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Thursday, 19 February 1987
Page: 382


Mr MILTON —On behalf of the Standing Committee on Environment and Conservation I present the report of the Committee on Fiscal Measures and the Achievement of Environmental Objectives, together with the minutes of proceedings and evidence received by the Committee.

Ordered that the report be printed.


Mr MILTON —by leave-I think it is fair to say that, when the Committee in the previous Parliament agreed to accept the fiscal measures reference from the Minister, it did not fully appreciate the potential scope of the inquiry or the importance of the matters that were to be investigated. However, it quickly became apparent that a very large number of environment issues were relevant to the inquiry and that existing or potential fiscal policies could affect environment protection and conservation in many ways. We had in fact possibly taken on an inquiry which was beyond our resources. We put the fiscal measures inquiry aside while we dealt with more urgent inquiries. But, even after we completed these other inquiries, we were able to make substantial progress with fiscal measures by only concentrating on those issues which received most attention in the submissions and which we judged would be fruitful areas to investigate.

Of course, other matters were raised which we have not specifically considered in our report, although we have referred to them in a more general way. I think these matters, which include issues as diverse as energy conservation and water pollution, could be considered in the future. Before proceeding to discuss each of the environmental issues in turn I want to make some general comments about fiscal measures as environmental policy instruments and the role of economic considerations in the resolution of environmental problems. For some time now there has been a general awareness in the community and in government of the importance of conserving the environment.

Although there is room to debate the environment and conservation role which is appropriate for the Commonwealth Government, bearing in mind State constitutional responsibilities, there is no doubt that the Commonwealth has dominant fiscal powers and we have found that these powers could be quite helpful in pursuing environmental objectives. In many case these powers would be just as useful or even more effective than the powers that the States have at their disposal in achieving environmental objectives. It would, in my view, be an evasion of responsibilities if these fiscal powers were not put to the best use in the national interest.

Despite the limited direct Commonwealth powers in the environment and conservation area, we have seen the clear statement of environmental objectives and policies at the national level. Many conservation issues are seen as national issues and there has been ample demonstration of the need to co-ordinate programs such as soil conservation across the States. It is appropriate, therefore, to look in some detail at how the Commonwealth can become involved and to ensure that such involvement is both efficient and effective.

Unfortunately, there has been a spectacular lack of success in progress and achievements. Whilst I am a strong supporter of developments such as the national conservation strategy and the national soil conservation program, I remain sceptical that much can be achieved until we have a proper awareness of the environmental problems and until we develop effective measures to implement policies. In this respect I believe that the 1986 report entitled State of the Environment in Australia, produced by the Department of Arts, Heritage and Environment, together with an accompanying source book, is a big step forward in providing the necessary information to assist in the formulation and implementation of environmental protection policies. In this respect the inquiry into fiscal measures is also important. Our report does not repeat what we already know about these problems. For example, we do not pretend that we have revealed soil conservation as a very serious problem because this has already been appreciated by government. Nor have we just repeated calls for something to be done. But rather, we have looked at how we can take steps to implement those policies which are already reasonably well accepted.

The Committee briefly considered the different approaches that could be taken to achieve environmental objectives. That is, we looked at whether direct regulation is preferable compared to indirect inducement by fiscal measures and whether or not we should apply the polluter pays principle. The Australian Mining Industry Council submitted that the adoption of the polluter pays principle has not been effective. Most Organisation for Economic Co-operation and Development countries provide some form of financial assistance for pollution control measures by way of government low interest loans, accelerated depreciation or other measures which contradict the essence of the polluter pays principle. The Mining Industry Council suggested that the subsidised situation in other countries contrasts badly with that in Australia and suggested that in terms of environment protection and pollution control the Australian mining industry is highly regulated and thus at a competitive disadvantage.

The problem seems to be not so much with the polluter pays principle as such, which seems to make good sense, but with the way the principle is applied or even avoided in some countries. It is a matter of some regret that other countries may not be adhering to all the elements of the principle and that this places Australia at a disadvantage. Although it would be preferable to conform to the principle, the Committee considers that it would be in Australia's interest in some special circumstances to adopt measures which would appear to conflict with the polluter pays principle. An important example of this is the cost of mine site rehabilitation. (Quorum formed)

It is most disappointing that the Opposition finds it necessary to disturb the proceedings of the House by calling quorums. I assure all the listeners to the broadcast of these proceedings that this will go on time and again because the Opposition's whole aim, the only thing it seems to be able to do, is to try to disturb the proper proceedings of government. I will continue with my report on fiscal measures and the achievement of environmental objectives.

In respect of mine site rehabilitation the Committee found the existing taxation provisions to be somewhat deficient. We accordingly recommended that there be a review of these provisions and that there should be appropriate taxation deductions for the costs of rehabilitation or for the cost associated with setting aside funds to cover anticipated rehabilitation at the end of the economic life of the mine. The Committee is also aware that in some cases the polluter pays principle may be difficult to apply-for example, with some soil erosion problems where the point source and individual contributions to erosion are difficult to identify. Therefore, the remedial measures which may have to be taken will be at a cost to the community that cannot be passed on. The difficulties with the polluter pays principle which I have cited are limited exceptions and do not detract from the need to use the principle as a general guide in our environmental and conservation decision-making.

