Chapter 4
Committee conclusions
4.1
The committee considers that the tax deductions for carbon sink forests under
the Income Tax Assessment Act 1997 (ITAA) represent a valuable policy
addition that will promote greenhouse gas reductions. The structures and processes
outlined in the Act provide for a sensible legislative and administrative
framework relating to the tax treatment around the establishment of forest
carbon sinks.
4.2
The committee notes that other forms of greenhouse gas emissions
reduction activities by industries are tax deductible. The change in the tax
treatment of carbon sink forests addresses this anomaly in the tax system.
4.3
The committee believes that the tax deductions will provide incentives
for corporate investment into greenhouse gas abatement activities which
represents an ideal opportunity to direct necessary capital to achieve positive
environmental outcomes.
4.4
The new tax arrangements provide a short-term incentive to encourage
early establishment of carbon sink forests that will contribute to a
medium-term emissions target, while other options for delivering significant
emissions reductions are further developed. Carbon sink forests also contribute
to the achievement of national policy objectives for sustainable natural
resource management.
4.5
The committee considers that if Australia is to meet its carbon
pollution reduction goals at least cost, the support of a viable carbon sink
industry is important. Appropriate taxation arrangements are one part of a
range of measures needed to encourage the role of carbon sink forests in Australia's
carbon pollution reduction effort.
4.6
The committee recognises the benefits of relying on existing state and
territory regulatory structures for the management of the impacts of carbon
sink forests on the environment. The committee has some concerns that in
certain key areas, such as land clearance legislation, natural resource
management and water sharing, some states and regions may not currently have in
place appropriate regulations or plans to manage the impacts of carbon sink
forests. The committee notes that through the National Water Initiative, states
and territories are committed to completing comprehensive water planning
arrangements by 2011 and that COAG is currently seeking to accelerate the pace
of this planning. The committee also notes that under this process steps have
been taken to ensure that those water systems under the greatest pressure
receive early attention. The committee considers that it would be desirable if
a similar focus could be directed to regulation of land clearance and natural
resource management.
4.7
More specifically, the committee notes the concerns raised in relation
to the need to include ground water within water sharing plans. The committee
supports the inclusion of specific reference to ground water in the Guidelines.
4.8
The committee notes the significant support expressed during this
inquiry for specific incentives to encourage the establishment of biodiverse
forests. The legislation as drafted does not distinguish between the type of
forest planted and the committee is satisfied that it provides no disincentive
for the plantation of biodiverse carbon sink forests. The committee also notes
that biodiversity considerations have been taken into account in the
development of the Guidelines and that these should contribute to the
establishment of carbon sink forests in conformity with good practice
environmental and natural resource management frameworks. The committee
considers that any proposal to offer specific incentives for the establishment
of biodiverse plantings must be considered within the context of existing
environmentally focussed taxation incentives.
4.9
Finally, the committee welcomes the evidence received in relation to
alternative options for terrestrial carbon stores, particularly in relation to
perennial pasture cropping. While there clearly is some work to be done to
demonstrate the benefits of such an approach within a carbon trading scheme,
the committee considers that the wider benefits of improved soil structures and
the potential increases in productivity of such systems warrant further
examination. The committee considers that the government should request CSIRO
to assess the data being accumulated from pasture cropping trials in Western
Australia and New South Wales.
Senator Glenn
Sterle
Chair
Navigation: Previous Page | Contents | Next Page