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

Before the dinner break I stood to address the Tax Laws Amendment (2008 Measures No. 1) Bill 2008 and the issue of what was schedule 3 and which will now be the subject of my new amendment for proposed schedule 7. If rural Australia was already worried about managed investment schemes then it should also be worried about this legislation, which is about managed investment schemes on steroids. That is the only way I can describe it.

Let me explain again why this is such a bad idea. It is supposedly to establish forests that will be of long-term use in absorbing excess carbon dioxide from the atmosphere. The Bills Digest says in its conclusions:

... the proposed deduction encourages the rapid establishment of these forests during the next few years.

That means the rapid establishment of plantations—yet more plantations on the backs of taxpayers and, in forgone revenue, they are going to cost $25.3 million in the forthcoming three years. This is the National Association of Forest Industries getting yet another major boost for plantation establishment around the country and starting up yet another whole raft of managed investment scheme types of companies, which will be out there getting 100 per cent tax-deductibility in the first year for establishing plantations.

As I said before, there is no requirement for these plantations to be biodiverse. There is no requirement for a hydrological study to look at the impact of these plantations on catchments, yet we already know that plantations are drying up catchments and destroying the water supplies of many towns around Australia. There is no requirement to look at the impact on existing land uses. As I mentioned earlier, the cane growers in Tully are a classic case. Well, on the north-west coast of Tasmania we are taking good food-growing land out of food production and putting it towards plantations, not because it is justified but so Collins Street investors can get up-front tax deductions to minimise their own incomes and maximise their own wealth, at the cost of food production and at the cost of local farmers.

Why is this the case? What is so horribly wrong with this? First of all, the federal government is meant to be taking a whole-of-government approach to climate change. This is a taxation measure which in theory ought to be assisting, not undermining, the effort on climate change. Why isn’t it? The reason is this. The IPCC report shows that, on all the science analysis, climate change is getting worse by the minute. We have not even until 2015 to significantly reduce our emissions. Bali’s starting negotiation point was 25 to 40 per cent reductions below 1990 levels by 2020. So the aim of the exercise should be to maximise the carbon store we have now got in the ground and keep it there and protect it, because we have huge volumes of carbon in our standing native forests, and in our savannahs and in our native vegetation around the country. If we subsidise the knocking down of those forests, we are putting into the atmosphere millions of tonnes of carbon dioxide. On the other side of the ledger, if we then give tax-deductibility for these schemes to plant plantations, it will take up to a hundred years, if those plantations survive, for us to be able to store as much carbon as can be stored in the forests that we are currently knocking down. And we do not have 80 to 100 years—we have only until 2015 at the maximum—to reduce these carbon dioxide emissions.

The problem with this whole legislation is it is based on Kyoto accounting. By that I mean that what we get credit for is afforestation and reforestation—that is, planting so-called forests, being plantations, on land that was cleared before 1990—but we do not get penalised for the emissions that we put into the atmosphere from the logging of forests. So all of those forests in Tasmania that are being logged, those dense old-growth forests, are regarded as being neutral for the purposes of Kyoto accounting, because, as long as the land use does not change and as long as you put in a plantation on private land or you regenerate on public land, it is regarded as neutral, because over hundreds of years it would be. But we are not doing this over hundreds of years. We do not have hundreds of years. So it is complete madness to give out taxpayers’ money to knock down carbon stores and put hundreds of millions of tonnes into the atmosphere and then give tax deductions to try to take a small fraction of those out of the atmosphere in the next 10 years. But that is what the government is doing.

What the minister has to explain here tonight is why the government is giving a tax deduction for planting plantations that are not biodiverse and are not required to be in the ground for any length of time and is providing subsidies to knock down carbon stores. If there were a whole-of-government approach the first thing you would do to reduce your emissions would be to protect your carbon stores by protecting your native vegetation. If you were going to go for establishing carbon sinks you would look at restoration forestry in areas that have been degraded and, again, look at building up mixed species. You would look at protecting more standing forest rather than displacing people off farms. Furthermore, this is yet another example of the destruction of the integrity—if there ever will be any in the end—of a supposed emissions-trading scheme. Instead of making the coal industry, in particular the coal-fired electricity generators, compete on an even playing field, you are giving them a tax deduction to go out and plant plantations in order to offset their emissions, rather than forcing them to reduce their emissions at the power station. There is no attempt by the government to do that by forcing them to implement the easiest energy efficiency opportunities which they are forced to identify but not forced to implement.

