It is a tad ironic that in the week before it seems that Paul Lennon will force a yes or no vote on the Tasmanian parliament over the Gunns Ltd pulp mill near Launceston, a prominent plantation industry person should let the cat out of the bag by admitting that if the Tax Commissioner prevails in his view of tax arrangements for forestry, it would “stop retail forestry dead in its tracks”.
For “retail forestry” read “plantations”.
Just a tad ironic, since Gunns claims that although the proposed pulp mill will consume mostly existing native forests in its early years, eventually it will have to rely on plantations.
The cat liberator is Alan Cummine, described as the Executive Director of Treefarm Investment Managers Australia (TIMA), and he was writing in the Winter edition (Vol.30 No.2) of Australian Forest Grower, the official magazine of Australian Forest Growers. TIMA is described in the article as a special branch of Australian Forest Growers.
It seems that the Commissioner is proceeding to litigate a test case on his views that investors in all primary production managed investment schemes should be treated as passive investors making non-deductible capital contributions to a trust. This is in contrast to the previous situation.
According to Cummine, TIMA lobbied the government in 2004 to remove a sunset clause on the 12 month prepayment rule. Subsequently, two public inquiries were held and 160 submissions received.
Cummine says that the existing laws which came into effect on 1 July 2007 should have little effect on the volume of investment in retail forestry and suggests that it will now be easier for long rotation sawlog projects to get a look in.
Many would disagree with him. A senior manager of Forestry Tasmania let slip at a Senate inquiry several years ago that the magic number for profitable sown or planted trees is about 30 years. After that age, compound interest on the investment made them unprofitable.
The supply of quality sawn timber from Australian trees — as distinct from the commodities of woodchips and pulp — looks more bleak than ever.