New Zealand's political parties have no plans to restrict log exports, conference told; Labour Opposition considered, rejected NZ$10/m3 export tax proposal in favor of policy that includes initiatives to stimulate wood processing industry, says spokesman

Wendy Lisney

ROTORUA, New Zealand , March 22, 2014 (press release) – In a very rare example of tri-partisan support, last week the two New Zealand major political Parties and one important minor Party each announced that they did not intend to impose any restrictions on log exports. In 2013 over 50% of the total harvest in New Zealand was exported in log form; probably the highest percentage of any country.

According to New Zealand forest industry analyst Dennis Neilson of DANA, there has been ongoing serious debate in political and industry circles for the last two years, as rapidly rising demand and prices for log imports, especially into China have made it very hard for many New Zealand sawmills to afford to pay log export parity prices and still make any margins. As a result, five sawmills have closed in the last six months alone.

However at an Forest Industry Association- sponsored conference in Wellington on March 19, spokespeople for the ruling National Party, the main Opposition Labour Party and the Green party all confirmed (for the first time according to Neilson) that they did not intend to interfere with the “free trade” of log exports by imposing any tariffs, taxes or countervailing duties.

The main Opposition Party Labour said that had considered imposing a NZ$10 per cubic meter log export tax, but had rejected this option. Instead it announced its 2014 September General Election (to be held in September) forestry policy, which included a series of initiatives to try to stimulate the wood processing industry. This included a plan to adopt a Government policy of “Wood First” for all Government building programmes less than four stories high: at least for all buildings to be designed and costed out using wood before a final decision on materials is made.

This immediately prompted one of the largest sawmilling companies, Red Stag to publically announce that it would spend $120 million on a major sawmill upgrade, increasing production by 70 per cent if this policy is indeed implemented later this year. Predictably, the Cement & Concrete Association of New Zealand has already reacted angrily. Labour also announced a raft of other initiatives.

“Neither the National nor the Green Parties have released their official pre- election forestry polices. National tends to be a “hands-off” Party, and is probably never going to interfere with the market; but the Green Party is seen as an interventionist party so its announcement came as surprise to many”, Neilson said.

One other possible “Kingmaker Party” – under New Zealand’s convoluted Mixed Member Proportional voting system where rarely can any one party govern alone – still has not announced its position. The New Zealand First Party, headed by controversial leader Winston Peters recently announced it would adopt a “New Zealand log price” to help the wood processing industry, but no-one yet knows what that means. Neilson quipped that, “New Zealand already has a log price: it equals the export log price landed at a North Asian port, minus shipping and New Zealand port handling costs”.

DANA is organising a major conference on the New Zealand forestry and wood processing industry in Rotorua on 11 & 12 August, and all three political Parties will form a panel at this meeting to discuss their policies. By then all will be well into electioneering mode.

To register see http://www.prcc.com.au/danarotorua2014/ or or contact Pamela Richards at pam@prcc.com.au ; and to see all 2014 DANA conferences world wide, and publications see www.dana.co.nz

The 2014 edition (the 9th) of the DANA- published The New Zealand Forest Products Industry Review is now available. Contact Julie Bell at admin@dana.co.nz 

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