NEW ZEALAND FOREST OWNERS ASSOCIATION

  • Jenny Shipley
Prime Minister

Ninety-nine and a half per cent of businesses in New Zealand employ less than 100 people.

New Zealand's economy and job market are driven by these businesses.

The National-led minority Government is committed to assisting business do business.

Our current economic framework allows exporters to see the world through a window of opportunity.

We are confident that the manufacturing and agricultural sectors are willing to take new opportunities created by low interest rates and a more competitive exchange rate.

The international economic situation has required the Government to reassess its programme and policy priorities.

Our response has been aimed at increasing the resilience of our economy so that it can better cope with international trade downturns and recover quickly when external conditions improve.

In the meantime, it is important, given the volatility of international capital, to retain our strong economic fundamentals, especially low inflation and sound fiscal policy. Markets tend to punish severely countries and governments that borrow and spend.

Keeping our house in order has been a priority for the last 10 months.

In response to the economic situation New Zealand faces, the Coalition Government as part of the Budget process, set aside $300 million that we had intended to spend in many areas had we been living in better times, but we cancelled those intentions.

In July, because of further concern about the international economy and because the tax receipts were beginning to fall, Government decided to reduce its spending and a further $300 million savings were identified. In response to the international economic downturn we asked something of everyone:

students contributed by having to pay more each year and the taxpayer paying less each year to support their studies;

the state sector contributed by cutting back on spending and staff;

the portability of Superannuation to some Pacific Islanders was deferred;

Ministers have been bulk funded;

welfare programmes have been trimmed back;

some things we would like to have done have been deferred.
The National-led minority Government is determined to manage our budget so we can invest in our future while still acting responsibly in relation to international economic realities.

Last week we announced the first of a series of policies for progress which are designed to meet a number of goals. The Government wants to:

make a difference with social assistance which genuinely breaks cycles of disadvantage;

ensure low income people are not taxed to pay benefits to the better off;

improve business competitiveness and increase the living standards of New Zealanders;

strengthen our economic and fiscal management.
Last week's Policies for Progress includes a range of measures which will help boost our economy by promoting New Zealand in the world.

The package is positive for exporters and addressed the single greatest long-term risk to the Government, the rising medium-term unsustainability of New Zealand Superannuation.

Public and private sector reports abound on this issue.

Many people are long on rhetoric and short on action.

Future generations of retired New Zealanders expect current politicians to make progress and this Government intends to make its best endeavours to do so.

While Government is managing the short-term problems and is making its best endeavours to keep New Zealand "in the black" without putting the brakes on the economy, we are concentrating on the medium-term issues which will return New Zealand to strong growth and an increase in jobs and prosperity.

For businesses like the Forestry industry, the Government is pursuing a number of policies aimed at increasing business efficiency and competitiveness.

These include:

ACC reform: Will allow competition and reduce costs for employers in the long run, especially for those employers with good safety records.

The Bill has been introduced and referred to a special select committee. We are on track for the law to be passed by the end of the year and the new arrangements to be in place by 1 July next year.

Labour is opposed and claims it could reverse this, killing competition and reduced costs for business.

Improving roading: We are making good progress on reviewing how we manage and fund our roads.

We need to invest in better roads in places where there is rising business and population pressure. To do that we need to be able to unlock the traditional distribution of spending and the cross-subsidies between modes of transport.

There is increasing agreement about the need for change within the community. Any changes would need to be spread over a number of years and we are focusing on how best to manage this process.

Labour has no new ideas in solving these complex issues which are essential for future planning.

The review of the Resource Management Act: We will be releasing our proposed changes to the RMA for discussion by the end of the month.

The RMA as a mechanism to ensure we sustain our environment must stay, but it can be improved to lessen the unnecessary unproductive costs around parts of its implementation.

The key areas of likely change include:

introducing contestability in the processing of consents;

using commissioners to make consent decisions and confining councillors to laying down rules and policies through regional and district plans;

amending Section 32 to ensure it is effective in constraining regulatory excesses;

ensuring controls over subdivisions are only used to deal with adverse land use effects;

narrowing down the definitions of "environment" and "amenity values" to remove references to social and economic matters; and

removing duplicated functions between councils.
Labour oppose reforms in this area.

Tariff reduction: The Government has embarked on a credible and realistic phase-out of tariffs which will reduce the costs of inputs to businesses, especially in the areas of plant and machinery.

At the same time we will work hard at APEC and other international forums to push for trade liberalisation from our exporting partners.

All these current and projected reforms will benefit the Forestry industry, not as quick-fixes or temporary stimulants, but they are aimed at creating lower direct and indirect cost structures to producers.

Your industry has been a keen advocate of getting government out of business.

