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STFFN newsletter - Autumn 2006
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Where plantations are a significant
feature of a regions landscape, rural livelihood is enhanced...
The most recent Abare report predicts the
real value of the beef, dairy and wool industry will decline over
the next 5 years. The same report reveals that Australia has an
almost $2 billion annual timber and wood products trade deficit.
Although new plantations, especially hardwood in Southern Australia
have dramatically increased in recent times, it has not been enough
to stem our increasing demand for wood.
Lately there has been much criticism for the
impact that plantation forestry is having on the value of rural
properties, as well as the visual landscape changes. Regions with
significant plantation industries on the other hand, have higher
socio-economic conditions than regions without. Plantations not
only bring jobs and new industry opportunities, but they can be
used to complement traditional agricultural enterprises.
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The Family Forest Option by Francis Clarke
Francis Clarke
has been a keen proponent of farm forestry, both plantation and
native forests, for the past 34 years. He is a past President
of Australian Forest Growers and is currently extending his house
with timber he has planted, grown and sawn.
The most sustainable land use in New South
Wales is well managed Private Native Forests. Only local native
species are grown. Chemicals are rarely applied - no artificial
fertiliser, few if any herbicides. Biodiversity is actively encouraged
and the forest protected from wildfire, weeds and disease. Native
forests can be managed – greenhouse positive, for continuous
yield or on very long rotations (60-120 years) with good profits
to the owner. There is little if any erosion - even at harvest time
and water quality is improved compared to other land uses. All this
is at no cost to the taxpayer, just improved local employment and
social outcomes. What more could you ask for in a sustainable triple
bottom line!
New South Wales has about eleven million hectares
of Private Native Forest (PNF), very little of which is being actively
managed for economic returns or for improved environmental outcomes.
Most owners put low or negative economic values on their native
‘bush/scrub’. Many such areas have been degraded by
constant grazing or the ‘high grade’ cutting of the
best trees leaving only inferior trees to grow and propagate. Such
land is usually just waiting for the next wildfire.
How can this be changed? Well there is a plan
being developed for the private native forests located on ‘Pinebank’
near Tarago that could well point the way. The private native forest
managed by Francis Clarke of Pinebank Pastoral Co recently achieved
certification under the Australian Forestry Standard (AFS) –
the fourth organisation to achieve such a distinction. The internationally
recognised AFS is a very high bar for a small, family managed forest,
to jump and ‘Pinebank’ is still the only private forest
to become accredited.
Maintaining the forest management objectives
over the full rotation, which at ‘Pinebank’ will be
100+ years (the forest is currently 78 years old), requires generational
change but younger family members have other aspirations. A solution
could be that a group of new forest owners continue the forest management
objectives while benefiting from a tax deductible rural investment
with life style attractions. Development approval has been obtained
for the subdivision of five 40ha native forest lots with building
permits. Most lots also have a small component of maturing pine
plantation and grazing land suitable for a horse or two.
If the new owners of these lots choose to
maintain the AFS certification and plan to operate their forests
as a micro business, it would be possible to apply for Commissioners
discretion to offset operational costs as a tax deduction. Family
forest ownership is a common land use in Europe and North America,
why should it not become the way of the future for Australia’s
native forests.
For further information contact: Francis Clarke
on 02 4849 4523 clarkef@gis.net.au
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Pine seedling
sales 2006
Get Your Orders in now!
STFFN will again be selling pine seedlings
in July/August 2006. Delivery dates will be 14th and 28th July,
and 11th and 25th August. This is fewer delivery dates than 2005,
as some delivery dates had less than 40 boxes. When you ring up
to order, please have selected which delivery date(s) you want,
as there will be no further follow up.
Seedling sales are only possible with the
goodwill and assistance of a lot of people. Dan & Dan Landscaping
Services allow STFFN the use of their depot in Dunkley Place, Spence,
free of charge. Pick up times for seedlings are strictly 9am to
3pm, as Dan & Dan use the depot on a daily basis for their landscaping
activities, so that it is essential that these pick up times are
adhered to.
State Forests of NSW supply seedlings packed
to STFFN specifications at a competitive price, and K&D Smith
Transport fit in with the delivery schedule. There are 120 seedlings
per box, as in past years.
There have been some price increases from
2005 in both seedlings and transport costs. STFFN has tried to minimise
costs, but there will be a price rise for orders of nine or less
boxes of seedlings, while orders for ten or more boxes will remain
unchanged.
The new prices are:
GF19, DR16 9 or less boxes $35 per box
10 or more boxes $33 per box
Special Xmas trees 9 or less boxes $57 per
box
10 or more boxes $55 per box
Please phone Ian McArthur on 0412 195 499
with your order and your selected delivery
date(s). Also, please inform Ian McArthur if you do not know where
the pick up point is, as there will be no ‘chasing-up’
following the initial phone order.
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Westbourne woods arboretum walks
A free guided 2-hour walk through the grounds
of the Royal Canberra Golf Club.
2nd Sunday of every month; 9.30 am at the entrance to Royal Canberra
Golf Club,
Bentham street Yarralumla.
No dogs are allowed and the dress code of
the Golf Club (no thongs, shorts) applies if you wish to accept
the invitation of the Club to take refreshments at the Spike Bar
after the walk. For further information contact the guide of the
month or Friends of ACT Arboreta on 62887656.
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Socio-economic impacts of plantation forestry
The Bureau of Rural Sciences (BRS) has funded
a major study into the socio-economic impacts of plantation forestry.
The study was undertaken by Dr. Jacki Schirmer, who now works with
the School of Resources, Environment and Society, Australian National
University. The research project started because many local government
councillors and their constituents were asking what effects plantations
would have on their communities. The study examined the social and
economic impacts associated with expanding plantation industries
in two regions, the Great Southern Region of WA, around Albany,
and the South West Slopes of NSW, stretching from Tumut to Albury.
The key results of the study were:
• In the Great Southern Region, where more than 127,000 hectares
of plantations have been established since the start of the 1990s,
expansion of the plantation estate has not exacerbated rural population
decline in the three shires with large areas of plantation. In fact,
nearby shires with few or no plantations generally experienced greater
population decline from 1996 to 2001 than the shires where most
plantations were established.
