Tree plantation rip offs

When tax incentives produce scams

When the federal government under John Howard decided to give tree plantation investors a tax break, they weren't doing them any favours.

While the ability to reduce tax is good news, plantation investors still need to stump up a good deal of their own cash to buy into tree plantation schemes.

Will they ever see their money again?

The problem with tax schemes is that they tend to stampede investors into particular financial arrangements because, for many people, tax effectiveness is an important part of investment and tax treatments lend schemes an artificial credibility...supported by the government...must be OK.

Unfortunately some operators clearly see these schemes as opportunities to take advantage of distant 'investors'.

Welcome to Gunns Ltd, Tasmania's biggest and most rapacious timber giant.

Gunns receives huge subsidies from government and puts enough back into party pockets to earn the simpering loyalty of major political party chiefs. That's the first cash merry go round.

Gunns has been clearing Tasmania's precious native forests for decades, converting beautiful and unique timbers into woodchips for sale on the world market. As native forests have been cleared, remaining forests are progressively harder to access and environmental objections have been more of a nuisance to Gunns. So began the shift to plantation timbers for wood chips.

The Howard government, keen to buy the votes of marginal Tasmanian seats, pandered to logging interests whom they believed controlled the vote.

Gunns, always ready for another handout, shifted focus into plantations to take advantage of federal MIS schemes which pay them significantly more than their costs to develop plantations.

With the amount of profit they make from each investor, they are able to buy more land for tree plantations. This process is rapidly converting Australia's farmlands into trees.

It is now clear that Gunns makes its money from two major sources - taxpayers and plantation investors.

If you've invested in a Gunns plantation, you should check your contract and your financial position carefully!