PM's keys to forestry sector growth

Free trade negotiations and a continued commitment to the emissions trading scheme are important to support further forestry sector growth, Prime Minister John Key said.

Forestry, New Zealand’s third largest export industry, brought in an estimated $3.7 billion of export earnings export in the year to June and is forecast to grow to an annual $6.2b by 2014.

Mr Key, addressing an industry conference at Te Papa yesterday, attributed a significant part of this growth to New Zealand’s free trade agreement (FTA) with China, now the largest importer of New Zealand timber in volume terms.

Relatively low tariffs for timber imports can rise “quite quickly” for processed timber products in countries like Korea - but can be reduced by a successful FTA agreement.

Mr Key pledged to continue working to reduce trade barriers for forestry through FTA negotiations in Korea, India and other potential trade partners.

Other government support includes Resource Management Act reform and the Ministry for the Environment's proposed national standard for forest planting and management, released for consultation this week.

Both aim to cut regulatory red tape and increase certainty for foresters.

Industry, in turn, was advised by the Prime Minister to continue working on added-value and innovative timber products and differentiation based on New Zealand’s environmental credentials.

Ongoing commitment to ETS
The emissions trading scheme (ETS) provides an additional and complementary revenue stream for foresters by crediting them for carbon stored in growing trees.

Both Mr Key and Environment Minister Nick Smith have credited the scheme with reversing a decline in tree planting in New Zealand.

“Without the ETS, tree planting may have occurred at about 3000 hectares a year whereas under the ETS it is forecast to hit 15,000 hectares in 2015 and 30,000 hectares in year in 2020,” Mr Key said.

He assured gathered forestry industry members that the government has an “ongoing” commitment to the ETS – a statement that may dash the hopes of those hoping that the scheme will be scrapped when it comes up for review.

“I’ve always believed that if we got in reasonably early and held the course, people would see that [the NZ ETS] wasn’t the scary onslaught that they thought – that’s all I can tell you,” Mr Key said.

The ETS is due for review in 2011 and will be reviewed again at five-year intervals.