The Government does not believe in direct intervention in business decisions. The Labour Party's proposed industry assistance programme does exactly that as it tries to pick winners and losers. They have promised to spend at least $100 million. They are spending others' money as they do so.

Labour continues to throw other people's money around like confetti. These rash promises that will have a huge cost for New Zealand businesses.

Today's promise by Labour to reintroduce income related rents for Housing New Zealand tenants of no more than 25 per cent of household income will cost $280 million per year.

New Zealand businesses need to know that, for every $120 million promise Labour makes, this is going to increase corporate tax by a cent.

In the last three days Labour's industry and rental assistance will add a further 3.3 cents to corporate tax.

And that's only since Monday.

At this time Australia's corporate tax is three cents lower in the dollar than ours. Labour's extravagant promises if they were elected would see businesses going to Australia in droves, robbing New Zealanders of jobs.

For the Forestry industry, there are a number of issues which are vital for your continuing success.

Innovation is important. Government is taking this seriously with its work on the Foresight Project, the Porter Project and the Ministerial Team who have responsibility in this area.

The greatest challenge to the New Zealand Forestry industry is to raise the value of pinus radiata in both its raw and processed forms. It is too low in the competitive chain, for example, being used for boxing and packaging in Japan.

Infrastructure is important. Government is doing its share by addressing complex issues such as further investment in roading, which is essential to your industry. The exotic forests that are coming on-stream, especially in Northland, will need efficient land transport and efficient ports to facilitate competitive exporting.

Investment is important, especially in processing, if we are to add value to our assets.

Government is doing its share by running responsible fiscal policy and introducing ongoing microeconomic reform in order to maintain New Zealand's reputation abroad as a good place to invest in industry.

Investors will not dally with a country or economy that they see as having a volatile currency; a maze of consent procedures and an underskilled, overpaid workforce, so the fundamentals are important to investors, especially offshore investors.

New Zealand's economic fundamentals are robust. The National minority Government intends to see that that remains so. The Labour and Alliance Parties on the other hand intend to tamper, which will be to the great cost of business and the taxpayers alike.

Marketing is vital. Fran Wilde will be speaking in more detail about the challenges of creating better demand internationally for log pine, processed pine and manufactured pine products, especially furniture.

Finding new customers and new markets will be an ongoing challenge to the industry. The proposals to bring together a new organisation "Wood New Zealand" which has as one of its aims to lift the external marketing effort of New Zealand's forestry companies, including small as well as large producers, is to be applauded.

Trade diplomacy is important. We must continue to make progress. Government is doing its share. Dr Lockwood Smith, Minister for International Trade, will speak in more detail on our efforts through the World Trade Organisation and APEC, that are being made to break down tariffs in the trade of wood and wood products.

Biosecurity is important. Government has been very active in introducing measures which protect New Zealand's medium-term interest and investments.

Our commitment to the eradication of the white spotted tussock moth in Auckland was a good example of this. The Government understands that biosecurity is absolutely vital to the Forestry industry.

Whilst we are confident we are currently doing a good job, we accept that there is always room for refinement and improvement. We must remain vigilant.

In bringing the various portfolios of Agriculture and Forestry, Fisheries, Land Information and Customs together into a single portfolio of Minister Responsible for Food, Fibre, Biosecurity and Border Control, I sought to do two things.

Firstly, we can adopt a more coordinated approach to border protection, which is in the interests of all our production and export industries.

Secondly, it invites all producers to focus on the needs of consumers in our international markets, their expectations and needs, rather than viewing these interests from a producer perspective.

Future success of our production and export industries requires us to make this transition.

Finally, sustainability is important. Integrated land care is a concept that links production and conservation, otherwise seen as apparently conflicting priorities. Government is leading in this area with its Beech Scheme proposed by Timberlands for the West Coast.

This balances the needs of production, conservation and employment, all of which are keys to New Zealand's successful future.

It does not necessarily follow that the best available protection to biodiversity comes from sealing off land in reserves that the Government, through DOC, must seek to maintain pest and disease-free.

There are examples here and in Australia of successful integration of production and conservation, and that is what the RMA intended and invites.

The Forestry industry is like any other New Zealand industry. Our success will come by working smarter, as well as harder, by ensuring we add intelligent value to the products we produce. There are some promising signs that some of your markets are recovering. This will bring renewed confidence to your industry.

Commodity markets tend to be very volatile and the greater value added to a commodity, the more secure the market becomes.

Government intends to continue to strongly support business competitiveness in New Zealand in order to create wealth, jobs and prosperity.

Your challenge as an industry is to continue to be innovative and seize opportunities that come your way. I am sure you are equal to the task.