• In the SW Slopes of NSW, the establishment
of plantation processing facilities in regional towns has contributed
to growth of working age populations in those towns, and to stable
economic growth.
• During periods of high demand for
land by the plantation sector, the price of land suitable for plantation
establishment increased at a higher rate than the price of most
other land in the Great Southern region.
• Most people working in the plantation
industry are based in regional towns, such as Tumut and Tumbarumba
in the NSW case study, and Albany and Mt. Barker in the WA case
study.
• In the Great Southern area, the number
of people directly employed by the plantation industry increased
from only 20 in 1991, when plantation establishment was beginning,
to 500 by 2004. This is likely to increase further as more of the
plantation reaches harvestable age.
• In the South West Slopes of NSW, where
softwood plantations were established from as early as the 1920s,
and there is a considerable processing industry, 1,680 people were
directly employed by the plantation sector in 2003/04. This equated
to 1.53 jobs per 100 hectares of plantation (including all direct
employment to the point of processed timber products leaving the
mill door). Of this employment, over 90% was based in the South
West slopes region.
The study process examined independent data
from sources such as the Australian Bureau of Statistics and state
government agencies to answer some of the common questions on the
socio-economic impacts of the plantation industry. The authors of
the study spent almost two years analysing data and comparing trends
in plantation and non plantation areas to find out whether, and
how, plantation regions differed from other rural regions. For each
question asked, the analysis was intensive. For example, data on
over 3,000 individual land sales had to be analysed to compare the
prices paid for plantation versus non plantation land in the Great
Southern region.
To ensure the data used was accurate, the
study authors held focus groups in the case study regions, with
local experts such as shire employees and members of the local farming
communities asked to examine data for their region to check for
any inaccuracy or bias. By doing this, the study team was able to
remove poor quality data.
While the study could not answer every question
communities are asking about plantations, it did answer questions
about the impact of plantation expansion on rural populations, on
land prices, levels of spending and investment by the plantation
sector, and how much employment is provided by the plantation sector
and where that employment is located.
The study identified three phases in the development
of a plantation industry, and the employment, expenditure and value
of output, population change and the land and property markets for
each of the phases.
The three phases of development are:
Phase 1: Establishment of the plantation resource.
Phase 2: Transition phase in which some harvesting and processing
of early plantings occurs, along with ongoing establishment of the
plantations.
Phase 3: Maturity of the sector, in which the plantation resource
is harvested on a rotational basis and a range of products are manufacture
by processing facilities.
These three phases are not mutually exclusive
and often overlap. For example, 85% of the SW slopes plantation
estate had been established by 1991. Since that time, ongoing expansion
of processing capacity has occurred in the region. This expansion
has created an impetus for the establishment of more plantations
to supply processors in the region.
Development of a mature plantation industry
generally requires a large area of plantation resource to support
the establishment of world class processing facilities that can
process a range of products from the plantation resource. It is
important to put the plantation area required into perspective.
In the Great Southern region, where the plantation area is large
enough to support the development of processing facilities, plantations
have been established on 10-22% of agricultural land in three local
government areas, with traditional agriculture continuing to operate
on most land in these areas.
Next newsletter: Will look at the employment,
expenditure, value of output, population change, and the land and
property markets for each of the three phases.
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Master Tree Grower course update
At the present time, STFFN has eight applicants
for the proposed Master Tree Grower course as advertised in the
last STFFN newsletter. As at least 12 participants are required
per course, it has been decided to postpone the MTG course until
early 2007. This will better fit with STFFN staff and leave proposals,
and allow more time for members to assess whether they want to do
the course.
If you have registered with Ian McArthur,
you will still be on the list of possible course participants. If
you wish to register for the MTG course, run over eight days, at
one day per week, possibly starting early in 2007, please contact
STFFN;
Ian McArthur on 0412 195 499 or stffn@bigpond.com
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Field day at Kowen
STFFN, along with Australian Forest Growers (AFG) and Friends of
ACT Arboreta (FACTA) will be running a combined field day at Kowen
on Sunday 28th May 2006.
The field day will visit:
• The black wattle species trial established
in 1994 as a joint venture between ACT Forests and CRIRO Division
of Forest Research. There were 24 species of wattle planted in a
number of locations in Australia and overseas. Although the trial
has been abandoned, it is still useful to see what species will
grow in a low rainfall environment in the Southern Tablelands.
• The 1983 Community Employment Programme
Eucalypt and Acacia species and provenance trial. This trial contains
121 different species and provenances of mainly Eucalypts, and was
one of three sites established across the ACT. Unfortunately, the
other two sites were destroyed in the 2003 Canberra bushfires, so
this site is now unique. Past politically motivated decisions have
seen the site degraded by becoming part of the Canberra International
Shotgun Club lease, and the trial has been neglected for some years,
but is still worth inspecting.
• A Eucalyptus polyanthemos trial established
in the 1950s by Alan Brown. Although slow growing, there are some
attractive specimens in the trial worth looking at.
• A small 1959 planting of the Guadeloupe
provenance of Pinus radiata. Although slower growing than the Monterey
provenance of Pinus radiata, this provenance shows excellent form
with small branches at almost 90 degrees to the trunk, and very
little taper.
• Time permitting, a stop will be made
at the Redwood grove near the airport. This has been affected by
drought and fire, but is still interesting to inspect.
It is planned to meet at 9.30am at the corner
of Piallago Avenue and Sutton Road. Participants will need to bring
their lunch and drinks, and it is anticipated that the field day
will conclude at around 3pm.
Please phone:
Ian McArthur (STFFN) on 0412 195 499
Steve Thomas (AFG) on 6281 1587, or
Tony Fearnside (FACTA) on 6288 7656
If you wish to attend...
