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Monday, 1 December 2008
Page: 7724


Senator JOYCE (Leader of the Nationals in the Senate) (5:18 PM) —I rise to concur with the views that were clearly and very well put by Senator Boswell and the views that were put forward by Senator Milne. This is an issue that we have been talking about since June. It is not something that is a flight of fancy. It is a very serious issue, and today a number of National Party senators unfortunately will have to cross the floor to enunciate that. Why is it so important? Because we have tried for so long to mediate another outcome; we have tried for so long to come up with another process; we have tried for so long to breathe some sense into this legislation.

The wider community must see that there is something peculiar happening when the National Party and the Greens, supported by some of the Independents, are at one on an issue such as this. It signals that there is something very peculiar and wrong with this legislation when both those groups have serious concerns about it. I do not believe in the operation of a pure market economy but, for all those who vote for it, this legislation says that obviously they do not believe in market theory. Theirs is an ‘optional market theory’ approach where at certain times you hold it up as a religion, as the be-all and end-all, and at other times you drop it like a hot potato. This is an upfront tax deduction for those who can afford it most, to be paid by those who can afford it least. It would be peculiar even if you knew nothing about agriculture or about regional Australia. You would look at it from the outside and say: ‘If I believed in market theory then I would just let the market operate. I would not come charging in, try to create market differentiation and interfere with the process when we have seen all the problems it has caused just lately.’

We look at this as extremely important—so important that it requires us to show our nation clearly that there are serious errors in it. I will go through just a few of them. They have probably already been covered by my colleagues. The big one is the demise of regional towns. If, by your own mechanisms, you take away the substance of their economic base and that of the hinterland that surrounds them, which has provided the commerce that has built up the town and which people have relied on to invest in that town—to buy a house, to move there as a doctor or a schoolteacher, to build a shop—then you are doing something very wrong. In that breath you are saying: ‘Don’t worry about the world economy. You have to worry about your own nation’s domestic tax policy. That has become a major threat to your future.’ That is a very peculiar thing for people who call themselves economic conservatives to inspire.

Remember, it is quite simple: if you are offering an upfront tax deduction, that is the impetus for people to invest in the scheme. It means that therefore they have a tax bill. And, as they get a tax deduction in a deficit budget, somebody else somewhere else has to pay the tax. So those corporations that can afford it most get the tax deduction, and those who pay for it are the Australian working families. They pay the bill for this cute little deal—and it is a cute little deal.

The effect of the loss of prime agricultural land, as we know, is quite simple. Going straight back to market theory, if you take out prime agricultural land, if you take out the mechanism of producing prime agricultural food, you force up food inflation, full stop—game, set and match. Not only are we imposing a tax bill on the Australian consumer but we are putting up the prices of groceries in the shops to boot, so they can remember it—another peculiar step for people who believe in market theory.

Whilst they are also doing that, they say: ‘Oh, well, we can rely on imports. We will remove Australian domestically grown food and we will rely on imports.’ It is strange in the extreme that a country the size of Western Europe, with only 21 million people, is starting to become more and more reliant on imported food. Our whole concept of food sovereignty should be one of our nation’s strengths. We are starting to make it one of our nation’s weaknesses. What are we going to rely on—a resource based economy, with about two per cent of the workforce employed in it, and the rest of the people in service industries hoping and praying that the game never stops? Every country knows it is one of the smartest things you can do—regardless of the rules, the laws, your beliefs, you must make sure you can feed yourself. This is yet another step away from being able to feed ourselves. Any household will tell you that the most tenuous position you can ever be in is when you are relying on somebody else to feed you, especially when those people are slightly hungry themselves.

One of the insults added to injury in this whole thing is that, when you look at a town, the income stream that was associated with that land, that used to go through that town, that used to support the commerce, that used to bring a benefit back to that region, is now going to be a carbon sink. And that carbon sink will get a future income stream. After we have given them an upfront tax deduction, it will get a future income stream, through the increase of weight on carbon that is petitioned by that area. But where will that income go? It will not go to the local town. It could even end up overseas. It could end up being owned by Mitsubishi Steel. It could go anywhere. What do we say to the people of that town—that not only have we completely circumscribed their access to income but we have also moved any potential income stream to somewhere else? And we believe that is morally just? It is yet another part of the oxymoronic process that enmeshes this piece of legislation—or whatever it is; I do not know what you call it.

So not only have we completely circumscribed their process; we have moved the income stream that supported that district to a completely different place somewhere else. And look at the actual commerce of it. If these people are going to get a future income stream, let us look at the concept. If there is a hectare, 10,000 square metres, and for every 10 square metres they can plant a tree, and, say, it is worth $100 a square metre, that is a possible future income stream of $100,000. What on earth are you giving them an upfront tax deduction for? Why do you need to do that? If this were a real economic issue, a real economic belief and statement of how the process should work, they would not need an upfront tax deduction. Otherwise, you are just propping up something that should not exist in the first place.

You can do with private land what you want. I have never suggested for one moment anything other than that with private land, if it is yours, you can do what you want. If it is private land, people can still put in a carbon sink. We are not saying you cannot put in a carbon sink—put in a carbon sink. But do not ask the Australian people to sponsor it, to subsidise it. Do not ask the mothers and the fathers of Australian working families to sponsor the deduction for the major companies. That is exactly what is happening.

