Labour has dismissed suggestions its suite of policies intended to boost forestry and wood processing will make it mandatory for wood to be used in new buildings built by the Government and others.

Leader David Cunliffe this morning unveiled a package at the Forestwood Conference this morning intended to assist the industry move from "volume to value" by increasing the amount of New Zealand logs processed into higher value products in this country.

That included a "pro-wood" policy for new government buildings, tax breaks for investment in new processing plant, special loans for tree planting, and forestry joint ventures with iwi.

The pro-wood policy procurement policy is a softer version of the "wood first" policy advocated by some in the industry and is based on former Forestry Minister Jim Anderton's requirement that all government-funded project proposals for new buildings up to four storeys high "shall require a build-in-wood option at the initial concept/request-for-proposals stage (with indicative sketches and price estimates)".


Labour has taken that a step further by requiring the agency responsible for the building to give an explanation if it chooses alternative building materials over a similarly priced wood structure.

Speaking to reporters in Beijing this morning, Prime Minister John Key said "if they are saying to companies they are going to force them to use wood over another product then I think that would be a very interesting place to get to".

"I'm not sure every company would want to build its building like that. The same with government departments, again, I think you'd need to be cautious about that."

But Mr Cunliffe said no one was going to be required to build in wood.

"That's a decision made by the folks who are contracting for the individual buildings. What we're going to ensure is that a pro-wood option is considered and where it is at least equally cost competitive if it's not selected then there's some explanation for why an alternative structure was chosen."

The other key plank of Labour's policy package was what finance spokesman David Parker called "a targeted tax incentive" which would assist wood processors overcome the increased risks they faced doing business in a small economy.

Labour's plan is to double the depreciation rate for investment in new processing plant from 15 to 30 per cent a year.

"This will encourage the substantial capital investment needed to maximise value from our wood industry", Mr Parker said.

That would cost the Government about $10 million to $25 million a year but 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", Mr Parker said.

Labour hadn't modelled the resulting increase in jobs, but Mr Cunliffe said: "we would expect a healthy increase of employment and an increase in the average income as those jobs pertain to higher value products".

Labour would also move to secure long term supply of raw logs with long term incentives for tree planting including a "suspensory loan" scheme and planting joint ventures with iwi.

Suspensory loans would be made available for the planting of new forests with an interest rate likely set at 1 per cent over the Crown's rate of borrowing. Principle and interest would repayable only when the forests were harvested.

The iwi joint venture would be based on the long running Te Tai Tokerau Forests scheme.

Mr Cunliffe also said a Labour government would establish a forestry taskforce, similar to Taskforce Green to get about 1000 long term unemployed working in the industry.

The scheme would be targeted at regions with high long-term unemployment such as Northland, East Coast and the central plateau and would involve tree planting on marginal Crown land and will include incentives for the private sector.

Wooden it be lovely - Labour's forestry and wood processing plan:
* Tax deferrals in the form of accelerated depreciation to encourage industry to invest in new technology and plant.

* A pro-wood government procurement policy for government-funded buildings up to four storeys high to boost the domestic market.

* Suspensory loans to encourage new forest planting.

* Forestry taskforces for long-term unemployed.

* Introduce legacy forest status to protect our indigenous forest