Foresters clamour for high export focus

By LIBBY MIDDLEBROOK

The New Zealand forestry industry is about to explode.

Millions of radiata pine seedlings planted 20 years ago are about to mature, pumping another 19 million cubic metres of wood into the industry's production stream by 2010.

The vast majority of wood is destined for overseas markets. Government activity during the next three years is crucial to reducing tariffs and maximising returns to the industry.

"What the industry needs is low inflation, low interest rates, a flexible labour market and better access to overseas markets - those are the key things the industry needs from Government during the next three years," said Rob McLagan, chief executive of the New Zealand Forest Owners' Association.

The forest industry, which contributed $2.4 billion to export earnings last year, is one of the world's most successful low-cost producers of wood, exporting huge quantities of logs for further processing overseas.

The smart money lies in milling, manufacturing and processing, but the industry is forced to ship raw log material because of costly tariffs in countries like China of up to 60 per cent for processed goods.

Combined with freight costs, Mr McLagan said it ws simply uneconomic to produce value-added products in New Zealand for export.

The forestry industry has identified five areas of Government activity which are essential to the industry's ongoing growth and development:
* International tariff reduction: Industry players agree that the next round of World Trade Organisation talks are key to improving market access and reducing tariffs on value-added products.
* Improved roading infrastructure: Carter Holt Harvey communications manager Murray Parrish said while forest owners paid rates to local body councils, funding was often not available to upgrade roads. He said huge roading investment was needed in areas like Gisborne and Northland before the increase in harvest.

He said the company supported roading reforms which would allow companies to negotiate the standard of roading construction and when upgrades occurred.
* Safety enforcement and safety promotion: The forest industry has one of the worst accident records in New Zealand. Fletcher Challenge Forests spokesperson Jenny Radford said improved safety performance would be achieved by separating safety enforcement and safety promotion, both areas now handled by the Occupational Safety and Health Service.
* Competitive personal and corporate tax regimes: Peter Wilson, chairman of Evergreen Forests, a mid-sized forestry investment company, said internationally competitive tax regimes would encourage foreign investment to further process the deluge of wood during the next 20 years. It is estimated that up to $6.5 billion needs to be invested in processing facilities.

"The industry is just emerging from the consequence of the Asian crisis. We need to invest in downstream processing and a large part needs to be funded from offshore. For investment to come to New Zealand they will want to see stable economic policies and reasonable taxation rates."
* Resource Management Act (RMA): New Zealand Forest Industries Council chief executive James Griffiths said the RMA was stalling foreign investment. He said the industry supported environmental sustainability, but the consents process was timely and costly.

Other major issues include:
* Effective workforce education.
* Maintaining the current ACC and Employment Contracts Act regimes.
* Increased Government support and funding in research and technology.

The policies of National and Labour offer similar commitments to negotiating free trader via the WTO and other bodies but after that the two parties diverge.

National's policies would see the retention of ACC reforms and the ECA, further improvements to the RMA, extensive roading reform, lower tax and increased pressure on local bodies to reform.

Labour would overturn ACC reforms and the ECA. It would probably have less impact than National on the RMA, roading and local councils. Its taxes would be higher but its R&D and science policies would offer more money than National's.