Speech by New Zealand First Leader and Northland MP Rt Hon Winston PetersWood Processors and Manufacturers’ Association Regional MeetingTuesday, 26 July, 2016 6.30pm
‘Show some loyalty to New Zealand industry’
When future historians consider what John Key and his neo-liberal government has done for New Zealand; they will be disappointed and dismayed.
They will be disappointed and will draw the sad conclusion that the Key government failed.
They will find this government was interested in one thing only - short term gain regardless of the consequences.
Forestry mismanagement
The Key Government will in future be condemned for many things. Their mismanagement of the forestry industry will be one of them.
Forestry is New Zealand’s third largest offshore export earner, behind dairy and meat.
However, what is happening now in this industry will have deep and serious consequences within the next decade.
The growth of unprocessed log exports, mainly to China has long been out of control and destroying any chance of growth to the wood value added sector in New Zealand.
Today we have no control, no laws, and no careful and astute management of one of our greatest resources.
Instead our forests are being plundered.
It’s boom and bust all over again.
The way things are going in coming years, exotic forests planted by people of foresight through the 1980s and early 1990s will be gone.
The National government treats this industry is if they are spud farmers producing an annual crop.
They don’t seem to realize that it takes 27 years to grow a forest.
New Zealand’s forestry crisis has too many raw logs going out, and too little planting going in. The amount of replanting on existing forest land has declined.
In the last 15 years the total area of new forest area planted has plummeted from 33,674 hectares down to 3051 hectares, an approximate 90% decrease.
The collapse in carbon prices from 2008 to 2012 saw very little land being converted to forestry with the reverse occurring as conversions to pasture were made – mainly for dairy production.
New Zealand is now clear felling and harvesting too early. Forest owners, the foreign companies, in the carbon price slump, are resorting to quick profits.
Eight of the top 10 forest companies in New Zealand are overseas controlled.
Other private companies and iwi are also caught up in this short term profit frenzy.
Private owners are selling early to the Chinese when it would be better that their trees are tagged for harvesting in five to 10 years’ time.
It is true log exports are needed for our economy, especially of our lower quality product, but not at the current excessive and unsustainable rates and to the detriment of processors and sawmills.
At all of our major New Zealand ports you can see raw logs stacked high waiting to be exported a rate that is utter economic madness.
When the ships leave – they take billions of dollars of added value and tens of thousands of jobs that should be kept in New Zealand.
In 2000 the amount of raw logs exported was almost 6000 cubic meters – in 2011 it was well over 11,000 and last year it was over 16,000 cubic meters.
The Wood Resource Quarterly reports New Zealand continues to be the world’s leading exporter of softwood logs followed by Russia and the US.
New Zealand, Russia and the US accounted for almost 50 per cent of globally traded logs last year in the main going to the Chinese market.
The Wood Resource Quarterly says we are exporting over 50 per cent of our total harvest in log form.
Northport has been extremely successful with log exports in this crazy climate but it is success that comes at a price and again – if it continues at the present levels, it will only be short term.
There is an old saying. You reap what you sow and that applies to our forestry industry.
But we have not been sowing, or rather planting, and so by 2023 Northport will suffer as will all of Northland.
Sawmills will have to wind back or close; jobs will be lost. Log truck companies will take a big hit as well.
Since 2000 the number of log sawmilling businesses in New Zealand has dropped from 507 with over 7500 employees to 327 businesses with about 4800 employees.
Statistics last year showed Northland had 460 employed in forestry and logging; 210 in forestry support services and 650 in sawmilling and timber dressing.
Many of these jobs will be at risk.
And this massive fall-off in a timber industry in crisis will continue through to 2040 because critical decisions to maintain our planting didn’t happen.
That’s why we must dramatically cut back this crazy sell-off of raw logs.
What Other Countries are Doing
While New Zealand’s forests are being cleaned out other nations are locking up their forests.
In the next five years China, our biggest market for logs, will fully stop the commercial harvest in their government owned forests thereby locking up 70.5 million hectares because they have over-harvested.
They will stop the commercial harvest in their collective ownership and private ownership natural forests on a step-by-step basis.
They will establish just over 33 million hectares of new plantations.
