Initially billed as low-risk investments, failed timber and agribusiness schemes around the country have now cost thousands of Australian investors their life savings. Source: ABC News
“Pests and diseases, bushfires — these things were anything but safe and the fact that you didn’t get a cash-flow for 15 to 20 years suggests that they always were going to be very high risk,” Senator Peter Whish- Wilson said.
Senator Whish-Wilson is part of a Senate committee examining managed investment schemes in forestry — and why so many have failed.
It has been six years since two of the largest agri-business schemes, Timbercorp and Great Southern, collapsed in spectacular fashion with combined losses of more than $1 billion.
Thousands of investors lost their life savings and were forced to fend off banks who moved to take their homes.
“We’ve really seen people who have lost their livelihoods, who just aren’t coping because they trusted people to put them into these schemes,” Senator Whish-Wilson said.
The number of failed schemes continues to grow with a Western Australia plantation of paulownia trees recently put into voluntary administration, leaving hundreds of growers like Warren Carter paying for trees that are undersize and unable to be sold.
“Nobody is going to get anything, it’s worthless, they might as well put a match through it,” he said. “They promised us up to $700,000 for the allotments I had. “Nobody can really tell us where all the money has been disappearing to.”
Earlier this month the company’s administrator sent a letter to investors outlining expert advice which said the trees were planted in the wrong place without enough rainfall and the management did not collect enough money to water and fertilise them properly.
The result was sunburnt trees half the size they were supposed to be, and worth nothing.
Mr Carter poured $90,000 into the scheme, including his superannuation, hoping the return would help him put his daughter through university.
“It’s a lot of money in anybody’s terms. I’m not filthy rich. That money is gone and I can’t see any way of getting it back,” he said.
“Because the Government was backing it, everybody thought it was legit and it should be fine,” he said.
Lorraine Stander was also caught up in the scheme run by Paulownia Farm Management.
“I’ve lost a lot of sleep and I’m angry,” she said.
The money was supposed to set her up for retirement but instead she found herself in a financial hole.
“It has been heartbreaking really … I’m only one of thousands of people who have been affected by this.”
The situation is all too common after lucrative tax incentives introduced in the 1990s saw hundreds of plantations established across the country.
The vast majority have since failed and Senator Whish-Wilson believes they were doomed from the start.
“What we saw was this massive land grab and almost like a gold rush of trying to grow trees as quickly as possible to meet these kinds of incentives that the Government had put in place, and of course that led to a huge oversupply — no market for these trees at all,” he said.
“There was no evidence that you could actually grow trees successfully in line with what the prospectuses were offering.
“There’s been almost a complete failure rate. There’s been very few successful schemes.”
Forestry managed investment schemes are still being established and the senate inquiry is expected to recommend the Government scrap the tax concessions that have propped up the schemes for decades.
The committee is due to hand down its findings next month.
