Money doesn't grow on trees

Paying farmers to plant trees that can't be harvested for 100 years is ... close to policy idiocy

IT IS difficult to imagine a more wretched waste of a colossal amount of money than paying farmers to plant trees that cannot be harvested for a century.

The new Abbott government is sticking with its plan to spend $1.55 billion on the Carbon Farming Initiative (CFI), part of its policy of direct action to reduce carbon dioxide emissions. The CFI was introduced by the Gillard government with the support of the Coalition.

Most of the money will be spent on growing trees, with the farms on which they are grown accumulating carbon credits. The original plan was for these to be bought by businesses needing to offset their emissions under the carbon tax scheme, but with the imminent repeal of the tax that market will not exist. And hopes of selling them overseas have evaporated with the rest of the world backing away from similar schemes and the virtual collapse of the EU’s carbon credits market.

Thus, apart from a small demand by companies choosing to voluntarily offset their emissions, most of the carbon credits will be purchased by the government. In practical terms, farmers will be paid by taxpayers to grow trees.

More trees may be a worthwhile goal, but this is not farm forestry.

The trees planted to generate carbon credits must continue growing for 100 years and cannot even be properly managed for fire control, otherwise the carbon credits will be lost and the farm obliged to replace the trees or repay the credits. They cannot be harvested for timber to build houses, fences or furniture, or even turned into woodchips to make paper.

If the government wanted to encourage more farm forestry, all it would have to do is improve the incentives, including removing the risk that when it comes to harvesting the trees, native vegetation conservation rules will stand in the way.

Paying farmers to plant trees that specifically cannot be harvested for 100 years is about as close to policy idiocy as it comes.

Some will argue that more trees to soak up carbon dioxide will help contribute to Australia’s role in combating climate change. And so it might. Nobody disputes the fact that atmospheric carbon dioxide is increasing, although there is debate about what effect this is having and whether it justifies government action.

But there is a problem. Even if rising carbon dioxide levels are causing climate change, and even if the consequences of this are negative to human civilisation, planting 20 million trees by 2020, the probably unachievable target of the CFI program, is a drop in the ocean. Its impact on Australia’s carbon dioxide emissions will be negligible and in global terms effectively zero.

Australia will be spending a very large amount of money, notwithstanding a significant budget deficit, rising government debt and many other deserving uses, to achieve next to nothing.

And it gets worse. A recent OECD research paper has confirmed that Australia’s pioneering carbon pricing is damaging its competitiveness, with energy-intensive industries shifting offshore to countries that do not tax carbon. This can only be avoided if Australia’s policies are also implemented by the rest of the world.

Assuming the repeal of the carbon tax, that problem will come to an end. But we will still be stuck with renewable energy targets that lead to the subsidising of solar and wind power generation, a major contributor to high and rising electricity costs. Our energy intensive industries will continue to be at a disadvantage compared to countries where energy costs are not artificially inflated.

But what if the CFI money was used as compensation for those who have invested in wind and solar power as these subsidies are progressively withdrawn? Within a few years our energy sector would be competing on the basis of cost efficiency, industry would benefit from lower energy costs, and consumers would be spending less to keep the lights on.

And that, I suggest, would be a much better use of the money than paying farmers to plant trees.

  • David Leyonhjelm has been an agribusiness consultant for 24 years. He was also elected to the Senate in the recent election as a member of the Liberal Democrats. He may be contacted at reclaimfreedom@gmail.com

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    David Leyonhjelm

    David Leyonhjelm

    has worked in agribusiness for 30 years and is a Senator for NSW representing the Liberal Democrats.
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    READER COMMENTS

    Trugger
    23/09/2013 4:01:09 AM

    "Paying farmers to plant trees that specifically cannot be harvested for 100 years is about as close to policy idiocy as it comes". I couldn't agree more. Since the 100 year tree planting scheme was first mooted, I have yet to see a costing/profit analysis for this bit of stupidity, as well as a study to compare it with the cost/profit of running the farm the same old way and a parallel study to analyze timber growing with a rotation of 25 or 30 years and selling the logs for timber. No matter what the govt says, wood does not disappear in a puff of smoke when the moment the tree is cut down.
    dunart
    23/09/2013 6:39:25 AM

    agree, it’s a bit like govt paying people the dole when there is work available. Actually better than paying dole for no return, at least this has a return!
    jack
    23/09/2013 7:00:14 AM

    Thansk you for your wiesdom David. Now if only you can convinve the taxation commissioner that mny contribution to the national tax affort is but a drop in the ocean and effectiely zero, so it wil be OK if I dont pay any income tax...
    Hamish Mitchell
    23/09/2013 7:14:05 AM

    The benefit of planting trees on farms is not only about credits it is also about productivity. Using poorer country & waterways to plant trees on increases productivity of the country. This is about investing in the future, increasing land productivity and developing a situation where the value is not only in the tree for timber or carbon, it is around that tree as well for shelter, habitat, water runoff mitigation it is endless. The beauty here is that farmers get to plant trees to benefit the country and the value of their properties as well.
    Bim Joyd
    23/09/2013 7:21:04 AM

    I look forward to David's wisdom being given free rain in the Senate.
    Archibald
    23/09/2013 9:01:29 AM

    I repeat, what about the Spencers and the Scrivens and the other numerous farmers, whom have had their assets ruined by the agreement Howard did with the States to lock up carbon and productive free hold agricultural land using Telstra money as the "carrot "for the Nationals and State Governments. Many famers got nothing for their carbon. Abbott needs to add $10 Billion to his number here, The original carbon was "stolen" now they decide to buy more with $1.5B. No matter what government we have, your private assets are not safe!! Valdimir, can I come to Russia, it looks good over there.
    sw
    23/09/2013 9:27:38 AM

    David, I don;t necessarily disagree but ...... can you just for once use some data and evidence to support your "opinion". Like they say ... everyone's got one. Also, it is easy to identify and yell about problems from the sidelines. What is your solution?
    Really
    23/09/2013 10:25:32 AM

    Well, David - our farms have been locked up under native veg - so we SHOULD be paid - buy the way, we have 5000 hec set aside for CFI - regrowth, we ARE grazing it, and we ARE maintaining roads, fences and feral animal control - so before you go off half cocked - do a bit more research on this subject - we are generational farmers, sick of costs rising, and men in suites like your locking up our land - with laws / legislation. If we can make $'s on it - then let us! The CFI IS workable now - unless YOU want to pay OUR bills - go away!
    macca
    23/09/2013 11:02:40 AM

    WA has a carbon register, it is interesting as you can see how it really works, who gains and who loses . Just about everything that is built or happens on Australian soil, has to provide a carbon offset, even concerts, footy events, parking i n cities, Those that will pay more are property owners of all types. To much interference towards property owners [ caretakers] from every department, needs immediate reform.
    bronwyn
    23/09/2013 11:58:38 AM

    David, if you can just make sure the LNP obliterates the Gillard/Rudd/Greens Carbon Tax legislation and do no more in your Senate term, you will be greatly applauded. As for the Abbott Direct Action Plan, I have no problems with your view on that either, - chop it!
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    Agribuzz with David LeyonhjelmCommentary, news and analysis with agribusiness consultant David Leyonhjelm. Email David at reclaimfreedom@gmail.com

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