And let us look at the efficacy of the carbon sink. It came to us through the committee hearings that summer pasture sequesters more carbon than a dry sclerophyll forest. This debunks the myth that it will not be using prime agricultural land, because if you go into prime agricultural land and you want to sequester more carbon than is already there, there is no point removing the summer pasture to plant trees. You would actually be going backwards. If you wanted to be authentic about it, you would have to go to an area with high rainfall and good soils and the prospect of being able to deliver a big increase in the weight of carbon in a short period of time.

We have asked for just one thing right from the start: for prime agricultural land to be excluded. It was not asking for much. We started in June. We never got there. We got this peculiar response, ‘We’ll rely on local government guidelines and state government guidelines,’ because they knew that the thing they had to dance around was that they would never grasp the nettle and exclude prime agricultural land. The reason they will not is that that is where it is going to go—because that is where the MISs go. This is just a turbo-charged MIS. If you are relying on local government guidelines, which local government guidelines? Which local government guidelines stop you from growing trees? I have no idea. Even if the local government came up with those guidelines, they would be taken to the land court at the state level. These issues are all part of this mystery and this riddle as they try to fool us in the way this legislation works.

On this issue—and this is something that the Australian Greens and the National Party differ on—I believe that the emissions trading scheme is going to be one of the worst things that ever happens to this nation. In a time of recession we are moving towards a period where we are going to create another tax. It is another tax to encourage people to leave our nation and do business somewhere else. That is what it is. The response to the queries that we put to Treasury in the Senate Standing Committee on Economics says that this is strongly revenue positive. That means the government collect money. It might be coincidental, as the government run into deficit, that they will be looking at ways to pick up funds. What a brilliant way to do it: go on a moral gig of ‘we’re going to save the world, collect money and fix up the deficit’—because the government become the arbiter of where it is morally right and morally wrong to send that money that they have collected from the Australian people.

But, if senators in this chamber do not believe in the concept of the ETS and they have serious concerns about it, they cannot vote for this, because this is step 1 of putting their foot on the sticky paper. I imagine the Australian Greens will continue their support of it, but I and my colleagues see that the ETS is going to be economic vandalism. If we want to reduce carbon emissions, I think a possible economic downturn will do that in spades. We do not need to exacerbate the process by encouraging the aluminium smelters and a whole range of other businesses to move overseas. If you vote for this, you have to understand that you are voting that you believe in the ETS and everything that surrounds it. You have to be sincere and fair dinkum. You are either on board or you are not; you cannot have this sort of optional belief system. That is also a key concern.

Australia cannot continue closing down prime agricultural land. As we continue to rely on overseas imports for food, we do not just lose our domestic production; we also make ourselves vulnerable because those overseas suppliers can enter into an arrangement where there is a specific supply contract with specific retailers of the product. Those supply lines to overseas venues become a very powerful instrument to stop other participants in the market. Big retail players have the capacity to set up explicit supply lines to certain big players overseas, but your independent greengrocer and your independent stall probably do not get the same arrangement and the same process. So, at a retail level, this can start to move against small business. This really shows the intermeshing of all the effects when you start passing legislation that reduces Australia’s access to prime agricultural land to produce food.

I also brought up through the Senate estimates the fact that the legislation, and I have quoted it before, in schedule 8, 40.10 says that capital expenditure is deductible for the establishment of carbon sink forests. Other people have said, ‘That’s different,’ and, ‘The explanatory memorandum’s different.’ We have heard today from Senator Milne, who has spoken to one of the leading tax barristers, who said that is bunkum: ‘If it says capital expenditure’s deductible, capital expenditure’s deductible.’ Game, set and match. The minister has never had the capacity, the bravery, to go into the legislation and say, ‘It excludes the purchase of land.’ So, if it does not exclude the purchase of land, I suppose it includes the purchase of land.

If that is the case, that is totally unfair. Who else gets a deduction for purchasing a block? Why don’t we give the deductions that we are giving to these people to the people growing fruit, vegetables and meat, people who are trying to sustain themselves and in the process send their hard-earned dollars by way of tax to the Treasury? Why aren’t we giving them the same advantage? I can imagine other things associated with the planning of a carbon sink forest—if they put up a shed to store stuff in, that is a capital expenditure, so they will get an upfront tax deduction. A farmer would have to write that off over 15 or 22 years or something. This is outrageous. Why are you creating another sentiment of market differentiation, where the person on one side of the fence gets one advantage and the person on the other side gets another advantage, and what differentiates them is that one has the gall to try and feed Australia while the other is planting trees to get an income stream at a future date and gets the benefit of an upfront tax deduction?

We heard Senator Boswell talk about the prospect of 40 million hectares of new forestry. We only have 22 million hectares of crops. We have to understand this concept and where it can go. We have to look into who is actually pushing this agenda—who is going to make money out of this? Follow the money and you find the problem. That is the query. It is obviously going to be the people who have the capacity to make a margin on trading it and the people who make a tax deduction on putting it in place.

For the sake of regional towns, for the sake of maintaining Australia’s food sovereignty and for the spirit of fairness among all citizens in this nation—who should not be compromised by having to pick up the tax bill for the tax deduction that this is—I ask and plead for people to knock out these regulations. At a later stage, to make sure we clarify it, part of the TLAB 5 measures will explicitly disallow the tax deduction.

I know there are people who feel very strongly about this—some of them probably not noted in the media. I know there are strong feelings against this piece of legislation. So I ask: even if you are not going to vote against this, at least do not vote for it, because if you vote for this you are voting for our nation to go down a path of unfairness and you are taking the first step in a very dangerous economic proposition for our nation to deal with in a possible recession.