Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

The Greens want an inquiry to look at whether government has any case to answer in the systemic failure of the forestry managed-investment scheme industry in this country. These schemes, supported by the coalition's Plantations 2020 policy, have had a calamitous impact on many rural communities and mum and dad investors across the country, some of whom have lost their life's savings and their homes.

It is time to make sure that this never happens again and to look at what support the victims of these schemes may be entitled to. The Greens want the government to consider a moratorium on new forestry managed investment schemes until this inquiry has concluded. Managed-investment schemes are the signature economic failure of recent coalition governments.

The inquiry would aim to investigate the role successive governments have played in forestry managed investment schemes. The terms of reference are to examine: (1) the motivation and drivers that established the framework for the schemes initially; (2) the role of governments in administering and regulating forestry MIS; (3) the current policy and regulatory framework of forestry MIS; (4) the role of some in the financial services industry in promoting and selling forestry MIS; (5) compensation arrangements for small investors in forestry MIS who have lost life savings and their homes in the face of the collapse of these schemes; (6) the burden on farmers and other agricultural producers who have been left with the uncertainty of timber plantations linked to a forestry MIS on their land; and (7) options for reforming forestry MIS to protect investors and rural communities.

In July 1996 the Ministerial Council on Forestry, Fisheries and Aquaculture endorsed the plantation industry's stated aim to increase Australia's plantation estate and agreed to the setting of national goals aimed at trebling Australia's plantation forestry estate by 2020. An implementation committee, made up of government and industry figures, developed a strategy which was launched in October 1997. The principle aim was a threefold increase in Australia's forest plantation estate by 2020. In 1996 there was 1.1 million hectares of forest plantation—964,000 hectares of softwood and 155,000 hectares of hardwood. Therefore the 2020 target was set at 3.3 million hectares, requiring plantings of 90,000 hectares per year. The vision document argued that global market conditions appeared favourable to this goal and that global market assessments pointed to faster wood demand growth relative to supply over the next 25 years.

Critics of the document argued that its economic reasoning was incomplete. One said: 'Although various economic advantages were listed such as the creation of new rural jobs and the invigoration of rural communities, no details of prices, costs or markets were set out.' The vision document was revised in 2000, by which time managed investment schemes had been in operation for a couple of years, but the revised document, unlike the 1997 version, failed to sound a warning about the previous bad reputation of plantation investment schemes. The 2000 version noted that no attempt was made to critically analyse whether the then burgeoning schemes were consistent with the goals of the original statement.

Tax incentives for MIS were central to attracting the investment capital required to complete the 2020 vision objective. It was the major policy instrument used by the government to meet that objective. In 2007, taxation incentive arrangements for non-forestry MIS were scaled back by the government. Taxation incentives for plantations were on the chopping block, but it appeared Senator Abetz and the industry directly lobbied Prime Minister Howard to ensure the tax incentives for forestry MIS remained in place. The lobbying efforts of Senator Abetz and the industry were rewarded; tax incentives for timber plantations remained in place. The Howard government could have stemmed the MIS bleeding, but they failed.

In 2009 Timbercorp and Great Southern, two companies that offered MIS investments, went into administration. We have met with their victims in parliament in recent weeks. Many small investors failed to understand the products, and some lost large amounts of money. Some regional and rural communities were left with massive changes to their landscapes and local economies. I have seen farmers left with unwanted plantations which, at this stage due to ongoing court proceedings, they are unable to remove or even appropriately manage.

We need to make sure we learn the lessons from the failure of these schemes. Politicians should never repeat the mistakes that led to the creation of this policy. We also need to look at what role the government can play to assist the people and communities that have been affected.