Plantations tax rort must be ended, not extended09.09.09 12:09...

Plantations tax rort must be ended, not extended


09.09.09 12:09 am

SENATOR CHRISTINE MILNE
The Managed Investment Scheme tax rort for plantations which has been a blight on regional Australia must be ended, not extended, the Australian Greens said today.

Australian Greens Deputy Leader, Senator Christine Milne, made this call in response to the tabling of a Joint Parliamentary Committee report into the operation of MIS schemes. The Labor and Liberal Parties closed ranks to protect the forest industry.

“People across regional Tasmania from Chudleigh to Preolenna will be beside themselves over this disgraceful decision to continue the MIS tax rort,” Senator Milne said.

“MIS plantations have been a blight on regional Australia, devastating rural communities by inflating land prices and putting further pressure on scarce water resources.”

“Every hectare of food producing land that is converted to plantations puts more pressure on our food security and increases the upward pressure on food prices for all AUSTRALIANS.

“The decision by Labor and Liberals to close ranks on this issue shows once again just how much the two old parties have been captured by resource sector, forestry as much as coal.”

“Growing the plantation sector was supposed to be about ending native forest logging by providing an alternative. Clearly that hasn’t come to pass. Ironically we have seen companies like Gunns picking up huge areas of plantations in the MIS fire sales for windfall gains at taxpayers’ expense, while still logging our magnificent native forests.

“Australia has enough plantations in the ground now to meet our needs. It is time to think about the global food task and our eco system resilience.”

The dairy industry is being squeezed by a pincer movement from forestry interests and large corporates exercising undue market power. The Greens want to see dairy farms remain as a critical part of rural Tasmania which will not happen if this preference for Collins St investors continues to grip the Liberal and Labor parties.”

“There is absolutely no justification for continuing the MIS tax rort.”

Politics | Local | National | State | Forestry | Gunns | Environment
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Comments (11)

1.As someone who was intimately involved in forestry and MIS companies I feel that I should point out that the whole MIS industry is based on a curious fact.

This fact is that the MIS industry has managed to convince the ATO that the tax deductible costs of establishing a hectare of timber are about double the actual costs.

So the investor actually pays for the establishment plus all or part of the land cost. Given MIS companies normally finance the investors this is of no benefit to the MIS company for the first crop rotation as the land has to be paid for; the super profits come on the second rotation - being the gap between the charge to the investor and the actual costs.

This is one of the dark little secrets behind Gunns push for its pulp mill.

Also if investors really thought about it they are only deferring the tax bill - which is why it is known as a Rumpelstiltskin investment.

Posted by Surveyor Nine on 09/09/09 at 09:59 AM
2.Unfortunately the upper echelon of the Liberal Party supporters are ever seeking some sort of quasi legal tax rortage, to see the Laborites joining together with Liberals on this one-sided fat-cat excercise is not going to assist the Labor cause in any way whatsoever.
Having witnessed the Abetz obsessed mantra that this MIS schemery is good stuff, now the facts are out in the open.
It has proven itself to be a huge Floppo excercise that has cost many people millions of dollars, though this does not concern this particular Senator.
Now before the blood from the carcasses of the 2 major MIS schemes has barely stopped flowing, there are noises being made to keep this rortage of MIS support alive essentially for the sole benefit of the likes of Gunns Ltd.
Much of the money invested in MIS goes straight into the coffers of that particular entity and is spent in all areas excluding that of long term care and maintenance as needed for the duration of bringing said crop of trees to the harvest stage.
Great Southern and Timbercorp have clearly illustrated the above.
Like moths to the light, gullible fools entertain this dodgy investment schemery to their ultimate realization of losing great swathes of money.

I recommend those who are tempted, to read up the history of this scemery.

Posted by William Boeder on 09/09/09 at 10:25 AM
3.MIS is as close as it gets to institutionalised fraud.

Allowing MIS promoters to sell vast amounts of tax breaks on the sale of grossly overpriced plantations, and then use the bloated proceeds to corner the rural property market, is the sort of thing you would expect from the Suhartos.

John Hayward

Posted by john hayward on 09/09/09 at 02:44 PM
4.What!!! After most of them (Timbercorp, Great Southern, etc.) have just gone belly up?

Why give unsustainable, unprofitable blatant tax rorts anything more?

I want to see each and every Labor/Liberal politician who voted for this (and members of their families) to publicly disclose any investments (direct or indirect) in MISs.

Posted by Russell Langfield on 09/09/09 at 05:29 PM
5.#4 the big worry is that our politicians will conclude that MIS only failed because they didn’t get enough subsidies!

Posted by Mike Bolan on 09/09/09 at 07:08 PM
6.It seems the Gravy Train still runs on Party lines!

Posted by Gerry Mander on 09/09/09 at 09:45 PM
7.I note the MIS proponent for forestry MIS is still keen to see this sort of madness continue, Yes!!
You guessed it, Senator Eric Abetz,
This Senator of ‘let’s keep the taxpayer supporting this radical conversion to managed plantations,’ is still snorting his endorsement of that which has proven to feed fat-cats only at the expense of others’.