They have set targets for their forest industry development by 2020 which include:
- China’s forest coverage rate is expected to reach 23.0%;
- Forestry national forest stock volume is expected to reach 16.5 billion cubic meters
- China’s forest industry output value will reach $US1.3 trillion
While China plans in this way, they tell their local wood users to continue buying cheap timber from overseas, from places like soft old New Zealand.
And as China does this – we have a government that has no planning and is interested only in the next quick buck that comes through the door.
And China is not alone in looking after its own forestry industry, Canada and Chile are doing the same.
They are acting prudently. They have a total maximum quota of logs that can be exported.
But not in New Zealand – it’s open slather.
New Zealand First says it must end – we must not delay any longer dealing with this crisis – we must act before the log supply from our forests dry up.
Forestry owners must be encouraged to replant.
The vast volumes of wood going across Northport at present must be dragged back to more rationale levels.
Logs should not continue to be taken across our wharves and overseas until policies to protect the local industry, processors, saw millers and workers are first put in place.
The local industry must be assured it can access the grades of logs they require.
New Zealand Domestic Log Price
There must be a set New Zealand domestic log price.
Like Canada quotas must be applied.
Foreign buyers don’t pay GST on logs – which local sawmills must do.
The Overseas Investment office must have much tighter scrutiny of foreign investors coming to New Zealand.
Buyers of our forests must provide real evidence to show selling to them is for the long term benefit of New Zealand.
There has to be investment in added value New Zealand wood products.
To help the industry, New Zealand First will use the ‘Cullen Fund’ to invest in getting ownership back into the hands of New Zealanders.
You know by now not to expect the National government to do anything about this crisis in your industry.
New Zealand First asked the Associate Minister for Primary Industries Jo Goodhew in Parliament earlier this year what the government was going to do.
She said the government was not a market interventionist.
That sums up the National government – boom and bust, and when the worst of the bust comes – they’ll be long gone.
It will be your industry, your businesses that will have to shrink or go under and the Northland economy will take a massive blow.
All because we have a non-interventionist, do nothing, let the market decide government.
Auckland housing
There are opportunities here in New Zealand that are not being pursued.
Northland pine is rated the best in the country for structural purposes.
With the home building crisis in Auckland, the construction industry must be encouraged to use timber.
Again this is looking after our local industry.
But to help this happen the government must play its part as well.
They must impose tariffs on imported building materials not made here.
In the 2014 Budget the government again worked against the best interests of this country and dropped the tariffs.
Instead of working for local industry, employing New Zealanders, the Government opted to subsidise foreign cheap-labour producers of plasterboard, steel, and cement.
New Zealand spends hard-earned foreign exchange on building materials when in many cases we have good domestically produced alternatives.
Plywood, flooring board, laminated beams, framing timber, linear board – the list goes on.
Who is this Government working for – businesses and workers in New Zealand, or foreign factories?
We have the absurd situation of Zealand timber, exported as a log, being processed in some foreign factory, and then shipped back to New Zealand.
Conclusion
It must be said no government is perfect but some are more imperfect than others.
The Key government fits the latter category.
At times you wonder whether we have in New Zealand something of what an American president, Woodrow Wilson, observed when he said the government which was designed for the people has got into the hands of the special interests and “an invisible empire has been set up above the forms of democracy.”
Unfortunately the Key government is not thinking beyond tomorrow.
It is not thinking of the consequences for Northland in 6 years’ time when the log supply begins to dry up and China starts saying “no thanks” to what logs we do have to export.
Government is not allowing prudent management to prevail and it is not showing due consideration for local industries, such as yours.
New Zealand First believes a vibrant forestry industry is crucial to Northland and this country’s economy and we must work to ensure the wealth and jobs are kept here.
Sawmills have invested millions of dollars in plant, equipment and staff in the belief they will receive a reliable, affordable supply of timber.
That belief and investment and support of the industry must be supported by central government.
As we look around Northland we see two opposites in stark contrast.
We see the raw resources that could be converted in to great wealth and employment here. However, what is happening is the consequence of central government neglect, short sightedness and a total pre occupation with one big city, Auckland, at great cost to the economic and social interest and needs of many provinces.
May I humbly suggest that your industry needs to see this contrast with great clarity. Because, on the positive side, your industry is critical to a great economic and social turn around up here - and we collectively have not got a day to waste.
