Pol­i­tics and forestry – new bed­fel­lows?

New Zealand Logger - - Tall Timber -

HERE IN NEW ZEALAND, FOR THE PAST 20 years forestry and pol­i­tics have rarely been found in the same sen­tence, let alone para­graph.

There was a clear sep­a­ra­tion fol­low­ing govern­ment forestry as­set sales in the late 1980s and early 1990s, which led to a clear com­mer­cial fo­cus re­plac­ing the pre­vi­ous, wider ob­jec­tives of the NZ For­est Ser­vice.

Now, it is pos­si­ble that the MMP coali­tion, will re­con­sider govern­ment’s role in forestry through com­mon poli­cies to in­ter­vene in the forestry sec­tor to achieve some of those wider ob­jec­tives once again, Much of the po­lit­i­cal cam­paign­ing has com­prised rhetoric rather than fact, so it is an op­por­tune time to re­view some of the key fac­tors mo­ti­vat­ing pre­vi­ous gov­ern­ments to get out of forestry as we await news on how it will be treated un­der the new ad­min­is­tra­tion.

DE­VOLV­ING FOR­EST OWN­ER­SHIP THROUGH PRI­VATI­SA­TION IN NEW ZEALAND

(Source: Food and Agri­cul­ture Or­ga­ni­za­tion of the United Na­tions, fao.org)

Be­tween 1990 and 1992 the govern­ment sold more than 350,000ha of planted forests to the pri­vate sec­tor. An ad­di­tional 188,000ha of govern­ment-owned forests were sold in 1996.

FROM GOVERN­MENT AGENCY TO

COR­PO­RA­TION

From 1919 to 1987, the govern­ment's forestry op­er­a­tions were run by a sin­gle agency, the New Zealand For­est Ser­vice. The de­part­ment's gov­ern­ing leg­is­la­tion of 1949 es­tab­lished its pri­mary ob­jec­tive to pro­duce and mar­ket for­est prod­ucts prof­itably. This ob­jec­tive was amended in 1976 to take other fac­tors into con­sid­er­a­tion, in­clud­ing poli­cies and di­rec­tives to un­der­take af­foresta­tion in re­gions re­quir­ing eco­nomic de­vel­op­ment, em­ploy­ment pro­vi­sion, util­i­sa­tion of low pro­duc­tiv­ity land and re­spect of plant­ing tar­gets and en­vi­ron­men­tal ob­jec­tives.

By the mid-1980s, a number of con­verg­ing fac­tors sug­gested it was time for the govern­ment to re­think how it man­aged its forestry as­sets:

• A surge in the sup­ply of wood from the forests was fore­cast for the 1990s, and a more com­mer­cial op­er­at­ing en­vi­ron­ment was re­garded as nec­es­sary to max­imise re­turns; this would re­quire down­stream in­vest­ments

• The en­vi­ron­men­tal move­ment was seek­ing to en­sure that the govern­ment broad­ened its fo­cus to con­sider not only wood sup­ply, but also other as­pects of sus­tain­able man­age­ment, in­clud­ing en­vi­ron­men­tal is­sues

• The govern­ment's eco­nomic pol­icy was to dereg­u­late in­dus­tries and thereby ex­pose busi­ness en­ter­prises to the pres­sures of a com­pet­i­tive en­vi­ron­ment for ef­fi­ciency

• As a sub­set of the above, govern­ment pol­icy was to clar­ify or­gan­i­sa­tional ob­jec­tives and thereby en­able trans­parency and ac­count­abil­ity.

In 1985, a de­ci­sion was taken to cor­po­ra­tise the com­mer­cial func­tions of the New Zealand For­est Ser­vice, ie to trans­fer these func­tions to a state-run en­ter­prise. Thus, in April 1987, the New Zealand Forestry Cor­po­ra­tion was es­tab­lished as a lim­ited li­a­bil­ity com­pany em­pow­ered to manage the govern­ment's com­mer­cial forestry op­er­a­tions (550,000ha of for­est plus sawmills, nurs­eries and other as­sets).

The non-com­mer­cial func­tions of the For­est Ser­vice were trans­ferred to two new govern­ment de­part­ments: the De­part­ment of Con­ser­va­tion (which would manage the state's nat­u­ral for­est es­tate) and the Min­istry of Forestry (which would have pol­icy, for­est health and pro­tec­tion, and forestry re­search func­tions). The roles of the Min­istry of Forestry were trans­ferred to the new Min­istry of Agri­cul­ture and Forestry in 1997. It sub­se­quently be­came the Min­istry for Pri­mary In­dus­tries.

The New Zealand Forestry Cor­po­ra­tion was a much leaner or­gan­i­sa­tion than its pre­de­ces­sor, as:

• Some jobs were trans­ferred to the newly es­tab­lished govern­ment de­part­ments

• Other jobs were turned into po­si­tions for con­trac­tors, as part of a strat­egy to im­prove labour ef­fi­ciency

• Many of the head of­fice jobs were lost. The prin­ci­pal ob­jec­tive of the New Zealand Forestry Cor­po­ra­tion, as with all state-owned en­ter­prises, was to op­er­ate as a suc­cess­ful busi­ness. A clear com­mer­cial fo­cus was re­garded as a pre­req­ui­site to en­able the cor­po­ra­tion to com­pete ef­fec­tively with the pri­vate sec­tor.

In­deed, the New Zealand Forestry NZ Forestry Cor­po­ra­tion Re­sults 1983 to 1990 (Source: FAO.org)

Cor­po­ra­tion proved very suc­cess­ful in turn­ing a loss-mak­ing govern­ment agency into a highly prof­itable corporate en­ter­prise (see graph above). No longer con­strained by so­cial and en­vi­ron­men­tal ob­jec­tives – now the do­mains of the newly es­tab­lished govern­ment de­part­ments – it fo­cused on its profit ob­jec­tive.

THE IM­PE­TUS TO PRI­VA­TISE

Com­mer­cial suc­cess was not suf­fi­cient, how­ever, to en­trench the new in­sti­tu­tional ap­proach to man­ag­ing the govern­ment's com­mer­cial in­ter­ests in forestry. The fol­low­ing considerations sug­gested that fur­ther change was needed and that the an­swer would be to sell the govern­ment's forests.

The higher prof­its of the New Zealand Forestry Cor­po­ra­tion were partly at­tributable to the fact that, with profit max­imi­sa­tion as its pri­mary ob­jec­tive, it did not carry out sev­eral of the mul­ti­ple func­tions – eco­nomic, en­vi­ron­men­tal and so­cial – of the New Zealand For­est Ser­vice (Kirk­land, 1996).

NZL

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