Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise to first of all say how distressed I am with the way this legislation has been handled by the government. Schedule 3 to the Tax Laws Amendment (2008 Measures No. 1) Bill 2008 relates to the establishment of carbon sink forests, and there was an expectation that that is how it would be dealt with. It is still in this bill as schedule 3 except that, in the House of Representatives, the legislation was amended and the schedule was inserted into another tax bill, which was passed in the Reps, came to the Senate and, because exactly the same schedule was in two tax bills at the same time, and the government whip did not notify the Senate that that was the case, that tax bill passed last week with an expectation from those of us who had been dealing with it that it would be in this bill this week. I think that is very bad because now it means that those of us who might have wished to oppose that schedule have been denied the opportunity to do so. The best we can do is amend this legislation. I want to make the point that, had the government not done that, I would have opposed the schedule—however, now it is law in Australia; it went through last week. So it is now my intention in the committee stage of this bill to introduce a new schedule 7 which amends the legislation that went through last week. I would particularly ask the government in future, if it is your intention to put schedules in two or more bills simultaneously, to at least let the whips alert the other people in the Senate to that; otherwise, it could be seen as pulling a swiftie on the Senate, particularly in relation to this, which is highly contentious.

It is contentious because managed investment schemes in Australia have already distorted the way that agricultural land is managed. Throughout the country, farmers are up in arms because the forest industry has been able to move in and displace crop land because of the incentives being offered by the government through tax-deductibility. For example, there was a recent article in the press about how cane farmers in the Tully area are complaining that, once again, the forest industry has moved in there and displaced many cane growers to the point where they are running out of the critical mass needed to provide the mill. In Tasmania, the managed investment schemes have displaced a number of dairy farms and have effectively destroyed whole districts by taking out the social infrastructure. Preolenna, in the north-west of Tasmania, for example, was a vibrant small rural community which had its own postal service, community hall and school bus run, but it now has none of those things. It is covered in plantations—plantations that have been established to distort the market in agricultural areas, in my view. All of those services have been lost and dairy farmers have essentially been driven out of the district.

What this legislation purports to do is establish carbon forest sinks. But this shows the wrongheadedness of the government. If you were serious about reducing emissions, the first thing you would do is protect the existing stores of carbon. The first thing you would do, therefore, is stop the logging of native forests and stop land clearance in Australia. You would be offering incentives for people to protect the sinks that are already there because, especially in the case of native forests, they are high-value carbon stores. But, instead of that, the government is giving massive subsidies to the logging industry to log native forests and to burn them—sending millions of tonnes of greenhouse gases into the atmosphere—and now wants to pay people at exactly the same time to put in tree farms using managed investment schemes.

They say, ‘Oh, they are carbon sink forests.’ How are they carbon sink forests? A forest is a much more complex ecosystem than a monoculture plantation, and yet this bill provides for the establishment of plantations. Secondly, if it were a carbon sink forest, you would require the trees to be in the ground for a length of time so that you established a carbon store. But, instead of that, you will be able to get a tax deduction for the full amount in the first year. There is no requirement for these so-called carbon sinks to be in the ground for any length of time and you can cut them down. There is no prohibition on cutting them down. If you cut them down, you do not have to pay back the tax deduction you got in the first year. So once you have your tax deduction in the first year, you can choose to leave those trees in the ground, if indeed they grow. They may not grow because, as with many of the managed investment schemes, they were put in for the tax-deductibility for the management of those schemes. The poor old people who invested will lose out in the long run, but the companies that run the schemes will have made a fortune because they established managed investment schemes in areas without sufficient rainfall to maintain the plantation.

In this case we have exactly the same thing. We have this possibility because it says in the bill that the people establishing these plantations, or so-called sinks, do not have to have any relationship to the land or the industry on the land. That means the energy companies, the large coal sector generators, the cement companies and so on will go out there and buy or lease agricultural land. They are already cashed up and they will get the irrigation rights and take the water from the farmers as well. They will establish these plantations and get their tax-deductibility in the early years. If they choose to deduct it over 14 years, which is another option, they get the tax deduction over 14 years—coincidently, the maturation life of one cycle in a plantation. But, if they do that and the plantation burns down halfway through, let us say, they not only get to keep the tax-deductibility that they have already got; they also get a one-off bonus payment plus the insurance money. So it is a beautiful thing! It is all about cash incentives for people who want to offset their income, or offset their emissions in the case of the large emitters, but it is not about increasing the carbon store in the ground permanently.

The issue here has to be permanence. There is no permanence with this legislation. There is no requirement for mixed species. There is no requirement for hydrological assessment of the area in which these so-called carbon sink forests are going to be planted. There is no requirement to assess the socioeconomic impact in rural and regional Australia of cashed-up companies coming and displacing farmers from the land, and that is inevitably what is going to occur here. What is even more extraordinary is that the government is doing this in the lead-up to Professor Garnaut’s emissions-trading report. This immediately distorts the market because on the one hand you are saying we are putting a cap on emissions, and these large carbon-emitting companies—the coal companies, for example—will have to meet their cap and buy permits, but at the same time you are giving them a tax deduction for going off and planting offsets when there is no guarantee of the volumes of carbon that will be in the ground after any length of time. It will be a lot cheaper for them to go and push farmers off the land than it will be to reduce their emissions at the power station.

So this legislation should never have been brought in ahead of an emissions-trading scheme, because it distorts the market in terms of the actual costs associated with it. But, more particularly, as I said, if you were serious about reducing emissions from land use, land use change and forestry, you would create a tax-deductibility for people to protect existing carbon stores, whether they be in forests, complex native forest systems, savannas or other types of native vegetation. This legislation says that, whilst you will not get a deduction for draining a wetland, you will get a deduction if you have already drained the wetland and then put the trees on it. So you can work out the costs of that. There are no biodiversity considerations, no water considerations, no diverse species considerations and essentially no length of time that these trees have to be in the ground. That is an absolute requirement if you are going to consider a carbon sink.

Alan Ferguson (President) Share this | Link to this | Hansard source

Order! Pursuant to the order of the Senate of 17 June 2008, debate is now interrupted and I call on Senator Murray to make a valedictory statement.