Issue
Do firebreak maintenance and wildfire control activities carried out in a national park on behalf of a government authority constitute 'forestry' as defined in section 35 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
No. Firebreak maintenance and wildfire control activities carried out in a national park on behalf of a government authority are not 'forestry' as defined in section 35 of the EGCSA.
Facts
The entity is contracted by a government authority to undertake regular firebreak maintenance and wildfire control activities.
The wildfire control activities involve constructing and maintaining control lines in the direct path of wildfires and away from the fire edge, and the movement of fire fighting machinery.
The work is carried out off-road in National Parks.
Reasons for Decision
Subsection 53(2) of the EGCSA provides that an off-road credit is payable if an entity purchases off-road diesel fuel for use 'in' primary production (otherwise than for the purpose of propelling a road vehicle on a public road).
The expression 'primary production' is defined in section 21 of the EGCSA to mean: (a) agriculture; or (b) fishing operations; or (c) forestry.
Unlike the definitions of agriculture in section 22 of the EGCSA and fishing operations in section 34 of the EGCSA, the definition of forestry in section 35 of the EGCSA has no specific requirement that the activities outlined in the section be carried on for the purposes of a business.
Despite this, it is considered that eligibility for off-road credits is only available for primary production activities (including forestry) that are conducted as a commercial or business enterprise.
This view is supported by the Explanatory Memorandum to the Diesel Fuel Taxes Legislation Amendment Bill (No 1) 1982. As the diesel fuel rebate scheme was the precursor to the Energy Grants Credits Scheme, and contained an identical definition of the term forestry, the explanatory memorandum is relevant when interpreting the EGCSA.
The explanatory memorandum states that the package was designed to 'introduce ... a new system providing for rebates of duty paid on diesel fuel used for "off-road" purposes by persons engaged in the agriculture, mining, forestry and fishing industries'. Hence, the measures were intended to encourage the primary industries to which they applied.
The Macquarie Dictionary 2001 rev. 3rd edn, The Macquarie Library Pty Ltd, NSW defines 'primary industry' as 'any industry such as dairy farming, forestry, mining etc., which is involved in the growing, producing, extracting, etc., of natural resources.'
The Macquarie Dictionary in turn defines 'industry' as 1. a particular branch of trade or manufacture 2. any large-scale business activity: the tourist industry 3. manufacture or trade as a whole: the growth of industry in underdeveloped countries.
The references to 'industries' in the explanatory memorandum confirm a legislative intent to confine eligibility for the diesel fuel rebate under the previous off-road scheme to persons that engage in primary production as a commercial or business enterprise.
As stated above, the principles enunciated in relation to the former diesel fuel rebate scheme are equally applicable to the EGCSA.
This view is also supported by comments made by the AAT in Re City of Nunawading and Comptroller-General of Customs No. V93/540 AAT No. 9758; (1994) 36 ALD 628. Although, in that case, the AAT was dealing with the meanings of agriculture and horticulture in subsection 164(7) of the Customs Act, prior to the 1995 amendments to that Act, in relation to the definition of forestry it observed that: Where trees are intended for felling then presumably there is both a commercial aspect and a "product" or "crop". We are not so clear that this is always the case when thinning or felling occurs in a forest or plantation of standing timber. Presumably, thinning or felling of that type may occur on occasion for conservation and environmental purposes rather than for the purpose of retrieval of the timber for itself.
In relation to horticulture, the AAT, after examining the context in which the word was used, and its ordinary and statutory meaning concluded: Looking at the context, we consider that the word "horticulture", when used in section 164, is not limited to those activities specified in paragraphs (a), (b) and (c) of the definition but that to come within the meaning of horticulture in the Act, an activity must relate in some way to an aspect of primary production conducted as a commercial or business enterprise.
Having regard to forestry being an aspect of primary production, a similar approach is appropriate to the forestry activities that are within the meaning of forestry in section 35 of the EGCSA. Those activities must be carried out as part of a commercial or business enterprise involving primary production.
Activities which are carried on in national parks may be similar or identical to some of the activities carried on in the primary industry of forestry. However, when carried on in national parks, such activities are not undertaken in the course of a primary production business or enterprise and do not result in the sale of a crop or product. Instead, when carried out in national parks, the activities are generally undertaken for the purpose of environmental preservation or conservation.
The activities in this case are carried on in national parks. They are not activities which are undertaken in the primary industry known as 'forestry.'