Retail forestry investment integral to forestry industry
Maintaining a stable tax and regulatory environment is essential for large-scale private investment to continue to be available for establishing and replanting these plantations for the value-adding wood and paper products industries in regional Australia. These were the two main messages presented to the Agforce Queensland 2009 State Conference by Alan Cummine, Manager - Plantation Investment with the Australian Plantation Products and Paper Industry Council (A3P). "Retail forestry is now creating the scale of resource needed to maintain future supply to existing mills and to underpin hundreds of millions of dollars of investment in new and upgraded facilities. From about 5% in the mid-1990s, retail forestry now accounts for over a third of the total national plantation estate of almost 2 million hectares. This private investment regularly funds over 80% of all new plantations each year, as well as a substantial proportion of replanting in harvested areas." Mr Cummine explained that it is inherently difficult to attract private investment into plantation forestry, because of the long periods between establishment and harvesting - between 10 years to produce pulpwood and 20-30 years to produce hardwood and softwood sawlogs. This is the reason that all other countries with large plantation industries have used grants, subsidies, bounties, concessionary loans and special tax incentives to encourage investment in the private plantation resource. "The Joint Parliamentary Committee on Corporations and Financial Services, in its recent report on aspects of agribusiness managed investment schemes found that the inherent disincentives to invest in long-term forestry warrant the retention of Australia's existing tax deductibility arrangements for retail forestry, as provided under Division 394 of the Income Tax Assessment Act 1997." "Although these arrangements are now in the form of a specific statutory deduction, they retain the same basic principle that has prevailed for decades - that is, 100% deductibility of eligible expenditure in the year the investor incurs the expenditure. All Australian businesses, including all primary production enterprises, are entitled to deduct 100% of their eligible expenditure in the same way, except that their deductions are under the general business deduction provisions of the Income Act." "The tax deductibility for retail forestry investment does not lead to a direct reduction in tax revenue that the Government could spend on diverse public services and infrastructure. If this standard tax entitlement were to be removed, the lost retail forestry investment would not magically become available to the Budget. Instead it would be redirected into the much larger pool of highly tax-effective negatively geared share and property portfolios and financially engineered products, rather than into rural Australia to create jobs, businesses and wealth." "Further regulatory steps to increase the level of investor protection may result from the Government's consideration of the report of Parliamentary Joint Committee's Inquiry into the recent collapse of major agribusiness companies Timbercorp and Great Southern. The retail forestry sector will be cooperating with the Government in any reasonable moves to enhance the level of investor protection in retail forestry projects." "Regardless of whatever tighter corporate regulation may emerge, retention of the entitlement to deduct eligible expenditure in the year the investor incurs it will remain a necessary condition to maintain the flow of private investment into plantation forestry to support Australia's regionally-based plantation products and paper industries" Mr Cummine said. | ||
Copyright 2004-2024 © Innovatek Ltd. All rights reserved. |
