OPINION:
“Capitalists always want to privatise their profits and socialise their losses” – that’s the traditional socialist critique of how businesses are big fans of state intervention when it suits their interests. There seems to be a lot of that going around at the moment – many industries want government to help them be super-profitable, largely by reducing industry regulation and taxation, despite any damage they might cause.
However, there’s increasingly a public mood against the special pleading of such vested interests. This is evidenced in the criticisms now coming from across the political spectrum about the huge costs that New Zealand forestry businesses have been imposing on society, particularly with the multi-billion-dollar cost of “slash” debris that exacerbated or caused flood damage when Cyclone Gabrielle hit this month.
Even National’s leader Christopher Luxon echoed the socialist critique when speaking about forestry last week in Parliament, describing it as “the only sector I know that gets to internalise the benefit and to socialise the cost”. He then talked about the need for further penalties and prosecutions of forestry businesses who fail to look after their own mess.
Although the timber industry isn’t unique in this regard, Luxon is quite correct to single them out. Forestry has become something of a case study in how vested interests have come to dominate the policymaking process, producing rules that favour the industry at the cost of society in general.
The weather events of January and February have caused a horrific toll, yet much of it was avoidable. The destruction caused by the storms was made much worse by the way forestry operations have changed the land in places on the East Coast of the North Island.
One of the biggest problems is the litter foresters leave behind when they harvest pine trees. The industry terms the branches and debris left to rot on the hillsides as “slash”, and in large storms this litter is prone to be washed down rivers, causing mayhem. The debris forms dams and diverts the flow of water, flooding towns and farms, and knocking out bridges and roads. In Cyclone Gabrielle the impact of slash was enormous.
Illustrating this, a New Zealand Herald editorial complained on Friday that the word slash “is too gentle for the power and heft of avalanches of logs and branches that have again hurtled down hillsides on flood water, scouring out land and riverbeds, smashing bridges, roads and private property, endangering lives, cutting off communities and wrecking infrastructure”.
The Herald’s Fran O’Sullivan wrote in the weekend about the logging problem, concluding “what we have observed over the past fortnight simply puts New Zealand in the Third World category”. This is because in other developed countries, the slash problem is better regulated or even banned. It’s a problem that has been known about for many years, and yet in New Zealand, the politicians have done virtually nothing about it, leaving society to pay for the damage caused by it.
The fact that the forestry companies can cause such great damage without being held accountable for the cost has astounded many. After all, citizens can be fined up to $5000 under the Litter Act 1979, and if the litter endangers anyone, the fine increases and can include imprisonment.
Professor Anne Salmond likens it to deliberate vandalism: “If you were an individual and you took a bulldozer onto a property and destroyed their crops, knocked down their house and put lives at risk, you’d be in jail. And this is happening to hundreds of people, maybe thousands. This is not an Act of God, it’s an act of companies that put profit before environmental responsibility.”
Minister of Forestry Stuart Nash, has so far been highly supportive of the forestry industry and has previously gone on record opposing a review of the slash problem. He suggested it is unnecessary, and that the forestry industry is best placed to self-regulate on this issue in conjunction with other stakeholders.
This stance has become untenable, and Prime Minister Chris Hipkins has overruled Nash, announcing a ministerial inquiry on Thursday. It will be headed by former National Party minister Hekia Parata, and also involves forestry engineer Matthew McCloy and former Ecan chief executive Bill Bayfield.
The Government’s inquiry is already getting a lot of criticism. One Tolaga Bay farmer has labelled it a “Clayton’s enquiry” because it’s so limited. Clive Bibby says the review is unlikely to get to the truth of the matter “given the parameters surrounding the terms of reference and the limited time for submissions. This version can best be described as a Clayton’s enquiry – the one you have when you’re not having an enquiry.”
