The 'Capital expenditure for the establishment of trees in carbon sink forests' schedule, which may pass today as part of the Tax Laws Amendment (2008 Measures No. 1) Bill 2008, allows an up front tax deduction for capital expenditure on prime agricultural land, as well as delivering an income stream from carbon credits.

This is a scheme which will most likely be used by large carbon emitters, such as coal companies, but the consequence of this will be a reduction of food production and the destruction of regional communities which are based around current food production. Unless Australian people are going to evolve into termites and live on a diet of trees, a piece of legislation that does not specifically preclude the use of prime agricultural land is bad legislation.

It is peculiar when people believe in the free market they would not say to those who need carbon credits, "If you want carbon credits go out and buy the land like anybody else." Why do we need to give them a tax incentive?

The issue that the Australian people must fully understand is that this legislation is like an MIS, only better because of the combination of both tax deductibility on capital expenditure up front as well as an income stream from the carbon credits. The effect of MIS’s, which this legislation mimics, has been the buying up of prime agricultural land and water licenses, to the fury of local farming communities, from the Murray in the south of our nation to Tully in the north. If people believe this is not going to be used on prime agricultural land, then proscribe it as such in the legislation because if it doesn’t say you can’t use prime agricultural land then, obviously, you can and they will.

The final position is that it will be inflationary on food prices, it gives an artificial non market driven aspiration to the creation of a product which has no immediate consumer worth, it is a free kick for certain energy companies who already have the advantage of record prices and could probably deal with these issues without a tax incentive and it says to farming communities, once more, because you are the weakest players in the political debate you are the one’s we will walk over.
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