25 August 2005 Media Statement

National plans to log public's conservation forest

The National Party plans to clear the way for potential logging in at least 1.5m hectares of protected native conservation forest, Conservation Minister Chris Carter said today.

"National's forestry policy puts its plans in black and white," Mr Carter said.

"The party is proposing to revisit the possibility of logging areas of Crown-owned native forests, including on the South Island's West Coast. This means forests on conservation land. They have hedged their bets by promising not to log forests protected under New Zealand's national parks and reserves network," Mr Carter said.

"But what National have not told the public is that even excluding national parks and reserves, their policy would still expose at least 1.5m hectares of the public's spectacularly beautiful conservation forest nationally to the potential of logging, and some 100,000 hectares of the Timberlands forests on the West Coast protected in 2002. This is because these forests carry a legal status other than national park or reserve.

"I think most New Zealanders would be appalled at National's plans to again take the chainsaws to our natural heritage and that of our children. Many of the conservation areas they could log under their policy are home to numerous threatened native species, such as kiwi and mohua," Mr Carter said.

"Sustainable logging of native forests can and does take place around the country on private land. There is no good reason whatsoever to restart the plunder of the public's conservation forests, especially after the matter was finally settled with the payment of $120m to the West Coast community.

"The sad thing is it appears this policy is endorsed by National leader Don Brash. Brash told a meeting of West Coasters in July 2004 that if National could reopen logging on the West Coast, it would. His comments were reported in the Greymouth Evening Star."

ATTACHED

Brian Connell - August 2005

Working with the Forest Industry

Forestry Policy

National recognises that

The New Zealand forestry sector has significant growth and innovation potential for our economy. New Zealand Trade and Enterprise predicts a $20 billion industry by 2025.

Currently it provides a GDP contribution of $4 billion, employs 25,000 people directly and another 75,000 indirectly.

Political and Financial Environment

New Zealand has made significant progress in the last 20 years, as an investment destination, but still remains a relatively unattractive location in terms of relative risk/return for processing investment. The lottery approach and process time under the RMA, uncompetitive corporate tax structures and depreciation policies, combined with poor prospects for energy supply/pricing, all limit New Zealand’s appeal.

Those who have invested are not advocates. Their businesses are exposed to high exchange rates, growing compliance costs and high shipping freight costs; all these render our export products less competitive internationally against traditional competitors such as Chile and new competitors such as Russia. This situation is exacerbated by current government policy that is inconsistent and inequitable between land uses and is encouraging deforestation and much reduced new planting rates.

Domestic operators have found conditions more favourable, which accords with New Zealand’s positive economic performance, but recent government legislative changes in employment law and the Holidays Act for example, have contributed to significant institutionalisation of costs.

To address these issues, Government needs to create an environment that is nimble and able to react quickly to the needs of industry. Government needs to provide confidence that it understands that a vibrant growing industrial sector re-invests and provides attractive work and skill development opportunities for New Zealanders. National has the business experience and skills to do this.

National recognises that there is a need for more research and technical development especially with regard to wood quality issues for radiata pine, but also to improve the knowledge, genetics, silviculture and processing of alternative species. National is committed to working with the forest industry to achieve this.

National’s Strategic Perspective

The forest industry’s future depends on the development of mid-sized processing across all forestry regions of New Zealand. Whether this can be realised depends on the government’s ability to position New Zealand as a more competitive and certain investment climate than other countries. New Zealand has good productive forests and already has some capable mid-sized processors (all privately owned). Negative media and analyst reporting of major corporations are not representative of the industry. The industry’s lack of scale by region prohibits large scale processing.

The market outlook for logs is diminishing in favour of lumber. In Japan and Korea, imports are already moving to lumber and so will China in the medium term. Chile, the Scandinavian Region, Canada and the US’s South East will all be formidable lumber competitors in Asia. Therefore, development of processing in New Zealand will be critical to industry fortunes. Australia is quickly becoming self-sufficient and this will exacerbate New Zealand’s dependence on Asia.

The critical issue is determining the extent of processed products versus log exports. The Wood Processing Strategy is on the right track but the focus by investors is on the relative/risk return prospects across countries. Risk diminishes as certainty improves and certainty is what a National Government will provide.

But time is running out. The uncertainty that now exists in the industry is being enflamed by Labour’s ideologically led charge into ratifying the Kyoto protocol. Its intention to impose a carbon tax on New Zealanders and then subsidize some of the Forestry Sector’s major competitors by entering into NGA’s (Negotiated Greenhouse Agreements) is creating an imbalance. And its intention to impose a land-use change tax on pre-1990 forests if they break the 10% deforestation cap is helping to create uncertainty and consequently New Zealand is experiencing record low new plantings. The future of the industry is at risk if this trend continues.

The lack of confidence in the relative risk/returns by industry players has seen the introduction of a relative new player and phenomenon in the industry. TIMOS (Timber Investment Management Organisations) are alternative management entities, which focus on investment returns from their assets and are not dictated to by corporate debt burdens or cash requirements. TIMOS are generally funded by US retirement funds that see forest assets as long-term positions. Consequently, the age profile of trees at harvest will expand. This will reduce supply in soft markets and while they are a major positive development, they will not be investing in processing.

What National will do?

1) Indigenous Forests
National will restore the integrity and confidence in the way in which indigenous forests are managed. While we recognise that Government has an essential role to play in the promotion of sustainable indigenous forest management we are not convinced that Labour has managed this issue well.

The decision to stop all indigenous logging on the West Coast of the South Island destroyed a hitherto sustainable indigenous forest industry. In stark contrast has been Labour’s acceptance of the ongoing unsustainable management of SILNA lands in Southland.

