Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

I rise this afternoon to talk about my portfolio responsibilities in respect of the forest industry. Australia’s forest and wood products industries contribute about two per cent of Australia’s GDP and directly employ more than 83,000 people. This is one of our largest manufacturing industries, and it is the lifeblood of many rural and regional communities around Australia. Although we are both a net producer and an exporter of timber in volume terms, we have a significant trade deficit in forest products of around $2 billion; hence, it is important that we grow both our domestic and export markets to offset that deficit. Plantations are therefore critical to this goal.

Over the last five years, managed investment schemes have injected over $2 billion into rural communities for plantation expansion. The industry is on the verge of realising another $4.5 billion investment in value-added processing capacity, underpinned by the expanding plantation resource increasingly provided by managed investment schemes. This investment could deliver another 4,600 jobs to regional Australia, but the Prime Minister and the Treasurer are putting this investment very seriously at risk. They will not come clean about where they stand on the taxation of the managed investment schemes that are so important to this industry.

History tells us very clearly that changes to the taxation arrangements for plantations can have serious economic and social consequences for the forest industry and for regional communities. Removal of the 13-month prepayment rule in 1999 led to a dramatic 70 per cent decline in investment in plantations, with damaging flow-on effects to the industry and to rural businesses and communities. I am told that changes being considered by the government today could result in the loss of up to 10,000 direct and indirect jobs in rural communities over the long term. Not only that but we could lose $1.2 billion off the gross value of production annually. Our $2 billion deficit in forest products would then grow by another half a billion dollars.

Demand for timber and wood products, as we all appreciate, will not disappear. We will just import more products, potentially from countries with unsustainable or illegal forest practices. Already 10 per cent of Australia’s timber imports are suspect. We will also lose the carbon sequestration potential of expanded plantations which will help Australia to meet its Kyoto target. This growing store of carbon in wood products, commercial forests and plantations offsets a full 10 per cent of Australia’s annual net greenhouse emissions. The accumulated storage of carbon in Australia’s forest plantations and wood products is equivalent to Australia’s total greenhouse emissions for 2003 and 2004 combined.

This government failed to resolve the taxation treatment of managed investment schemes for forestry in the last parliament. We are now seeing this parliament slip away, with the industry enduring continued and damaging investment uncertainty. The Minister for Agriculture, Fisheries and Forestry wants to preserve the right to invest in rural and regional Australia for the landed gentry and his mates in the merchant banks but, for some strange reason, he does not want city mums and dads to get a slice of Australia’s farms or forests.

This government wants to limit the deductions mums and dads will be able to obtain when they invest in plantation forests through managed investment schemes. In the case of Tasmania, to withdraw support for managed investment schemes in the plantation forest industry is a clear breach of the Tasmanian Community Forest Agreement and a threat to the all-important Tasmanian pulp mill. In the case of the Northern Territory, Indigenous communities such as the Tiwi Islanders will lose their new found economic and social empowerment brought by the plantation forest industry.

The government is not listening to its own research agencies such as the Australian Bureau of Agricultural and Resource Economics and the Productivity Commission, which have reported the severe decline in rural and regional Australia and the deepening and urgent need for capital. After more than a year of uncertainty and continual reviews that are damaging the industry, it is time to get on with the job. I simply say: with Christmas fast approaching, please make a decision. That is the request from the industry to the Howard government. End the uncertainty which is holding back investment, putting this industry at risk and undermining key carbon sequestration options. Cabinet meets on Monday. The industry and the opposition wait to see whether this issue will be resolved once and for all. (Time expired)