Today’s Greenhouse Gas Inventory clearly makes this point: transport emissions are going up, energy generation emissions are on the way up, fugitive emissions from coalmining are on the way up and coal accounts for 70 per cent of the increase in our emissions. And what is this bill doing? It is saying to rush out and plant out rural Australia with plantations to try to mop it all up, rather than saying: deal with the issue at the source. But, even more ridiculously, it is about subsidising more emissions into the atmosphere from logging than will be absorbed from these plantations for which you are driving the farmers of Australia off their land to actually establish.

I would like to know from the minister what the justification is for there being no time frame in this legislation requiring the length of time for these so-called forests to be in the ground. What is the justification for them not being mixed species—local native mixed species? What is the justification for no hydrological assessment and no assessment of the impacts on existing industries in that area—whether it is dairies, cane or whatever else? Rural Australia is already up in arms. And it is no use Senator Boswell rushing around Queensland saying, ‘Oh dear, the MISs have been terrible for cane,’ because he is about to vote for something that will be worse. It will make the situation far worse.

I am really appalled by the fact that, if the plantation that you plant burns down in a bushfire, not only do you not have to make good—you do not have to pay back the tax deduction you got for establishing it—but you get the rest of your tax deduction paid out, plus a bonus, plus your insurance money. So there are no worries! You can get a 100 per cent tax deduction up front or you can take it over 14 years, which is coincidentally the life of a plantation. And, if it burns down after eight years, you get the tax deduction paid out up to the eight years, plus a bonus, plus your insurance. This is yet another mechanism for investors to make money out of the government—and it will be $24.3 million out of the government—minimise their incomes, invest in reducing their own mortgages or whatever, drive farmers off the land and do nothing for climate change.

There will be a net loss of carbon, as there is right now, and the only reason forestry pretends there is not is that there is not yet full carbon accounting. Native forest logging is regarded as neutral and, until we get proper accounting, we will have this distorted, ridiculous pretence about the level of emissions coming out of the forest sector in Australia. I foreshadow that I have amendments which will require mixed species, which will require the trees to be in the ground a hundred years and which will require information on hydrological and other ecological impacts as well as impacts on surrounding land uses. As I said before, I would have been voting against this schedule but, in what can only be seen as a sleight of hand, the government switched the schedules. (Time expired)

Michael Ronaldson (Victoria, Liberal Party, Shadow Special Minister of State) Share this | Link to this | Hansard source

I want to say a couple of words, albeit briefly, in relation to the Tax Laws Amendment (2008 Measures No. 1) Bill 2008. The opposition is concerned that at the eleventh hour we were given some quite considerable amendments. We will be supporting the government in relation to those and we will be opposing the bill, which will come as no surprise to anyone. But we are a little surprised, quite frankly, that it took them until the eleventh hour. This bill has been around for a long time. There are very detailed amendments to this bill, but I will address those when we get into committee.

I want to speak tonight about schedule 1. Schedules 2 to 6 were effectively dealt with last week, so the remaining matter that we have is schedule 1. I refer to the Joint Standing Committee on Electoral Matters advisory report on the Tax Laws Amendment (2008 Measures No. 1) Bill 2008, and I would draw the honourable senators’ attention to the minority report tabled on behalf of Mr Morrison and Mr Scott from the other place, Senator Birmingham and me. I will not go into great detail, but what the minority report effectively indicates is that there is no reason for this legislation to proceed in light of the quite detailed reference that is presently before the joint standing committee. We have asked on numerous occasions, and the minor parties have asked on numerous occasions, for the Senate to agree to deferring these bills until we can look at this whole political donation issue.

