Media Release - 16 August 2005

Next government must improve investment climate

New Zealand’s next government must urgently improve the investment climate if the country is to receive maximum benefit from forestry and wood processing, industry leaders say.

Combined industry organisations today released a 13-point agenda that any incoming government must address to help secure the industry’s future.

Called Securing a Sustainable Future, the agenda has been developed by the New Zealand Forest Industries Council, the New Zealand Forest Owners Association, The New Zealand Farm Forestry Association, and the New Zealand Pine Manufacturers Association.

New Zealand Forest Industries Council Chairman Lees Seymour says there are some clear actions an incoming government can take that will help the forest industry reach its true potential.

“There are major areas where action is needed to make sure we get a fair go at competing internationally,” he said. “We want to see some commitment from all the major parties to addressing those issues.”

“As an export industry we have been challenged by things like shipping costs and the global commodity cycle. Those are our problems and we have to manage them. But the local regulatory environment is not helping us and government can do something about that.

“The Resource Management Act, for example, is a major disincentive to investment in added-value wood processing. Our industry has great potential for growth but the RMA is helping to stymie that – despite recent improvements we still need to fix the fundamental imbalance between environmental and economic concerns.

“The Government should also look to the tax system to ensuring companies retain funds for further investment in the industry. That means looking to reduce corporate tax, introducing accelerated depreciation and abolishing pointless measures such as the proposed carbon tax”.

New Zealand Forest Owners Association President Peter Berg said the industry agenda called for urgent review of the Government’s policies to implement the Kyoto Protocol.

“We want to see the Kyoto policies reviewed to introduce market-based incentives for new plantings as well as ensure different resource based sectors are treated equally,” he said.

“Forestry has an enormous contribution to make to New Zealand socially, economically and environmentally. Though harvests have declined recently it remains likely the annual harvest will be 50 per cent bigger again by 2015. The industry is not going to disappear. We need to make sure it prospers too.”

For its part, the industry is working to improve cooperation across the supply chain and investing in market and product development. This effort will be assisted by a new representational structure for the industry which will be in place by the end of September.

The forestry and wood processing industry currently accounts for 3.5 per cent of GDP, is the third largest export sector and directly employs over 26,000 New Zealanders as well as 100,000 people indirectly.

The 13 points are:

1. Continue with the Forest Industry Development Agenda (FIDA) as a high level interaction between industry and government including funding for market access and development, wood design, skills and bioenergy.

2. Abolish the carbon tax.

3. Review the implementation of New Zealand’s Kyoto Protocol policies to provide market incentives for new planting and for uptake of new climate-friendly technologies, promote the wider use of wood, provide equitable treatment across sectors and respect private property rights.

4. Provide compensation to landowners when public benefits are required from privately owned forest assets (e.g. carbon, biodiversity, water, nitrate).

5. Reform the Resource Management Act to address the fundamental imbalance between economic/environmental concerns, provide for less discretion on the part of local authorities, more national standards and greater certainty of process for investors.

6. Reduce corporate tax and introduce accelerated depreciation for large scale, capital-intensive projects.

7. Maintain strong investment in biosecurity controls and responses to incursions and potential incursions moving responsibility for cost-sharing to shippers and importers, including tourism, moving risk management offshore where possible, and provide funding for "solutions oriented” biosecurity research.

8. Continue investment in transport and energy infrastructure.

9. Continue to seek open international markets through the World Trade Organisation (WTO) and bilateral free trade agreements (with China and the United States as highest priorities).

10. Explore regional approaches to address illegal logging.

11. Expand immigration and adopt a population policy aimed at having 6 million New Zealanders by the end of the century.

12. Develop a more innovative research and development regime, including tax incentives and accelerated depreciation rates, and continue the consortia approach.

13. Maintain funding for skills and training initiatives including apprenticeships and adult apprenticeships.

A copy of the full agenda is attached.

ENDS

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