Funny thing is the ‘House of Straw’ Liberals are all in agreement with this Abetz quazi-rortage.

Posted by William Boeder on 10/09/09 at 08:10 AM
8.1; Thanks for that Surveyor 9. I hadn’t really thought it right through.
I was aware of the difference in cost versus investment amount. In fact, some of the figures I’ve seen, especially from the early days, show the investor paying for the land, the establishment of the plantation and a nice little parcel of cash for the MIS company.
What I hadn’t thought through was what happens on the next rotation. They’re going to rake it in. No wonder they need a pulp mill. Doesn’t matter whether or not the mill runs at a profit, as long as it turns over those trees and gets more MIS money flowing.
Really though, it shows what a dog the actual mill investment must be. John Gay must be just about ready to do a deal with the devil to get the thing built, and still he can’t get finance!

Posted by Steve on 10/09/09 at 04:18 PM
9.Surveyor Nine, that’s not surprising. When it comes to Gunns Ltd there is no distinction to be made between the Governments (who created MIS) and the beneficiaries (Gunns Ltd). A Macquarie investment fund, for instance is a major investor in Gunns and Macquarie Group has a particularly large bevy of former Australian politicians employed by it. That’s how the world turns (perhaps in its grave) these days.

Some highlights on MIS:
2009 – July 11th. Managed investment scheme promoters have been accused of issuing death threats, bribery and running ponzi schemes.

MIS: Bribes, death threat claim
LESLIE WHITE Weekly TimesJuly 8, Here
http://tasmaniantimes.com/index.php?/weblog/article/mis-bribes-death-threat-claim/

2009 – May 21st. ALMOST half of $1.8 billion that investors paid to crippled investment giant Great Southern went on sales commissions, marketing costs and overheads. And it was revealed yesterday that several thousand investors who had borrowed from the Bendigo and Adelaide Bank risked losing their homes over the collapse of the Perth-based company. it was not uncommon for accountants to receive direct commissions of up to 18 per cent for selling tax-effective projects in Great Southern to their clients. “We have learned that only about 55 per cent of what investors paid went into the ground”. Great Southern relied heavily on the major accounting firms to promote its products. An average $80,000 was borrowed by each investor and the bank held security over family homes as well as the various crops that Great Southern had planted. high net-worth investors were attracted to MIS because they could borrow the amount of money they chose to invest and claim an immediate tax deduction. As a result they could offset their tax bill.

How it worked
2009 – May 19th. 10% upfront commissions for financial … many advisers received much more under so called “marketing arrangements”. Great Southern lent the investors money. In February 2009 it forced (at least one) investor to give up cattle investments for Great Southern shares. The company itself was extravagant. 70% of the investment went into the trees. They used to joke about 30% Government mandated profit ... which they spent on big offices, expensive junkets and outrageous employee (read: management) benefits. Basically - living high on the hog!.

Posted by Brenda rosser on 10/09/09 at 11:28 PM
10.Re #8
I hope the devil collects, without the pulp mill.

Posted by Russell Langfield on 11/09/09 at 09:10 AM
11.Rumpelstiltskin, as I recall, had 3 rotations before his deal was concluded and on each occasion he demanded payment. He turned straw into gold, whereas MIS turns blue gums into bucket loads of cash and land. He came unstuck in the end and that should a be a warning to any investor in MIS. I agree with Christine, It must be stopped now.

Carbon Kevin spruiks almost daily about tackling climate change whilst the true rhetorical Rudd does nothing. Ending MIS will go a long way to saving our ground water, preventing the reduction in rainfall and protecting our food supplies.

Climate change is happening a lot quicker than any government or industrial scientist cares to admit. It is with us now and will be for the rest of our lives (however long that will be) from emissions already in the atmosphere. We have to live with sea-level rise and atmospheric warming; both will have a huge impact on food supply.

Sea-level rise is not just what is seen on the surface; water tables are affected long before we see the rising tides. Salt water seeping into fresh water destroys crops.

People movement is already apparent and will increase rapidly as food sources are disrupted. Islands and coastal regions will come under attack and food growing land will be in short supply. People can’t eat trees.

It is interesting that the Australian Government/s do not include the foul practices of deforestation and plantations in the carbon tally. If one reads the garnaut Interim Report an interesting table shows how Malaysia does include deforestation and it accounts for 75% of its total emissions.

Australia is already responsible for almost 20% of global emissions from the coal it exports. If deforestation were to be added to the total carbon tally, Australia would be responsible a lot more.
The report shows only 6.5 tons per capita, when in fact, with such a small population compared to land mass, it is far more.

We are being conned on climate change in much the same way as investors are being duped on MIS.

Also #8 and #10, Steve and Russell, John Gay is the ...

Posted by David Leigh on 13/09/09 at 10:12 AM