Honourable senators have heard me talk about my view of the rationale for this bill and also for the political disclosure bill, and we believe it is to address the political imperatives of the government and it is not addressing the real issue, which is political financing and donations. The committee tried, along with the Nationals, the Liberals and Senator Brown, to oppose it. I read from page 45 of the minority report:

Coalition Party members of the Committee, together with Senator Bob Brown of the Greens, have opposed this inquiry proceeding in isolation, preferring that the matters referred by the Senate in relation to the Bill, be taken up as part of the committee’s broader inquiry. This position was rejected by Government members of the committee on the casting vote of the Government Chairman.

For the honourable senators who were at this inquiry, it became very clear—as is articulated in the minority report—that there is no reason for this bill to proceed now. The evidence given by Treasury quite clearly shows that the Senate cannot rely on the figures that were given during that inquiry to substantiate the government’s claims in relation to revenue savings. They do not support the position of the government, and we believe that is the first reason.

I will read the first recommendation of the minority report:

That consideration by the Senate of the proposal by the Government for the removal of tax-deductibility for contributions and gifts made to political parties be deferred until such time that the committee has had the opportunity to conclude its broader inquiry into the 2007 federal election, including the extensive review of issues relating to campaign finance reform, furthermore no consideration should be given to the Bill until the Government makes its Green Paper public.

I refer the Senate back to the terms of reference lodged by me and supported by the Senate. This was lodged by me on 11 March and referred to the committee on 12 March. The inquiry, and, again, it was supported by the minor parties, was to be an exhaustive inquiry by the Joint Standing Committee on Electoral Matters. I will read the start of the motion I moved on 12 March:

That the following matter be referred to the Joint Standing Committee on Electoral Matters for inquiry and report:All aspects of the 2007 Federal Election and matters related thereto, with particular reference to ...

The motion goes on to refer in part (a) to the level of donations. The second part, part (b), refers to political fundraising. The third part, part (c), says:

(c) the take up, by whom and by what groups, of current provisions for tax-deductibility for political donations as well as other groups with tax-deductibility that involve themselves in the political process without disclosing that tax-deductible funds are being used …

The Senate, quite rightly in my view, made that referral. Part of that referral was for JSCEM, as the committee is known by honourable senators, to look at all these matters in conjunction with its inquiry into the 2007 election. There was no grey area here; it is quite clear. Those terms of reference, and everything involved in those terms of reference, including tax-deductibility and disclosure, were to be covered in the context of the committee’s inquiry. I am a member of that committee. We have substantial inquiries coming up right throughout Australia. I saw from the committee’s schedule that Senator Brown will be coming to a large number of those inquiries. That 2007 federal election inquiry takes into account, because of the motion passed by this chamber, a large number of matters, including tax-deductibility.

As the minority report says, there are some real issues in relation to equity. It is interesting that equity has been used by some to defend this legislation. I will go to page 48 and quote the minority report. It says:

The arguments for inequity were not raised unprompted in the hearing undertaken by the committee, and were raised only by the Chair late in the hearing, quoting from the submission received after deadline by Mr Sempill and Dr Tham as follows:

the current provisions are inequitable on several counts. They discriminate against those who do not have to pay tax. Job seekers, retirees without income, full-time parents and students not engaged in paid work who make small contributions or take out party membership are denied the benefit of the current system ...

The report then goes on:

In response to questioning by the Chair—

that is, Mr Melham from the other place; he was the chair of the committee—

in relation to this statement, Professor Orr—

from the Democratic Audit of Australia—

put this issue in its proper perspective:

As I said, you might as well say that any form of tax-deductibility, including donations to charity, discriminate against such people ...

The report goes on to say:

The only real argument advanced for this initiative in the majority report is an argument for the abolition of tax deductions in general. Coalition Party members of the committee do not believe such an argument can be accepted to justify the isolated progression of the measure contained in this Bill.

In further response to the Chairman’s comments regarding inequity, the advantage to Members of Parliament over members of the community was highlighted in evidence given.

