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Sorry guys I'm in Great Southern---pardon me I stand corrected it is now Gunns,Ifound this article,you may have seen it



Economist calls for end to forestry tax breaks Asa Wahlquist From: The Australian February 11, 2010 12:00AM ?


HARDWOOD forestry managed investment schemes received tax-based subsidies of between $900 million and $1.2 billion in the five years to 2008, according to Australian National University economist Judith Ajani.
Dr Ajani said that, as a result, wood was now competing unfairly with food for agricultural land, water and other resources. She said government assistance to forestry and logging was equivalent to 42 per cent of the industry's unassisted value added, with tax-based subsidies through managed investment schemes making up 77 per cent of that assistance.

"Government assistance to grain, beef and sheep, which includes drought-related payments, are around 7 per cent of their unassisted value added," she said.

She warned that if managed investment schemes combined with forestry for carbon credits under an emissions trading scheme, vast areas of land would move from agriculture to forestry.

"At such significant differentials, government assistance works to redirect agricultural land, water and other resources away from food growing to wood growing, relative to an unfettered market outcome," she said.

She said many investors in managed investment schemes would recoup just 25 per cent of their money, "so they haven't turned out, for many investors, to be a very wise investment at all. The immediacy of the upfront tax deduction seems to blind the more considered judgment about wise investment." Dr Ajani said the return from Great Southern's hardwood plantation MIS was an estimated 1.9 per cent per annum.

She was critical of the Australian Tax Office for "providing a dispensation" to plantation managed investment schemes. "To receive that dispensation, the ATO must consider these investments are commercially viable. Without that deduction capability, most of these (schemes) would collapse."

Dr Ajani said there was mounting evidence the schemes were not commercially viable.

"Many of them are not covering costs," she said.

In the past year two major plantation forestry managed investment schemes, Timbercorp and Great Southern, have collapsed. But Dr Ajani said many others were still active in the market.

In 2009, ASIC reported 198 registered plantation schemes.

Speaking at the National Conference of the Australian Agricultural and Resource Economics Society in Adelaide yesterday, Dr Ajani called for tax-based assistance to forestry schemes to end, and for a Treasury review of the tax office treatment of forestry schemes.

Dr Ajani noted that the sale of Timbercorp's 90,000ha of plantations, at an average of $2200 per hectare, was "significantly less than the establishment costs of any plantation MIS project currently on offer". She said the assumed average investment in MIS hardwood plantations was $10,000/ha. But she estimated the actual cost of planting a hectare of trees and managing them over a 10-year rotation was $2000/ha.

She said many foresters claimed the assumptions about wood yields in MIS forestry prospectuses were optimistic, but her view was that price was "less of an overstatement than the wood yield".