Forests Amendment Bill

, on behalf of the Hon Pete Hodgson, Minister in charge of the bill: I move, That the Forests Amendment Bill be now read a third time. The bill amends Part IIIA of the Forests Act 1949, which relates to indigenous forest, and was inserted into the Act in 1993. The bill was introduced into the House in July 1999 by the then National Government. The bill as now reported from the Committee of the whole House has confirmed, modified, and added provisions.

The bill implements Government policy on SILNA land, which was allocated to Māori under the South Island Landless Maoris Act 1906. Of the land still under SILNA ownership, about 17,300 hectares are forested. SILNA land was exempted from the 1993 amendment to the Forests Act because the Government of the day had not determined its policy on that land. The current Government’s SILNA policy package is a balanced one, which provides $19.7 million over a number of years for conservation covenants, sustainable forest management plans, and improved application of the Resource Management Act. It also funds moratorium payments for SILNA owners in exchange for forest protection, giving those owners some income while they consider the options for the future of their forests. Areas of SILNA forest at Waitutu and Lords River are excluded from the policy, as they have been dealt with under separate conservation agreements in legislation.

SILNA owners have a very firm view of their ownership rights, a view reinforced by the approach that Governments have taken to the SILNA issue over a number of years. Considerable consultation and discussion with SILNA owners made it clear that they would not accept any legislative measures that made no distinction between SILNA forests and other indigenous forests. The bill therefore makes such a distinction.

On the domestic timber market, SILNA owners will be exempt from the sustainable forest management requirements of the Forests Act that apply to all other Māori and non-Māori forest owners. However, owners of SILNA land can voluntarily place their forests under these provisions and receive Government assistance to develop sustainable management plans. The domestic timber market exception does not extend to exports of timber from these lands. The bill reimposes controls on timber exports from those lands, so that the same statutory controls will apply equally to all indigenous timber exporters.

The bill precludes compensation to owners of SILNA land for the impact of the changes on them. That was the subject of some comment in the Committee of the whole House. However, the provision is consistent with the 1993 amendment Act, which precluded compensation to all other forest owners. In any event, the impact of this no-compensation provision is expected to be negligible. The only relevant change is the reapplication of export controls, and there is little or no foreseeable export market for the hardwood chips exported from SILNA forests in the past. Also, there is already a domestic market for sawn indigenous timber.

The bill does provide a mechanism for assistance for financial loss if export contracts signed before the bill’s introduction are frustrated by its enactment. Few, if any, such claims are expected. To the benefit of owners of SILNA land, a provision has been added to the bill to make payments for conservation covenants income tax exempt. The bill also provides that the $18.55 million Waitutu Forest settlement is income tax exempt. A Supplementary Order Paper made it clear that this provision applies to the whole $18.55 million settlement, including the $5 million in kind component of it. This is as Parliament intended in 1997, when it legislated on the settlement, and as the select committee that considered the current bill also intended.

The bill as introduced contained considerable liberalisation of the export controls, in order to allow export of all sustainably produced indigenous timber products. However, consistent with an election promise, the Government decided to retain the existing controls on the export of indigenous timber. These prohibit the export of woodchips and logs, but allow the export of some items, including sustainably produced sawn beech or rimu, finished or manufactured products, and personal effects. The existing export controls have been in the Forests Act since 1993, and are a publicly acceptable compromise on an issue that historically has been highly controversial. Indigenous timber is regarded as a heritage material that should not be exported in low-value-added form. The Government considers that indigenous timber production should be a low-volume, high-value business, with an emphasis on domestic use but with an opportunity for exporting finished products of high value. The existing export controls serve this purpose, and the bill streamlines administrative requirements for finished or manufactured products by removing the need for the Ministry of Agriculture and Forestry to approve each export consignment. Also, the Government has proceeded in the bill with an exemption from export controls for planted indigenous forests.

The Government’s position on export controls is consistent in important respects with the recommendations of the Primary Production Committee in its 2002 report A Sustainable Future for Our Indigenous Forests. In particular, the committee recommended retention of the ban on exporting indigenous logs and chips.

