ACT Forestry Spokesman Ken Shirley today revealed details from a secret Government-funded report, which finds that adherence to the Kyoto Protocol will strip billions of dollars of value from New Zealand's forest growing sector, drive our processing industries offshore and result in lost investment and jobs.

"The NZIER report, funded by the Ministry of Economic Development and industry for the joint wood processing strategy working group, exposes the nonsense of New Zealand's excessively enthusiastic support for the Kyoto Protocol.

"The Government has promised to ratify this flawed Protocol next year, and in the process will betray the New Zealand forestry sector along with other industries.

"The Protocol arbitrarily classifies forests on the date they were planted, with pre-1990 plantings attracting carbon debits, effectively a tax, upon harvest, but conversely, post 1990 forests (Kyoto forests) earn a carbon credit ' a windfall gain.

"However, under the Protocol, three quarters of our 2 million hectares of plantation forestry will be liable to carbon debits upon harvest. Based on available information I would estimate that the carbon debit liability could strip up to $9 billion from the value of that 1.5 million hectares of forestry. Inevitably, new forestry investments will be heavily weighted in favour of new plantings on bare land to the disadvantage of the bulk of New Zealand's existing plantation forests.

"We can expect vast tracks of bare land to be planted world wide to realise this windfall gain. These tax-driven plantings will produce wood fibre in competition to New Zealand's pre-Kyoto plantations and inevitably depress the world price for wood. This in turn will further discourage investments for wood fibre production.

"Under the Protocol our pulp and paper, sawmilling and MDF plants will incur significant carbon taxes along with our other industries ' processing our dairy and meat products together with our steel, aluminium and cement works. One of the biggest nonsenses is that only Annexe 1 countries carry an obligation and the major of non-Annexe 1 countries such as China, India, Malaysia, Indonesia, Singapore and most of Latin America have no obligation whatsoever.

"Quite simply investment dollars will flow like water and New Zealand's processing industries will progressively relocate to non-Annexe 1 countries to avoid the carbon tax liability. New Zealand will lose the investment, lose the jobs and pay more for imported products.

"The Government should take heed of the advice it has paid for and re-examine its commitment to ratifying the Protocol and move to protect the forestry industry, investment and jobs," Ken Shirley said.

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