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Senate debate tax break for trees -

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Senate debate tax break for trees

The World Today - Wednesday, 25 June , 2008 12:50:00

Reporter: Jennifer Macey

TANYA NOLAN: There's a row brewing in the Senate and this one doesn't involve alcopops or changes
to the Medicare levy.

The Coalition joined forces with the Greens overnight to oppose a tax deduction for carbon sink

Nationals Senator Barnaby Joyce and Liberals Senator Bill Heffernan say the bill will force farmers
off the land by encouraging investment in plantation forests.

And they say there's nothing to prevent the trees from being cut down, erasing any value they may
have in helping combat climate change.

Jennifer Macey reports.

JENNIFER MACEY: The tax incentive for carbon sink forests was introduced by the previous Coalition
government and passed just last week.

But now National Senator Barnaby Joyce and Liberals Senator Bill Heffernan have changed their

Senator Heffernan says he's worried farming communities will be pushed off their land to make way
for plantation forests.

BILL HEFFERNAN: A lot of these plantings will take place in good farming land where the signs are
telling us that in the future we are going to have to be very careful how we produce food and
protect the land we produce the food from and that is part of the energy versus food debate for
land use.

For that to happen there has to be a covenant so that land is locked up for 80 years so it is a
genuine sink for purpose of the legislation.

JENNIFER MACEY: The Greens also have a problem with the legislation saying forests are taking
valuable farming land out of food production.

They highlight Tasmania's dairy country, Queensland's cane areas and any food bowl region where
there's good rainfall.

Greens Senator Christine Milne says the bill also allows polluters to avoid cutting their own

CHRISTINE MILNE: There is no requirement that the trees stay in the ground any length of time.
There is no biodiversity in what is being proposed. There is no hydrological assessment of the
impact or the impacts on agricultural land.

So we are going to see the big end of town once again on the back of the carbon market, destroying
the environment in rural Australia and putting farmers out of business and having no material
impact on greenhouse gas emissions.

JENNIFER MACEY: But the forestry industry disagrees. Todd Loydell is a senior policy officer with
the National Association of Forest Industries.

TODD LOYDELL: The legislation clearly points out that you must be in the business of creating a
carbon credit under any legitimate market in Australia and those trees must be there for 70 years
or 100 years respectively.

So if you create a credit and then knock the trees down, either through bushfire or through
harvesting, you will then have to make good on that credit in some other way.

JENNIFER MACEY: But Christine Milne argues if the forest dies or is cut down - the carbon credit
has to be paid back but not the tax exemption.

CHRISTINE MILNE: So you can get an up-front tax deduction for investing in the establishment of
trees and then cut them down within five years if you want to without having to pay back the tax

JENNIFER MACEY: There is already a thriving voluntary carbon market - whereby companies and
individuals can offset their own greenhouse gas emissions or flights by investing in forests.

Andrew Grant is the CEO of CO2 Australia - a company that sells carbon credits by planting long
term eucalypt forests.

He says the senators' concerns are unfounded and that this bill will actually encourage long-term

ANDREW GRANT: The Tax Act in its previous form rewarded people for cutting trees down, so this
doesn't in any way reward you for cutting a tree down.

Under greenhouse gas schemes and if you create a carbon credit from planting a tree, if you cut
down that tree, you lose the carbon credit. You lose the very economic interest you have in that

JENNIFER MACEY: But you lose the tax credit?

ANDREW GRANT: Well the tax is a minor component of the economic driver of the subtuned (phonetic)

JENNIFER MACEY: But just yesterday the Wentworth Group of Concerned Scientists warned of an
increasing risk of forests diverting water from critical catchments in the Murray-Darling Basin.

Professor Mike Young from Adelaide University says it is irresponsible to hand out tax incentives
without first doing proper water assessments.

MIKE YOUNG: We have to be very, very careful here because in the Murray-Darling Basin, significant
increases in forestry could virtually wipe out the irrigation industry as we know it.

JENNIFER MACEY: To address these concerns the Greens and the two Coalition Senators are lobbying
their Coalition colleagues to reform the legislation to provide greater environmental protection.

TANYA NOLAN: Jennifer Macey with that report.