I would now like to briefly discuss those matters which we have reported on in some detail. The environmental issues which we have examined are commercial forestry, tree planting and general vegetation conservation in rural areas, soil conservation and land degradation, and heritage conservation. In each case we discussed taxation provisions but we also looked at other fiscal measures. The competing demands on our forests have in recent times generated some considerable debate within the community. For the future we need to be able to conserve our forests and in some cases protect them from logging altogether. We also need to ensure a continuing supply of timber for the wood-based industries. To achieve this we need to give more attention to privately owned forests. At present there are few incentives, and indeed there are outright disincentives, to the retention and proper management of privately owned and potentially productive native forests. In particular, the taxation provisions and various interpretations of the Income Tax Assessment Act made by the courts actually encourage land owners to either neglect or clear fall any existing native forest on their properties. The tax provisions also include disincentives which inhibit land owners who want to reafforest land that has been previously cleared.

We considered all these matters in some detail and recommended that the taxation measures be reviewed to remove all provisions which act as either incentives for forest clearing or disincentives to the sound management of privately owned native forest. We also believe that taxation measures must ensure that gains from timber harvesting are treated equally under the Income Tax Assessment Act, regardless of whether the land was obtained with the intention of falling the forest or maintaining it. We considered the question of plantations, and although there are some environmental problems, the establishment of either native or even exotic softwood plantations on previously cleared land is a more attractive alternative than clear falling State owned native forest.

There are financial problems here as well. We have recommended that the taxation provisions which apply to plantation forestry, particularly plantations of native species, be reviewed to remove existing disincentives and to introduce incentives for environmentally acceptable plantation establishments on previously cleared agricultural land.

As I mentioned previously, we also considered the question of the retention of remnants of native vegetation and tree planting in rural areas for purposes other than commercial forestry. There are many benefits to be obtained from these activities and to a certain extent they have been recognised by the creation of the national tree program. We found that the benefits include the control of soil erosion, reduction in soil salinity and soil acidification, less siltation of reservoirs and the maintenance of wildlife habitats, including the encouragement of insects feeding birds, which are important to agricultural pest control. There are also benefits which individual land holders might reap, including increased livestock and crop production due to increased shelter; honey production; the provision of emergency stock fodder; and a supply of firewood and fencing material.

Despite these benefits and recent public education campaigns, it seems that the assistance programs which have so far made available by the Commonwealth and some States give insufficient attention to vegetation conservation or the adverse impacts of land clearing. We have recommended that the taxation provisions which could apply to tree planting and vegetation conservation for nature and soil conservation purposes need to be reviewed, and that tree planting and vegetation retention be encouraged by the provision of taxation incentives to land holders.

I consider that the most serious problem we examined was soil erosion and land degradation. The extent of soil erosion has been well documented and the rural community and governments are aware that it is a serious matter. However, the problem seems so overwhelming that governments have been stunned into inaction by the immensity of the problem. To a certain extent we have also been lulled into a false sense of security because the problem seems to be long term and, therefore, could be left for someone else to deal with at a future time. Until we can influence the behaviour of individual land holders in a significant way, the problem will only get worse. There have been calls for action, and the development of the Government's national soil conservation program, which provides assistance to the States, is a most welcome and timely development. But there is much more which can and should be done.

The Committee found that once again the taxation provisions provide an excellent opportunity to put remedial policies into practice. We recommended that the Commonwealth, in consultation with the States, review all aspects of Commonwealth and State soil conservation programs to develop an integrated, comprehensive and effective program. A principal element of this review should be a comprehensive revision of existing taxation provisions and the introduction of new taxation measures, particularly rebates and tax credits.

The final matter which we have dealt with in our report is heritage conservation. By this I am referring principally to the conservation of the built heritage in the form of historic buildings. This is another area where there is widespread agreement that conservation activity is worth while. For some time now people have been calling for action on the taxation front to encourage the owners of heritage properties to preserve and maintain these assets. We agree with this view and we recommended that the Commonwealth Government develop a tax rebate provision for expenditure on certified conservation works on properties listed on the Register of the National Estate. We also recommended that the Commonwealth Government, in consultation with the States, establish a jointly funded revolving fund to provide loans to State national trusts to acquire and renovate historic properties.


Mrs Darling —We did that in Queensland.


Mr MILTON —As the honourable member for Lilley has mentioned, that has been done in Queensland. That is one positive thing amongst, unfortunately, a number of negative things that have happened in Queensland. I have referred to only some of the Committee's recommendations. There are many others. I do not suggest that any of them will be easy to implement. There will need to be considerable co-operation between elements of the Australian Public Service and between the three levels of government in Australia. If this co-operation can be achieved and our recommendations put in place, I believe that we will have a more effective, efficient and comprehensive approach to environmental conservation.

Before finishing, I have pleasure in once again thanking the Committee secretariat for its outstanding work, particularly Mr Ian Dundas, who was secretary to this inquiry. Regrettably, Mr Dundas has transferred to the Standing Committee on Expenditure secretariat, which will gain from his skills. We are sorry that he is leaving us, but we wish him well. I commend the report to the House.