Image for A Submission to the Senate Enquiry into Forestry Managed Investment Schemes

The Greens submitted a dissenting report to the Senate Enquiry based on the fact that the Chairs’s Report seriously underplayed the role that taxation incentives provided in fuelling the forestry MIS bubble.

They noted that the ATO sought to address this issue.

The part played by Minister’s Eric Abetz and Peter Dutton in legislating a specific workaround allowing for 70% of the investment to be deducted upfront without having to prove that they were carrying on a business, stumped the ATO.

Importantly the fact that the ATO had queried the matter brought down these Ponzi schemes and those involved lost between 4 and 6 billion dollars as the scam imploded

As a result one could suggest that the Gunns $50,000 gifted to the Liberals three weeks after Abetz was made the Minister for Forests was not a good investment.

I made a submission which in hindsight is now topical regarding political power and dual nationals sitting in the Senate ...

The Committee Secretariat,
Senate Standing Committees on Economics, Canberra, ACT
10 August 2014

Introduction:

Ferguson, Peter (September 2009). “Anti-environmentalism and the Australian culture war” - Journal of Australian Studies 33 (3): 289–304 quotes Senator Erich Abetz, the then Forestry Minister as stating:
“The campaign against the export of Tasmanian woodchips is akin to Treason ...”

I hereby make a submission to the Senate Enquiry into Forestry Managed Investment Schemes. This submission may be published. I will address the given Terms of Reference with regard to the structure and development of Forestry Managed Investment Schemes (MIS) under two headings.

(a) The motivation and drivers to establish the framework of the schemes

(b) The role of Governments in administering and regulating Forestry Management Schemes

I will address (a) and (b) regarding the influence exercised over these matters by the then Minister of Forests, Senator Eric Abetz, and some of the drivers behind this thinking as expressed in his extraordinary Treason statement above.

Background:

Abetz was first appointed a Minister as the Special Minister for State in January 2001, a position he held until January 27, 2006 when he became Minister for Fisheries, Forestry and Conservation in the Liberal Howard government.

I was to challenge his status as a dual citizen sitting in the Australian Senate contrary to the Australian Constitution section 44. The preparation of this challenge held before the High Court of Australia gave me a considered and detailed insight into the Abetzian world which enables me to provide a possibly unique context to this submission.

I took objection to an article written by the Senator in The Age of the 9th February 2007 headed “Brown can’t see the forest for the trees.” Abetz stated “… no Senator Brown, Forests are not harvested for woodchips. Forests are harvested for saw logs and specialty timbers such as for furniture. Rather than being wasted, the residue is turned into woodchips.”

I knew this to be untrue and it intrigued me that a Minister of the Crown could, or would, make such a blatantly biased statement.

The Age published my letter of reply which read in part:

“The reader should bear in mind after the last Federal Election and not before, the Senator accepted on behalf of the Tasmanian Liberal Party a donation of $60,000 from the Tasmanian woodchip logging and plantation company, Gunns Ltd.”

This paragraph prompted a letter from Abetz to me and I quote:

“I write regarding a letter to the Editor you published in The Age on 13th February 2007. In that letter you asserted that I had personally accepted monies from Gunns Ltd on behalf of the Liberal Party. I have communicated to The Age that this is demonstrably false and on advice defamatory…”

This caused me to look into the Parliamentary history of Senator Abetz where I discovered that he had not been elected but had been appointed by the Tasmanian Parliament to a fill a casual vacancy in the Senate in 1994.

The creation and filling of the 1994 vacancy was achieved in the very short period of three weeks. Premier Groom, in advising the Parliament when moving the appointment of Abetz, made the statement that he was not disqualified from being appointed to the Senate. There are two requirements that the person must be a member of the Liberal Party and be qualified to sit in the Senate the unusual phrase “he was not disqualified” aroused my interest.

Candidates for election have to make a formal declaration that they are qualified to sit in the Senate. The Electoral Office advises candidates that if they were born overseas certain requirements must be fulfilled to be qualified, to stand and to sit. It is the responsibility of each candidate to satisfy himself that he is qualified. In the case of a German born person a request must be made to the German Federal Government to cancel the individual’s citizenship.

There are no records of the paper work submitted by the Tasmanian Liberal Party to support the nomination of Abetz.

In another letter to Senator Abetz 16 March 2007 (A copy of which was sent to the Clerk of the Senate) I asked the question “Please supply me with the date of your Certificate of Citizenship and photocopy of same so as to prove your eligibility to sit as a Senator in the Upper House of the Australian Parliament.”

Abetz replied “There appears no logical correlation between these two matters you have raised and your bizarre request of me save for vexatious artifice.”

