Keep the promises, save forestry jobs
With the Chinese market for logs grinding to a halt, Finance Minister Grant Robertson is urging government departments to come up with policy ideas to diversify markets and prevent 1500 forestry workers losing their jobs.
He wouldn’t need to had Labour implemented its 2017 election promise to support the forestry industry with government procurement.
Increasing supply to local sawmills is a far safer and more predictable option than leaving 60 per cent of our logs in the China basket.
Consultancy Deloitte estimated that if policy changes bring a 25 per cent increase in wood’s domestic market share there would be demand for a further 313,000 cubic metres of structural timber a year. Add to that the resulting volume of export and lower grade timber and the extra demand is more than 1 million cubic metres. That needs 1.75 million cubic metres of logs.
These cubic metres of logs support 750 forestry, transport and port jobs, NZIER estimations of log volume per New Zealand forestry worker show. But the policy was never implemented.
The Forest Owners Association estimates 1500 jobs could go this year. Half of those could have been saved. It should have been done under Steven Joyce as economic development minister, but it was never his policy. It is Labour, Green and NZ First party policy though.
Labour campaigned hard on it in 2017 but successive ministers — Parker and now Twyford — have not prioritised it, yet.
Government procurement has instead backed overseas cement and steel-manufacturing jobs. It’s too late to save many of the jobs but rather than point the finger at those who presided over delays we need policies now to rebuild those 750 jobs. So here are four policies ministers Robertson, Parker, Twyford and Jones should prioritise.
The first among them is the long-promised government wood-procurement policy. New
Zealand architects, engineers and builders have the experience to design these now. The Deloitte analysis calculated a net present value of $411m within five years from increasing wood’s market share by 25 per cent. That took no account of the carbon value of the policy. It will also generate 1050 wood-processing sector jobs.
Many parts of the world have these policies. France recently announced it will require government buildings to be built with at least 50 per cent wood, following the announcement by the local government in Paris that all buildings up to 8-storeys high for the 2024 Olympic games must be all-timber construction.
Immediate implementation of the policy will help stem some jobs losses in the short term. Mills will expand and forest investors will plant more trees knowing there will be a stronger domestic market.
It’s also crucial we shore up confidence in forest investors if we are to achieve our 1 billion trees climate-change targets. The domestic market for log processing is the obvious choice given the plethora of billion tree programmes around the world that will target China for sales.
Broader regulation here that all buildings must achieve Embodied Carbon neutrality would be consistent with the Zero Carbon Act and the government’s efforts to support a bio-economy. Embodied Carbon is the carbon associated with materials used in construction.
Indeed, research by Canterbury and Victoria Universities and Scion helped establish that New Zealand could be carbonneutral in building structures if two-thirds of all mid-rise buildings were made mainly with wood. This could be done by 2025, eliminating much of the 10 per cent Embodied Carbon that research company Thinkstep estimates is caused by building construction.
The second is the Harvest Wood Products. These are the international carbon-accounting credits now earned by countries for converting logs into long-life wood products. Just as foresters earn carbon credits for locking up carbon for the first 28 years in trees, so too do wood processors for locking it away for a further 50-to-100 years.
The credits should be devolved as soon as possible to those processors earning them, to help fund the capital projects required to process the 1 million cubic metres of timber targeted by the wood-procurement policies referred to above.
Third, the steel and concrete industries need to be bought fully into the ETS, instead of being subsidised with partial exposure. For imports from countries that don’t put a cost of carbon on steel and cement, a carbon-linked border adjustment tariff should be applied to level the playing field with New Zealand producers.
Lastly, Provincial Growth Fund grants should be used to support processing of products not currently made in New Zealand. Practically every other country provides this type of support for wood processors that New Zealand processors have to complete with. We need a level playing field.