This is the second point I want to raise. I find it quite extraordinary that this chamber would allow members of parliament to have effectively unlimited tax-deductibility to guarantee their own preselection or to curry favour within their own political party, yet if a member of the public wants to make a contribution to the process they will be denied that. I find that an extraordinary notion, and I find it extraordinary that this chamber would actually allow that to occur. Why would we allow members of parliament to curry favour within their own parties to achieve preselection but not be prepared to allow a citizen of this country the opportunity to participate and receive a tax deduction for a contribution to a political party? It beggars belief. I honestly do not believe that you can allow such a system, where members of parliament are in a privileged position and members of the community are denied even the smallest tax-deductibility for the smallest donation, to remain. That is why this should be considered in the context of these exhaustive terms of reference.

I think it was bitterly disappointing that Mr Melham from the other place used his casting vote on that committee when he had a very clear indication—in fact, I would say a bipartisan indication—from the Nationals, the Liberals and the Greens in relation to what we believed should happen with this legislation. Given everything that has gone on in relation to this, to actually allow members of parliament a privileged position I think is unacceptable—and I hope it is unacceptable to others in this chamber, apart from the Australian Labor Party, which I understand will be insisting on this legislation being put to the vote.

As I said earlier, the Australian Taxation Office were actually not in a position to justify the government’s estimation of revenue gained and expenditure saved. They were simply not able to. In fact, if you read the transcript, it is quite clear that they were, at best, guesstimates. No doubt I will hear from Senator Conroy about the budget and other matters, but I say to Senator Conroy through you, Madam Acting Deputy President, that it is incumbent upon any government to ensure that when they make political points about savings they can actually justify them. Anyone who cares to read the transcript of the evidence given by Treasury will understand very quickly that, despite their very best endeavours, they were unable to justify and substantiate the figures that the government has claimed in relation to savings.

In conclusion, I want to talk about the ALP’s past support for tax-deductibility for political donations. In its submission to the JSCEM report on the 1987 election and 1988 referendums, the ALP claimed: ‘The additional funds raised by political parties with tax-deductibility advantage would alleviate any pressure for increased levels of public funding, encourage political parties to continue to seek direct support from the public and help them more adequately fulfil their social functions.’

In December 1991, the Hawke government voted along party lines and introduced tax-deductibility for political donations of up to $100. The Political Broadcasts and Political Disclosures Bill 1991, assented to on 19 December, gave effect to the introduction of tax-deductibility for political donations of up to $100. That bill was introduced by the then Minister for Transport and Communications, Kim Beazley. The ALP in government, making up the majority of JSCEM, had nothing to say about the issue of tax-deductibility of contributions to political parties in the reports on the 1990 and 1993 elections. The JSCEM report on the 1996 election included a recommendation to make donations of up to $1,500 annually to a political party, whether from an individual or a corporation tax-deductible. And, in the same report, the ALP nominated $1,500 as the maximum level for tax-deductibility. The JSCEM report on the 1996 election was unanimous in recommending:

... that donations to a political party of up to $1500 annually, whether from an individual or a corporation, are tax-deductible.

Membership of that committee, which unanimously recommended tax-deductibility for donations of up to $1,500 for both individuals and corporations, included Senator Stephen Conroy, who was the deputy chair, Mr Robert McClelland, from the other place, and Mr Laurie Ferguson, from the other place. And I do not need to remind honourable senators that Senator Conroy is now a cabinet minister, that Mr McClelland is now the Attorney-General and that Mr Ferguson is now a parliamentary secretary—or he is at the moment; we will see what transpires over the next couple of months.

You cannot talk about the benefits of tax-deductibility and then turn around, with no justification at all, and go ahead—not supported by Treasury, not supported by evidence given to the committee, where the majority of people who gave evidence, irrespective of their views about whether there should or should not be tax-deductibility, viewed it as inappropriate for the matter to be dealt with at that moment. Indeed, they viewed it as appropriate for it to be discussed in the context of potential further, substantial changes.

