‘Corporate Raiders Eye Rural Australia’ drills the The Weekly Times headline (June 18, 2008). With the Macquarie Pastoral Fund having $1billion in it’s pastoral investment kitty and PrimeAg having invested $225million since December 07, the 3.8% of Victorian agricultural land in corporate hands is tipped to rapidly escalate.
Concerned readers of George Monbiot’s Small Is Bountiful article last week will be scratching their heads. Monbiot quotes several well researched articles showing that large corporate farms have a lower output per acre than smaller, labour intensive farms.
However, the profit-motive of corporate investments is clouded by the tax deductive subsidy that Managed Investment Schemes can write off. Much controversy has surrounded the role of MIS’s in the avalanche of tree plantations taking over the countryside. Read this well balanced report from Landline. 100% of the first year’s investment can be written off by taxpayers, regardless of whether the trees survive or not. This investment pool of cash gives MIS’s a huge pool of cash from which to outbid the average family farmer. MIS funds have been growing at extraordinary levels for the last 6 years, with 93% growth in capital in 03/04, and 54% in 04/05.
In an act of shameless political shannanigans, the ATO has announced a removal of the non-forestry component of MIS’s. This is currently being fought in court on one level and in the Senate on another. This politicking avoids the fact that ‘green tree’ investment accounts for 2/3’s of all MIS activity. Macquarie & PrimeAg will be lobbying that even this legislation doesn’t pass.
Beyond the danger that plantations result in underground water tables being over-used, we bring this issue to your attention because it highlights how the tax system is increasingly used as a tool for hand delivering subsidies to vested interests. Of course they aren’t called subsidies, nor dare we say corporate welfare, but that’s the effect the frontiers of policy making wizadry are performing.
On the horizon are ATO exemptions for carbon sinks. Will rows of trees jammed together with disregard for understory fauna growth be able to apply for such exemptions? Let’s hope such exemptions are restricted to multi-story forestry.
Food production, even with rising grain prices, struggles to compete with the tax write-off’s MIS schemes allow. With financial behemoth’s like Macquarie having an abililty to print up new equity (by announcing a new issue of shares), the cheap capital this raises gives them an advantage over the true blue aussie battler when bidding for a new property.
All these forces combine to see the corporate powerhouses with their lobbyists clean up time and again, speeding up the consolidation of land ownership until we have orchestrated the seeming end goal of monopoly capitalism; having two or three brands controlling all of our supermarket aisles, transport corridors and housing ‘developments’. Sound a bit like socialism?
A Resource Rental system would encourage the high output farming that labour intensive, sustainable farming practices allow, putting massive farms with poor output at a financial disadvantage. This occurs because the larger the land holding, the greater the Rental fee (in a given locational region). With income and indirect taxes abolished under this system, prices of inputs become cheaper, giving the freedom loving farmer more room to grow.