Mr McGAURAN (Minister for Agriculture, Fisheries and Forestry) (8:56 PM) —The government has the 2020 vision and target for the plantation industry, especially hardwood plantations—the most popular being blue gums. For that reason, we have a tax arrangement for forestry managed investment schemes, built on the basis that there is no country in the world that has a plantation industry without a subsidy or a grant because of the patient capital needed 10, 15 or more years before harvesting. It is just a fact of life: if you want a plantation industry, you must have a tax incentive. We do it through managed investment schemes and they are not without controversy, as the honourable member would be well aware.

I am often asked by rural communities, even in my own electorate of Gippsland, why the government provides such a tax arrangement for urban investors or retirees who are not farming the land directly. There are a number of reasons. The first is that state governments have progressively locked out the industry from the hardwood resource in native forests. As a result there is a greater scarcity of hardwood than ever before. Also, there are import replacement issues. We run a big enough deficit of $1½ billion or more on imported timber or timber products. In addition to that there are the environmental benefits that go with plantations. There are a great many rural communities who do not see the benefit of plantations.

The Bureau of Rural Science has done a study which shows that the net gain to rural communities in job creation and economic stimulus is greater than any loss of farming land, but that has not convinced many rural communities. It is a sensitive and difficult issue. There are many in the dairy, beef and pastoral industries who believe they cannot compete for land against Great Southern Plantations Ltd or Timber Corporation Ltd and so on. I can tell you that I have faced many angry audiences in rural areas wanting to know why the government has favoured these companies with what they regard as favourable taxation concessions. We believe it is a sound policy, but we have to be mindful of the planning aspects regarding plantations. I think states have a great deal more work to do here. The matter remains under consideration, but the government does differentiate between non-forestry managed investment schemes and forestry managed investment schemes. We do not support non-forestry managed investment schemes in the way we have special arrangements for forestry MISs.

Proposed expenditure agreed to.

Industry, Tourism and Resources Portfolio

Debate (on motion by Mrs Gash) adjourned.