Senate debates

Tuesday, 27 February 2007

Committees

Rural and Regional Affairs and Transport Committee; Reference

4:46 pm

Photo of Kerry O'BrienKerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Hansard source

I move:

That the following matter be referred to the Rural and Regional Affairs and Transport Committee for inquiry and report by the first sitting day in June 2007:

An examination of the effect on regional and rural Australia of the Government’s February 2007 decision to phase-out Non-Forestry Managed Investment Schemes, including:

(a)
the effect on jobs and investment in rural and regional Australia;
(b)
the identity of agricultural industries which will be most affected;
(c)
the regional and rural communities which will be most affected;
(d)
the effect on exports; and
(e)
the merits of maintaining Non-Forestry Managed Investment Schemes and alternatives to the Government’s decision.

This motion proposes that the Senate Rural and Regional Affairs and Transport Committee conduct an inquiry into the effect on rural and regional Australia of the government’s recent decision to abolish non-forestry managed investment schemes. The government may try to dress that decision up as a decision of another body, but I will demonstrate that it was in fact the government’s decision to allow that to occur.

The effect of the government’s decision is that non-forestry managed investment schemes will no longer have access to product rulings from the Australian Taxation Office after 30 June this year. This will remove their capacity to raise capital to make investments in rural and regional communities. The motion proposes a Senate inquiry which will examine all the aspects of the decision, including the effect on jobs and investment in rural Australia, the impact on rural exports and the effect on rural and regional communities. The motion also proposes that the inquiry examine the merits of non-forestry managed investment schemes and any alternatives to the government’s decision.

Before I discuss the detail of the motion, I want to explore the government’s handling of this affair in more detail and expose the true intentions of the Minister for Agriculture, Fisheries and Forestry, Mr McGauran, who has been the government’s and the National Party’s champion for the destruction of this scheme. I want to spend some time exposing the government’s ducking and weaving on this issue—everything from blaming investors for the political fallout to its pathetic attempt to pass the buck to the ATO.

First, let us look at the government’s sneaky attempt to bury the story earlier this month. The Assistant Treasurer, Mr Dutton, issued a press release announcing the government’s decision at eight minutes to seven on the evening of Tuesday, 6 February 2007. If the government was comfortable with this decision on this matter, why would it attempt to hide it by sneakily issuing the announcement at eight minutes to seven on a Tuesday night? Maybe the government was hoping that no-one would notice and that it could sneak this one through without any fuss. Maybe the government just did not fully appreciate the impact of its decision.

Since announcing the decision earlier in February, rural communities and the investment community have expressed widespread concern over both the substance and the process of the government’s handling of this issue. The government, frankly, even ambushed its own backbench. It is well known that the coalition is in disarray over this matter. Government backbenchers are aware of the concerns raised by their own constituents about how deeply this decision will impact on jobs and investment in their own communities. After several weeks of passing the buck onto the ATO, this week the cat was let out of the bag. Yesterday in question time, Senator Abetz admitted that the government had:

... determined that it was—and I think the language I am about to use is correct—‘not disposed to intervene’.

So the question is: why then did the government have no problem intervening on exactly the same issue when it came to forestry managed investment schemes? In forestry managed investment schemes the government handled the matter quite differently. For example, in that case the government held in-depth consultations with industry. The government developed a plan that increased accountability on how money would be invested. That plan provides long-term certainty to the forestry industry.

Compare that decision with the government’s handling of the non-forestry managed investment schemes. First, the government made the decision without warning. It gave the industry less than five months before it would effectively be out of business. Secondly, it took no consultation with industry, and in fact discouraged those who sought consultation, saying ‘it was not time’. It undertook no consultation with affected communities. Thirdly, in Senate estimates two weeks ago it was revealed that the minister’s own department, the Department of Agriculture, Fisheries and Forestry, has undertaken no research on the issue and has provided no advice to the minister.

In response to questions I asked on the research undertaken by his department on agricultural MISs, the department’s corporate policy chief, Mr Allen Grant, said:

I am not aware that we have done any specific research on that.

…     …         …

Partly because ... up until recent times that has not been seen to be a high priority issue.

So not even the department knew this decision was coming. I am sure the department, if they appreciated the foolishness of the government’s decision-making process, would have forewarned the minister of the impact. They did not because they were given no notice that this was likely to happen.

So it is abundantly clear that the minister sought no advice on the impact of his government’s decision on jobs or investments in rural and regional communities, the very communities that this government and this minister claim to have concerns about. He did nothing. He did not consult them. He did nothing to alert them to a matter which would have a drastic effect on their communities. He slipped the decision through late on a business day, to avoid news coverage that day, no doubt. But, frankly, it has caused great consternation.

What do we also know? The minister does not know how many jobs will be affected. He has no idea. He does not know how many businesses will be shut down. The minister does not know the impact of his decision on Australia’s rural exports. The truth is that the minister for agriculture and this government have no idea what will occur as a result of this decision. It has been motivated not by a concern for the prosperity of rural Australian towns and communities but by a desperate need to respond to pressure from within the minister’s own party.

Minister McGauran has been campaigning on behalf of the National Party to close down non-forestry managed investment schemes. He has had, I must say, the single purpose of shutting down these investments in rural and regional Australia without any knowledge as to the impact his actions would have. At best, I would have to say, the minister’s actions have been grossly irresponsible and self-interested and the government’s handling of this affair has been arbitrary and condescending. It is little wonder that the coalition is in utter disarray over the minister’s handling of this matter, and the government’s handling of it, for that matter.

I want to have a closer look now at the managed investment schemes and outline some of these specific examples of businesses and communities that will be impacted by the government’s decision. Managed investment schemes require several years—in some cases fewer—to be prepared and established. This lead time involves the employment of many subcontractors who prepare the necessary plant and equipment in anticipation of the managed investment scheme coming into effect. As well, there are all the legal preparations for the investment, in the prospectus and the like.

Labor is aware that there were dozens of managed investment schemes due to start in the upcoming years. These schemes would have employed hundreds of contractors and employees in various projects right around regional Australia. Labor would like to know—and I am sure that these people and their communities would like to know—where the government’s decision leaves the projects. What is the impact of the government’s decision on the companies involved in these planned managed investment schemes and on their employees and contractors? Frankly, the government has ignored these companies and individuals.

But worse than that, the uncertainty created by the government has already caused job losses even before 1 July 2007. Take the case of the olive producer Boundary Bend in Victoria. It has already laid off 30 permanent staff from its operation in the community of Lara.

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