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Forests for the People: maintaining a balance
The International Forestry Students’ Symposium 2005
Forestry students from the University of Melbourne
and the Australian National University were proud hosts of the 33rd
International Forestry Students’ Symposium, Australia, 14-28th
August 2005. The symposium is an annual event of the International
Forestry Students’ Association (IFSA), and brings together
forestry students from around the world to both share information
and create opportunities to participate internationally in forestry
events and issues. The 33rd IFSS drew on three primary goals:
- To provide forestry students with a means
to meet their peers from other countries, discuss and develop
ideas and views, and to create an atmosphere of solidarity and
inspiration;
- To increase international understanding
of economic, social and environmental issues surrounding Australian
forestry and forestry practices;
- To increase knowledge and understanding
of common and unique forest issues from around the world.
The theme
of the symposium; ‘Forests for the Future, Maintaining a Balance’
aimed to explore issues associated with forest management and the
paradigm shift from managing for timber production, to managing
forests for a multiplicity of values. This year was the first time
in over a decade that the symposium was held in the Southern hemisphere
and the two week event proved both exciting and challenging as forestry
‘the Australian way’ was presented to 100 forestry student
from over 50 corners of the globe. The students toured from Canberra
to Melbourne and experienced first-hand key forestry activities
and issues in Australia, as well as meet both national and international
prominent foresters.
Forest management for a range of values, unique
in their Australian context, was covered through a wide variety
of field visits. Production forestry was show-cased through visits
to both native and plantation harvesting coupes, as well as the
Neville Smith timber mills, in Victoria’s East Gippsland.
Many students came within arms length of a harvester for the first
time. Social values were explored in visits to Victoria’s
first community forest management trial in the Wombat State Forest
and a special day hosted at the Aboriginal Darnhya Centre in the
Barmah Redgum forest, giving first-hand insight into Indigenous
forest management issues. Farm forestry trials and successes were
explored at Lynfield Park near Gunning, NSW, and throughout Victoria
with sugar gum and acacia plantings. This gave the students a unique
chance to see how trees can be incorporated with traditional farming
enterprises. Management issues associated with forest fires in Australia
were emphasised and ACT Forests hosted a full-day tour in which
students learnt the impacts and issues of major wildfires. In addition,
another session at the Victorian
School of Forestry gave an introduction to
the fire ecology in native forests and the complexity its management
in Australia; a new concept to many students. The comparative differences
in management practices internationally, familiar to each student,
were keenly expressed and explored by participants with wide ranging
questions and views.
The symposium also offered a prime opportunity
for students to present their studies and discuss issues relevant
to their own countries, which was facilitated by both informal discussions
and individual student presentations during workshop sessions. These
presentations covered a wide variety of subject areas from Conservation
reserves in Brazil to Harvesting systems in South Africa. As part
of an IFSS tradition a cultural night was also held, full of food,
song, fun and dance brought from all over the world by our participants.
‘After having spent two weeks with so
many incredible people from all over the world, I did not feel to
be anywhere else on earth, except to be in the ‘International’.
This feeling was deliciously great and I keep from this experience
some of the greatest souvenirs of my life.’
The success of this IFSS was reflected in
an increased awareness and understanding expressed by the students
towards their fresh experience in a broad range of values that people
place on forests. This knowledge is invaluable in assisting them
in their future careers as forest managers. The organising committee
would like to sincerely thank all of our Australian sponsors*. Without
there support this unforgettable experience for so many students
could not have been possible.
Samantha Citroen, University of Melbourne,
Australia.
On behalf of the IFSS 2005 organising committee*
The IFSS 2005 organising committee and sponsors
Organising committee: Emma Leslie, Geoff Roberts,
Jacqui Slingo, Sam Citroen, Vince White, Roger Cross, Elspeth Coker,
Angela Constantine, Amy Davidson, Loris Duclos, Michelle Freeman,
Claire Johnsen, Emma Paulding, Michael Pescott, Emma Franks, Andrew
Robertson, James Paulding, Mel Dyne, Nick Harris, Joseph Henry,
Richard Laity, Charles Lawson, Robyn Sakkara, Heath Synnott.
Sponsors:
GOLD: Neville Smith Timbers, The Department
of Sustainability and Environment, Victoria, ACT forests (now Environment
ACT), Australian Government Forest and Wood Products Research and
Development Corperation.
SILVER: The Crawford fund, Department of Agriculture
Fisheries and Forestry, National Association of Forest Industries,
University of Melbourne, Central Victorian Farm Plantations, Australia
National University, Victorian Association of Forest Industries,
Institute of Foresters Australia, Australian Forest Growers, Australian
Centre for International Agricultural Research, Hancocks, Gunns,
Jaakko Poyry.
BRONZE: Bob Newman, STFFN, Mawsons, TWFF,
Forestry Tasmania.
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Planting Companion
- A guide to native revegetation in the ACT region
Compiled by Lori Gould,
Greening Australia ACT & SE NSW
for ACT Forests
This publication draws together the experience
and expertise of many revegetation practitioners around the country.
It gives a wide range of useful information on topics such as site
preparation, species selection, monitoring & evaluation and
a guide to revegetation costs.
The Planting Companion is available for $10
(an additional $5 applies if postage is required). Please phone
Rebecca from Environment ACT on 6207 2145.
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Swearing by the Windbreaks at Bannister...
Bannister is a little spot in between Gunning
and Crookwell, where some of the locals have been getting into windbreaks
and farm forestry to complement their cell grazing. This is cold
country even for the Southern Tablelands, but rainfall is a bit
better than most.
The Bannister boyz insist that windbreaks
need to be at least 4-5 rows for maximum wind protection benefits,
leaving enough space to grow timber down the middle.
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Using waste products to grow better trees
For the past 15 years, Georgina Kelly, a research
officer with Forests NSW, has been focussed on boosting plantation
growth by adding amendments to the soil. Initially, her work focussed
on placing bio-solids (the soil like organic material resulting
from treated waste water) around pine plantations in the Southern
Highlands of NSW.
More recently, trials have focussed on eucalypt
and other native species plantations, particularly on coal mines
in the Hunter Valley, west of Newcastle. In the Hunter, Georgina
has experimented with bio-solids, green waste and bottom ash (a
by product of coal fired electricity generation), through to composted
domestic garbage and mulch.
