Forests are great investments, not public utilities

17 Oct 2004

New Zealand's plantation forests are owned by real people who have invested real money and have real rights, says NZ Forest Owners Association president Peter Berg.

"Forests are not public utilities."

Speaking at the association's annual meeting in Auckland last week, Mr Berg said he has great faith in the long-term future of forestry in New Zealand, despite cyclically depressed prices.

"New markets and robust demand in our home markets mean the long-term outlook is still good — but we must get out of the commodity cycle if our full potential is to be realised."

He said his greatest concern was not short-term economics, but the growing tendency for officials to use forestry as a convenient dumping ground for problems caused by others.

"Forestry, because it is environmentally friendly, has a potential to help New Zealand society solve wider environmental problems. But that's not why forests exist — they're primarily there because their owners see the production of timber and other forest products as great long-term investments," he said.

Yet, Mr Berg said, two regional councils had come up with plans in the last year which severely threatened the property rights of forest owners. One wanted to prevent land owners from going out of forestry. The other one wanted to prevent them from going into forestry.

"Environment Waikato sees keeping land in trees as a way to prevent nitrogen pollution in Lake Taupo. Environment Canterbury doesn't like trees in the hills, because they supposedly intercept water the council has over-allocated to farmers for irrigation on the flats.

"Neither organisation consulted their forest-owning ratepayers before coming up with their plans. Nor did it cross their minds that forest owners should be compensated for foregoing business opportunities for the benefit of other ratepayers. However, I must congratulate Environment Waikato on its willingness in recent months to engage in constructive dialogue." Local body rating policies were another example where land in forestry was seen as fair game, Mr Berg said. Many district councils had used the rates paid by forest owners to subsidise services to other ratepayers.

"After 30 years of paying roading rates, forest owners wanting to harvest their trees are being asked to pay a second time over for roads that were never built. We don't see decisions like this made in respect of people who live in towns. If they pay a rate for water, the water is supplied. If they pay a rate for a sports stadium, the stadium is built."

Mr Berg said forestry was making a huge contribution to the economy and had the potential to be the country's biggest export industry. However, for this to happen, central and local government had to recognise that forestry was an investment which had to stack up against other land uses, while competing with suppliers from other countries.

"A large part of the association's focus has been on supporting programmes that will facilitate value adding — better infrastructure, increasing skill levels, R&D, and support for product promotion and market access activities. In this respect, I would like to acknowledge the support we have had from trade and enterprise minister Hon Jim Anderton.

"The Wood Processing Strategy has opened a lot of doors, and created new opportunities. It would not have happened without his input.

"However the Forest Industry Framework Agreement, which was meant to fairly compensate the industry for the nationalisation of its carbon credits has been a disappointment. We are still talking with climate change minister Pete Hodgson on the government's framework proposals, but I can't help but feel that forestry is once again being seen by officials as a convenient way-out of problems which don't belong in its lap."

Mr Berg said the association would continue to vigorously defend the property interests of its forest owner members and push for a more enlightened view of the real benefit and opportunity that forestry affords New Zealand.

"Ours is an extraordinarily interesting and diverse industry. Our forests are owned by farmers, individual investors, unit trusts, public bodies, pension funds, public and private companies, the list goes on … tens of thousands of individuals have put their faith and money into tree growing and wood processing. More thousands work in the industry; growing, tending and harvesting forests; and creating forest products.

"When officials take the industry for granted, and impose costs and policies upon it for the good of wider society, there is an unseen cost carried by everyone who is committed to forestry. And if that cost is too great, there will be less investment, fewer jobs and less added-value production.

"Many in the industry argue that this is already happening. If so, New Zealand is the poorer for it."