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The Government is being accused of an about-turn which could undermine its proposed billion tree planting programme and its climate change mitigation goals.
The Forest Owners Association (FOA) has come out strongly against a Treasury proposal that the Overseas Investment Office (OIO) should in future approve or decline sales of forest cutting rights.
FOA president Peter Clark said that in November the Government wanted more forest investment and gave the OIO a directive to help achieve this, but now in January was heading in the direction of the same OIO rules "thwarting that investment".
"Unfortunately, this proposal looks to me like reverse gear, rather than head on," Mr Clark said.
Mr Clark’s call comes at the same time the Wood Processors & Manufacturers Association of New Zealand has raised concerns domestic wood processors cannot afford the present high export prices, to the detriment of local supply, the sector and manufacturing.
Treasury had recently invited submissions on a proposal to expand the OIO’s scope to include forest cutting rights of forestland blocks larger than 50ha.
Mr Clark said overseas investors would look elsewhere if cutting rights came under consideration of the OIO.
"It would jeopardise the Government’s ambitions of both seeing a billion trees planted and of meeting its Paris Agreement obligations to reduce carbon emissions," he said in a statement.
He accepted that overseas investors wanting to buy or lease substantial areas of land in New Zealand to plant forests had to go through the OIO application process.
"But this proposed change of direction goes well beyond land ownership into another interest entirely," he said.
He said Treasury had suggested overseas investors offer to commit half their forest volume to processing within New Zealand, to give themselves a better chance of having their OIO application approved.
"I don’t know how any investor, local or otherwise, could sensibly commit such a volume of their harvest to a local processor more than 25 years into the future, nor how a government could expect that," Mr Clark said.
He said 25 years out, no-one would know where local mills might be, what their timber specifications might be and what sort of tree management be required to supply to those specifications.
Mr Clark said the Government’s ministerial directive in late November to the OIO separated the approval criteria for forestland, from that for farmland.
"That separation was a clear signal that the Government believed it was vital to attract investors to plant some of the extra 50,000ha of land a year which would be necessary to meet the Government’s own billion tree target," he said.
At present, more than half the value of New Zealand forest exports was in processed wood products, worth about $2.8billion. Sawn timber was the biggest component, he said.
Mr Clark said there was "manifestly" not enough capital available in New Zealand, including from the Government, to plant enough trees to reach the climate change target, without properly approved overseas investment.
Even when approvals were granted by the OIO, the process had become extraordinarily time-consuming and expensive, he said.
"It would not be worth the grief and months of uncertainty [of investors] to put cutting rights applications in," he said.