Working with a number of partners in the mining
industry and government, eight plantation trials have been established
on a variety of sites in the Hunter Valley. Sites have ranged from
river flat buffer land to reclaimed overburden from open cut coal
mining, all in areas of less than 650 mm of rainfall per year, poor
soils and winter frosts.
Georgina is very excited about her most recent
trial, established a year ago on Xstrata’s Narama Mine, midway
between Singleton and Muswellbrook. The five hectare site has been
planted with spotted gum (Corymbia maculata) and a river red gum/flooded
gum hybrid (Eucalyptus camaldulensis X Eucalyptus grandis), with
eight treatments used; bio-solids; mulch; soil conditioner; municipal
waste compost; inorganic fertiliser; bio-solids plus mulch; fertiliser
plus mulch; and an untreated (control) site.
So far, the areas treated with bio-solids
and the bio-solid/mulch combination exhibit the best growth in both
height and diameter. The benefits of mulch in moderating soil temperature
and maintaining soil moisture would be of no surprise to most gardeners.
The trial, funded by the Department of Environment and Conservation,
will continue for another two years. Georgina is confident that
the results will add further weight to the concept of eucalypt plantations
supporting a future timber industry in the Upper Hunter.
The community, particularly local government,
are very supportive of the plantation trials and are keen to explore
opportunities for viable industries to complement the existing mining
industry. The research demonstrates that it is possible to “boutique
mix” combinations of treatments to each site to maximise tree
growth and also ensure that plantation establishment and management
costs are on par with other traditional forms of mine site rehabilitation.
Plantations can be grown for timber, to create bio-diversity corridors,
for carbon credits or for charcoal and power generation.
It is a fantastic concept, restoring land
by establishing plantations, with their growth boosted by what has
traditionally been regarded as waste. The social, environmental
and economic benefits are obvious. Supporters of the concept are
now focusing their efforts on how to best attract the private investment
needed to establish large scale plantations in the area, utilising
the knowledge that Forests NSW researchers have gathered over the
past six years.
Georgina has said that Forests NSW is keen
to see more plantations established in the Upper Hunter and hoped
to be able to work with mine owners and operators to see this outcome
realised.
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Australian Forest Grower - policy statement
This edition of the STFFN newsletter continues
with the reproduction of AFG policy statements. These statements
are reproduced with the permission of AFG.
Taxation: Non –
commercial Loss and the Commissioner’s Discretion
Australian Forest Growers will work with the
Australian Taxation Office to streamline the process by which private
forest growers secure the Commissioner’s discretion under
the non – commercial loss legislation.
Background:
The non – commercial loss provisions of the Tax Act enable
a taxpayer to seek the Tax Commissioner’s discretion to claim
business losses in the year they are incurred for a business activity
that has a “lead time” between the losses claimed and
the tax to be paid on revenue earned from that activity. Private
forestry is the most common primary production activity for which
the Commissioner’s discretion is sought.
Where the private forestry activity involves
the common widely used “commodity” tree species, such
as radiata pine, blue gum, shining gum, etc, and other species about
which there is a substantial body of scientific and commercial information,
private growers by and large are successful in being granted the
Commissioner’s discretion.
However, private forest growers whose forestry
activities involve species and forestry configurations that are
less well known and less researched continue to face a difficult
time with Australian Taxation Office (ATO) staff, involving repeated
ATO requests fore more information from different independent sources.
The lack of available information creates consistent and repeated
challenges for the forest grower applicant, who must be able to
compile sufficient independent evidence and cash flow information
for the Commissioner’s discretion to be awarded.
Discussion:
The administrative burden imposed on many private forestry applicants
for the Commissioner’s discretion is unnecessarily onerous
and unacceptable. It is important that a mechanism be found by which
private forestry applicants can more easily satisfy the Commissioner’s
requirements in cases where there is very little readily available
“independent evidence” to support the applicant’s
claim to be carrying on a commercial forestry operation.
Australian Forest Growers is engaged in discussions
with the ATO on this matter, and has the ATO’s agreement that
an applicant’s case would be strengthened by relying on evidence
provided by AFG as to the commerciality of the diverse silvicultural
regimes for various forest tree species around Australia.
AFG Is developing the means to provide private
growers with material to support their applications for Commissioner’s
discretion.
Preferred Outcomes:
More willing and sympathetic ATO treatment of private forestry applications
for the Commissioner’s discretion under the non – commercial
loss provisions when the applications are supported by evidence
derived from an AFG “reference guide” to private commercial
forestry activity.
Taxation and Superannuation
Australian Forest Growers advocates that all
relevant legislation should enhance the capacity for private forest
growers to utilise their forests as a form of superannuation.
Background:
Many private plantations have been, and continue to be, established
and managed as an important element, and in some cases the totality,
of the grower’s superannuation.
Despite this admirable intention, such growers are subject to severe
discrimination within the superannuation regulatory system. This
failure takes two major forms.
One is the endemic problem of “lumpy
returns”, whereby the grower receives “superannuation”
income at harvest in one lump sum, almost all of which is taxable
at the highest marginal rate, rather than at any form of concessional
rate such as that applying to moneys withdrawn from a superannuation
fund.
This problem is made worse for most private
plantation growers by the limited and highly conditional access
they have to the major income averaging provision available to other
primary producers. First, Farm Management Deposits (FMDs) are only
available to primary producers with “off – farm”
incomes less than $50,000, which eliminates most private plantation
growers. Second, any eligibility quickly evaporates if the grower
does not carry on primary production after final harvesting (most
common), because any income placed with an FMD must be withdrawn
within 120 days of when primary production ceases.
The second important manifestation is the
treatment of a private plantation with respect to its contribution
to a grower’s self managed superannuation fund (SMSF). Although
a private forest may be part of a SMSF in circumstances where the
forest operation is commenced by the fund, transfer of an established
forest into a SMSF can only occur in very specific and very rare
circumstances that satisfy a number of the SMSF tests, such as “sole
purpose”, “related party” and “business
real property”.
Most private plantations now approaching harvest
age were established well before the contemporary SMSF “revolution”,
and have no chance of being made to fit
the SMSF conditions that would allow the growers
to take advantage of the tax treatment of superannuation funds.
