FOREST INDUSTRY GAINS HUGE BENEFITS FROM DEREGULATION

  • Dr Lockwood Smith
Forestry

An report released by the Forest Industries Council in Wellington today shows that the Forest Industry has gained huge benefits from New Zealand's economic reforms of the past 15 years.

The report was commissioned by the Forest Industries Council and undertaken by Crown Research Institute Forest Research, was formally released at a function in Wellington today by Chief Executive of the Forest Industries Council, James Griffiths, Chief Executive of Forest Research, Bryce Heard and Trade Minister Lockwood Smith.

The report shows that the reforms of the past 15 years, including the deregulation of financial markets and the transport and energy sectors, the Employment Contracts Act, the privatisation of the plantation resource and the removal of import licences and tariffs have had a positive effect on the business environment in general through improved global competitiveness, a low inflationary environment and lower transport costs.

"Our research indicates that over the past 15 years, energy intensities have fallen per unit, wood recovery rates have improved, and the industry's competitiveness has improved significantly to the extent that it now constitutes 4% of New Zealand's GDP," Mr Heard commented.

"For the forest industry, these benefits have meant that productivity has improved considerably, largely because of the significantly increased operational flexibility delivered by the Employment Contracts Act," Mr Griffiths said.

Trade Minister Lockwood Smith said that since 1984, New Zealand's trade in forest products had increased by 400% to $2.6 billion dollars.
"But the report also shows that ongoing trade liberalisation of forest products was crucial in order to maintain this growth," Dr Smith said.

"While its good business to sell 15 cent seedlings as $150 logs a few years later, the real money, and the additional jobs for New Zealanders, lies in controlling more of the value chain. The New Zealand industry can't exploit the milling, processing and manufacturing opportunities while it faces tariff barriers in the 30 to 50 percent range, as it currently does for value added products. Tariffs of this magnitude raise the cost of value added product to levels that preclude market penetration, and limit our industry's growth.

"Ongoing trade liberalisation, through work with our trading partners in APEC and the WTO, is crucial to the industry's ongoing growth and new jobs for New Zealanders," Dr Smith concluded.