I live in the rural village of Chudleigh in Tasmania, so it was with much surprise that I received unannounced, and at my front door, two men from Senator Abetz’s office in Canberra. They informed me that they were there to warn me against continuing my “vendetta” (their words) against Abetz. I told them to go back to their master and inform him that as a result of this visit “I would pursue him to the grave” for I did not like being threatened by a Minister of the Crown.

I assume that the visit was a result of my sending copies of the Abetz correspondence to the Prime Minister and the Clerk of the Senate.

The results of my investigations and the case against Abetz have been fully documented on Tasmanian Times and I attach some of the relevant documents.

The end result of this matter was that having told Senator Abetz I would challenge his right to sit in the Senate, he being a dual national, Abetz made application in 2009 to the German Federal Government to renounce his citizenship. Having been the Minister for the Electoral Act from 2000 until 2006 and in the Senate since 1994 he would have been fully aware of his predicament as a dual national sitting in the Australian Parliament and his status before the High Court.

The fact that Abetz as a Minister of the Crown saw fit to send two men from his office to my front door in Chudleigh to threaten me is indicative of the importance, in his own mind, that he attached to his compromised position.

Senator Abetz had sat in the Senate as a Senator for Tasmania for several terms whilst a dual citizen contrary to section 44 of the Australian Constitution. The law requires that you must have renounced your non Australian citizenship before you nominate for the office. I advised Abetz that I would challenge his right to nominate for 2010 Federal election to the Senate.

I took the right of Abetz to be elected in 2010 before the High Court acting as the Court of Disputed Returns. As the case proceeded Senator Abetz revealed that he had written to the German Government in 2009 and that as a result they had revoked his German citizenship in 2010. Abetz was therefore, for the 2010 election, eligible to nominate and so I was forced to withdraw my case. Such a case can only be heard within 30 days of an election and hence only the 2010 election was being contested.

Abetz could not renounce a citizenship that he did not have and he was therefore ipso facto a dual national sitting illegally in the Senate prior to 2010.

His then current 6 year Senate term did not finish until June 2011, a period of some 20 months while his status was still in the hands of a foreign power, and he continued to sit as a Senator when he was not eligible to either nominate or sit for that term.

The Senate is responsible for the enforcement of who is entitled to sit in the Senate. Three Presidents of the Senate stated that it would be impertinent for them to ascertain the status of Senator Abetz, and they refused.

There was no attempt by Senator Abetz to do what several other members of Parliament have done, when caught in similar circumstances, namely to resign and contest the casual vacancy. Nor did he apologise for his failure to either admit his ignorance, or to have knowingly illegally sat in the Senate having declared that he was qualified.

This is a dangerous situation for a person whose status is subject to unwanted public exposure for he becomes vulnerable to undue external influences to avoid such exposure.

On 20 November 2007 I drew in writing Senator Abetz’ attention to the fact that a further $50,000 had been given by Gunns Ltd to the Federal Liberal Party on 21 April 2006. This was within weeks of him having been made Minister for Forests. This donation was declared but it was given from a company pushing a controversial pulp mill in Tasmania and directly involved in every aspect of forestry in Tasmania.

This donation would be perceived in the worst light possible by the electors of Tasmania.

It could be perceived as compromising the position of the Minister, or at the very least influencing him and his party’s thinking in the execution of their duty.

What all sides have learned, or should have learned, from the NSW ICAC hearings is that politicians and political donors are a dangerous mix.

The history of the Liberal Party and its relationship to Gunns Ltd has been long and eventful. The actions of John Gay, the Edmond Rouse bribery scandal, Robin Gray and the money in the freezer, the appointment of a Gray a former Liberal Premier of Tasmania to the Gunns Ltd board, all allowed these men to act as players in the Gunns pulp mill approval process, its ongoing survival, and the introduction and protection of the MIS Ponzi scam that converted Tasmanian native forests to plantations.

Many of the decisions taken in relationship to forestry can be described as corrupt. One such definition of corruption is the illegitimate use of public power to benefit a private interest.

The planning approval process for the pulp mill, resignations of tribunals members, removal of the process to parliament and special legislative privileges unheard of in Tasmania all added to a climate that ensured that there were none of the checks and balances normally associated with regulatory and enforcement procedures separate from the parliamentary process in regard to local planning, roads, pipelines and land transfers to name but a few.

The mixing of private sector corporate interests, crown interests, the functions of Government departments, the performance of statutory officers ie crown lands and environment forest practices were all being undermined by the implementation of MIS in Tasmania and they have served to keep the state, business and the public in a state of turmoil for almost four decades.

The other element operating was cronyism - where one seeks to help one’s friend because he is a friend of another. In a small state such as Tasmania where relations, religions, and schools clubs are so closely connected it’s hard to distinguish any difference other than with those who are referred to as others their ma..aates.

In many of these cases, the people they were trying to help were significant donors to the party.

