The Government’s internal fight about curtailing the tax rort afforded rural managed investment schemes continues, but the stock market suddenly seems to be hedging its bets on who might be winning. If Eric Abetz and his timber plantation lobby have turned the corner, is it possible that Cabinet is leaking and there’s a little insider trading going down?

As we reported on Wednesday, the main MIS timber outfits had been slip-sliding away since the chance of the reducing (not ending) the tax break was raised in the Budget, but yesterday’s trading saw a remarkable surge. Timbercorp led the way with rally of nearly 14% – up 33 cents to $2.71 while Gunns and Great Southern Plantations both put on a nice 10 cents. In the first hour or so this morning, Great Southern is up another 3 cents while Timbercorp and Gunns have given back 4 and 1 respectively.

PM last night was canvassing some of the issues, including some dire warnings from anti-MIS campaigner Senator “I’m-John-Howard’s-right-hand-man” Heffernan:

I think that everyone wants to take a deep breath and think deeply about the potential of this to change the whole institution of family farming in Australia… there are a lot of people playing ducks and drakes here with future of Australia’s farmers, and this is becoming for me an over-my-dead-body issue.

In my view, something that relies for its viability on what I would describe as no more complex than a tax rort, is fraught with danger … this is as corrupting to the market place as the American farm aid program, in my view, in the long-term.

This will cause a serious corruption in the capital base of rural Australia, and I mean, I can’t speak more plainly than that.

No, Bill – but are some well-connected folks around the stock exchange listening?

Peter Fray

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