National News - September 2006
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19/09/06 Farmer planning diesel tree biofuel, AAP
15/09/06 Call to cut tax 'rorts' on agriculture schemes, Katharine Murphy, Canberra, The Age
13/09/06 Coalition split on investment schemes, Katharine Murphy, Canberra, The Age
11/09/06 Cabinet wrangle on forestry tax perks, Michelle Grattan, The Age Business,
06/09/06 Fire threat grows : Herald-Sun Wimmera; Sept 06; Mallee
01/09/06 Gunns' chips down in profits, -NICK CLARK, The Mercury
September 19, 2006 - 2:54PM, AAP
They say that money doesn't grow on trees, but a Queensland farmer believes fuel does.
Mike Jubow, a nursery wholesaler from Mackay, has begun importing seed from Brazil to plant diesel trees.
The tropical trees, which have the botanic name copaifera langsdorfii, produce a biofuel that can be tapped, filtered and used to power machinery such as tractors.
It is estimated a one hectare plantation could produce 12,000 litres of fuel a year - enough to make a small farm fuel self-sufficient.
Mr Jubow, who operates the Nunyara Wholesale Forestry Nursery and has been in the industry for 14 years, said he had heard about the trees from a colleague attending a forestry conference.
"I pricked my ears and thought 'This guy is having a go at me' but when I came home I got onto the net and typed in diesel tree and there it was," Mr Jubow said.
"I thought 'I've got to get seeds for this thing' and it's taken me three years to track them down."
He sourced the seed from Brazil and says the first seedlings would be available in late January.
The recommended method of growing them is to plant 1,000 trees on a hectare of land, preferably in a tropical area, then test them for their vigour, growth and yield about three years later, which ordinarily would lead to culling about half of them.
About four to six years later they would be measured again before culling them down to between 250 and 350 of the best trees, which would be inter-bred and harvested for seed.
Mr Jubow said a large mature tree would yield about 40 litres of diesel a year, which equated to about 12,000 litres per hectare of trees.
"It becomes astonishingly viable for a farmer to have a piece of his most productive land to get the tree up and running and then he can be independent from the fuel companies for the rest of his life," he said.
They are known to produce fuel for 70 years.
While the fuel cannot be stored for more than a few months it can be tapped.
But even if it is left too long, it thickens into copaiba oil, which is used in alternative medicines and fetches around $100 a litre in the United States.
And at the end of the tree's life, it can be milled to produce a light brown timber favoured by cabinet makers.
"There's nothing wasted on the tree," Mr Jubow said.
Katharine Murphy, Canberra, The Age
September 15, 2006
Coalition split on investment schemes
Cabinet wrangle on forestry tax perks
OUTSPOKEN Liberal senator Bill Heffernan has launched an attack on the tax breaks offered to investors through so-called "managed investment schemes" aimed at agricultural products such as plantation timber.
As cabinet again considered a Treasury proposal to wind back the generosity of the schemes, Senator Heffernan told The Age last night they were a "rort" that threatened the viability of family farming. He later told ABC Radio he would campaign to shut the schemes down.
"There are a lot of fake people playing ducks and drakes here with the future of Australian farmers and this is becoming for me an 'over my dead body' issue," he said. "This will cause a serious corruption in the capital base of rural Australia and I mean, I can't speak more plainly than that."
The future of the schemes was the subject of an intense debate in the Coalition party room earlier this week.
A number of senators and MPs supported a push by Forestry Minister Eric Abetz to maintain the schemes in their current form. But West Australian MP Mal Washer backed Senator Heffernan's concerns, and also described the schemes as a rort.
Treasury wants to wind back the schemes. Revenue Minister Peter Dutton has taken a proposal to cabinet to scrap the rule allowing investors to claim an up-front deduction — the 12-month "pre-payment" rule.
Senator Abetz believes major changes to the schemes will force investors out of industries such as forestry and into more tax-effective investments — which could compromise the viability of the industries.
The Government is expected to announce its final position on the issue shortly following yesterday's cabinet deliberations.
Katharine Murphy, Canberra
September 13, 2006
Cabinet wrangle on forestry tax perks
A BRAWL has erupted within Federal Government ranks over a proposal to limit tax breaks for plantation investments ahead of further cabinet consideration of the controversial plan expected later this week.
A substantial group of MPs and senators used yesterday's Coalition party-room meeting in Canberra to speak in favour of retaining the current arrangements, which give investors the benefits of open-ended tax breaks if they invest in products like plantation timber.
Supporters of the status-quo included Tasmanians Guy Barnett, Richard Colebeck and Mark Baker, and West Australians David Johnston and Judith Adams.
Their arguments — which dominated yesterday's meeting — bolster the position of Forestry Minister Eric Abetz, who has been fighting a push by Treasury to cap the tax breaks offered under the schemes.