Before I sum up, there are just one or two little technical amendments proposed in the original bill that have been confirmed, and others have been added. The aim is not only to improve the administration of the Forests Act but also to foster best practice in sustainable forest management. The transitional provisions originally in the bill relating to the West Coast indigenous production forests have been dropped, because those forests form a Timberlands-managed forest and are now part of public conservation land. Consequently, a Supplementary Order Paper deleted the redundant term “West Coast indigenous production forest” from the interpretation section of the Forests Act.

In conclusion, I would like to thank all of those involved in developing this legislation, particularly members of the Local Government and Environment Committee of this Parliament, members of previous select committees, and departmental officials. I also want to acknowledge the support that the bill has received from other parties in the House. I welcome the enactment of the bill, and I look forward to the improvements it will facilitate in the protection, management, and use of New Zealand’s privately owned indigenous forests.

Here we are in 2004, this bill having been introduced to the House under urgency in 1999. If that is this Government’s idea of urgency, then God help us if it ever decides to go on a go-slow.

Essentially, this bill deals with the issues of private property rights versus sustainable forest management, and here there is a huge inconsistency on behalf of this Government. It was not very long ago that the Holy Grail of sustainably managed indigenous forest on the West Coast was held up as a classic example of where we wanted to go. What happened? Overnight this Government decided that, no, we would not do that, that those products could not be sold, and it closed the business down. But down south the SILNA owners are able to clear-fell their forests willy-nilly. We are now at the point of trying to tell people—and I agree with this; this is the thrust of the bill that the National Party agrees with—“OK, let’s come under a sustainable management regime, and then we’ll let you deal with your product as you see fit.”

Well, one would think that would be the argument, but having got people to come on board, what did the Government do? It turned round and slogged them with an export control component. This is the component I really struggle with. If we have sustainably managed forests, does it matter how that product is used after the tree has been cut down? Does it matter, when the tree is on the ground, where the product goes? The point is that forests are meant to be sustainably managed. I find it a major contradiction that Jim Sutton is swanning around the world arguing for free-trade agreements with New Zealand at the same time as we are limiting free enterprise back here in our own country. To me, that is a huge contradiction.

I want to make this a relatively short call, but there is one other part I want to address. We have spent something like $150 million in the last 12 months importing indigenous forest products. Is there not some hypocrisy in the argument that says one cannot export indigenous products from one’s own sustainably managed forests, yet import them from another country?

This is the real issue. Those products are coming from countries like Malaysia and Indonesia—and we can bet our bottom dollar that those forests are not being managed on a sustainable basis. I bet members of the Green Party will want to stand up and take a call on this issue, because it must be worrying them. Here in this country we are managing our forests on a sustainable basis, yet we are importing from countries that are not managing theirs on a sustainable basis. We can drive people out of our high-country farms, we can buy stations at hugely inflated values, but we are told that we cannot use our own resources as we see fit, even when we do so on a sustainable basis.

The other issue I want to conclude with is this: if we are then impacting on the balance sheets, asset values, land values, and cash flows of people who have legitimate private property rights, why are we not stumping up with some form of compensation? This bothers me. The argument is—and I have heard it put by various members of the House—that when others lost their property rights, or the value of their forests, like farmers did in the 1990s, they did not get any compensation. Well, two wrongs do not make a right, in my view.

💬 Hon Ken Shirley: Which Government did that?

It does not really matter which Government did it—it happened. The point is that we cannot do much about our history, but we can do a lot about our future. I know that when Mr Shirley gets up to take a call, he will argue that point just as strongly as I have, because it is simply not right. We need to stump up with some compensation for these people, because it is the only source of income they have. They are forest owners.

The great irony is that back in 1906 we could not give this land away to those people quickly enough. We did not think the land had any great value, but now that it does, now that we want to protect our heritage and our indigenous forests, we want our principles, but we do not want to pay for them. I think that is clearly unreasonable and unfair. Having achieved the Holy Grail of sustainable management, we should let people get on and manage their assets.

One other component occurs to me, as well. Rather than ask for a voluntary regime to stop people clear-felling their forests, I believe that this bill should have taken the ultimate step and simply said that it will be compulsory for people to manage these forests sustainably. But the quid pro quo would have to be that once they have managed those forests sustainably and to our satisfaction as a country, then they can use and market those products as they see fit.

