Welcome to Issue 13 of In Focus: the newsletter of Plantations For Australia: The 2020 Vision. In Focus aims to keep interested groups and individuals informed of plantation development activities and issues around the country
What’s happening?
>Review of Taxation of Plantation Forestry - UPDATE
The Government’s long-running review of the taxation of plantation forestry appears to have come to a conclusion, although it seems only two of the five terms of reference have received any serious attention. (Australian Forest Growers, undaunted, is making strong representations for the Government to take seriously the other terms of reference, which embrace several tax issues that have bedevilled private forest growers for years.)
On 21 December 2006, the Minister for Revenue and Assistant Treasurer, Peter Dutton, and Forestry and Conservation Minister, Senator Eric Abetz, jointly announced new arrangements for the taxation of investments in forestry managed investment schemes (MIS).
The full text of the Government’s decision can be found at http://www.mffc.gov.au/releases/2006/06152aj.html. The plantation industry’s initial response to the announcement can be seen in a joint media release from Alan Cummine (Executive Director of TIMA) and Neil Fisher (CEO of A3P) can be found by reading this media release.
The Government has decided that investors in forestry MIS will still be entitled to full deductibility of their expenditure, but under somewhat different conditions after 1 July 2007. In essence, all the investor’s expenditure will be deductible in whatever years it is incurred, provided it can be demonstrated to the Tax Office that at least 70 per cent of the expenditure (in present value terms) will constitute ‘direct forestry expenditure’, determined against ‘arm’s length’ prices. ‘Direct forestry expenditure’ is described as comprising:
(a) expenditures associated with planting, tending and harvesting of trees at any time over the life of the investment; and
(b) annual costs of the land used to develop forestry, whether that be effective rental costs or lease payments for the land.
The deduction will be provided by way of a separate statutory provision (a ‘specific deduction’under section 8-5 of the ITAA 1997, of which there are scores in the Act), rather than the ‘general deduction’ provisions (section8-1) that have applied for decades. Thus it will no longer be necessary for taxpayers to demonstrate that they are carrying on a business in order to access the specific deduction.
The specific deduction will do away with the need for the 12-month prepayment rule, while still enabling plantations to be established in a seasonally appropriate manner.
The ATO’s product rulings program will still be used to provide certainty to investors, and to scrutinize and regulate the industry, as has been the case for almost a decade.
The new arrangement is intended to take effect from 1 July 2007, although consideration is apparently being given to some form of transitional arrangement from the current to the new tax regime, which may possibly result in a later implementation date.
The underlying driver for the Government’s decision to create a ‘specific deduction’ for investors in forestry MISs is the Tax Commissioner’s opinion that recent developments in case law are making it difficult to continue to treat investors in forestry and agricultural MISs as ‘carrying on a business’ (ie, section 8-1). This became very public on 6 February 2007 in a media announcement by Assistant Treasurer Peter Dutton pertaining mostly to agricultural MISs. The media release can be found at http://assistant.treasurer.gov.au/pcd/content/pressreleases/2007/007.asp.
The other term of reference from the original tax review that has received attention is the question of removing impediments to the operation of secondary markets to facilitate trading in interests in forestry MISs, the objective being to attract more investment into long-rotation sawlog plantations. This is being addressed.
The biggest challenges now are for Treasury to translate the Government’s decision into workable legislation that must be enacted before the end of June 2007, and for the ATO to develop new guidelines and processes for assessing product ruling applications for 2007-08 projects and beyond and for monitoring compliance with the new conditions for deductibility. These highly technical tasks have already seen intense activity and industry consultation during January and February.
Read Proposed Taxation Arrangements for Plantation Forestry Treasury Media Release 21 December 2006  PDF
(26 kb)
>Northern Territory Forest Industry Development Information Forum
Around 50 Government, Industry and community people attended a Forest Industry Development Information Forum organised by the NT Government Department of Business, Economic and Regional Development on 15 November 2006 in Darwin.
The forum aimed to provide forestry industry representatives and interested stakeholders with detailed information relating to land-use capability and development opportunity in the Top End of the NT and to bring together industry, stakeholders and government agencies to discuss the potential for enhanced development of an environmentally and economically sustainable forestry industry.
Presentations at the forum covered the follwoing range of topics:
The Forestry Industry in the NT by the year 2020; a business taxonomy of Tropical Forests - a guide to the market place; Land Systems; Water Systems; Pastoral Lease Administration; Land Administration and Tenure; Land Development Assessment; Land Clearing Controls and Assessment; Environmental Assessment; Rural & Regional Social Infrastructure; Rail and Port Infrastructure; Economic Development on Indigenous Land; Greening Australia involvement in farm forestry and development of sustainable high value forest-tree plantations in northern Australia for competitive edge.
