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Thursday, 23 August 2001
Page: 30206

Mr LAURIE FERGUSON (11:15 AM) —Political life is certainly full of surprises. I might have expected the previous speaker, the member for McEwen, to have taken this first opportunity to castigate coalition senators such as Senator Troeth for their performance with respect to support for a resolution from Senator Brown which Senator Brown described as being the end of old growth timber felling in this country. She likes to present herself as a strong supporter of the native timber industry but not a word has been heard castigating Senator Hill and coalition senators for going along with this rather preposterous, bizarre resolution from Senator Brown.

I wish to speak today about the challenges facing the timber plantation sector at the moment. An important goal of Labor's—and I stress the word `Labor'—national forest policy statement of 1992 is to significantly expand Australia's softwood and hardwood plantation estate. The purpose in doing so is to provide an additional economically viable, reliable and high quality wood resource for the timber industry. In this regard, it is important to note that the national RFA process entails a greater reliance on plantations as a source of our wood and paper products. It is often overlooked that the Commonwealth-state RFAs have rightly led to over 2½ million hectares of old growth and high conservation value native forest being placed in the national reserve system. As a result of this and earlier conservation decisions, plantations already supply more than half of our national annual timber harvest.

The opposition also recognises that increased tree planting by plantation companies and farmers will play a significant role in addressing the nation's key environmental and natural resource management challenges. The most obvious examples are in combating salinity and greenhouse gas emissions. The national forest policy statement recognised that various players can contribute to the expansion of our plantation and farm forestry estate, including traditional state forest agencies, established timber firms seeking to diversify wood supply, and farmers and plantation firms who raise investment funds through a public offer or prospectus. The scale of tree planting envisaged under Plantation 2020 Vision is to treble the plantation estate to three million hectares, and it is clearly beyond the capacity of the state forest agencies to raise the amount of capital required. The latest official data showed that Australia's plantations stood at just over 1.3 million hectares as of September 1999. In 1998 there were new plantings of 65,000 hectares and in 1999 nearly 95,000 plantings.

It is clear that the tax office's recent crackdown on mass marketed tax minimisation schemes and the shambles of its private ruling system have greatly contributed to this situation where the rate of expansion has fallen substantially by severely undermining investor confidence in prospectus based plantation companies. This would be apparent to any reader of the financial pages of our daily newspapers. What is of most concern is that the misleading impression developed that there was a cloud over the tax position of reputable plantation companies with a valid tax office product ruling. In reality, this was not the case.

I thus welcome the tax commissioner's public statement of 13 August that plantation managed investments with a valid product ruling are quite distinct from the schemes that are subject to the crackdown. Commissioner Carmody's statement confirmed that the ATO has not disallowed any deductions for investments covered by and acting in accordance with a valid product ruling. It indicated that investors thus have certainty about the tax consequences of such investments. In welcoming this clarification, I certainly acknowledge that tax office product rulings do not provide any guarantees of the commercial success of any managed investment scheme. These rulings are confined to their tax status. A separate agency, ASIC, regulates the operation of the managed investment sector. The opposition would always encourage potential investors to seek independent financial advice before investing in a plantation.

In this regard, I am supportive of efforts by the group Australian Forest Growers to improve the provision of information to the market through mechanisms such as the proposed code of practice for forestry managed investment schemes and the accompanying investors guide to afforestation investment. I reiterate that recent events and media reporting have led to widespread public confusion and a resulting reduction in investor and lender confidence. This has directly impacted on legitimate plantation operators and on their contractors and suppliers. There was thus a clear need for the statement of clarification that was somewhat belatedly issued by the tax commissioner last week in such an area of crucial environmental requirement.