Bibby suggests the inquiry has been deliberately designed to avoid too much being revealed, as the Government itself could be blamed: “Nash will know that any enquiry worth its salt will implicate government ideologically driven policy as one of the main culprits when apportioning blame. That is why he has done his best to limit the opportunity for this one to get to the bottom of what really happened”. He argues that “successive governments have supported the expansion of an industry that has unfortunately consumed everything in its path.”
Another local resident, Professor Anne Salmond, has also expressed her reservations about the independence of inquiry, saying: “It shouldn’t be run by the Minister of Forestry because there are vested interests in there. The minister is accountable to the people of New Zealand, not the forestry companies.” She says the inquiry needs to be able to cross-examine expert witnesses.
Fran O’Sullivan argues Labour has made a mistake ordering “the quick turnaround of the Hekia Parata-chaired ministerial inquiry when a more full-scale “Commission of Inquiry with all the powers attendant with that” better matches the scale of the disaster. She suggests there might be public suspicion about the independence and transparency of the review.
And, in fact, Stuart Nash emphasised yesterday that his Government won’t be bound by the recommendations of the inquiry.
Professor Anne Salmond has called New Zealand’s regulation of forestry “third world”. And in the weekend, political commentator Max Rashbrooke argued that “The regulations governing their activities, and the penalties for their misbehaviour, have both been weak.”
It seems that forestry businesses have successfully sheltered themselves from the application of tough rules for their sector. This is perhaps unsurprising since they constitute a $7 billion industry – and are therefore one of New Zealand’s true “big businesses”. And the industry is in a significant growth phrase. Newshub revealed last night that the rise in new forestry area had gone from 695 hectares in 2013 to more than 18,000 hectares in 2022.
With this economic size, they naturally have a lot of political clout. In arguing aginst further regulation of their sector, forestry points out new rules would reduce their productivity and profitability. And in their pleas against further regulation they also make a great appeal to how reliant the New Zealand economy is on forestry earnings and employment.
The lobbying power of forestry is therefore huge. As the Herald’s editorial said on Friday: “Critics suggest the sector, much of it foreign-owned, has got away with it for so long because it works ‘out of sight, out of mind’ and because it has deep pockets to lobby the Beehive and local authority politicians.”
One of those critics, Anne Salmond, has been reported as believing “Forestry has formidable lobbying power and deep pockets”. And last week, Herald agriculture journalist Andrea Fox argued that the “powerful forestry lobby was marshalling its forces” to prevent any sort of significant inquiry into their operations.
The politicians themselves are often very close to the forestry operators, too. For instance, the Minister of Forestry himself used to work in the industry, and is now in charge of regulating what his former colleagues do. In 2020, when he was appointed, Nash was able to boast of an “extensive network of contacts in the forestry sector”.
Stuart Nash also carries out much of his election fundraising in this sector. In the last three elections he declared large donations totalling $99,000, $27,500, and $49,504. In 2020 about half of it came from forestry and timber companies. One timber businessman explained his financial backing for Nash, saying: “It is important to the economy that government has politicians who understand industry.”
Being a Minister of Forestry who has been bankrolled by the sector he regulates does not mean he has broken any rules or done anything wrong. But it does raise questions about conflicts of interest, and about whether Nash’s funding has fostered a highly-favourable orientation towards the sector his donors come from. The public might well suspect that he has become too close to this vested interest.
The public and media are now putting Nash under pressure for his pro-forestry business orientation. In fact, a Herald editorial on Friday celebrated the increased pressure on Nash, saying “it’s about time”.
Nash answered these criticisms yesterday on TVNZ’s Q+A, claiming: “I’m not an apologist for the forest sector.” But as the human misery and billions of dollars of damage mount from unregulated forestry practices, the public are starting to push back on the free ride that the sector is still receiving. And it won’t just be socialists on the left and Christopher Luxon on the right demanding that vested interests pay their way, but a wider public that is increasingly angry with how such unfairness contributes to human disasters.
Much of the South Island is set to plunge below 0C tonight and tomorrow.