Unlocking 'a wall of wood'

Regional Economic Development Minister Shane Jones. Photo / Mark Mitchell

Shane Jones has a big new idea: He wants to open the way for Pacific Islanders to join an expanded workforce to help unlock a "wall of wood" and pave the way for more forest products processing to take place in New Zealand. This would involve expanding the Regional Seasonal Employment scheme to include forestry.

Jones says forestry investors — including those from China — have said to him that if New Zealand wants to expand its processing capacity here, it has to address logistical issues, the adequacy of supply and a suitably skilled workforce to enable them to create products that may or may not have been done in Southeast Asia.

Jones makes the point that raw labour jobs should be available to New Zealanders, but says there is a huge reservoir of labour just sitting off the coast of New Zealand in the Pacific and "I think that it ticks a lot of boxes".

The Regional Development Minister is uniquely qualified to float this idea. He spent three years as NZ's Pacific Economic Ambassador during an interregnum from national politics before again becoming an MP at the 2017 election. "I've advanced my perspectives with the other ministers — it's not government policy," he adds, saying he doesn't want "apocryphal tales of a whole lot of Islanders living on top of each other being gouged."

"If there was any hint of that, then I will not support the RSE scheme ever being applied to address some of the labour shortages in forestry."

Jones is not entirely sure that his proposal fits within the Pacific Reset policy promoted by his colleague, Foreign Affairs Minister Winston Peters, but says "to me it shows that one and one can definitely equal three."

Jones has no qualms promoting the forestry processing opportunities to potential Chinese investors.

He says they are aware that the wall of of wood is predominantly in the East Coast of the North Island. "We have spent quite a lot of dough with the East Coast in terms of roads. I feel there is scope and the Government's willing to throw some money at underlying infrastructure to attract not necessarily Chinese I have to say, but if it was Chinese, an expansion of our manufacturing capacity."

The expansion will not be limited to the East Coast. But Jones notes the East Coast has a river port and "copious quantities of trees" and up to $300 million is going to be spent over the next three to four years on the roading infrastructure — at least 40-50 per cent of it from the NZ Transport Agency and the rest from the Provincial Growth Fund.

Jones visited China last year to attend the 8th Global Wood Trade Conference in Chongqing, along with a delegation that included NZ wood processing companies, the NZ Forest Owners Association, and Crown Research Institute Scion.

"I was astounded as to how high was the quality of contact that I enjoyed up in China," says Jones.

"The difficulty is the size of the deals investors were doing in other parts of the world — nothing I said could match them.

"That's the curse of New Zealand. What we think is a big transaction, for them it takes the same amount of nervous energy to spend and park their money here that it does for a multibillion-dollar deal somewhere else."

The visit allowed him to highlight changes to the Overseas Investment Act that were coming into force the following month which increased investors' flexibility in obtaining consent and removing unnecessary red tape so they could choose from any of three different tests when seeking to acquire forestry land or rights.

Jones recently gave an upbeat speech to a charity fundraising dinner hosted by the Chinese Chamber of Commerce (NZ). "I'm conscious of how important the relationship between New Zealand and China is; the value of our two-way trade is stupendous," says Jones. "From time to time issues will arise and as I said at the dinner we need to address and navigate those with goodwill and accept there'll be some robustness."

Jones describes himself as unashamedly a "pro-industry politician" and says "the industry the Prime Minister and Deputy Prime Minister have asked me to provide some titular leadership to is China."

"I feel it's time for Chinese investors to outgrow the inaccurate view that they're only after the quick buck," he adds. "That perception took root probably before the free trade deal but now China is leading the way in terms of solving its environmental problems. "

"When I bump into Chinese investors in New Zealand, several have said to me 'our forefathers didn't capture the upside of the industrial revolution, but mark my words we are not going to miss out on the technological revolution'."

China is New Zealand's largest market for forestry products. In 2018, New Zealand exported over $3.2 billion of forestry products to China. This comprised:

● over 16 million cubic metres ($2.7 billion) of logs
● over 447,000 cubic metres ($146 million) of sawn timber
● over 310,000 tonnes ($280 million) of pulp
● $78 million of other products.

New Zealand and China first signed a co-operation arrangement in 1990, updated in 2001.

Te Uru Rākau does not hold accurate data on NZ forests or forest land owned by Chinese investors.

However, the New Zealand Forest Products Industry Review for 2018 produced by DANA (a forestry consulting business) estimated Chinese companies owned 3 per cent (53,000 ha) of New Zealand's industrial scale production forests ( forest estates over 3000ha). This compared to 20 per cent of NZ forests that were US-owned, and 8 per cent each for Malaysia and Japan.

The Overseas Investment Office says between 1 January 2010 and 31 December 2018, 10 applications were approved for forestry and logging involving Chinese interests totalling approximately $310 million.

The most notable current large-scale Chinese forestry investor is China Forestry Group, which owns over 20 forests, about 25,000ha hectares. The OIO is not aware of Chinese applications since the simplified screening pathway for forestry was implemented last year.