"PRIME Minister John Howard has moved to defuse growing dissent among Government backbenchers over the treatment of agricultural managed investment schemes by proposing that an industry taskforce be established to find a compromise.
Mr Howard met with members of his back bench yesterday who had been angered by his decision to allow the Tax Office to scrap tax breaks on non-forestry investment schemes from July 1.
Although Mr Howard has not agreed to a review, he has softened his stance after revolt from his own back bench last week and reports of job losses across rural and regional Australia.
Victorian Treasurer John Brumby has criticised the decision, saying it will cost Victoria $800 million worth of investment, "… the new policy has been poorly thought out and is fundamentally flawed", Mr Brumby said. "Why have one set of rules for growing eucalypt trees and another for almonds or olives? The decision will cost Victoria hundreds of millions of investment and has already cost job losses."
The issue is expected to spark heated debate in the Coalition's party room meeting today, with Liberal MP Wilson Tuckey warning that land prices will plummet if the schemes, supporting a range of agricultural investments including nuts, olives and wine, are scrapped. "I am deeply concerned that if this were to proceed, there would be a big reduction in land prices in rural areas," he said.
Federal Treasurer Peter Costello and Agriculture Minister Peter McGauran are against the schemes, which have been criticised by some as hurting farming families by increasing the cost of land and water, and distorting commodity prices.
Mr McGauran agrees that the schemes have pushed up land prices, but refuted Mr Tuckey's suggestion that land prices could fall if the tax concessions were removed.
"Some farmers have done very well out of selling to MISs and good luck to them.
"But you can't structure agriculture on the basis of tax-driven investment rather than market-based investment. Already there are strong signs that olives, almonds and avocados will be in overproduction in the near future," Mr McGauran said
TIM Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
