Labour began fleshing out its election-year economic package yesterday with a wide-ranging suite of policies to boost the value of the forestry sector, including tax breaks for investment in wood processing.

Launched at the Forestwood industry conference, Labour's prescription also featured a "pro-wood" policy to encourage the use of wood in new low-rise government buildings including those being replaced after the Canterbury earthquakes.

Leader David Cunliffe told the conference that making New Zealand's forests more valuable would "recharge our regions" and was "an urgent priority because every day millions of dollars in lost value leaves our ports in the form of raw logs".

Mr Cunliffe told the conference that at present, "what we've got is some structural impediments in place that prevent the long-term development of this industry".


"It's about the fact that the investments required are long-life high cost and therefore seen in some ways as higher risk, and that's why we want a more favourable tax treatment for those investments to help get you over the line."

Labour would double the depreciation rate for investment in new processing plant from 15 to 30 per cent a year which would reduce the tax bill for wood processors after such investment.

Costing the government about $10 million to $25 million a year, independent analysis estimated it would generate up to $80 million a year in new investment, "and of course there's a benefit back to the taxpayer because we get higher taxes from people's wages and company profits because they're making more money as well", Labour finance spokesman David Parker said.

Meanwhile, the pro-wood policy would mean that all government-funded proposals for new buildings up to four storeys high would require a build-in-wood option at the initial request-for-proposal stage. The agency responsible would have to explain if it chose alternative building materials over a similarly priced wood structure.

Labour would also move to secure long term supply of raw logs with long term incentives including low cost loans for tree planting, joint ventures with iwi and a restriction on the use of cheap imported carbon credits.

Mr Cunliffe also said a Labour Government would in conjunction with the private sector establish a "forestry taskforce" to get about 1000 long-term unemployed working in the industry.

Economic Development Minister Steven Joyce said Labour's policies amounted to a "grab bag of ideas" from the 1970s.

But Mr Parker said Mr Joyce "thinks industry support involves handing out cheques to multinationals like Rio Tinto, setting up dodgy deals with the likes of SkyCity or doling out subsidies to their farmer mates".

Branching out

Labour's forestry and wood processing policy planks
• Tax deferrals in the form of accelerated depreciation to encourage the industry to invest in new technology.
• A pro-wood procurement policy to encourage the use of wood for new government buildings up to four storeys.
&bull Low-interest loans.
• Forestry joint ventures with iwi.
• Forestry taskforces for long-term unemployment in partnership with the private sector.
• A restriction on the use of cheap international carbon credits to boost the value of foresters' carbon credits.

Prize to get builders to use wood

The Green Party wants to offer a $1 million prize to the builders of the first 10-storey or higher wooden building, co-leader Russel Norman told the forestry and wood processing industry yesterday.

While, like National, the Greens wouldn't give details of their forestry industry policy at the Forestwood conference yesterday, Dr Norman took the opportunity to talk up the prospects for this country's structural wood industry.

"Laminated timbers can be used as a smart, green alternative to the concrete and steel currently used for the load-bearing elements in high-rise buildings.

"We will create a $1 million award in government to encourage the wider uptake of structural timber in the building sector."

Dr Norman said Canterbury University was spearheading the use of structural timber. "Obviously they have a very close interest to make sure it is particularly earthquake safe.

"Because it's a new technology a lot of the architects, designers, builders and estimators are a bit unsure so this is basically a prize to help them get over that hump of using the new technology."