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Monday, 1 December 2008
Page: 7738

Senator McGAURAN (6:22 PM) —In the seven or eight minutes just before dinner, I too wish to address this disallowance motion. Like other speakers, I believe the legislation is fundamentally flawed. It is farcical in many areas and shoddy all around. It will be no good for the government to say later on, as I predict they will after dinner, ‘This was your legislation.’ In fact, it is the government’s legislation. They passed it. While the scheme and concept, in the early stages, were thought up by the previous government, the legislation never came before the parliament. The whole scaffolding of this legislation and, consequently, the regulations we are debating today, are your work. You brought it before the parliament, you put it down before the parliament and subsequently defended it. So do not come in here later, after dinner, as predictable as it is, and say, ‘This was your legislation.’

The beginnings and the concept of this legislation were bred by our government and would have been fixed up. Whatever shoddiness is there now would surely have been fixed up, because we were a very efficient and good government. We could see bad legislation coming a mile away. So I make that point upfront before the Minister for Climate Change and Water, Senator Wong, stands up and speaks to the matter. I think this legislation gives a very generous tax incentive to investors to establish permanent tree plantations to offset carbon emissions. When I say ‘permanent’, the Senate committee hearings defined ‘permanent’ as between 70 and 100 years.

It is my view that this is bad legislation for the farmers and consequently it is bad legislation for the farming communities. Senator Boswell touched on this subject in his address. Recently we had the government’s senior economic and climate change adviser seriously write in his review—for those who want to be bothered to read it, but this utterly discredits it—the suggestion that farmers ought to replace grazing cattle and sheep with kangaroos. He envisaged 240 million kangaroos by around 2020. That is the extreme laughable, farcical end of this whole climate change debate—the kangaroo question. I notice the government have yet to rule it out, by the way.

This legislation and the regulations that introduce a tax incentive to establish permanent forests on farming land are at the extremely dangerous end of the climate change debate. As others have said, the legislation basically slipped through the parliament as part of a cognate debate on several tax law amendments. It certainly slipped by me. Thankfully, many of my colleagues were raising the issue at the time, and they did single it out. As often happens in this place, these sorts of serious issues are buried deep in legislation, but thankfully this found its way to a Senate committee, and I was part of that Senate committee in reporting. That is where we flushed out what is wrong with this legislation, and I would say that anyone with a serious conscience who sat on that committee would stand up here today and say that this legislation is wrong. It is bad for the farmers, it is putting forests ahead of food, and, sure as God made little green apples, we will be back in this chamber again fixing up the loopholes and the nightmare that we have created for the tax office with the impossibility of managing this tax incentive.

I make the prediction that we will be back in this parliament fixing this legislation up. So I say to Senator Boswell and colleagues on the far left of the chamber that this will not be the last chance that we will have to debate this issue. It is predictable already. The flaws are so fundamental, so obvious, I do not know how the government is going to get up after a long dinner break and actually defend this legislation. I know we are talking about the regulations but I join with the other speakers and say that if you knock out the regulations you will make the legislation inoperable. So we are discussing the scheme in itself.

In short, the establishment of the scheme for the carbon-sink forests does not represent a valuable policy addition to the national objective of reducing greenhouse gas emissions. It is a scheme that lacks foresight or care as to the consequences for rural Australia. The intent of the legislation, the intent of the scheme, ought to be abandoned. The obvious result of providing a tax incentive to one sector of the market, in this case the carbon-sink forest investors, will be to raise the rate of return of investment—to make it attractive. That is what tax incentives do. Consequently, the value of the land increases, whether marginal or prime, for the purposes of carbon-sink investment. In contrast, agricultural land—food-producing land, the land farmers are working—will not have the equivalent tax incentive and will suffer almost an equivalent, or perhaps greater, decline in the rate of return. It cannot compete and consequently rural land will lose its value as a food-producing resource. In short, it is not a level playing field. It is tilted one way.

The added downside to this tax incentive, as distinct from the tax incentive given to the managed investment funds that have been addressed by earlier speakers, is that carbon-sink forests are permanent. That is the difference between this tax incentive and that given to the MISs. The MISs are a crop, in many respects, and it is debatable whether they should get their tax incentive or not.

Debate (on motion by Senator Conroy) adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.

Sitting suspended from 6.30 pm to 7.30 pm