The Forest Industries Federation says calls for a review of forestry managed investment schemes (MIS) are unwarranted.
Last week, Assistant Treasurer Nick Sherry accused the Coalition of wanting to scrap such schemes after the collapse of major agribusinesses Timbercorp and Great Southern last year.
Deputy Opposition Leader Julie Bishop denied the claim but said a review of the way the schemes operate is needed.
The federation's executive director, Bob Pearce, says the schemes are vital to the forestry sector and says they are operating well.
"Some changes have been made to MIS schemes to tighten up the way in which they operate but they are absolutely crucial to the plantation timber industry because there's no other way of getting significant sums of capital invested," he said.
"There needs to be a tax system which gives them some encouragement and some return early on by way of tax breaks."
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