Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697627851804.pdf (Australia)
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Submission to the Senate inquiry into: The structure and development of forestry managed investment schemes (MIS).!

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Prepared by Sean Cadman (Cadman and Norwood Environmental Consultancy)!

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Terms of Reference The structure and development of forestry managed investment schemes (MIS), including: a b c d the motivation and drivers that established the framework for the schemes initially; the role of governments in administering and regulating forestry MIS; the current policy and regulatory framework of forestry MIS; the role of some in the ﬁnancial services industry in promoting and selling forestry MIS; compensation arrangements for small investors in forestry MTS who have lost life savings and their homes in the face of the collapse of forestry MIS; the burden on farmers and other agricultural producers who have been left with the uncertainty of timber plantations linked to forestry MIS on their land; the options for reforming forestry MIS to protect investors and rural communities; and any other related matters.
The committee resolved that under term of reference (h) it would accept submissions that deal with agricultural MIS.

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Background!

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Speciﬁc concerns included:!

In 1990 the National Plantations Advisory Committee was established to investigate the opportunities for Integrating forestry and farming commercial wood production on cleared agricultural land.

I was a member of that committee representing the Australian Conservation Foundation.
The committee was established by the Commonwealth Government to examine sustainable opportunities for expanding Australia’s plantation estate.
It is important to recognise that as early as 1990 there was recognition in the terms and references of the committee and in the reports that were undertaken to inform the recommendations of the committee, that a poorly managed rollout of a plantation development agenda could lead to very perverse outcomes for the environment and the long term sustainability of an Australian plantation estate.!

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• Plantation establishment should NOT drive land clearing.!

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• The taxation treatment of the time was a disincentive to investment because the tax all fell due !

• Any taxation changes to incentivise plantation should not become an end in themselves and there was a recommendation that plantation establishment needed to be based on business models that did not require the continuation of tax deductibility for the business model to succeed.

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at the point of harvest.!


Forestry managed investment schemesSubmission 105 plants and that just growing for wood chips for exports was unlikely to be sustainable.!

• Speciﬁcally that taxation incentives needed to be phased down to zero over a 10 year period.

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• To be sustainable plantations needed to be established to provide inputs to industrial processing !
• Site selection should be based on realistic growth rates, speciﬁcally that the costs of pest control shouldn't be underestimated and that rainfall and soil parameters need to be within a certain range or economic growth rates would not be realised (CSIRO modelled the sites in Australia that would be most likely to succeed) .

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• Communities needed to clearly beneﬁt from any large plantation establishment program !

because of negative community experiences in the past.!
This is not an exhaustive list and the ﬁnal reports and appendices are still sitting on various library shelves the full citation is set out below !1 !

MIS Schemes and the 2020 Plantation Vision!

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When MIS schemes were introduced in 1998 by Wilson Tuckey then Minister for Forests all of the advice given in the 1991 report was ignored.!
The MIS schemes drove the largest and fastest land clearing seen in Tasmanian history, On the mainland where conversion was explicitly prohibited by State legislation and policy there was a rush to get plantations on farm land and sound site selection quickly gave way to headlong rush to sign up investors, land prices quickly were grossly inﬂated and unrealistic yields were promised.

The behaviour of the companies was highly variable.
While Timbercorp for example invested heavily in planning and management infrastructure other companies did not.

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The most disgraceful activities occurred on the Tiwi Islands where there were no controls on land clearing and large tracts of Eucalytpus tetradonta woodlands and forest and small patches of rainforest scrub were replaced with Acacia plantations.

Within a few years many of these were destroyed by a tropical cyclone.
The aboriginal community received almost nothing from the large scale degradation of their native title lands.!

When the ﬁrst plantations were harvested by Great Southern and Timbercorp the unrealistic nature of the yield forecasts and returns to investors became apparent.

Despite this the schemes continued and further changes to the taxation treatments actually made things worse.

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As other submissions to this inquiry have shown the Australian Government and two Ministers for Forests Wilson Tuckey and Eric Abetz pointedly refused to heed warnings coming from many quarters when the 2020 vision was being reviewed.

At the time I was working for Bushcare a National Heritage Trust programme which was actively engaged in trying to stop the environmental and social damage that the schemes were causing in Tasmania.
We met with the parliamentary committee conducting the review and our concerns were ignored.!

Other have elaborated on the behaviours of the ﬁnancial sector which in some cases were nothing short of disgraceful but the principal blame for the failure of these schemes lies ﬁrmly with Government.

Sound advice was provide in 1990.

This was ignored.

When the 2020 vision was reviewed there was plenty of evidence provided of both the ﬁnical issues and the environmental !

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1 Title: Integrating forestry and farming commercial wood production on cleared agricultural land!

Author: Australia National Plantations Advisory Committee Richards, B. N. Bryant Neville!

Publication Information: 1991 s1991!

ISBN: 9780642168627!

Forestry managed investment schemesSubmission 105 impacts, particularly in Tasmania.

This again was ignored.

The failure of the 2020 vision and MIS schemes was an avoidable train wreck.!

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Plantation management and establishment in Australia the way forward.!

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Every one of the MIS companies has collapsed, faith in the sector has been destroyed.

Hundreds of thousands of hectares of land was cleared in Tasmania and on the Tiwi Islands at a huge environmental cost.

The Australian Public has almost nothing to show for the millions of dollars of tax incentives given and gullible investors pursued by unscrupulous ﬁnancial advisors have lost millions.!
The most critical issue is what is the long term future of the plantation estates established and how can they be maintained.

As things currently stand there is a very high probability that most will be cleared and revert to either agricultural production or become derelict weed-scapes.!

The reality of forestry in Australia is that the most proﬁtable and sustainable plantation estates were not established by the private sector but by State and Federal planting schemes.
Most of these have been short sightedly sold off to shore up ailing state government budgets.!

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If the Australian Government wants to ensure the continued wood supply from these lands it should seriously examine a market intervention.

The economic rationalists who persuaded successive governments that the private sector could do it better have been proved spectacularly wrong.
Instead of throwing tax incentives at the private sector and bailing out stranded investors at huge cost the Australian Government should consider using Direct Action climate change funding to take control of these assets and ensure that these do not become a net carbon emission as they are all eventually converted to cleared land.
The private sector roll would be conﬁned to investing in processing facilities to convert the wood into products to replace imports and provide jobs in manufacturing for Australians.

Without these facilities both Australian plantations AND native forests have no real value to the Australian economy and would be better left in the ground to sequester carbon.

Forestry managed investment schemesSubmission 105