I rise to take a very brief call on the third reading of the Forests Amendment Bill. The Minister read out the reasons for this legislation very well at the beginning of the debate. One aspect I am very pleased about is the flexibility this bill gives the Minister in deciding what to do in respect of the disposal of timber that has been illegally harvested. At the moment, it has to be used as firewood, and it seems to me that the bill will enable some more creative solutions to be found in that regard. I support the third reading.

This is a very, very sorry day, and it is one that in 1906 this House, when it passed the South Island Landless Natives Bill as an Act of Parliament, a statute, would never have envisaged. It would not have been envisaged that all these many, many years later, this House would so lightly disregard the work of the commission of inquiry in 1888, the work done in the 1890s, and the work done in the Cabinet of the day in trying to bring to this House in 1906 what was then thought to be a fair opportunity for people who had missed out, by Government inclination, on their share of the tenth part of the land purchases in the South Island. That is the historical basis to the bill that is before us now, and it is a very, very sorry day that we have come to this point in time. Those people took the legal opportunity that was presented to them by the Government of the day—because we know that this land was, in the minds of people then, wasteland of little value—and over decade after decade their descendants hoped for the promised ability to exploit the natural resources that they had been given. Today in 2004 the land is transformed from the wasteland of 1906 into the precious resource that our indigenous forest is, and those people are being denied their proper and rightful opportunity to develop their forests. I do not mean development in an exploitative way, which no true forest owner would do, but development in a planned, managed way, so that those people are able to develop fully the economic benefit and the opportunity that is theirs—the one that they have cherished for so long.

The Minister over there on the Government benches can lightly and very quickly speed through a few speech notes, and talk about an acceptable compromise. To whom is it acceptable? It is certainly not an acceptable compromise to the owners of the SILNA lands. I doubt whether the honourable member for Te Tai Tonga, who should be here to speak on behalf of his people, believes that this bill is an acceptable compromise in 2004. I very much doubt whether the other members who make up the Māori bench on the Government side of the House think so, either. As I said last night, I am very, very sorry to see that they are not prepared to stand here on behalf of their constituents and put a case not only to us over here on the Opposition benches—and we would have listened with great interest—but also to their own Ministers, their own Cabinet, and their own Prime Minister. This bill is for some people a complete sell-out. I know that some owners of these lands have done a compromise deal with the Department of Conservation: three blocks in the last 2 years. But under this bill, the vast majority of owners will still not be able to enjoy the economic benefit that they should be enjoying. The issue before the House is therefore this, and Doug McPhail put it very well in his monograph, which was prepared for the Minister: should the Crown wish to reach a fair and reasonable solution, it is necessary to fully recognise the facts of history and recent actions in relation to the people, their land, and their forests.

What are the facts of history? I have gone through some of them previously in the debate on this bill. Hansard records them well, as do the commission of inquiry notes. The 1906 Act was very promising, despite the wasteland nature of the land, and it enjoyed the support of the Minister and Prime Minister of the day. I will just interpose at this stage, and say again that it is very, very interesting to find that in two contrasting Crown Law reports disparaging comments were made about James Carroll, the then Native Minister. There was a suggestion that he had been ambiguous in what he said in his speech in the second reading debate, yet every member of this House knows that when a Minister leads a second reading debate on behalf of the Government, he or she deliberately and very carefully puts the intentions of the Government of the time out there. I find it very, very disturbing that almost a century later Crown Law officers, by various methods, have begun to place uncertainty and ambiguity in the mind of a Minister such as James Carroll—unless it was to fit in with the Government of the day.

That brings me to the second major issue I want to bring to the House, which is this. In 1993 the then National Government disabused all private forest owners of their rights, without compensation. The fact is—as the previous speaker has said—that it was done without any compensation at all. Compensation was not given; it was exactly as he has said. But this Government willingly gave away $120 million of our money to people not to mill our forests, because those forests were New Zealand taxpayer - owned forests. This Government was as large and as generous in its goodwill to the West Coast as that, yet it cannot see that in this particular instance there is an opportunity to give equity to private landowners who, by Government intention and legislation, are being deprived of their right to the forest on their land—to mill it. That is the issue. The fact that the then National Government of 1993 did not see fit to do the same, and made private forest owners into imprest public benefactors—

💬 Brian Connell: It’s history.