I refer to comments I made the other day about the disclosure bill. They were matters that are going to be part of the green paper. How can you put through legislation that is going to be part of a green paper? How can you put forward a bill in relation to tax-deductibility that is also going to be part of a green paper? Senator Brown is in the chamber tonight. I believe that Senator Brown genuinely wants to discuss appropriate reform. We are quite happy to sit down with the government and discuss appropriate reform, but was the opposition part of the green paper negotiations or discussions? No. Wouldn’t you think, if this was such an important issue for the Prime Minister, that he would have said to Dr Nelson, the Leader of the Opposition, ‘Why don’t you and I sit down and have some discussions about what we are going to put into this green paper so that we can get an appropriate outcome?’ Rather than speak to the opposition about this, the discussions were with the state premiers. We saw the impact of that recently. We saw the impact of the New South Wales committee, which actually put out a very significant and substantial report, but we did not see anything from Premier Iemma, who was part of the consultative process about what was going to be in the green paper.

I will end where I started. The only reason that you can possibly insist on this piecemeal cherry picking involving disclosure and tax-deductibility is that you want to be seen to be doing something, and the only reason the government wants to be seen to be doing something at the moment is Wollongong. We are absolutely convinced that Wollongong has driven this piecemeal approach. We are convinced that this cherry picking is driven by the Wollongong sex and bribery scandal, and again we say to the government: if you want to sit down and talk about this sensibly, we will participate. I believe the Australian Greens want to sit down and participate properly in moving forward. We most certainly do, and I would be surprised if the Independents did not as well. We have said it before; we will say it again: we want this done holistically. We are not prepared to sit back and watch the government cherry pick parts of reform for their own cheap political purposes and we will be opposing this bill tonight.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I am obliged to Senator Ronaldson for that contribution, and I will come back to it in a moment. I firstly want to say that the Australian Greens will be supporting the Tax Laws Amendment (2008 Measures No. 1) Bill 2008. But let me explain that. There were six parts to this bill; there is essentially now one—that is, a measure to remove tax-deductibility for donations towards election campaigns. That is what Senator Ronaldson was largely talking about a moment ago. But another part of the bill, which was dealt with last week in the main, is to allow tax-deductibility for the establishment of plantations as carbon offsets, and Senator Milne has explained that. So we have two things: one about election spending, and the other about tax-deductibility for people who put in trees under specified conditions to offset greenhouse gas emissions.

Let me deal with the first first. As Senator Ronaldson indicated, the Greens are very keen to get public input on tax-deductibility for election campaign spending. I understand that the government is going to be working on this quite a bit over the coming months. We favour the abolition of tax-deductibility for donations for electoral purposes. We have to vote on that measure tonight, and we will vote for it. Senator Ronaldson pointed out an anomaly for people who make donations to political parties, if this bill passes—and it sounds like it may not because the opposition, the coalition, still has the numbers and therefore can block the passage of that bill up until Thursday of this week, and then we will see what happens when we come back at the end of August.

The anomaly Senator Ronaldson spoke about is that MPs will still be able to tax-deduct their contribution for their own re-election or for their party’s re-election. It raises the interesting possibility—doesn’t it?—of us doing what Senator Ronaldson wants but in reverse, which is to abolish the tax-deductibility for spending which comes from members themselves towards their election campaign or their party election campaign. Let’s be the same as the rest of the public and let’s ensure that money that we get as servants of the public, as elected members of parliament, goes to the purpose of servicing our electorate. But, where we cross over and put money into election campaigns, let’s—and I am indebted to Senator Ronaldson for this thought—explore the possibility of removing tax-deductibility for that as well. I will certainly speak with my colleagues about making a level playing field in that way.

I want to go to the tax concessions which the government had adopted with the support of the opposition for the planting of trees—and they are wonderful indeed. If you plant more than 0.2 hectares, a fifth of a hectare, of trees which are to grow in their maturity to cover more than 20 per cent of the land in which they stand, as far as their canopy is concerned—in other words 80 per cent of the land need not be covered by tree canopy—you get whacking big tax deductions for that, and you only have to maintain the plantation for 14 years. As Senator Milne pointed out, indeed there is a fairly handsome compensation program: if on the 15th year the whole plantation is burnt to the ground, you can get your insurance for that and then retain the tax-deductibility you got way back 14 years earlier when you put into this scheme.

