Timber plantations to bounce back

Investments in the timber plantation industry will return to form in the new year due to recent changes in legislation, according to plantation group Great Southern managing director John Young.

He says the last financial year was disastrous for those investing in timber plantations and, “I have never seen an industry so slaughtered”.

However, Young says in the next financial year, tax-effective timber plantations will be popular again as they have gained a level of government support.

The government support Young refers to is the 12-month pre-payment rule for plantations which allows investors immediate deductions for units that will be planted in the following financial year.

“We shall still do our key planting in June, but this now allows us to continue planting in July and August,” he says.

The proposed cooling-off period under the Financial Services Reform Bill is also of no concern, Young says.

“We do not want investors who are not happy. Our philosophy is that if there are people who want to leave the scheme, they get their whole investment back,” he says.

“We have very few people in that category, but a few do wish to get out due to their circumstances changing.”

Young is still confident that Great Southern’s investors will get the published returns on their investment.

“Our projected returns are a conservative 6 to 8 per cent and I see no reason why they are not achievable,” he says.

“Plantation timber is sold at a premium price and production prices are dropping due to automation.”