It may be history, but sometimes history is very interesting. They became imprest public benefactors. Again, on reading the notes from 1996 to 1999, I found no intention other than that. All I saw there—as I said yesterday—was the Hon Nick Smith heading down to Rehua Marae and apologising to the people there for his haste, his complete lack of communication, and his complete lack of a wish to communicate with them at all, and then saying the situation had to be fixed, and it should be done then. Any thoughtful owner, one who, along with his or her forebears, had waited for the promise to be realised, said no to that. It is to the credit of a former New Zealand First member of the House, Tu Wyllie, that he came back and said exactly that in this House at the time. So from the mishmash of two major parties—one previously, and one now—when dealing with this issue, we come to 2004. Those are some of the reasons we should look at the history of this issue, and those are the facts of the matter.

In the Local Government and Environment Committee, we endeavoured to see how we could do better than this bill did with regard to clause 25, “Compensation”. We sought, and we were very thankful for, sound advice from the Ministry of Forestry and the Department of Conversation with regard to some of the issues we had. We looked at how the relative values of SILNA forests under sustainable management compared with values under a clear-felling regime, and at whether a proper comparison could be achieved of the economic value of the forest with, and without, an export trade in industrial wood. So we looked for those statistics with regard to beech and rimu. Basically, it was rather difficult for people to really get out of the statistics what the losses were, but it was quite certain that for the 11 years from 1993 until the present time, there was a loss. How much the loss was could not be quantified in the short time that we had. There was also a loss arising from the economic controls on land use activities issued by the regional council and the district council in the early 1990s.

To come back to the present time, contrary to what the Minister said in his hasty statement, I say this bill is not an answer. The answer today is not, as the Greens said last week, to go out to the hīkoi—to front up, sit down, fold one’s arms, and put one’s feet up—and have a good chat. This bill should have been preceded by intense and lengthy discussions, given the knotty issues that are still involved with regard to clear-felling compared with the concept of long-term, sustainable management. We should have seen attention being given to providing funding and help in terms of modern resources and technology for the people affected by the South Island Landless Maoris Act. Most of all, in closing, I want to go back to my comment on the original Act. That was a unique Act for a special group of New Zealanders, and was the result of the earlier failure of the Crown to remedy the issues of the day. The time had come, as Sir James Carroll said, and generations have passed away with a promise unfulfilled. I am sorry to say it looks as though that will be the case in the future, too. We oppose the bill.

I find myself substantially in agreement with Mr Jim Peters, the member who just resumed his seat. This is an affront to anyone who understands and respects property rights. The Forests Amendment Bill, and the actions of the Government in bringing this bill here today, really remind us that consistency is certainly the last refuge of scoundrels.

The reason the Government wants to bring the bill in and address SILNA issues is an attempt to make it, as best it can, compatible with the Forests Amendment Act of 1993, when the then National Government stripped the property rights off all indigenous forest owners in New Zealand. The point is that the Government says it is trying to be consistent, but it is trying to be consistent with something that is totally wrong in principle.

If we look at the issue of the forests, we see that in 1906 the settlers were very happily doing a deal with local Māori. They graciously gave them a block of land that was regarded as wasteland. It was in remote, mountainous areas, covered in dense forest. The Waitutu and those areas have some of the densest forest in the country. In those days, the forest was the enemy. We were in our pioneering era. One had to clear the forest to convert it to farmland, and the market was awash with timber. We used to build our houses out of heart rimu studs up until about 1950 or 1960 when treated pine became available. There was no value market for wood products. The forest was a challenge and a burden that had to be cleared.

So those Māori owners essentially got what at that time was a wasteland, but the world has changed. With the clearance of Sumatra, Borneo, and the Amazon basin, we now know that the world is no longer awash with high-value specialist timbers, and they have now assumed a scarcity that gives them an extraordinary value. People now do not use those timbers profligately as we did in the past, with low-value, high-volume uses; we now concentrate on high-value, low-volume uses.