How can it be that we have a government putting this forward and an opposition supporting it in an age where there is a need to be scrupulous in addressing the matter of climate change? We are dealing with a piece of legislation which says, ‘You’ll get a tax reward if you plant trees, and you’ll be able to hang on to that even if they’re burnt to the ground 15 years later and all that greenhouse gas goes into the atmosphere.’ There is no penalty clause; there is no need to ensure that you have fire procedures to prevent that from happening. In fact, one could see an incentive built into this legislation for there to be more bushfires than we have seen in a long, long time coming down the line. Then presumably you can plant the same area of ground again and, if the intent of this legislation is followed through, get all the tax-deductibility again and put in another plantation. Fifteen years later you have all that tax-deductibility and you do not have to maintain it any further—it can be burnt to the ground again.

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

Or logged.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Or logged, as Senator Milne said. It is irresponsible legislation. We are talking about taxpayers’ money, because this is tax forgone. It does not go into the exchequer; it is not available for tackling climate change or for assisting public schools or hospitals. It is going to, and it will obviously go to, big corporations, coal corporations, aluminium corporations—polluters—because they are the people with the money to buy up vast amounts of land, including food-producing land, and get a huge windfall through this scheme to put in plantations for which they have no responsibility 15 years down the line. Incredible!

Senator Milne proposes a new schedule, which says, ‘You will have to keep those trees for a hundred years; you will have to see them through to maturity,’ and the government says, ‘We’re not going to support that.’ And the opposition says, ‘We won’t support that either.’ I will tell you what has happened here. The very, very powerful coal and logging industries at the front of the queue, at the open doors of the ministry of this new government, have handed across this legislation. It has not been thought through. It is now being dumped on the Senate and will perhaps be passed, and later on we will have newspaper articles about what an absolute rort it was. It has taken Senator Milne to pick up on it, and it will take the Greens to question the government carefully in committee about the various components of the program through the new schedule that Senator Milne has brought forward.

One thing that I will be asking the government about is the definition of a forest. They have invented a new definition. The government can get up and tell me if I am wrong, but the logging industry had a big hand in this legislation; it is written all over it. As I said, the definition of a forest for this planet-saving plantation forest through which taxpayers are going to be able to avoid millions of dollars in tax, this ill thought out scheme, is one where it can be reasonably expected that when these trees grow to maturity—and remember trees do not grow in 15 years; in the main, they take a century or more and most of the trees in our eucalypt forests go on to live for centuries—the canopy of the planted trees will cover 20 per cent of the land on which they stand. Hey bingo, you have a forest!

Mr Acting Deputy President Barnett, we are from Tasmania. I sought out the accepted definition of a forest according to the Forestry Industries Association of Tasmania. Here it is:

The term forest is used to define areas of land where trees exceeding five meters in height (current or potential) dominate an area, and where the tree canopy shades more than thirty percent of the ground surface.

The forest industry itself defines a forest as having a canopy that covers 30 per cent of the ground, but we look into this legislation and suddenly find that the definition of a forest for the purposes of this legislation is one that covers 20 per cent. Marvellous, is it not, that millions of dollars in tax deductions are going to be taken out of public moneys by already wealthy organisations planting trees to make forests that do not qualify under the definition of forests? Even when they grow to maturity, they will cover two-thirds of the land that the industry itself says they would need to cover to qualify as forests.

Moreover, you will note from that definition that the trees, if they are in a forest, are destined to be at least five metres in height. Have a look at the definition in this tax avoidance legislation—they have to grow to only two metres. Suddenly the whole world’s definition of forests, worked out by the experts, is dropped by the industry itself and by the corporate sector, which have written this legislation to allow tax-deductibility for a plantation that is never going to be in the region of what has always been defined as a forest.