The question I ask the Committee to address is who in the Liberal Party was aware of this serious skeleton in the Abetz closet, and were they able to use this information to enforce his promotion and protection of the MIS scam. These are questions that should be asked by the Committee of the then principal decision maker, the Minister, Senator Abetz. If others such as Groom or Robin Gray knew of the Abetz problem over his citizenship then Abetz was in an untenable position.

Citizens have limited means of keeping tabs on elected officials in circumstances where there has been political corruption, failures of regulatory bodies and a consensus by the forces of influence at every political level.

Evidence of Ministerial intervention regarding MIS scams using the Minister’s own words.

Abetz was appointed Minister for Forests in the Howard Government in January 2006. His philosophy regarding his Ministerial responsibilities can be assessed, in his own words as taken from his address to the Borden Regional Outlook Conference held on the 23rd August 2006 in Western Australia.

Abetz address is quoted here in part ...

Introduction:

• Today I particularly want to focus on plantations something which I take a great deal of interest in as Australia’s Minister for Forestry

• We need to remember that as we move out of harvesting old growth and native forests around the country, limiting our timber supply, there are only two alternative sources for timber, one to import more timber and timber products from overseas, bearing in mind we already have a $2 million dollar trade deficit in timber and timber producers, or two, we can crop our own trees. That is, plantations
Plantations Tax Review:

• I am sure you are all familiar with the Review into the Taxation Treatment of Forestry

• Plantation taxation has been one of the most challenging issues I have dealt with as Forestry Minister

• the Productivity Commission Trade and Assistance review reveals the following:

In 2004/5 a total of $1.4 billion in assistance was provided to primary production including drought funding

• of this $40.3 million went to forestry and logging of which $20 million went to the CSIRO for research into forestry

• leaving only $20 million for forestry and logging, I suspect the plantation sectors’ share of this was very small.

• We also need to recognise that without support from the taxation system our plantations sector would struggle

• to be internationally competitive I am very supportive of the current twelve months rule plantations taxation arrangement and want to maintain it

• The twelve month rule has been very successful in leveraging private sector investment to create plantations through managed investment scheme arrangements

• It has also been very successful in bringing city money into the country

• That is city money creating rural jobs

• There are claims that plantations destroy rural jobs and rural communities, can I say that I have not seen any evidence of this.

• The twelve month rule has been in existence in its current form since 2002

• What is actually happening is that plantations are creating new jobs and revitalising rural communities

• There are also claims that MIS are driving up property prices at the expense of local farmers on that let me just say that I am informed that more recently there has been New Zealand dairy farmers out bidding companies like Great Southern Plantations for land who are driving up prices

• I do not know many farmers who would not prefer their land to be worth more than worth less

I suggest that here, as expressed in Abetz’ own words, is an example of what can be achieved in the purchase of political influence by a declared donation, a donation made by the MIS and logging company Gunns Ltd (then reliant for its survival on the MIS scam)a donation to a political party and a Minister who was in a position, willingly or unwillingly, to influence an outcome in the company’s favour.

Abetz comments should be read in the context of a gift of an extra $50 thousand dollars to the Liberal Party made immediately after Abetz became the Minister for Forests. His comments made at the Borden Regional Outlook Conference 2006 are, in the main, a tissue of lies woven by a man who is possibly under duress over his parliamentary status and who is further compromised by political donations from a major player within the forest industry.

Despite a stalwart defence by Abetz, the MIS scam relating to nitens plantations was to finally implode with dramatic results, principally a cost to the taxpayer of some $4 billion because the promoters of the scheme went bankrupt. The ATO cut them off at the knees over what was a tax avoidance scam dressed up by Minister Abetz as a scheme that brought city money into the country.

Subsequently the bankrupt MIS companies have had their land assets purchased by offshore investors in what has been the largest transfer of developed freehold land in Tasmanian history, all at a fraction of the cost of establishment, thereby crystallising the loss to the taxpayer and the loss of good farmland to the farmer.

John Hawkins,
“Bentley”
Tasmania,
August, 2014

Sources ...

I attach the references for the sequence of events as detailed above regarding my interest in Abetz as published on Tasmanian Times ( grouped here: http://tasmaniantimes.com/index.php/category-article/149 ) ...

Tasmanian Times,12th January 2009 “Abetz put on notice”

Tasmanian Times, 2nd August 2010.”Where is the document Senator Abetz? ”

Tasmanian Times, 16th August 2010 “Abetz the Senate and the Court of Disputed returns.”

Tasmanian Times, 15th November 2010 Abetz wins in the High Court- Eligible to serve.”

Tasmanian Times, 20th November 2010. “Hawkins v Abetz what the High Court said.”

Tasmanian Times, 26th November 2010. “Senator Abetz statement to the Senate.”

Tasmanian Times, 29th November 2010. “An Open Letter to the President of the Senate.”

Tasmanian Times, 5th March 2012. “Abetz, Carr and a Senate Casual Vacancy.”....................