Photo: Dr Garth Nikles, Queensland Department of Primary Industries and Fisheries with a select specimen of Khaya senegalensis (African Mahogany) - a preferred potential species for a plantation future in the Top End.
For more information about the Forum contact Tony.Eggington@nt.gov.au
> CO2 Group Creates Carbon Credits
CO2 Group Limited (and its related entities) is pleased to announce that the first carbon abatement certificates (carbon credits) from its CO2 AUSTRALIA™ Carbon Sequestration Program have been created and secured on the NSW Greenhouse Gas Abatement Scheme’s (NSW Scheme) registry.
This represents an important final milestone in the commercial development of the Company’s CO2 AUSTRALIA™ Carbon Sequestration Program (Program).
This is the first time in Australia that a dedicated permanent mallee environmental planting has produced carbon abatement certificates (carbon credits) registered on a carbon trading scheme.
Read more in the CO2 Media Release
FEATURE - A whole plantations value chain perspective on a National Emissions Trading Scheme
Greenhouse gas emissions trading is fast becoming the number one topic for politics, media and weekend barbecues. Forest industry views on emissions trading have been varied and changeable. Optimism about the potential flow of funds for seuqestration in plantations has been tempered by difficulties in defining the rules. Paper and board manufacturers, as significant users of energy (and therefore emitters of CO2), have been concerned about impacts on energy costs and therefore international competitiveness.
Miles Prosser, Manager Pulp and Paper, A3P provides a useful and timely analysis of the whole plantations value chain and the potential implications of a national emissions trading scheme. Many thanks Miles!
Read more A whole value chain perspective on a National Emissions Trading Scheme PDF
(114kb)
Contact Miles Prosser@a3p.asn.au
Local Government and the 2020 Vision
>Planning Plantations - a new website
Working with the support of Timber Towns Victoria and the Australian Local Government Association, Australian Forest Growers and the 2020 Vision Project have invested in and built a new website for use by both local government and the plantation sector.
The website is a collection of scientific and planning information intended to support improved understanding of the many aspects of establishing and managing plantations in Australia's rural landscapes.
Access: www.planningplantations.com.au
>Local Government form National Timber Councils Task Force
In November 2006, Mayors, Councillors and CEOs representing Councils with an interest in sustainable forestry from across Australia unanimously agreed to form a National Timber Councils Taskforce.
Australian Government Minister for Fisheries, Forestry and Conservation, Senator Eric Abetz, strongly encouraged Councillors to form the national group at a breakfast meeting hosted by Timber Towns Victoria in conjunction with the Australian Local Government Association (ALGA) National General Assembly.
“I think that such an organisation can bring substantial benefits in terms of a united voice, and it will get Local Government voices heard at a national level,” the Minister said.
National plantation industry organisations, Australian Forest Growers and A3P – the Australian Plantation Products and Paper Industry Council, were also represented at the meeting.
It was Chaired by President of Timber Towns Victoria and Mayor of Wellington Shire in Victoria, Councillor Malcolm Hole. Councillor Hole agreed that Local Governments working collectively will have a stronger voice to work with State and Federal Governments.
“This taskforce will also allow us to share information about matters of common interest relating to sustainable forestry, such as strategic funding of roads,” he said.
Timber Towns Victoria will support the formation of the taskforce, along with ALGA and Plantations for Australia: The 2020 Vision.
An initial Task Force development group, comprising Local Government representatives from each State is now being formed to guide the formation. A proposal detailing this formation will be sent out to Mayors of all potentially interested Councils and State Local Government Associations during March 2007.
The 2020 Vision Project will continue to support Local Government with development of the Task Force.
(Right) Senator Eric Abetz, Federal Minister for Fisheries, Forestry and Conservation, with Councillor Malcolm Hole, Mayor of Wellington Shire, Victoria and President, Timber Towns Victoria at the Timber Towns breakfast meeting.
Around the Regions
>Mallees go hi-tech in the Avon - W.A.
Avon Catchment Council (ACC) funding for integrating Oil Mallees on farms within the Wickepin cell near Narrogin, Western Australia, has provided an ideal opportunity to explore and demonstrate the practical use of GPS technology for advanced site planning to achieve integrated and complimentary tree and drainage designs.
Read more Mallees go hi-tech in the Avon PDF
(139kb)
>Groundwater Monitoring - Lake Warden Catchment, Esperance - W.A
The Esperance-based Private Forestry Development Committee (PFDC) South East Forest Foundation (SEFF) and the Department of Agriculture and Food Western Australian (DAFWA) have designed and installed a groundwater monitoring system to determine the environmental service benefits of tree planting in the Lake Warden and Lake Gore catchments.
Read more Groundwater Monitoring - Lake Warden PDF
(139kb)
>Environmental services from farm forestry plantings - Tasmania
Since 1995 Private Forests Tasmania has embraced Australian Government programs that assist and empower landholders to manage their forests and plantations for sustainable resource and farm enterprise outcomes.