Discussion:
For more than a decade, policy makers in Australia have realised
that, with an ageing population that will live longer, steps must
be taken to encourage individuals to fund their own retirement.
Over roughly the same period, State and Federal
Governments and industry have driven a plantation industry development
strategy, Plantations for Australia: The 2020 Vision, and have recognised
the simultaneous contributions that private plantations and farm
forestry can make to natural resource management as well as social
and economic development objectives.
However, many of the private growers who established
long rotation plantations decades ago to fund their own retirement
are now suffering personally from that decision. They are confronted
by a tax regime that penalises “long term forestry with one
final harvest”, and that also prevents them converting an
older form of superannuation (plantation forestry) into a more contemporary
form (SMSF).
Further, anecdotal evidence abounds that many
potential farm foresters and private plantation growers are being
discouraged from growing plantations because they learn from existing
forest growers of the severe tax penalties they will face at the
time of harvest.
All of these problems are separate from but
not unrelated to the fact that the tax system also discourages trading
in immature standing plantations (secondary markets), which, if
it were readily achievable, would provide more flexibility and choice
for private plantation investors, and perhaps diminish the pressure
for superannuation change.
Preferred Outcome:
Australian Government recognition that amending the tax rules applying
to superannuation and biophysical self generating assets (such as
private forests) can help achieve its retirement policy objectives.
A tax regime that (i) recognises the “period
inequity” that applies to long term plantation investment,
and (ii) encourages private investment in plantation forestry at
any scale.
Taxation: A Prepayment
Rule for Managed Investment Plantations
Australian Forest Growers strongly advocates
the retention of an appropriate prepayment rule for managed investment
plantations, as a timing mechanism that recognises the complex and
unique nature of plantation investment, and that enables plantations
to be established in seasonally optimal conditions to maximise early
survival.
Background:
Managed Investment Scheme (MIS) plantations, and the pre 1998 “prescribed
interest” schemes have been subject to prepayment rules for
many years. A 13 month rule applied from May 1988 to November 1999,
but was removed as part of the Government’s response to the
Ralph business tax review. A replacement 12 month prepayment rule
was announced in October 2001 and became law in April 2002.
The 13 month prepayment rule was removed not
because it was seen as a special tax concession for growers, but
primarily because the tax mismatch guaranteed by the High Court
“Arthur Murray Case” enabled the plantation manager
to defer its tax liability on funds received from the grower until
the contracted services had been completed – in effect, an
unacceptable two tax years tax holiday.
But the loss of a prepayment rule had two
serious unintended (but predictable) consequences. It forced MIS
plantation managers to gamble massively on their requirements for
land, seedlings and contractors well in advance of woodlot sales,
and also to carry out plantation establishment operations in sub
optimal seasonal conditions – both of which consequences occurred
in financial years 2000 and 2001.
The new 12 month prepayment rule was introduced
to correct the unintended consequences and the tax mismatch. Section
82KZMG of the ITAA 1997 allows growers to claim “year of expenditure”
tax deductions for eligible services to be carried out in the following
12 months (just as if the eligible services were to be carried out
in the same tax year; ie no difference in the grower deductions).
At the same time, s15-45 requires that plantation managers must
declare those gross receipts from growers as assessable income in
the same year, whereas they would not otherwise have to do so until
the services were completed.
Regrettably, the enabling legislation had
a sunset clause inserted at the last minute by the Senate, which
has the effect of terminating the 12 month prepayment rule on the
30th June 2006, an event that would once again (as in 1999) destabilize
the only source of investment in new and replanted plantations,
with potentially serious consequences for the plantation based processing
industries.
Discussion:
A prepayment rule for MIS plantations is a timing device, not a
special incentive or tax concession, as long as it also has a provision
that prevents a mismatch of tax deductions and liabilities (as the
12 month prepayment rule does). The 12 month rule thus offers NO
special incentive to growers and causes NO revenue tax leakage,
other than whatever leakage may be created by the differential between
personal and company tax rates, which cannot be fairly attributed
to the 12 month rule.
The so called tax effectiveness of MIS plantations
is merely the standard year of expenditure tax deductibility applied
to the proven MIS model. As with other agricultural crops, all non
capital costs of plantation establishment, management, harvesting
and transport are legitimate tax deductible business expenses, claimable
in the year that they are incurred. A grower in an MIS plantation
is carrying on a business, and is entitles to claim the standard
year of expenditure business tax deductions.
Maintaining the 12 month prepayment rule beyond
its legislated June 2006 expiry date is essential for the stability
of the MIS plantation sector, which has proven to be the only substantial
source of private investment in new and replanted plantations in
Australia. Successful plantation based industries require a stable
and predictable operating environment, where the rules are not being
continually changed or re-interpreted. Stable plantation investment
in turn leads to the secure long term flow of harvested resource
that underpins the viability of the plantation based processing
and value adding industries in regional Australia.
Ideally, not only should the sunset clause
be removed or extended for a substantial period, but the eligible
service period should be extended from 12 months to at least 15
months to enable the maximum necessary flexibility in optimal planting
times in both southern and northern Australia. Section 15-45 would
still apply, meaning no leakage irrespective of the length of the
prepayment period.
Concerns have been expressed about the social
and environmental impacts of the rapid expansion of the new plantations.
To the degree that governments may seek to influence where plantations
should be grown, they must insist on the use of appropriate catchment
and landscape planning policies and taxation incentives, and must
leave alone the year of expenditure business tax deductions and
the 12 month prepayment rule, which are neither the cause nor the
solutions to perceived catchment and landscape problems.
Preferred Outcomes:
A stable, predictable and neutral taxation environment that, as
a matter of course, incorporates an appropriate prepayment provision
as a timing device to enable the MIS plantations sector to raise
funds and establish plantations in the manner most likely to achieve
maximum returns to growers.
Research and Development
Australian Forests Growers continues to seek
that research and development outcomes in line with AFG policy priorities
are pursued for private forestry through the Joint Venture Agroforestry
Programme, the Forest and Wood Products Research and Development
Corporation and other appropriate research and development providers.
