Jan Davis: Forestry schemes a disaster

One subject certain to touch a raw nerve of Tasmanian farmers is forest managed investment schemes. Farmers have been left high and dry as scheme after scheme has failed.

Some have been investors as well as growers, in the true sense of the word. Now, with the collapse of Gunns, for instance, they have plantations growing on their land, they have trees whose ownership is in question but for which there may not be a market even if they had clear title.

It is a disaster, particularly for those farmers who saw participation in the schemes as an attractive, sensible, productive, commonsense way to provide for their retirement, their superannuation.

The Australian Securities and Investments Commission is critical of the lack of research that went into the Howard Government’s initial approval of the concept of the schemes, a concept that has damaged tens of thousands of Australians, not only farmers.

And, in true fashion, successive federal governments have not addressed the shortcomings that led to this avalanche of financial disasters for so many Australians and so many Tasmanians.

Treasurer Joe Hockey has promised to examine regulation of the schemes as part of his overall review of the national taxation system. The outcome will be riveting.

In the national press recently, attention focused on the plight of investors in Great Southern plantations who saw their investments collapse, but particularly for those who took out loans to finance those investments. They face crippling interest at the bank, notably the Bendigo Bank, which bought the debt. Those investors face paying huge, inflated loans for a worthless asset. It is like paying the mortgage on land you don’t own and on buildings that have been razed.

But what do we do? What do the courts do? What does the government do? Intervene and say that the loans are not repayable because the schemes collapsed? What about those who paid hard cash for their investment, didn’t take out loans? Equity demands that both sets of investors be treated the same.
The fate of all investors hangs on an imminent decision in the Victorian Supreme Court. At the same time, at the political level, NSW Liberal senator Bill Heffernan and ALP powerbroker Sam Dastyari are calling for a parliamentary inquiry into the Great Southern collapse and the involvement of banks.

You have to draw the conclusion that, once again, because of the relatively unregulated state of the financial advisory industry, investors were sold a pup. They have lost immense amounts of money; and only the promoters of the schemes have won.

Meanwhile, with the associated collapse of Gunns, it is Tasmanian farmers who have been left stranded – unmanaged trees on land leased from them but the leases have not been paid and, when they thought the trees would at least revert to them as a form of collateral, even that has not applied.

This is a mess, a tragedy, a disaster – and it is taking its toll on those who are the victims. It should not be swept under the carpet. State and Federal governments need to address the hardships that continue to afflict so many long after the quick money men have packed their bags and moved on.
TFGA chief executive Jan Davis