Under the legislation, you need to make sure that the land you are planting did not have a forest on it on 1 January 1990—that is the Kyoto protocol basic measuring date—which could have grown to be a forest two metres high or covering 20 per cent of the land. In other words, the land needs to have been cleared. You can put your forest on that land and you will get the tax-deductibility. But, if somebody planted a plantation on that land in 1991 and by now it has grown or would have grown into a forest much bigger than this definition, you can flatten it, you can burn it down, you can do what you like. You can release tonnes of greenhouse gas into the atmosphere and replace it with a much inferior forest that is going to meet only the two metres and 20 per cent canopy definition—a much inferior forest in terms of holding back carbon—and get tax-deductibility for it. You are going to be rewarded for destroying an established plantation which has a greater planet-saving capability than the one defined in this legislation. You will get no reward for the plantation that stood there.

Money runs these things, so flatten that, destroy the wildlife and destroy the biology of that piece of country and this government—and that includes the Minister for Climate Change and Water, Senator Wong; the Minister for the Environment, Heritage and the Arts, Peter Garrett; and the Prime Minister, the Hon. Kevin Rudd—will reward you for doing the wrong thing, by any measure, to reduce the carbon load in the atmosphere. In fact, by increasing it you will be rewarded; you will get massive tax deductions under this scheme. How poorly thought out is this? What a rort it will be! Here is a reward system for doing the wrong thing by the environment.

I have circulated an amendment which will at least deal with that last matter, because it says that, if there was existing, in 1990 or at any time since, a forest which measured up to the 20 per cent canopy and two metres high rule, you cannot claim tax-deductibility for that land. That is plain common sense. I gave that amendment to Minister Wong this afternoon. I know that the experts in the government are looking at it. I would expect that the government, and indeed the opposition, will support that amendment.

This is very serious legislation, which requires very serious amendment. Senator Milne and I have put forward amendments. Senator Milne has a new schedule which, in one go, says that these forests are going to have to be dinkum and are going to have to be there for at least a hundred years. Why would you not say that if you expect to protect the welfare not just of the corporations now but of the planet into the future? In other words, these trees that are planted now to offset dangerous climate change will need to be there for our children and our grandchildren to see, and they will be the custodians.

I cannot believe that this legislation is as it is. I will be astonished if the government does not support these amendments and I will be astonished if the opposition does not support them either.

Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

I have not brought any notes, but I can speak because I have a full understanding of the implications of what has been a serious oversight by this parliament with the Tax Laws Amendment (2008 Measures No. 1) Bill 2008. We need to fix it. I presume that the government will not support the Greens amendments, but I am hopeful that the government will come up with their own solution, because we need a solution. This legislation was switched from the No. 1 tax bill to the No. 2 tax bill and it was non-controversial. It is seriously, seriously flawed.

The fact is that this bill for carbon sinks will open up, for all those adventurous people and likeable lads in the community, a rort. With great respect to anyone who thinks that it is not the case—I am happy to have a private conversation with them—this bill is absolutely and fundamentally flawed. It allows a person for the first four years, till 2010 or 2011—I have not got notes before me—to cop a tax deduction up-front which is predominantly for the planting of trees for a carbon sink. There is a whole lot of technical advice around that. That would be fair enough if it had a covenant and some sort of easement security around it, but what will happen—and I am a farmer and I concede that we are all likeable rogues in the bush; as Kerry Packer said, why pay more tax than you need to?—is that this bill will become a fundamental tax rort.

I concede that the government, in its generosity to me and others, has looked at this and has got advice from the department. I am hopeful that, not necessarily tonight but in the future, the government will solve this issue. But what will happen in practice is that a farmer—take me, for instance—will lease a paddock, as long as it is 0.2 of a hectare or greater in size, to someone who will come along and say: ‘I’ll plant trees there for a carbon sink and I’ll cop the tax deduction up-front. I’ve got a big income this year. I’m not going to go for the write-off over 14 years.’ Then the next year I might have a heart attack and sell the farm. The next bloke that comes along might say: ‘Who was the silly bugger that planted all those bloody trees down on that beautiful food-producing flat? I could be growing corn or something there.’ He could then plough them in. And there is nothing in the legislation to prevent that. There is absolutely nothing in the legislation to prevent that, and I defy anyone to stand up in this chamber and say there is.

