Commercial arrangements protected
In its report back to Parliament, the committee has recommended an amendment spelling out that any such rules must not impose conditions or requirements that are "properly a matter for commercial agreement between parties.
That and other amendments make it "clear that price controls would not be able to be imposed by rules," the committee said in its majority report. "In light of this, the committee is confident that this bill is compliant with New Zealand's international obligations."
Forestry and wood processing comprise the country's third-largest export earner. But despite years of talk from successive governments, domestic processing capacity has not kept pace with the growing harvest profile. Older, smaller mills have also closed as Chinese demand has pushed up log prices and 'big box' hardware chains have come to dominate domestic timber purchasing.
The committee heard that New Zealand is one of the few countries in the world that doesn't subsidise domestic sawmilling or allocate log volume to it. Greater volumes of European logs and wood products are also making their way into NZ's traditional markets in Australia, Asia and the west coast of the US.
While highly critical of the proposed legislation, Forest Owners Association president Phil Taylor said the bill had at least encouraged debate about the future of the NZ industry and the importance of local processing in that.
But he said that discussion had to be broader than just an argument about the costs of one input – logs.
'Wood-first'
For processing to develop there had to be greater demand, and the government's stalled "wood-first" policy for public construction could be a big part of that, he said.
There also needed to be greater examination of the type of products that could be produced here and how to capture the most value from them, right across the supply chain, Taylor said prior to release of the committee's report.
Many of the committee's recommendations fix obvious flaws in the bill – such as spelling out that trucking firms and port companies are not captured by the draft legislation's loose definition of log trading.
The committee also recommended an exemption from registration for individuals trading less than 2,000 cubic metres of logs a year.
More material requirements were an explicit obligation on the Forestry Authority to ensure that its decision-making on registration, disputes and complaints complied with natural justice.
The new body would also not be allowed to make regulations unless the minister was satisfied they were necessary to meet the legislation's objectives and that there had been sufficient consultation with affected parties, including iwi, industry bodies and trade unions.
- BusinessDesk