Background:
Both government and industry in Australia have a long standing commitment
to cost effective research. A number of programmes, such as the
Joint Venture Agroforestry Programme and the Forest and Wood Products
Research and Development Corporation, demonstrate this commitment
in the forestry sector.
Discussion:
Returns on some types of investment take so long to realise, or
the benefits cannot be quarantined and are available to so many
individuals, that there is little or no incentive for individual
firms to take on the task alone. This is true of research and development.
Yet the results of this investment provide the foundation for programmes
that yield more rapid returns and applied benefits that can be captured
by forest growers and other entrepreneurs.
Reviews of government investment in agricultural
research and development activities have shown that the expenditure
generally provides a high rate of return on the public dollars invested.
Moreover, much of the return has been in areas of “public
good”. It is also clear that the programmes with the highest
rate of return on public investment are those in which producers
are involved in setting directions and identifying research priorities.
To simultaneously improve production, and
therefore returns, and conform to environmental regulation, is difficult
without access to advances in technology and management knowledge.
If development of this technology results in achievement of environmental
outcomes sought by the community, it is reasonable to expect the
community to contribute to the costs of such development. Of all
productive land uses, forestry provides the best chance of simultaneously
achieving multiple outcomes. Research into silvicultural systems
balancing trade-offs between production and environmental outcomes
is vital to turning this from chance to manageable likelihood at
farm level.
It is essential that governments act for the
community in areas of pure research and development to maximise
opportunities for sustainable economic growth. It is also vital
that governments contribute to forestry research and development
at a time when regulatory constraints on the ability of farmers
to effectively manage their land is increasing. Small scale growers,
particularly farmers, require support in research and development.
AFG seeks to ensure that as work is pursued
on multiple products from Australian tree species, such as electricity,
oils and liquid fuel, that the potential for farm scale methods
of extraction and production is not neglected.
Preferred Outcomes:
• The priorities of government, joint venture and other appropriate
research and development organisations reflect the priorities and
outcomes sought by private forest growers.
• A coordinated national technology transfer infrastructure
is established to realise the benefits of successful public research
and development.
Government Responsibility,
Road Funding
Australian Forest Growers seeks that:
Road funding be provided only by relevant agencies of government,
and
The forest industry not be singled out for different treatment from
other industries.
Background:
Maintenance and construction of the local road network in regional
and rural Australia has not kept pace with the increase in size
and number of trucks or with the increase in freight volumes carried.
In many cases, roads and bridges that were not designed and constructed
for modern heavy vehicles have not been upgraded to meet current
needs. It is not surprising that, in the absence of adequate funding
for maintenance, road quality has deteriorated. Councils and local
communities have become concerned where there is an increase in
the size and volume of trucks using local roads with the attendant
deterioration and safety issues.
The Australian Government’s Roads to
Recovery programme has begun to fill the funding gap, but only a
small portion of road related taxes and charges are directed to
local road maintenance and improvement. Some State and local governments
have imposed mass limits on access to certain bridges and roads
and others are considering imposing user charges based on the cost
of repairing damage to roads. In some areas, it appears that the
forestry industry has been unfairly targeted in this process.
Discussion:
Traditionally, funding for local roads has been raised from registration
charges, fuel excise and local government rates, although the relative
contribution from local government rates varies significantly from
one region to another. The burden of maintaining local roads rests
on inadequately resourced local governments. Only a small portion
of the revenue raised from registration charges and fuel excise
is allocated by State and Federal Governments to road funding. Either
increased portions of this revenue must be returned to meet the
cost of maintaining roads or the revenue raising methods must change.
The use of public roads by timber trucks during
harvesting does not occur until many years after establishment of
the plantation, during which period the landholder will be contributing
to local road funding by paying annual local government rates. During
timber extraction the landholder will also contribute in the same
way as other landholders moving annual crops, through registration
charges and fuel excise related (if somewhat clumsily) to mass and
distance traveled. If prospective growers are expected to pay additional
amounts, funding road repair after harvesting, this will add to
the factors currently impeding plantings and limit the achievement
of wider policy objectives.
In some regions studies have been undertaken
assessing road use by the community and local industries. These
quantify vehicle movements, road uses and heavily used routes. This
information assists with planning and management, including supporting
strategic allocation of available road funding to improve road capacity
and safety, and separating road uses by careful route selection.
Preferred Outcome:
A fully integrated approach to planning for future road needs and
to incorporate a suitable funding mechanism that sees all levels
of government meet their responsibilities for funding road maintenance.
If direct private sector contributions to funding road maintenance
are charged they should be offset by a reduction in existing indirect
contributions (through rates, excise and registration charges) to
road funding.
Funding mechanisms that apply sound, scientifically based principles
equitably to all industries using local roads.
Government Responsibility,
Land Valuation and Rates
Australian Forests Growers advocates that
the land valuation practice underlying the setting of local government
rates should apply consistent, transparent principles to all land
uses and not disadvantage forestry by applying rates value only
to plantation trees.
Background:
In most areas of Australia, local governments have limited resources
and a limited revenue base. A primary source of income is revenue
raised by levying rates from local landholders and charging users
of services. Typically, local government calculates the rate as
a percent of a recognised valuation, usually provided by a State
Government valuer.
Recently, some local governments have considered,
or have introduced, specific rates levied on plantation development
only.
Discussion:
Credible land valuation practice applies consistent transparent
principles when valuing property. Typically in Australia, reference
is to the market value, particularly for urban residential property.
As in any other competitive market, Australian property market prices
reflect the value of the income generating potential of the property
as agreed between the seller and the final bidder.
In many rural areas, market value cannot be the sole reference because
of a lack of market activity or market distortions. For example,
in areas suffering drought the demand for properties is low, and
with sellers forced in to the market. Prices are depressed, at least
in the short term. In these cases, valuation incorporates a calculation
of the income generating potential of the property. There may also
be reference to the values of comparable properties. Typically,
improvements such as irrigation systems, and attendant rights, such
as licences, are not included at their individual value but rather
the additional income generating potential they confer is included.
It is unfair to levy rates on a stand of timber
when the value of other standing crops is not similarly taxed. This
places the farmer who includes trees in a farming system at a disadvantage.