National is not convinced that Labour’s approach to clear felling ½ hectare plots within our indigenous forests is right. This approach does not discriminate; juvenile, millable and old trees are destroyed. National believes that selective felling of appropriate beech trees is a more effective approach.

National will:

- Restore the integrity and confidence in the way in which indigenous forests are managed.

- Allow selective sustainable harvesting of native beech trees from privately owned forests and will review similar production from carefully selected areas of crown-owned forests including the South Island’s West Coast. Inherent in this policy is an absolute commitment that National will not touch forests already protected under New Zealand’s national parks and reserves network.

- Work urgently with SILNA owners to bring their forests under the Forest Act’s sustainable forests management regime. This will necessitate concluding a commercial settlement for beech and rimu forests.

- Require all indigenous timber and timber products that are harvested to come from forests with a sustainable forest management plan or permit.

- Remove export controls where timber products come from sustainably managed forests.

2) Exotic Forests

National recognises that New Zealand’s planted forests have an important role in sustaining New Zealand’s forest products industry. It provides rural employment but also makes a major contribution to a more sustainable future for the New Zealand economy including carbon sequestration, flood and erosion control, protection of water quality (including long term de-nitrification of waters flowing into important scenic lakes such as Lake Taupo), improved biodiversity, shelter, landscape and aesthetic values.

Wood products generally have lower embedded energy requirements in their production and use and contribute significantly to long-term carbon storage, while forest products may also provide a permanent and fully renewable energy source.

National will:

- Look at ways to better recognise and promote the special values that forests provide and encourage further research into ways to maximise these benefits.

- Encourage greater use of sustainably grown, lower energy consuming wood products including in Government’s own projects and activities.

- Encourage a return to a vigorous new tree-planting programme, particularly in the softer, sedimentary hill country of the North Island which is suffering very serious soil erosion under pastoral farming which is not a sustainable land use.

- Encourage the planting of a wider range of species (both proven plantation and native species) and support further research into these with a view to providing both greater biological and product diversity.

- Encourage and assist research and development into alternative biomaterial based sustainable energy sources.

3) Energy Pricing and Supply – National will:

- Allow line companies to re-enter the generation business with no limit on the amount of generation they own – subject to the rules currently separating the lines businesses.

- Actively encourage the use of alternative fuels to generate electricity - gas, coal, thermal, wind and water are all acceptable.

- Develop a plan with the electricity industry to ensure that future electricity generation occurs in a planned and timely fashion.

4) Kyoto Protocol – National will:

- Repeal Labour’s carbon tax that will increase fuel prices by 5c/Hr and electricity by 1c/Kw hr.

- Not impose a land-use change tax.

- Negotiate a FIDA package with the forest industry which is truly reflective of the industry’s contribution to New Zealand’s carbon credits and which will encourage the industry to reinvest in new plantings with confidence.

- Not use $1 billion of taxpayers’ money to buy carbon credits from Russia or the Ukraine.

- Reconsider New Zealand’s commitment to the Kyoto Protocol by:

1. Immediately getting an independent assessment of New Zealand’s projected greenhouse gas balance for commitment period (2008-2012).

2. Working with the forest industry to try and plan how New Zealand can balance its emissions with sustainable forest plantings.

3. Review the costs and benefits of such a plan to contain omissions.

4. Withdrawing under article 27 if this proves to be in the best economic interests of New Zealand.

5) RMA – National will:
Introduce a substantive RMA reform bill within 3 months of coming to Government and pass this within 9 months. These reforms will assist the forestry industry by:

- Requiring balance in decision making by explicitly recognising importance of development and property rights.

- Providing for a greater use of National standards so that the forestry industry is not faced with different rules for different districts.

- Limiting objectors to those actually affected and provide for rejecting vexatious and frivolous objections.

- Repealing Treaty and Maori spiritual provisions and ensure all citizens are treated equally.

- Providing for direct referral to the Environment Court.

The package of substantive reforms is not only important for new forestry processing but will also have an important benefit in enabling much needed roads and electricity infrastructure.

6) OSH - National will:
- Develop industry-specific voluntary codes of good practice that will achieve compliance with the Act.
- Allow employers to drug test employees using agreed legal guidelines.
- Target consistently non-complying companies specifically and the not the industry generally.
- Remove ‘stress’ provisions from OSH legislation.

7) ACC – National will:
- Enable employers to choose their own insurer.
- Enable self-employed people to choose the provider of cover for their own statutory accident insurance requirements, and leave them free to choose higher levels of cover if desired.
- Remove duplication between OSH and ACC in the area of injury prevention services.
- Reduce the claims accept/decline cut off time from three weeks to seven working days.

8) Employment Relations – National will:

- Encourage a flexible and competitive labour market.
- Allow employer and employees to negotiate working terms and conditions that suit their working environment.
- Place limits on union access to the workplace.
-Remove union monopoly bargaining rights over collective agreement contracts.
- Remove unfair dismissal penalties and personal grievance actions (subject to criminal wrong doing as above) where the dismissal is substantially fair but procedurally flawed and establish a 90-day probation period for new workers to reduce the barriers to employment.
 Amend the Holidays Act to change the definitions of relevant daily pay to ensure it does not pay more to be sick than to work.

9) Tax - National will:
- Reduce corporate tax rate to 30%.

10) Trade
National recognises that trade barriers continue to limit the access of our timber products to many international markets. We are committed to working hard to maintain and increase export market access, especially for value added products.

National will:

- Work in close co-operation with industry groups to push hard for free trade deals, work to lower trade barriers and ensure that New Zealand’s input into world trade negotiations and world trade forums are well resourced by Government and industry officials.

ENDS

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