Request for inquiry into the regulation of the ancient swamp kauri industry

10 September 2015

File Ref: INQ 13430

Far North Conservation Advocate
C/- Forest and Bird

Northland Environmental Protection Society

Dear Mr Baigent-Mercer and Ms Furrell

REQUEST FOR INQUIRY INTO THE REGULATION OF THE ANCIENT SWAMP KAURI INDUSTRY

In your email of 28 May 2015, you asked me to carry out a formal inquiry into how the Ministry for Primary Industries (the Ministry) and New Zealand Customs regulate and oversee the ancient swamp kauri industry (swamp kauri). I consider that we have done enough work now to address your concerns and report back to you.

The matters that you raised

You specifically raised the following matters in your 28 May 2015 email:

• Online evidence of prohibited exports of swamp kauri

• Destruction of indigenous forests/wetlands throughout Northland

• Lack of enforcement action

• Failure to keep and maintain adequate records

• The Ministry’s approval of apparently prohibited swamp kauri products for export.

During the course of our work, we received additional correspondence from individuals who provided us with what, in their view, was further evidence of illegal practice, systemic failure of industry controls, or suspected corruption by officials. We have chosen not to separately address the additional claims because we consider our assessment of the matters you raise also addresses those raised by others.

Our main conclusions are:

• The Ministry has recently made changes to tighten and clarify the regulation of swamp kauri. We consider these changes appropriate for addressing some of the risks we’ve identified, but they will require time to take effect.

• Interpretation of legislation, specifically in this case of what constitutes a finished product, is first and foremost a matter for the courts.

• The Ministry’s ongoing efforts to provide better public information should improve transparency, industry compliance, and public understanding of the industry.

• We have seen no evidence that the Ministry is allowing the export of illegal timber or timber products.

I have attached a poster made by the Ministry which shows the changes to the swamp kauri extraction, milling, and export controls.

Our suggestions for the Ministry for Primary Industries

We have suggested to the Ministry some changes that are intended to:

• promote better oversight of swamp kauri;

• increase transparency and public access to information; and

• increase the Ministry’s understanding of the cultural, heritage, and scientific value of swamp kauri.
SUGGESTION ONE: The Ministry should, in co-operation with relevant councils, consider compiling, and making publicly available, information about estimates of the quantity/scarcity of the total swamp kauri resource. This could include the extent of current and potential mining areas.

SUGGESTION TWO: While we acknowledge the Ministry’s July 2015 release of new regulatory measures, the Ministry should work more closely with councils to ensure that extraction takes place from an “approved source” before issuing milling statements.

SUGGESTION THREE: The Ministry should, in co-operation with relevant councils, raise public awareness of improved site inspection and the consequences for milling of illegally sourced and illegally extracted swamp kauri to encourage future industry-wide compliance. Appropriate statistics on the results of those inspections and information on monitoring could be made publicly available by either the council or the Ministry.

SUGGESTION FOUR: In consultation with the Ministry of Culture and Heritage and other relevant parties, and well before the resource is exhausted, the Ministry for Primary Industries should use information it has on the industry to initiate and inform discussions with relevant parties about the cultural, heritage, and scientific value some of the swamp kauri might have. This process should provide ways for that value to be retained for future New Zealanders. This information should be publicly released.
What we did

We met with senior Ministry staff to discuss the issues you raised with us. As part of this discussion, we requested copies of all documents, guidance, forms, and any other relevant information used by the Ministry or its contractors in regulating swamp kauri.

We thoroughly examined the information provided by both the Ministry and yourselves, as well as the relevant legislation. Our comments are based on that work.

What we did not do

It is important to understand the limits of our role. For example:

• We cannot intervene in decisions that public entities make.

• We cannot injunct or stop activities or contracts.

• We cannot make a binding judgement about the legality of actions.

• We cannot order redress or other remedies, or overturn decisions.

• We cannot direct a public entity to act on our findings or recommendations.

We chose not to include New Zealand Customs because we consider that the matters raised are best dealt with by reviewing the processes of the Ministry and the relevant council.

Prohibited exports of swamp kauri being approved by the Ministry

Overseas advertising of swamp kauri

Swamp kauri can only be exported as a finished product or as whole or sawn swamp kauri stumps or roots. The Ministry has investigated your concerns that overseas websites are advertising large quantities of raw timber or unmanufactured swamp kauri logs for sale and determined that the logs in the photos on the websites are still in New Zealand. It is the Ministry’s policy that varnishing, oiling, or sanding of swamp kauri after export does not constitute further machining or modification. The Ministry also notes that the stockpiling of logs or sawn timber after extraction is not unusual given customer and market demands. The Ministry intends to assist operators with guidance for advertising products in overseas markets.