Cabinet is expected to consider the Government's final position on managed investment schemes on Thursday.
Revenue Minister Peter Dutton took a proposal to Cabinet earlier this week to scrap the current rule allowing investors to claim an up-front deduction — the so-called 12 month "pre-payment" rule.
Several Government MPs, including West Australians Mal Washer and Geoff Prosser, and Victoria's Stewart McArthur, believe the Government should wind back managed investment schemes.
They believe the schemes have created perverse outcomes in key Australian agricultural markets, for example, the huge tax-driven investments in wine grapes in recent years.
The wine industry is battling a glut of grapes that is damaging its viability.
Dr Washer told the party room yesterday that managed investment schemes should be reformed because they cost the Government millions in lost revenue and distorted the market by encouraging capital to flow to certain investments.
He described the schemes as a "rort".
But this view was countered by MPs such as Mark Baker, who argued that the schemes were essential to ensuring sufficient capital for industries ranging from forestry to apricots, and walnuts to garlic.
Michelle Grattan, The Age Business
September 11, 2006
THE future tax arrangement for investment in plantations is due to go before Cabinet today, with Forestry Minister Eric Abetz resisting a budget proposal to cap deductibility.
The budget flagged a cap of $6500 per hectare first-year tax deduction for those in managed investment schemes, with any balance deductible in the following year.
The period in which planting must occur would be extended from 12 to 18 months. The plan would change the status of investors from being growers carrying on a business to passive investors, who would receive a statutory tax concession.
Revenue Minister Peter Dutton has been consulting the plantation timber industry and others about the plan. It is believed that the proposal he is bringing to cabinet differs little from the budget one.
But Senator Abetz is believed to be arguing that the proposed cap would harm the industry and lead to a decline in the plantation sector, which has become increasingly important because of the declining availability of native and old-growth forests.
The present open-ended tax deductibility is estimated by Treasury to cost about $300 million a year in revenue, although this is disputed by the forest sector.
The executive director of the industry body, Treefarm Investment Managers Australia, Alan Cummine, said the existing tax arrangement should be retained because it was stable, workable and provided confidence to the industry. "When the Government changed the tax rules in 1999, it caused a 70 per cent fall in plantation investment, with a dramatic impact on jobs and businesses in rural Australia. The Government was forced to backtrack in 2002, and the industry has only now recovered. The Dutton proposal is more complex than the 1999 action."
At present there are about 20 forestry schemes in the market, of which seven are listed on the stock exchange. The schemes in total have about 70,000 woodlot owners. The managed investment schemes have raised about $3 billion for plantations in the past five years.
Fire threat grows
September 06, 2006 12:00am Herald-Sun
AUSTRALIA has recorded its driest August on record, increasing the chance of severe bushfires and giving little hope of an end to the crippling drought.
In Victoria, the Wimmera-Mallee is in particular trouble with the ninth year of the worst drought to strike the area since records were first kept.
Gunns' chips down in profits
NICK CLARK, The Mercury
September 01, 2006 12:00am
TIMBER giant Gunns Limited has had a major fall in annual profit, mainly because of a downturn in woodchip sales to Asia.
The company reported a 13 per cent drop in annual profit to $87.1 million, compared with $101.3 million the year before.
Woodchip sales plummeted from 4.4 million tonnes to 3.5 million tonnes causing a 20 per cent drop in forest products revenue.
In 2004 Gunns sold nearly five million tonnes of woodchips and recorded a $105 million profit.
But the stock market reacted favourably to the result and pushed Gunns shares up by 16c to close at $2.76.
Pulp and paper industry analyst Robert Eastment said although revenue was down the market had liked Gunns' cost management.
"They have sacrificed some woodchip volumes to maintain price and I think that is a sensible strategy in the present market," he said.
He said the tough woodchip market made a pulp mill a sensible aim.
Executive chairman John Gay said the export markets remained difficult because of the relative strength of the Australian currency and highly competitive but subdued activity levels in the building industry in NSW and Victoria.
"Improvements in earnings for the forest products business in 2007 will be largely influenced by our international competitive position, that is by our currency value relative to international trading competitors," he said.
"Current indications are that the trading conditions in the domestic timber market will remain subdued."
Mr Gay said the $1.45 billion Long Reach pulp mill was a clear priority for the company.
"Based on current market pricing the project has the potential to increase annual revenue by more than $650 million a year," he said.
"The company will be highly competitive in a global context with its capacity to produce high quality wood fibre, the location of its resource, proximity to market and the application of efficient technology."
Mr Gay said the managed investment business provided earnings of $68 million compared with $30 million the year before.
The Tamar Ridge wine business had grown. "Annual sales increased to 45,000 cases in 2006 and we expect 65,000 cases in 2007," he said.
Walnut and winegrape managed investment programs had not met expectations.
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