A new log registration scheme and practice standards will bring us one step closer to achieving ‘value over volume’ in our forestry sector, says Forestry Minister Shane Jones.
New legislation – introduced as part of Budget 2020 – will require forestry advisers, log traders and exporters to register and work to nationally-agreed practice standards that will strengthen the integrity of New Zealand’s forestry supply chain.
But the Forest Owners Association sees the Forests (Regulation of Log Traders and Forestry Advisers) Amendment Bill very differently – saying the industry anticipates an unacceptable and pointless bureaucratic cost to all parts of the sector if the Bill becomes law.
FOA president Phil Taylor says the first details forest growers saw of the scheme was when it was introduced to Parliament for its first reading on May 14 – the Government’s 2020 Budget day. It will now go to the Environment Select Committee.
“The Government speakers in its first reading debate seem to think that giving a certificate to someone who buys and sells logs, is going to lead to more logs being processed in NZ and not exported.
“That means, for instance, that the Government appears to have no confidence in its own $5 billion spending for new housing units. We hope the Government will make sure timber is used extensively for this. Labour promised a wood preference policy in the last election.”
“That’s how to build demand for timber. You can’t make processors buy more logs without someone to sell their processed timber too. Someone with a clip-board register isn’t going to work.”
The Forestry Minister says the new legislation follows a smaller package of measures announced late-2019 as part of the Government’s ambition to see a thriving forestry sector that benefits NZ and NZers first and foremost.
“The Covid-19 crisis showed us how an overreliance on log exports to a small number of markets makes our forestry industry less resilient and more susceptible to global forces,” says the Minister.
“An enhanced domestic wood processing sector will play an important part of the recovery for our regional economies, helping create new export products, new jobs for Kiwis and a renewed sense of ownership of our forests.
“Industry consultation identified that improved professional standards, market assurance measures and better information resources were critical areas to enable a more integrated system.
“The quality of advice from forestry advisers and interactions with log traders is critical to the financial returns forest growers receive, and to the operation of the broader log market.
The Minister says the new regulatory system will provide critical foundations to help the industry navigate what is anticipated to be a more volatile and uncertain trading environment during the Covid-19 recovery period.
“Having a more transparent market will better connect owners of land and owners of trees – particularly for first-time entrants to the market – to timber processors and marketers of forest resources to domestic and overseas customers.”
But Phil says the new law is either going to be a pointless system of adding costs and inefficiencies into the timber supply pipeline “or there is some other hidden intent further down the track in regulations under the new law, which is meant to tie trees in red tape and direct timber growing, harvesting and processing”.
“Either way, it’s a disincentive for anyone to invest if it goes through,” says Phil. “Just when we have planting picking up again, mostly driven by small-scale NZ investors and farmers, the Government is trying to restrict it.
“If ethical behaviour is the problem, then there’s plenty of contract and criminal law to deal to that. If bad advice about planting and selling is the problem, then let government agency Te Uru Rakau step up and provide good advice to forest owners – not persecution,” says Phil.
The Minister says NZ’s log supply market is in transition, with smaller owners playing an increasingly important role in the annual harvest.
“Knowing that only registered professionals can provide forestry advice is expected to give growers greater confidence in the recommendations they receive on the management and valuation of their investment, and the financial returns achieved through the sales and purchase process,” says Shane.
Forestry advisers will need to demonstrate they have the relevant skills, experience, and qualifications to advise growers, and undertake training and professional development in their specialist areas.
Log trading entities will need to pass a fit and proper person test, operate in accordance with industry standards, and meet record keeping and reporting requirements.
The Bill also allows for an arbitration and compliance system to support accountability. “This will help support a continuous, predictable and long-term supply of timber for domestic processing and export and result in greater confidence in business transactions, both in NZ and internationally,” says Shane.
“These changes are critical for the country’s reputation as a reliable, high quality producer and exporter of wood products, and for the improved economic, employment and environmental outcomes for the industry and community regionally and nationally.”
Phil also can’t understand why the legislation is going to be heard by the Environment Select Committee and not the Primary Production Select Committee. Not only does he wants the PPSC to hear submissions, but for the committee to carry out an inquiry into the timber supply chain.
“Let’s have a proper investigation into how the system works, with plenty of good data, and how it can be properly reformed, to provide more than employment just to people who are issuing registration certificates.
“We are a major industry. We are fighting climate change with our trees. We have the capacity to provide thousands of jobs, in the forests, in transport and in construction. Jobs are vital in the Covid-19 recovery. We are keen to work with the Government. This scheme is a step backwards – not forwards.”