In some areas, this may be an attempt to recover
the cost of repairing road damage attributed to timber harvested
and transported on local roads. If so, there are fairer ways of
recovering costs. AFG does not support this approach and is actively
campaigning for better and fairer ways of funding the maintenance
and development of the local road network. If local users were to
contribute directly to road funding, a user charge should bear a
direct relationship to the costs incurred, not be levied in each
year the trees remain standing.
Preferred Outcomes:
Equitable levying of local government rates so that forestry is
not disadvantaged by being required to pay higher contributions
to general local government revenue than other land uses in the
area.
Government Responsibility,
Extension and Technical Support Services
Australian Forest Growers seeks to ensure
adequate provisions of forestry extension and technical support
services by Government funding.
The Australian Government does not directly undertake extension
and advisory activities but supports various state and non government
agencies, such as Greening Australia and AFG in performing these
roles. This community led approach has proved successful and deserves
on going support.
Discussion:
Almost all government policy and programmes supporting an increase
in plantation resources and the role of farm forestry in NRM include
actions reliant on extension services and/or technical support services.
However, not all jurisdictions are supporting policy implementation
through extension provision.
NRM programmes have limited funds, so additional
investment is sought from the private sector. Properly resources
programmes, like Landcare and Farm Forestry Support, can influence
community opinion and facilitate behavioural change. Such change
will not occur quickly so these and other mechanisms for technical
support and extension, including Private Forestry Development Committees,
require secure long term funding.
The complexities of farm forestry achieving
its role in NRM, and the importance of meeting the requirement for
technical support, should not be underestimated. The right trees
must be planted in the right place and new regional enterprises
will need to emerge to provide commercial returns. Public and private
benefits are intertwined, making it difficult to distribute returns
to extension services.
Background:
Over the past decade policy directions in natural resource management
(NRM) have changed significantly. At the same time, governments
have significantly reduced their contribution to extension services.
There is a greater reliance on private sector delivery and user
pays, with government services increasingly limited to perceived
public goods. Development of policies and programmes supporting
the timber industry’s role in NRM has coincided with a decline
in government extension services.
Australia has an excellent record in government
provision of technical, production related extension, and there
are examples of unique success in specific programmes such as Landcare.
Restricting funding for extension and technical
support services to areas with perceived public good characteristics
is likely to hinder success, particularly in the early stages of
implementing new policy directions. It is also clear that there
are market failures for some information, such as market intelligence.
Government support in addressing these needs is a necessary condition
of achieving the broader, public good objectives possible from private
forestry.
Preferred Outcomes:
• Sufficient government funds allocated to ensure the achievement
of Plantations for Australia: the 2020 Vision and NRM policy outcomes,
including accessible and valued farm forestry extension services
in each region.
• Effective dissemination of research and development findings
and the underpinning of policy debate by scientific reasoning.
• Regional afforestation plans based on sound analysis of
land capability, resource condition, economic opportunity and social
values that have been agreed by well informed communities.
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Join up with
AFG...
The national association representing private forestry and commercial
treegrowing interests in Australia.
Special services
• Standing up for growers rights… AFG represents its
members and all private forestry interests to the appropriate levels
of government. At present we are actively lobbying the NSW State
Government for legislative reforms in government policies and strategies
relating to all private forestry interests.
• Encouraging government investment into market developments
for forest products and the creation of better linkages for grower
access to domestic and international markets is another high priority
area for AFG. This includes close involvement and support in the
development of the Australian Forestry Standard, as well as for
treegrower cooperatives and looming environmental services markets.
• We have close relationships with reputable and reliable
plantation insurance agencies. AFG can always source a competitive
premium from plantation insurance companies for our members.
• The ‘Pruned Stand Certification Scheme is an AFG initiative
to ensure growers earn the highest premium possible from the harvest
of their plantation. This recognised certification process provides
lumber markets with confidence in the quality of log resource they
are buying from growers.
• State and National Treefarmer of the year awards is a stand
out AFG event, with cash prizes presented at our popular biennial
conference, this year held in Launceston.
• Representatives from all 24 AFG branches Australia wide
attend a biennial policy forum, where AFG priorities in policy direct
that best represents our growers is compiled.
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Two new and interesting honours projects
at the ANU
Two Forestry students are currently undertaking
Honours in the School of Resources Environment and Society at the
Australian National University. Their projects are addressing issues
related to impediments to farm forestry and dry sclerophyll forests
on the Southern Tablelands.
Project 1: Conducted by Melinda Mylek
Title
Socio-economic survey of perceptions of different
landholders about impediments to private forestry in the Southern
Tablelands.
Purpose
To help address perceived impediments to farm
forestry on the Southern Tablelands.
Methods
Surveys of a diversity of landholders to compare
demographic characteristics with responses about perceptions of
impediments to the uptake of private forestry on the Southern Tablelands.
Interviews of people chosen to represent the diversity of perceptions
that may exist about impediments.
Project 2: Conducted by Emily May
Title
Landholders’ perspectives on their dry
sclerophyll forests on the Southern Tablelands.
Purpose
To understand how farmers use, value and perceive
their dry sclerophyll forests.
Methods
Surveys of dry sclerophyll forest landholders
on the Southern Tablelands to identify landholders’ attitudes
towards their forests. Interviews of a selection of dry sclerophyll
owners that represent the diversity of issues that may exist.
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Friends of the
ACT Arboreta
Contribution to National Parks Association newsletter or journal,
12 November 2005. Prepared by Alan Brown 02 6281 1569 alan.and.erika@mintbow.com
Arboreta are sites where trees are planted
for evaluation or display — ‘living experiments’.
Charles Weston commenced planting the first arboretum in the ACT
— Westbourne Woods — in 1914 at Yarralumla to ‘add
ornament to the city’ and ‘so all classes of trees could
be tested with a view to being planted throughout the Territory’.
In 1929, Charles Lane-Poole commenced planting an arboretum —
Blundells — at the foot of Mt Coree, with a particular emphasis
on species which might be used in industrial forest plantations.
