Labour leader David Cunliffe made an announcement of forestry yesterday which would take us back to the failed policies of the 70s:
The Labour Party’s desire to turn the clock back to the 1970s is once again highlighted with their grab-bag of ideas for the forestry industry, says Economic Development Minister Steven Joyce.
“Subsidised loans, expensive tax concessions, preferential treatment, and make-work schemes for young people are all a flashback to a time when governments decided which industries succeeded based solely on political whim rather than competitiveness,” Mr Joyce says.
“This is classic 70s ‘government knows best’ interventionism and we all know how badly that ended. What next, supplementary minimum prices for wood?
“Why should the forestry industry receive preferential treatment over the high tech manufacturing industry, ICT, the services industries, the construction industry or the farming industry? Or is it Labour’s plan to provide subsidies for everyone so we can subsidise our way to success?
“About the only thing they have got right is suggesting a focus on innovation. However it’s like they have been asleep since 2008 and now woken up ‘Rip van Winkle’ like to say we should do some innovation.
“While Labour has been asleep this Government has massively lifted its investment in innovation and helped grow private sector R & D across the economy by 23 per cent in just two years. Total government funding since 2010 for forestry-related science, research and product development alone amounts to over $160 million.
“The only sensible way to run a modern successful economy is to provide a strong macroeconomic base, supported by polices that lift the competitiveness of all firms. Our comprehensive Business Growth Agenda, which Labour has still not bothered itself to read, systematically improves access to markets, innovation, natural resources, capital, skills, and infrastructure.
“The results of our policies so far are reflected in strong growth, lowering unemployment, a much improved trade balance, stronger productivity growth, and real wages rising faster than the cost of living. Turning the clock back to the 70s is an amazingly out-of-touch response to some of the strongest economic data New Zealand has produced in many years.
“New Zealanders know they are just starting to see the positive results of five years of sensible modern economic policies and hard work by New Zealand companies. Turning the clock back 40 years would send New Zealand back to the bad old days of sluggish performance, high current account deficits, low productivity, and high inflation that the Labour Party knows so well.”
Acting Prime Minister Bill English highlighted the flaws in the policy too:
Hon David Cunliffe: In relation to the economics of forestry, is he comfortable that the rate of unprocessed log exports has grown at 10 times the rate of processed logs, given that the export of raw logs is really exporting jobs?
Hon BILL ENGLISH: I would need to check the member’s figures, but he may also be interested to know that around 60 percent of all forestry production is currently value-added. It may well be that in the light of a rise in prices for export logs there are more logs being exported, but anyone who has been in the industry knows that those prices can drop as fast as they rise. I am sure that there are many people in the forestry industry taking a longer view and keeping that in mind. . .
Hon Dr Nick Smith: My question is to the Prime Minister and it asks what reports has he received on the recent developments in forest processing in Tasmania, where its Labour-Green Government has fallen apart over the very issues of forest processing and where there has been a huge loss of jobs and confidence in that sector because the—
Mr SPEAKER: Order! You have made the point with your question.
Hon BILL ENGLISH: I have received the same—[Interruption]
Mr SPEAKER: The question was what reports has he received.
Hon BILL ENGLISH: The Deputy Prime Minister and the Prime Minister have received the same reports, obviously, which have been to the effect that the Government in Tasmania has overseen the destruction of the forestry industry by trying to get involved in it.
Hon David Cunliffe: Would the Prime Minister support an accelerated depreciation tax including for forestry processing?
Hon BILL ENGLISH: No, we are not entertaining that. Those kinds of policies were tried consistently, I think, from the 1970s when they were a bright idea, and they lead to unsustainable industries and unsustainable jobs as a whole lot of Australian workers are now finding out, where industries that were subsidised by the Government there are now closing down. . .
Hon David Cunliffe: Does the Prime Minister support a pro-wood Government procurement strategy to assist jobs and value added in New Zealand, including in those South Otago sawmills; if not, why not?
Hon BILL ENGLISH: No. The member should have more confidence in the forestry industry. It has evolved from the time in the late 1980s when sawmillers used to be able to get very cheap logs from Government-owned forests through to a modern processing industry that is internationally competitive and makes very sophisticated decisions about the balance of financial risk, different types of product, and exchange rate and price risk in export markets. The idea that Labour would do a better job of that is wrong, and it would end up destroying the forestry industry if it gets that involved in it. . .
Criticism of the policy isn’t confined to parliament:
Labour’s “pro-wood” government procurement strategy will create an inappropriate commercial advantage for one construction sector over another, according to the New Zealand cement and concrete industries.
Announced today by David Cunliffe at the ForestWood conference in Wellington, the policy would mandate that “all government-funded project proposals for new buildings up to four storeys high shall require a build-in-wood option at the initial concept / request-for-proposals stage (with indicative sketches and price estimates).”
Rob Gaimster, CEO of the Cement & Concrete Association of New Zealand (CCANZ), believes that policies which appear to be giving preferential treatment to one construction material are misguided.
“It is inappropriate to mandate that those designing new government buildings consider wood as a structural option, and then require an explanation if an alternative material is chosen,” says Mr Gaimster.
“Government should not be picking winners when it comes to the selection of construction materials, which should stand or fall on their own technical, cost, aesthetic and sustainability credentials.
“In addition, the policy does a huge dis-service to the hardworking men and women in the cement and concrete industries. Favouring a single construction material during the design phase of a new government building could seriously impact on their livelihoods and jobs.
“This policy does not create a level playing field for the use of construction materials in government buildings. In fact, materials other than wood will be considerably disadvantaged.
“We are concerned about the wide-reaching implications of this policy and believe it should in no circumstances be adopted.”
Labour’s policy is designed to help one sector but would hurt another.
Gravedodger illustrates other shortcomings in the policy.