Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Hansard source

The government will not support the amendments to be moved by Senator Milne of the Australian Greens, Senator Joyce and Senator Xenophon in relation to carbon sink forests. I note that the carbon sink forest measure was passed by the Senate on 17 June 2008 as part of the Tax Laws Amendment (2008 Measures No. 2) Bill 2008. This measure will encourage the establishment of carbon sink forests and, in turn, make an important contribution to carbon sequestration. The implementation, operation and administration of the legislation underpinning carbon sink forests was considered by the Senate Standing Committee on Rural and Regional Affairs and Transport. The committee considered that the tax deductions for carbon sink forests represent a valuable policy addition that will promote greenhouse gas reductions. The structures and processes outlined in the Income Tax Assessment Act 1997 provide for a sensible legislative and administrative framework relating to the tax treatment around the establishment of forest carbon sinks.

I note that the carbon sink measure is unrelated to the bill that we are considering today, the Tax Laws Amendment (2008 Measures No. 5) Bill 2008. I would like to make all honourable senators aware that this is an urgent bill. Schedule 3 to the bill extends eligibility for exemption from interest withholding tax to bonds issued in Australia by state and territory central borrowing authorities and commences from the date of royal assent. This amendment will result in a lower cost of capital and financing costs for the states and territories. Lower financing costs for the states and territories are crucial to state infrastructure projects, which need to be funded in the most efficient manner possible. The amendment will also aid in easing some of the pressures currently facing the Commonwealth government securities market.