Blundells eventually became the largest of the non-urban arboreta
in the Territory. It was progressively complemented by more than
30 others at sites ranging from Mt Ginini to the Cotter Homestead,
Kowen and Jervis Bay.
During the war years, interest in fuel prompted
the establishment of small trials of eucalypts around the city to
assess the prospects of growing firewood. In the 1950s, Lindsay
Pryor tested newly-introduced trees and shrubs at a site near the
Yarralumla Woolshed, and (1954–1957) on the now-northern shore
of Lake Burley Griffin, opposite the Governor-General’s residence.
This latter site was gazetted as the Lindsay Pryor National Arboretum
on 1 August 2001 to commemorate Lindsay’s contribution to
the city.
Fire has been a significant factor in the
history of the ACT arboreta. Much of the early planting at Blundells
and Reids Pinch was burnt in 1939, while the 2003 fires destroyed
almost all sites west of the city — only Bendora escaped.
Plans for the large new Canberra International Arboretum and Gardens,
adjacent to the Pryor Arboretum have emerged from the ashes of the
2003 fires.
Arboreta are long-term enterprises, and it
is not surprising that they may outlive the organisations and arrangements
that led to their establishment, while new stakeholders emerge.
Thus the forest research interest in the non-urban arboreta has
moved to semi-arid and tropical climates, while Westbourne Woods
is now the home of a major golf club. Despite these changes, the
maturing, diverse trees in the arboreta are a significant and increasingly-valued
community asset. Westbourne Woods was placed on the Register of
the National Estate in 1981 as an historically-important arboretum,
and the heritage value of Bendora Arboretum was officially recognised
in 2004.
More than two decades ago, Brian Haddy and
Ken Eldridge formed the Westbourne Woods Action Association and,
with the cooperation of the Royal Canberra Golf Club and participation
of colleagues, instituted free monthly guided public walks in the
Woods, which have continued to this day (the second Sunday of each
month at 9.30 am). A small guide book was published in 1983.
Tony Fearnside and Kim Wells have taken an
increasing interest in the non-urban arboreta over the last decade,
assisting in maintenance and labelling. Following the 2003 fires,
they organised a final measurement of trees in the burnt arboreta
and at Bendora. Grants were obtained to assess future options for
Blundells and to prepare conservation management and communication
plans for Bendora. Staff of Environment ACT welcomed offers of further
assistance, for example through responses to opportunities for public
comment on various post-fire studies.
These activities were undertaken within the
framework of the embryonic ‘Friends of the ACT Arboreta’.
From September 2003, a periodic Newsletter was issued and a series
of Fact Sheets was initiated. Charlotte Keller prepared a demountable
display to serve as an introduction to local arboreta. Periodically
field days have been organised to the Bendora, Blundells, Blue Range,
Pryor and International arboreta.
On 19 July 2005, FACTA adopted an interim
set of rules as the first step towards incorporation, a move that
will enhance the status of the organisation. The prime purpose of
FACTA is ‘to foster the management and appreciation of arboreta
in the Canberra region’.
FACTA warmly welcomes new members: it is a
community venture, the success of which will depend on an ‘us’
rather than ‘them’ approach. An early activity has been
to assume responsibility for organising the monthly walks in Westbourne
Woods, a task which James Gray had undertaken for a number of years.
Contacts are Tony Fearnside (President, 6288
7656, janton@netspeed.com.au);
Steve Thomas (Treasurer, 6281 1587, sgandmlthomas@netspeed.com.au)
or
Charlotte Keller (Vice-President, charlotte.keller@mdbc.gov.au).
Bendora Arboretum
The arboretum is an interesting example of
the scientific approach taken to ameliorate Australia’s chronic
shortage of construction timber. Most of the trees were planted
between 1940 and 1958. The arboretum, at an elevation of 1265 m
on a gentle east-facing slope, is in an attractive mountain setting
surrounded by native forest in Namadji National Park. A small adjacent
hut marks the site of a camp used in building the road to Mt Franklin
and the arboretum. The arboretum and hut are accessible by foot
from a point 1.3 km along narrow Chalet Road, leading off to the
east from Mount Franklin Rd at a point about midway between Bulls
Head and Mount Franklin.
Of the 40 or so species planted, radiata pine has proved to be the
best and is widely used in forest plantations in southern Australia.
A brochure is available from FACTA, and a
self-guided trail is under development.
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A summary of the Economic Impact &
Perception of the Plantation Forest & Timber Industries in the
Central Tablelands Region of NSW
Extracted from a recent report by the Western
Research Institute
Overall the Plantation Forest and Timber Industry
is the mainstay of the economy of the Oberon Local Government area.
In 2003 this industry accounted for 59% of the gross regional product
of the area and 33% of the employment.
As to be expected, the impact is reduced when
considered for the Central Tablelands region and for the state of
NSW as a whole, but given that the Plantation Forest and Timber
Industry accounts for approximately 4% of the total land area of
the Central Tablelands the industry has been estimated to provide
almost 4% of the employment for the region, 5.4% of the household
incomes and 6.9% of the Gross Regional Product. As such the Plantation
Forest and Timber Industry is a valuable contributor to the economic
well being of the Central Tablelands region of NSW.
From a series of focus groups and telephone
interviews of 400 residents of the Oberon area, conducted between
March and June of 2005, it would appear that overall the community
of Oberon have positive view about the industry, including its potential
to expand both in the processing and forest plantation sectors.
There was a clear differentiation between peoples understanding
of the forest issues and the processing sector and subtle differences
in the views between residents of the town of Oberon and those living
in the villages and farms of the region.
From the perspective of investment by the
industry into the community, it was interesting to note that very
few respondents to the survey knew of any sponsorship or support
provided by the industry to the Oberon community. This is despite
an on-going investment by the industry in sponsorship and support
to community events such as the daffodil festival and forest based
activities such as car rallies, support of local sporting teams,
development of major road infrastructure in the region and the provision
of on-going support of community groups.
Whilst the community
of Oberon would appear to currently have a high level of satisfaction
with the Plantation Forest and Timber Industry it is likely
that a continued change in the demographics of the population will
bring about an eventual change in the expectations of the population.
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