Tuesday, July 26, 2011

Costs of Climate Tax 'Could Drive Farmers From the Land'

Carbon tax costs could push farmers off the land and raise the price of agricultural productivity, a Senate committee has been told.

Sitting in Brisbane, the Senate select committee on the scrutiny of new taxes heard that the Queensland government would forgo $1 billion in royalties in the coming decade because of the tax.

Queensland Farmers Federation chief executive Dan Galligan said the extra costs would put more pressure on farm profits, and called for industry-specific economic modelling.

"The analysis is too broad to give us a clear understanding of how many farmers this will affect to a point where they may well leave the industry," he said. "That may well happen for many farmers -- that loss in profit margins, associated with a number of other issues, will be enough reason for them to leave the farm."

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Under questioning from Labor senators, Mr Galligan acknowledged the government exemptions on agriculture emissions and fuel were helpful. He said the Coalition's direct-action plan to pay $10 a tonne of soil carbon abatement would be insufficient.

But he said the Gillard government's carbon reduction scheme could have the "perverse effect" of stalling farm productivity because improvements relied on power use, which would be more expensive under the carbon tax.

"The mitigation options under the carbon farming initiatives may in fact further constrain a farmer's ability to increase productivity, which would be their usual mechanism to fight against a reduction in margins," he said.

Also appearing before the Coalition-dominated committee, Queensland Resources Council chief executive Michael Roche said taxpayers could be forced to compensate the $1.7 billion asset writedown in state-owned coal-fired power generators.

He queried why the Bligh government had not highlighted an estimated $1bn in lost coal royalties between 2012 and 2021. "I would have thought the Queensland government would see the risk for their single largest source of revenue outside of grants from the federal government," he said.

But Queensland Premier Anna Bligh said the coal industry had a "very strong future", with almost $60bn worth of mining applications in the pipeline.

Next week, the committee will visit the northern NSW town of Tamworth, in Tony Windsor's federal electorate, before moving to the Queensland coalmining centre of Bowen.

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