That is good. That is what the market is dictating, but what does the Government say now? It says: “Oh, no. We were happy to give you compensation for this wasteland that we knew was no use to you.” But all of a sudden it is of value and of use, so the Government is saying: “Oh, by the way, we are taking away your property right, and we are not going to let you harvest it.” So now the Government has done this scramble-round, brought this bill to the House, and said that because the previous Government took away the property rights of indigenous forest owners elsewhere in the country, it has to do the same—as best it can—to these owners, and give them some sort of partial compensation.

That is a nonsense in principle. If we look at what happened in the substantive amendments of 1993 to the Forests Act, we see that it is an outrage. Generations of New Zealanders have cleared their forests, often with Government taxpayer subsidies. But what is happening to some of the more responsible people who did not want to clear their forests, but sustained them, carefully managed them, and husbanded them? The Government is now saying that they can no longer clear their forests and, by the way, they cannot continue to harvest any products from them. That is an outrage when for generations we have dished out taxpayer subsidies to people to clear their forests—often, just to burn them off. It is an outrage to property rights, and it is wrong in principle. It was wrong in 1993 when the National Government did it, and it is wrong today when this Government is perpetuating that policy, which is so lacking in principle.

Of course, we had the outrageous situation of the West Coast Accord, where on State lands, a substantial area—recognised by experts as one of the best examples in the world of truly sustainable beech forest management—would be harvested to the point where it was proposed that one tree per hectare would be extracted on a 15-year rotation by helicopter. One would never see where the trees came from—the wind blows down vastly greater areas than that. But what did this Labour Government do? It closed that forest down. Because of its mantra, and because of its chardonnay, latte-swilling set that had never been to the West Coast, the Government, aided and abetted by the Greens, said “No”. It closed the operation down completely, and said that not even one tree per hectare could be taken out by helicopter on a 15-year rotation.

In so doing, the Government was prepared to renege totally on another property right. That was the property right the Labour Government entered into in 1987 with the negotiated West Coast Accord, which was signed by the Hon Phil Goff, the Minister for the Environment of the day. He pledged that there would be forest management on a sustainable basis in perpetuity, but the Labour Government just tore that policy up. It was an outrage, another affront to property rights, and a continuation of the very sorry story associated with the indigenous forest policy of this country over recent decades.

We then come to another aspect of this bill that is absolute nonsense. Mr Connell has touched on it. What the Government is saying in this bill is: “Oh, and by the way, not only are we taking away your property right, severely restricting you—though in extreme cases you can still harvest your forests—but we’re going to put an export ban on the product. The Government is going to dictate to you how you can export your product.” That is like saying to strawberry growers that they can export their product only as strawberry jam, or telling woolgrowers that they can export their wool only as woolly jumpers.

It is a nonsense when Government becomes that prescriptive, and members should think about the illogical nonsense associated with it. The objective is sustainable management of our indigenous forests. Once we have cut the trees down— recognising they have been harvested within a sustainable regime—it does not matter one jot what we do with the product. The market will determine that. Given the global market today, people can be very innovative. In an earlier stage of the debate, Mr Copeland mentioned someone he knew who had beech barbecue chips, which are specialist chips for smoking.

💬 Gordon Copeland: Mānuka.

Mānuka—but beech chips are also great for smoking, let me assure the member. That is a high-value product, yet because of the mantra and the silly nonsense we get out of the Green Party that influences this Labour Government, it says: “Oh, no. Chips are bad. You can’t export any chips.” As long as the product is harvested on a sustainable basis, it does not matter a jot what it is. The market will determine that. The pressures on high-value, sustainable wood products will ensure that the market gets the best value for them.

So this bill is a nonsense, and the ACT party will strongly oppose it. It is an affront to property rights, and a continuation of the appalling policy of indigenous forest management in this country. It is another loony left policy.