Also, as probably has been pointed out, if you are a likeable lad you can plant this carbon sink and, if you have some sort of natural disaster—it does not rain and the trees all die—you still get the tax deduction. You have got no trees. You could have a fire and cop the insurance money plus the tax deduction and have nothing to show for the environment. Surely to God this parliament in its wisdom will fix this very seriously flawed legislation.

John Watson (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I wish to take part in this debate on the Tax Laws Amendment (2008 Measures No. 1) Bill 2008 very briefly in relation to the difficulties of carbon sinks. Carbon sinks will cause competition problems for managed investment in forests because there will be another competitor forcing up the price of a scarce resource—that is, the land. Carbon sinks will put challenges before primary producers because a lot of pastoral land, in particular, will go under carbon sinks. In my state, we are becoming increasingly conscious that good, arable land suitable for prime crops is going under trees. Anybody who is a botanist must surely be worried about an increasing lack of diversity in our forests, which is a problem. In a few years time, nature being what it is, there will be a huge risk of fires and disease outbreak problems.

Tonight I was talking to an actuary in Parliament House. His focus is increasingly being directed towards risk assessment in terms of fires wiping out huge areas in not only Tasmania but also other parts of Australia, as a result of the perhaps inappropriate manner in which plantations have been put in in terms of their density, proximity to buildings, roads and so on. We all know, particularly in Tasmania, the climatic conditions are such that, in the months of February and March, a dry understorey and huge winds can cause the sorts of problems that we saw here in Canberra a few years ago, when plantations were just the other side of the road from residential allotments.

I am very concerned because the people who are going to seek the benefits from this legislation are those with very, very deep pockets—pockets far deeper than those we have had with MIS and pockets far deeper than the farmers’. This is a difficult issue for the farmers because older farmers, upon their retirement, naturally regard obtaining a high price for their land as their superannuation. On the other hand, young farmers who want to come into the industry are finding that the cost of competing with the MIS and the new carbon sinks is making it so much more difficult for them to have a place in agriculture.

In my state of Tasmania, agriculture is certainly facing some very severe challenges. We used to be called the horticultural food bowl of Australia, but I can see us losing that title over the years. This comes at a time when the world is getting short of food. We need as much agricultural land as we can get to put in sustainable crops et cetera. We have got the water and the land. Although we may not have the scale of operation, we have got the factories to produce and further add value to the crops. Organisations such as the CSIRO and other far-sighted scientists should be brought in to this whole issue to see what impact carbon sinks will have on food, food prices, sustainability, the problems with monoculture and the difficulties that we are likely to face with fire. There are certainly challenges.

I will not be voting against the legislation, but I think it is time we woke up and acknowledged that agriculture does have some challenges—challenges that very few people have foreseen. In my closing days of being here in the Senate I draw to the attention of the chamber that I think we have to look very carefully at the nature of the legislation and the entitlements in it because, as my colleague Senator Heffernan and others indicated, there are flaws to this legislation; it is not fail-safe. Look at the ecological issues, the food issues and the risk of what it could be doing to our state. I thank the Senate.

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

I would like to thank those senators who have taken part in the debate on the Tax Laws Amendment (2008 Measures No. 1) Bill 2008. This bill honours the government’s election commitment to remove tax-deductibility for donations made to political parties, candidates and members. This commitment was made as part of Labor’s $3 billion savings plan, which was announced by the Minister for Finance and Deregulation on 2 March 2007. Currently, deductions are allowed for donations to political parties, members of parliament and candidates, including Independents, of up to a maximum of $1,500. Prior to 2006, donations and membership fees were deductible up to a lower $100 threshold, when the former government implemented an increase up to the current $1,500 and expanded the deduction of donations to independent candidates and members and to donations by business.

The proposal to remove deductibility of political donations has the support of the majority of members of the Joint Standing Committee on Electoral Matters. This measure will save Australian taxpayers about $10 million per annum. Amendments to this bill are to be moved by the government in the committee stage of the debate. The amendments will in part omit schedules 2 to 6 to this bill. These schedules have been incorporated into the Tax Laws Amendment (2008 Measures No. 2) Bill 2008, which passed the Senate on 17 June 2008.

Question agreed to.

Bill read a second time.