Proposed forestry legislation raises debate
“THE GOVERNMENT SPEAKERS IN ITS first reading debate seem to think that giving a certificate to someone who buys and sells logs, is going to lead to more logs being processed in New Zealand and not exported,” says Forest Owners Association (FOA) President, Phil Taylor, of the Forests (Regulation of Log Traders and Forestry Advisers) Amendment Bill recently introduced into Parliament.
He says the industry anticipates an ‘unacceptable and pointless bureaucratic cost’ to all parts of the forest industry if the Bill, which will go to the Environment Select Committee early next month, becomes law. The proposed legislation requires forestry advisers, log traders and exporters to register and work to nationally agreed practice standards
Mr Taylor says the first details forest growers saw of the scheme was when the Bill was introduced: “The Government appears to have no confidence in its own $5 billion spending for new housing units. We hope the government will make sure timber is used extensively for this. Labour promised a wood preference policy in the last election.
“That’s how to build demand for timber. You can’t make processors buy more logs without someone to sell their processed timber too. Someone with a clip-board register isn’t going to work.”
Wood Processors and Manufacturers Association of New Zealand’s Chair, Brian Stanley, disagrees, welcoming the legislation to regulate the behaviour of traders operating in the New Zealand log market.
“New Zealand wood processors cannot access local logs because of massive price distortions in the domestic log market that are being caused by overseas subsidies. This legislation will help to ensure that log traders treat New Zealand wood processors and manufacturers fairly – enabling our local processors to add value to NZ logs and provide local employment,” says Mr Stanley.
The Amendment Bill proposes a test that persons trading in logs or providing advice are “fit and proper”. Mr Stanley says: “As an industry that prides itself on, and is certified for its ethical practices, we would expect the government to set a high bar for registration here.”
Mr Taylor has a different take on its intentions:
“Either the new law is going to be a pointless system of adding costs and inefficiencies into the timber supply pipeline, or there is some other hidden intent further down the track in regulations under the new law, which is meant to tie trees in red tape and direct timber growing, harvesting and processing.”
He says either way, it’s a disincentive for investment if it goes through: “Just when we have planting picking up again, mostly driven by small scale New Zealand investors and farmers, the government is trying to restrict it.
“If ethical behaviour is the problem, then there’s plenty of contract and criminal law to deal with that. If bad advice about planting and selling is the problem, then let the government agency, Te Uru Rākau, step up and provide good advice to forest owners – not persecution.”
Mr Taylor says he wonders if the government is also going to target other primary industries to force more domestic processing: “Sometimes the raw material is the best thing – look at apples and kiwifruit. Is the government going to force the wool industry to process more than the current five percent of the national clip in New Zealand carpet mills? We currently process 42 percent of our wood harvest right here in New Zealand – more than eight times the ratio of the wool industry.”
Mr Stanley points out that, “As a NZ manufacturing sector feeling the full brunt of unfair industrial support measures overseas, the WPMA would expect the proposed Forestry Authority to enforce standards for sale and purchase agreements for domestic log transactions that reflect the real world price of logs and not prices artificially jacked up by subsidies.
“Government subsidies to the wood industry are alive and well overseas. Unless we level the playing field in the NZ log market we will see further loss of jobs in the regions, wood prices to the NZ public driven up, an ongoing disincentive to investment in our industry and the nation’s hopes of a future zero-carbon economy based on the wood industry dashed. We are not calling on the NZ government to match these subsidies – they are illegal under WTO law – but asking for regulations that remove the extreme marketskewing effect that these foreign subsides have here.”
Mr Taylor adds that the legislation should be heard by the Primary Production Select Committee, not the Environment Select Committee: “The government says the bill is going to be about ethical behaviour and timber processing. So why go to the Environment Select Committee? Forestry operations are governed by the National Environmental Standard for Plantation Forestry. It’s the most comprehensive list of environmental regulations under the Resource Management Act. It took eight years to complete. Now something is coming through which the government wants to sort in 15 days.”
Forestry Minister Shane Jones believes the legislation will strengthen the integrity of New Zealand’s forestry supply chain during the more volatile and uncertain trading environment during the COVID-19 recovery period: “New Zealand’s log supply market is in transition, with smaller owners playing an increasingly important role in the annual harvest. Knowing that only registered professionals can provide forestry advice is expected to give growers greater confidence in the recommendations they receive on the management and valuation of their investment, and the financial returns achieved through the sales and purchase process,” Mr Jones says.
He adds: “The COVID-19 crisis showed us how an overreliance on log exports to a small number of markets makes our forestry industry less resilient and more susceptible to global forces. Industry consultation identified that improved professional standards, market assurance measures and better information resources were critical areas to enable a more integrated system. The quality of advice from forestry advisers and interactions with log traders is critical to the financial returns forest growers receive, and to the operation of the broader log market.
According to the Bill, Forestry advisers will need to demonstrate they have the relevant skills, experience and qualifications to advise growers, and undertake training and professional development in their specialist areas.
In addition, log trading entities will need to pass a fit and proper person test, operate in accordance with industry standards, and meet record keeping and reporting requirements. The Bill also allows for an arbitration and compliance system to support accountability.
NZL