Four policies could have saved 750 forestry jobs and it’s not too late

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OPINION: With the Chinese log market crippled, Finance Minister Grant Robertson urges ministries to come up with policy ideas to diversify markets and prevent 1,500 forestry workers from losing their jobs.

He would not need Labor to implement its 2017 election pledge to support the forestry industry with public procurement.

Increasing the supply to local sawmills is a much safer and more predictable option than leaving 60% of our logs in the Chinese basket.

Consulting firm Deloitte estimated that if the policy changes resulted in a 25 percent increase in timber market share in the domestic market, there would be demand for an additional 313,000 cubic meters of lumber per year.

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Add to this the resulting volume of export and substandard timber and the additional demand exceeds 1 million cubic meters. This requires 1.75 million cubic meters of logs.

Marty Verry, managing director of Red Stag Timber and a leading voice in the forestry industry, says it's not too late for the government to keep its promises.

PROVIDED

Marty Verry, managing director of Red Stag Timber and a leading voice in the forestry industry, says it’s not too late for the government to keep its promises.

These cubic meters of logs support 750 forestry, transport and port jobs, according to NZIER estimates of log volume per New Zealand forestry worker.

But the policy was never implemented.

The Forest Owners Association estimates that 1,500 jobs could be lost this year. Half of these could have been saved.

It should have been done under Steven Joyce as Minister of Economic Development, but it was never his policy. This is the policy of the Labor, Green and New Zealand Party. Labor campaigned against it in 2017 and was elected to implement it.

Successive ministers – Parker and now Twyford – have yet to prioritize it.

Data from Deloitte shows New Zealand's potential to use more wood, save 750 forestry jobs and create 1,000 jobs in wood processing.  (archive photo)

SEAN GALUP / GETTY

Data from Deloitte shows New Zealand’s potential to use more wood, save 750 forestry jobs and create 1,000 jobs in wood processing. (archive photo)

In fact, government procurement has instead supported jobs in cement and steel manufacturing overseas. The damage is done. It is too late to save many lost jobs.

Rather than pointing fingers at those who presided over the delays, we must take this opportunity to put in place the policies now to rebuild those 750 jobs.

So here is a set of four policies that ministers Robertson, Parker, Twyford and Jones should focus on.

The first of these is the government’s long-promised timber procurement policy. New Zealand architects, engineers and builders have the experience to design them now. Deloitte’s analysis calculated a net present value of $ 411 million in five years thanks to the 25 percent increase in lumber market share. This did not take into account the carbon value of the policy. It will also generate 1,050 new jobs in the wood processing sector.

Economic Development Minister Phil Twyford said the government plans to support families affected by the downturn in forest industries due, in part, to the coronavirus outbreak.

WARWCK SMITH / STUFF

Economic Development Minister Phil Twyford said the government plans to support families affected by the downturn in forest industries due, in part, to the coronavirus outbreak.

Many parts of the world have these policies.

France recently announced that it would require government buildings to be constructed with at least 50% wood, following the announcement by the local government in Paris that all buildings up to eight floors for the Olympic Games in 2024 must be made of wood.

The immediate implementation of the policy will help stem some job losses in the short term. Factories will expand and forest investors will plant more trees knowing that there will be a stronger and more reliable domestic market for logs in the future.

Building confidence in forest investors is also crucial if we are to meet our billion-tree climate change targets. The domestic log processing market is the obvious choice given the plethora of billion-tree programs around the world that will target China for sales, including the World Economic Forum’s Trillion Tree program for which the president Trump has just pledged the support of the United States.

Wider regulation here that all buildings must achieve embodied carbon neutrality would be consistent with the Zero Carbon Act and government efforts to support a bioeconomy. Embedded carbon is the carbon associated with the materials used in the construction of a building.

The coronavirus has hit the forestry industry hard, with bottlenecks in Chinese ports due to restricted movement and a decline in the available workforce.

ROBYN EDIE / STUFF

The coronavirus has hit the forestry industry hard, with bottlenecks in Chinese ports due to restricted movement and a decline in the available workforce.

Indeed, research from the Universities of Canterbury and Victoria and Scion found that New Zealand could be carbon neutral in building structures if two-thirds of all mid-rise buildings were constructed primarily from wood. . This could be done by 2025, by removing much of the 10 percent of embedded carbon that research company ThinkStep estimates is caused by the construction of buildings.

The second is the harvesting of wood products. These are the international carbon accounting credits now obtained by countries for the conversion of logs into long-lived wood products. Just as foresters earn carbon credits for trapping carbon for the first 28 years in trees, so do wood processors for trapping it for another 50 to 100 years.

The credits should be transferred as soon as possible to the processors who earn them, in order to help finance the capital projects necessary for the processing of the million cubic meters of wood targeted by the wood supply policies mentioned above.

Third, the steel and concrete industries must be fully bought into the ETS, instead of being subsidized with partial exposure as is currently the case. For imports from countries that do not impose carbon costs on steel and cement, a carbon-linked border adjustment tariff should be applied to level the playing field with New Zealand producers.

In 2017, the Labor Party pledged to support the forestry industry with public procurement, prioritizing wood over concrete and steel.

GLENN JEFFREY / STUFF

In 2017, the Labor Party pledged to support the forestry industry with public procurement, prioritizing wood over concrete and steel.

Finally, grants from the Provincial Growth Fund should be used to support the processing of new products that are not currently made in New Zealand. Virtually all other countries offer this type of support to wood processors with which New Zealand processors must supplement. We need a level playing field.

These four policies – Wood Supply / Embedded Carbon, Harvested Wood Products, Integration of Concrete and Steel in ETS and Financial Aid – are the easy-to-win policies to add 1,800 jobs in our forestry sector and of wood processing and reduce our dependence on China.

Marty Verry is the Managing Director of the Red Stag Group which invests in forestry, wood processing, prefabrication, cross-laminated timber (CLT) and real estate development.


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