It was all set up as a tax minimisation scheme, and look what an utter and complete mess and collapse has occurred because of that.

At the time, I said we should be repealing the managed investment schemes, not bringing in another managed investment scheme by way of carbon sink forests. Yet the government and the coalition overruled that and went ahead. Now we have got two Senate inquiries into the managed investment schemes whilst continuing with this absolutely flawed proposal for carbon sink forests. I said at the time that these forests will not be biodiverse plantings, and the government said, ‘Oh yes, they will.’ But now in the government’s own response it says:

The Government notes that it is not the primary objective of the legislation to promote biodiversity.

Exactly. The trees they put in they will put on the best land to grow the best trees with the most water because the idea is to bulk up the trees, bulk up the carbon as quickly as possible, and it is not its primary objective to achieve biodiversity and improvements in the long term in rural and regional Australia.

The other major concern I had was in relation to land clearance. I said that this will lead to land clearance for people to plant these forests. The government have said, ‘Oh no, that’s not the case because it can’t have been forested in 1990.’ But the point is when you are talking about native vegetation you are not necessarily talking about land which conforms to the definition of a forest. There is a specific definition of a forest and quite a lot of areas of native vegetation across Australia do not conform to that, and there will be land clearance because of this. I urge the government to recognise that it is all waffle in the government’s response here about the wonderful strategies that are in place nationally to look at the clearance of native vegetation. We do not even have a trigger under the EPBC Act on land clearance, let alone anything else in terms of greenhouse. In the Tasmanian context I can tell you now there is no enforcement and compliance in relation to land clearance, there is no enforcement and compliance in relation to groundwater.

The express concerns of National Party senators and the Greens in relation to this particular legislation were specifically in terms of four particular areas. One was that carbon sinks be registered on the property title, and I am glad the government has taken that up. The second one was no native vegetation to be cleared or converted for carbon sink forests. That has not been dealt with. Carbon sink forests should be biodiverse and cannot be harvested or cleared. That has not been dealt with. As I said, the definitions are such that native vegetation will be able to be cleared. The third thing we said was no carbon sink forests could be established in the absence of hydrological analysis in terms of groundwater and groundwater interception in the proposed areas. That has not been dealt with. In fact, the government has made a statement there saying that requiring hydrological analysis would be cost prohibitive. So in my view we have got MI schemes on steroids. That has always been my view.

The MI schemes have now fallen over big time. The investors in them have had their fingers burnt very badly. The people who made the money out of them were the accountants and the middlemen, the financial arrangers. They were the ones who walked off with the cash with these MI schemes. Now a lot of rural communities are stranded, and the communities I feel particularly sorry for are those where the MI schemes went in and bought up the water rights. Now those water rights will be the first things sold off as the MI schemes are wound up, and whole rural communities are going to be left without water because the water rights will be sold somewhere else, further down the catchment, most likely, and that will mean the big corporate buyers will buy the water and the family farms will be left in communities without water. So this is a living disaster, the MI schemes, and nobody in this place can say that they were not warned. They were warned. They were warned by the Greens and warned by the Nationals about what the impact would be in rural and regional Australia, and everybody took no notice, went ahead and said, ‘Let’s do it again with the carbon sink forests. Let’s get out there and give 100 per cent tax deductions for carbon sink forests.’ And now we have had proof from the government that their primary objective is not biodiversity: ‘It’s too expensive to require hydrological analysis; we’ll rely on the states to oversee land clearance.’ But we know that, in a case like Tasmania, that is a joke because there is no enforcement or compliance with regard to vegetation clearance.

I hope when this parliament starts looking at the mess of the MI schemes we will rapidly think again about this carbon sink forests legislation and get rid of it, because its primary objective is a tax deduction. When you introduce a financial mechanism the primary objective of which is tax minimisation and not the outcome—whether it was almonds, whether it was trees in the case of the forestry ones or whether it is now in terms of carbon sink forests—you always get rorting. That is what has happened. To the detriment of regional and rural Australia, that is what happened. The Collins Street investors moved in, the accountants got their 30 per cent commissions and the communities are going to end up with a mess. They are now surrounded by plantations that are going to be fire hazards this summer, that are going to be full of weeds and feral animals. There is no money to manage those MIS forests sitting out there now and there will not be any money to manage these so-called carbon sink forests either once this scheme gets underway.

We are still at a matter of debate in this parliament as to whether the tax deduction includes the cost of land. I believe it does and I have advice to say that it does which I provided to the parliament, and it is now only going to be a matter of someone taking this the court. We are going to have huge areas left with these MI schemes and what we have to make sure is that the government does not now enable forests that were planted as a result of tax deductions for wood production to end up able to be suddenly converted into carbon sink forests in order to realise some value for the investors that were in it to reduce their tax in the first place and not actually to get outcomes. That would make an even worse situation because you would then take out those plantations that were wood production and put them in as carbon sink forests and drive the logging further and further into native forests. That would be a disaster in biodiversity terms, a disaster in terms of the timber industry and the downstreaming that was meant to come from those plantations. It would be an Australian rural community horror show, in fact.

So I would like to see the government rethink what it is doing and help to resolve the mess that was created because the Liberal and Labor parties supported this tax minimisation in the first place, clean up the mess of the MI schemes and repeal this legislation before we end up with exactly the same mess very shortly down the track.

Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

I want to make a couple of quick comments in respect of the government’s response to the Standing Committee on Rural and Regional Affairs and Transport report Implementation, operation and administration of the legislation underpinning carbon sink forests. I welcome the fact that the government has made the report. I would note that, despite the predictions of doom and gloom and disaster that we have just heard from the Greens, enormous opportunities arise for Australian agriculture with the incorporation of carbon sink forests into their lands.

I still have some concerns about the processes that the government is putting in place through this measure and also through the CPRS. My concern is that the opportunities that should exist for farmers to integrate farm forestry into their whole-of-farm management plans, which is the way that this should be encouraged, is not being put into place in the way that it could be. The government should be showing greater intensity in the work that it is doing to try and get some of the accounting procedures modified, particularly those that give the opportunity for the recognition of carbon stored in wood products. This not the case under the current accounting rules, which severely limit the capacity of farmers in rural communities to take advantage of the opportunities that exist for the sequestration of carbon and the take-up of these opportunities. I am concerned that the growth in restrictions around the operation of some of these projects really does provide those limitations.

In respect of Senator Milne’s comments, while I do agree with some of the prudential measures that are in place governing managed investment schemes, the collapse of two companies does not mean the demise of the whole process. There are companies that are still quite successfully operating managed investment schemes and providing opportunities for farmers and the supply of timber products into the wood supply. We all know that the Greens have the view that you should close down all forestry in Australia, and the way they misuse terminology and definitions in this debate is quite deceptive at times. I would urge people to take real caution when they listen to some of the hysterical contributions that are being made in this debate. In particular, people should listen very carefully to some of the terminology that is being used.

I welcome the fact that the government has made a response to the committee report, but there remain some concerns, as I have indicated. The government needs to make sure that the real opportunities that exist for rural Australia to participate properly in forestry are dealt with as part of both this process and the development of the CPRS moving forward.

Question agreed to.