Forest Owners Slam Triple-Dipping Councils

3 September 2004

Forest Owners Slam Triple-Dipping Councils

District councils have been criticised for double and triple-dipping on the roading rates paid by forest owners.

"The Gisborne District Council is currently the worst offender," says NZ Forest Owners Association chief executive Rob McLagan.

"But our greatest worry is a new rating regime in Southland which could be viewed as a precedent by other district councils."

Councils are imposing rating surcharges on plantation forests to meet what councils say are the additional costs of making roads suitable for log trucks. But an independent report by consultants, Frame Group, says there is no justification for the surcharges.

Taken over a 25 year period, the report says forestry makes similar use of rural roads to horticulture and beef farming, and much less use than dairy farming.

The association is considering a legal opinion, which gives it several options for challenging differential rating schemes which unfairly discriminate against forestry.

"Our obvious preference is to talk and negotiate. But the sums of money involved in rating surcharges are so great, we cannot rule out legal action," McLagan says.

"The problem is that councils, over many years, have siphoned off the roading rates paid by forest owners to subsidise other activities. They could get away with this because of the rapid expansion in forest plantings 25 to 30 years ago.

"Now that these forests are reaching maturity, the chickens are coming home to roost. The roads are needed, the roading rates have been spent, and councils are asking for forest owners to pay again."

One Tairawhiti forest manager said a typical 5000 ha forestry block in the Gisborne District would attract about $58,750 in rates. Over 25 years, allowing for 5 per cent compound interest, this would amount to $2.94 million.

"For 24 of those 25 years, we make little use of the roads - the odd ute or 4WD is about the extent of it - so when it comes to harvest, it is reasonable to expect that the council will provide us with the roads we have been paying for."

McLagan says the government has provided Northland and the East Coast regions with special grants to finance roading where new forests are coming 'on stream'.

"If you add in these special grants, it appears the Gisborne District Council is triple-dipping." The Gisborne council applies a weighting factor of 4 to land in forestry. Horticulture and pastoral farming pay a weighing of 1.5. This means foresters pay 400 per cent of the standard rate; farmers pay 150 per cent.

Southland District Council has imposed a differential rate in which residential, sheep and beef farming pays a weighting of 1, dairying 1.5, forestry 2.5 and industry 4.

Mr McLagan says differential rating is so rife with anomalies that it is hard to escape the conclusion that councils are picking figures out of the air in the hope of placating other land-users.

"Neighbouring councils have wildly differing rating formulas. In some areas, dairying - which makes much greater use of roads than either pastoral farming or forestry - pays a rating premium. In other districts it pays less than forestry and more than pastoral; and in others all three industries pay the same," he says.

"No councils appear to differentiate between types of forest, even though the roading needs for eucalypts on a 15-year harvest cycle are very different to radiata on 25-30 years and Douglas-fir on 90 years. Nor is any allowance made for multiple land use - such as a 500 ha sheep farm which has 50 ha in forestry."

In a submission to Southland District Council, forest owner and timber processing company Rayonier says, "Forest owners do not expect to be subsidised by other ratepayers. Nor do they expect to subsidise other land uses.

"Proponents of differential rating on forestry sometimes argue that the unit output from forest land causes relatively more damage to road surfaces than other land uses.

"Actual analysis of total output from different rural land uses does not support this assertion, with total truck movements per hectare per year from forestry approximating that of beef farming and being less than half that of dairy farming when calculated over a 25 year period. For a forest owner growing a species on a longer rotation this imposes an even larger imposition.

"The argument has been advanced that the intensity of road use during the relatively short period of harvest in any 25 year cycle causes a greater impact than the same traffic over a 25 year cycle. Expert opinion does not support that conclusion, except to the extent that concentrating 25 years of maintenance into a much shorter period may create the perception of a greater relative impact."

"There is also the iniquitous situation facing forest owners whose plantations border State Highways. They make absolutely no demands on district roads but pay a surcharge on their rates supposedly for the extra costs associated with their activities. This is manifestly unfair," said McLagan.

ENDS

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