These innovative programs have:
1. Assisted farmers integrate plantations into farms for environmental services and productivity gains; and
2. Invested Australian Government funds to effectively purchase up-front environmental services benefits for the community.
Much has been learned about accounting for environmental services.
Read more Environmental services from farm forestry plantings - Tasmania PDF
(338kb)
EVENT-BATHURST 20 MARCH 2007
'Plantation Futures – Will tomorrow be a repeat of today?'
The Central West Regional Development Board will be hosting a one day forum at Charles Sturt University in Bathurst on the 20th March ’07 titled 'Plantation Futures – Will tomorrow be a repeat of today?'
Presenters on the day are as follows:
Keynote Speaker – Bernard Salt, KPMG
Bernard will provide an insight into what the future may look like for the plantation forest and timber industry, with a particular bias towards the Central Tablelands of NSW. This will include consideration of what a changing demographic may mean to the demand for product and the impact on land use.
Keith Mackie, CEO NZ Wood Quality Initiative Limited
The NZ Wood Quality Initiative Limited is strongly focused on solid wood production from plantations, aiming to greatly enhance the value of the next Pinus radiata crop. Keith will outline what his organisation sees as the options to create value in plantations.
Professor John Walker, School of Forestry, Canterbury University NZ
Professor Walker has an interest in the mechanical properties of processed timber, however lately his research has lead him to explore the technical contradictions and historic failures in NZ pine management and the prospective benefits of a more diversified plantation estate. This will be discussed in the context of how a structural market may be supplied into the future, particularly with products other than timber and from outside existing supply chains.
Dr David Brand, New Forests Pty Ltd
Dr Brand will review market opportunities associated with the provision of environmental services and provide some insight into how markets can be set up and managed at the same time as retaining the production potential for planted forests.
This will be A one day event only, with places strictly limited by the size of the venue.
Cost will be $66 per person including GST
For further details contact Allan Wilson, phone 0408 324068,
Email maecs@bigpond.com
For bookings contact Sharon Rabey, phone (02) 63608412,
Email Sharon@centralwest.com
Research News
> Subtropical Forest Health Alliance
A new forest growers and researchers alliance has formed to improve forest health R&D outcomes in Southeast Queensland and Northern NSW.
The Subtropical Forest Health Alliance (SFHA) is a group of sub-tropical forest growers and researchers that includes representatives from the Queensland Department of Primary Industries and Fisheries (DPI&F), Forestry Plantations Queensland, the NSW Department of Primary Industries – Forests NSW, NSW Department of Primary Industries – Resources Research, Ensis, Integrated Tree Cropping Limited, Forest Enterprises Australia Limited, Queensland University of Technology and Southern Cross University.
The Alliance provides a forum for communication and collaboration between forest health researchers and growers across the region.
Forest health issues facing plantation growers in north eastern New South Wales and south eastern Queensland differ from those in temperate Australia. The region has comparatively more variable soil types, less reliable rainfall, more planted timber species and a greater diversity of insects and pathogenic fungi than in temperate Australia.
It is expected that the collaboration between Alliance members will increase our knowledge base for plantation pests and diseases in the subtropics by improving our understanding of basic pest biology, ecology and impacts on plantation productivity, with the goal of developing effective, sustainable methods for management.
Contact: Dr Simon Lawson, Department of Primary Industries and Fisheries, simon.lawson@dpi.qld.gov.au
>Seventh Hardwood Plantation Research Tour - Central & South east Queensland October 2006
The Department of Primary Industries and Fisheries (DPI&F) held the seventh hardwood plantation field tour on 18–20 October 2006. This important forestry industry forum showcased critical ongoing hardwood breeding trials, as well as the comparative field performance of a large range of hardwood species across a number of challenging environments.
The tour was well attended, with over 55 key industry and government representatives from across Australia. All of the leading forestry plantation companies with interests in Queensland were represented at the field tour. This year, the tour focused on trials in the Gladstone to Gympie region, where the bulk of the hardwood plantation development has been centred.
The tour also involved the launch of Corymbia hybrid clones that provide strong hopes for the hardwood plantation future in Queensland.
Read DPI & F launches new trees for Queenslands Native Hardwood Plantations Media Release October 2006 PDF
(28 kb)
Thanks to all In-Focus Contributors:
- Alan Cummine, EO, TIMA
- Monica Durcan, EO, Avongro
- Dr Susan House, DPI&F, Queensland
- David Lane, Private Forests, Tasmania
- Wade Milne, DPI & F, Queensland
- Francene O'Connor, Farm Forestry Officer, South East Forests Foundation, Esperance
- Miles Prosser, Manager, Pulp & Paper, A3P
- Jo Roberts, Coordinator, Plantations for Australia: The 2020 Vision
- Allan Wilson, Central West Regional Development Board, Oberon
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