Opinion: Rating changes 'threaten viability of forestry investment'

Forestry is punching above its weight and thrives on confidence, writes Keith Dolman. Photo / Supplied

The primary industries led by forestry are propping up the Hawke's Bay economy at a time when many regions are struggling.

According to the latest Westpac McDermott Miller survey of consumer confidence (September 15, 2020), Gisborne and Hawke's Bay now top the nation, and the data shows that forestry is leading this surge of optimism.

In many other regions, consumer confidence slipped again in September and is languishing at levels we last saw during the financial crisis in 2008.

Significantly, central, and regional governments are promoting the environmental benefits of forestry (sediment control and carbon sequestration particularly) and are economically incentivising afforestation.

People see here an industry offering real hope in an imperilled economy. It is no secret that the Covid tsunami has gutted tourism, our second-largest export earner.

Economic diversity and the free market are pillars of economic theory. Competitiveness is a key to business survival.

The survey data suggests that most people now recognise the critical role forestry is playing in building resilience to change and that we would all be poorer without forestry.

Yet in some local governments, forestry faces serious resistance. Wairoa District Council for instance recently affected massive hikes in forest land rates.

The message here is that forestry is patently unwelcome.

Rating hikes come on top of veneers of new regulations emanating from policy change. All add governance and compliance costs.

Herein lies a real threat to the industry, as while forestry expects to pay its way, it cannot be expected to pay everyone's way.

While the survey results are comforting; we need to keep an eye on the big picture - to see the wood for the trees. If forestry is to continue its august role in the national economy, it must maintain competitiveness.

We do a good job of planting, managing, and caring for our forests but the reality is we offer a low-value high-volume product from the bottom of the world to a market spoilt for choice.

Forestry is a long-term venture. It is punching above its weight and it thrives on confidence.

However, a negative forestry mindset, such as is driving rating policy change in Wairoa District, threatens to deprive ratepayers of a major economic opportunity that can support the traditional farming base.

Our concern is that if boxed in by policy uncertainty and restrictive regulation, such as massive land rating charges, the industry as we know it may fade away.

In which case we will have killed the goose that lays the golden egg.

- Keith Dolman is CEO of Hawke's Bay Forestry Group