Export of swamp kauri products

Another concern is that the Ministry is approving illegally sourced and/or unfinished products, such as temple poles and carvings from logs that had not been milled.

The legislation under which milling and export of swamp kauri is regulated is very specific, including what constitutes a finished product. The Ministry has sought legal advice on the matter and is comfortable that the exported products meet legislative standards.

In our view, the definition of a finished product can be, and has been, interpreted in different ways. It is clear to us that some exporters have tried “testing” the level of modification required before swamp kauri can be exported. However, we have seen no evidence that the Ministry is allowing the export of illegal timber. We have seen evidence that the Ministry or AsureQuality declines export approval if a product does not meet their definition of the regulatory requirements.

The Ministry has provided us with correspondence from the purchaser of one of these temple poles showing that the temple poles met their definition of a finished product and the specifications requested from the buyer. The Ministry told us that they have recently received evidence that the poles have reached their destination intact and unmodified. Emails received from the Ministry show that AsureQuality forestry officers approve products such as this on a case-by-case basis. In some instances, officers have required exporters to produce supporting evidence about the source, destination, and proposed use of these products. Based on the information supplied to us, we consider the legislative requirements are well understood by the Ministry’s staff.

The correspondence we have received and the debate we have seen about swamp kauri show a level of confusion about what constitutes a manufactured or finished product. The Ministry intends to produce new public guidance about what it considers a finished product to be.

In our view, better and publicly available information about swamp kauri could help reduce public concerns about illegal activity. That information should include estimates of the quantity/scarcity of the total resource, including the mapping of current and potential mining areas. Better information should enable informed decisions about future regulation and protection of the resource.

Illegal sourcing of swamp kauri

Records management

You are concerned that the Ministry is failing to keep and maintain adequate swamp kauri milling and export records, or to take enforcement action to seize illegally extracted swamp kauri. The Ministry has started to publicly release on its website information about swamp kauri, including releases under the Official Information Act 1982. The new regulatory measures will strengthen the controls for records management, including the use of new swamp kauri-specific milling statement application and intention to export forms. The Ministry will also be increasing resourcing to Whangarei to increase inspections of sawmills and export shipments.

In our view, greater public awareness of the rules and regulations, and of the operation of the industry as a whole, will aid compliance throughout the industry both in New Zealand and overseas.

Environmental effects

Managing the environmental effects of swamp kauri extraction is primarily the responsibility of the Northland Regional Council, both through regional plans and the Resource Management Act 1991. We have suggested that the Ministry work more closely with councils such as Northland Regional Council.

Under Northland Regional Council’s regional plan, extracting swamp kauri is a permitted activity provided it occurs outside areas of indigenous wetlands. Resource consent is required for extraction from indigenous forests/wetlands.

We understand that milling controls are designed to prevent illegally extracted swamp kauri from being milled. All milling of swamp kauri requires a milling statement approved by the Ministry. This grants the applicant permission to mill timber for a period of six months at a Ministry-registered sawmill. Approval of a milling statement requires verification that it was sourced from non-indigenous forest/wetland (or indigenous land with prior resource consent).

Information from the Ministry has not convinced us that previous milling controls were sufficient to verify the source of extracted logs. Milling statements have been issued based on a high-trust system, with minimal physical inspections of pre- or post-extraction sites. Source verification has mostly been based on photographic, map, and land title data provided by operators and exporters.

Before the recent changes announced by the Ministry, it clearly considered that its legislative responsibility in verifying the source of swamp kauri was limited to the milling process. The Ministry considered the council responsible for ensuring the protection of the environment at the extraction site. Because extraction of swamp kauri from non-indigenous land is a permitted activity, there has been minimal central and local government oversight of swamp kauri sourcing and extraction activities. This created a possibility that milling statements could have been approved based on inaccurate, incorrect, or false information. In our view, the new controls will appropriately mitigate this risk.

Under the Ministry’s new policy, operators will now notify the relevant council of any and all extraction activities, and this information will be shared with the Ministry. The Ministry have stated that where possible they will visit all extraction sites as part of its new milling statement approval process.

Other submissions suggested that the Forests Act 1949 was not the correct piece of legislation to control the export of swamp kauri. We agree that there are other value considerations for swamp kauri. In our view, the Ministry for Culture and Heritage is better placed to consider this matter and we suggest that this matter be discussed with it and other interested parties. Better information should enable informed decisions about future regulation and protection of the resource.

Thank you for bringing these matters to my attention. Because of the public interest in these matters, I will publish this letter on my Office’s website.

Yours sincerely

Lyn Provost
Controller and Auditor-General

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