For reasons that I have explained at both the second reading and the Committee stage, United Future will support this bill. Notwithstanding, I must confess to still having some qualms of conscience about the way the bill treats the owners of the South Island Māori forests, and the straightjacket nature of the outcomes from their point of view. I hope the Government may not regard this bill as the end of the matter, but, rather, a start point for a more detailed and sympathetic look that might both achieve the major policy goal of this bill with regard to the ban on the export of sustainably produced wood-chips and other sawn timber from indigenous species, and at the same time give some more flexibility by having regard to the actual on-the-ground state of the beech trees contained in and on those lands.

During the Committee stage I drew the House’s attention to my own experience with West Coast beech. Only one in every five trees is suitable for timber, because around 80 percent of the trees are way past their maturity date and have rotted right down through the middle—a reality that can only be ascertained when the trees have been felled and dissected in a sawmill.

I will put that another way: once the millable timber has been removed from beech trees for the purpose of furniture manufacture or similar, a huge amount of waste often remains. This opens up opportunities for wood pellet fuels. If the SILNA forest owners were able to find an economic use for that waste material, be it within New Zealand or overseas, why would we stop them doing that?

In addition to the reject-quality timber—because of rot or similar—the waste material can also include branches and, using modern technology extraction, the stumps and even the roots of trees. Such whole-of-tree strategies are now increasingly common in places such as Scandinavia, the USA, and Germany. Literally nothing gets wasted—everything is put to some good commercial use. Who would possibly quibble with such outcomes when surely they represent simple commonsense?

What I am saying is that we should not rob the SILNA forest owners of those kinds of export opportunities without good and sound reasons. Surely it is not beyond the wit of Government officials to ensure that the millable beech and rimu is taken up the value chain into furniture or similar before it is exported, whilst at the same time allowing export opportunities utilising the waste material to proceed.

As I mentioned at the Committee stage of the bill, a determining factor in United Future’s support is also the letter received from the Waimumu Trust seeking the rapid passage of this bill so that it can advance its claim for compensation with the Waitangi Tribunal. That claim will now go ahead. It will start to be heard immediately that word of the passage of this bill reaches the Waimumu Trust people and its legal counsel. So, like it or not, the reality is that the Government has not heard the last of this matter.

I want now to raise a further matter, which has also been touched on briefly by Brian Connell. Last year New Zealand spent $284 million importing into this country so-called special-purpose timber. But very few of those imports were from verifiable sustainable forest sources. At the same time, we insisted that our own indigenous privately owned timber industry should mill and market only against high-level sustainability criteria. That is a complete mismatch that does nothing for world conservation, utilises scarce overseas funds, and has adverse economic impacts for our indigenous timber industry. With that in mind, I have raised with the Government the possibility of banning such importation to New Zealand unless, in line with our practice here, it is sourced on a verifiable sustainable basis. That would do no more than create a level playing field in favour of our own forest owners.

It is extremely important that the Government continues to look at the matter, because fledgling industries in New Zealand using beech for, say, furniture manufacture, need—if they are to become serious export players—to first develop strong domestic markets. However, that will not happen if they are undercut by rival furniture manufacturers here in New Zealand who are able to pick up equivalent or superior timbers imported from overseas, derived from the clear-felling of virgin indigenous forests in places such as Indonesia, Malaysia, or Africa.

I am disappointed that the Government has indicated to me that it is not prepared to move on the matter at this stage. It believes that it would be difficult to impose a blanket ban on imports of such timber without inviting retaliatory measures from our trading partners. I beg to differ with that analysis. On the contrary, I believe that New Zealand has a strong moral case to argue when it comes to non-plantation virgin forests or indigenous timbers. Fair international trade for everyone means meeting sustainability criteria equivalent to that established for our own forests.

We have a proud tradition of displaying some leadership in those kinds of areas. I think, for example, of our nuclear weapons position, which has earned us the respect of the international community. I see no good reason why we cannot do the same for the sake of the world’s forests and their preservation for future generations. After all, it is not just New Zealand but the whole globe that is called to wise stewardship of those scarce and fast-disappearing forests.

In short, some tidying-up remains, and I hope that the Hon Jim Sutton, the Minister of Forestry, will ensure that the work in the area I have mentioned continues on into the future until those matters are resolved.