The New Zealand Government could be about to fell its own tree-planting plans. Sources say Treasury has drafted legislation that it will put to Cabinet at the end of the month which will bring forestry cutting rights into the Overseas Investment Act framework. Source: Stuff NZ
That would mean foreign purchasers would have to be vetted by the Overseas Investment Office before they bought the right to forest trees in New Zealand.
Forestry consultant Pete Clark said it would be unfair and have a significant impact on New Zealand’s forestry sector, which is reliant on foreign investment.
“It’s like saying if you want to invest in cows, you need to go through the Overseas Investment Office. Forests are a crop on the land. I would have thought Kiwis would be concerned about the land itself, which is already clearly captured.”
He estimated NZ$15 billion to NZ$20b of forests were already in foreign ownership.
“If foreigners are restricted from purchasing tree crops across the board, who’s going to own that?”
New Zealanders’ capital would be better spent on more high-growth, productive investments, he said. Foreign ownership was needed in some sectors of the economy, and it made sense for that to be areas such as forestry that were good for the environment and non-threatening to New Zealand businesses.
A restriction on cutting rights purchases would create a problem with the liquidity of New Zealanders’ forest investments, including iwi. They would not be able to sell their investments for the same return.
“If you restrict the sale of forestry rights, you raise the hurdle rate for investing in the asset,” Mr Clark said.
The government has a goal to plant one billion trees over the next 10 years. Forests on Department of Conservation land will act as carbon sinks to boost anti-climate change efforts. Trees are also to be planted on Maori land, with an emphasis on creating jobs.
Don Carson, spokesman for the Forest Owners Association, said any move to make it more difficult to make money from felling trees would be inconsistent with that goal.
“It would require capital to be invested in planting these trees from a domestic source that would be better used elsewhere,” he said.
“It’s a good idea to put more trees in. If people overseas are prepared to help us do that, that’s worthwhile.”
Senior press secretary Vernon Small said whether forestry cutting rights would be included in the Overseas Investment Amendment Bill had not yet been decided.
Shane Jones, the minister tasked with overseeing the tree-planting efforts, said he could not comment.
