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Minister’s claims of policy warning incorrect

12 June 2008

Media Statement

Minister’s claims of policy warning incorrect

Claims by forestry minister Jim Anderton on Radio New Zealand’s Morning Report yesterday that land owners were warned five years ago of potential deforestation liabilities are not correct, the New Zealand Forest Owners Association said today.

In fact the opposite is true, said NZFOA climate change spokesperson Peter Clark.

“As recently as December 2006, no less an authority than prime minister Helen Clark told The Dominion Post there was no proposal for a $13,000 retrospective deforestation tax. She said claims to the contrary were ‘hysterical’. In fact, officials are now using $20,000 - $25,000 per hectare as a working number, with speculation it could be as high as $65,000 per hectare depending on the price of carbon.

“This massive potential liability devalues all pre-1990 forests, whether or not the owner was considering a change of land use. Such a terrible precedent is hardly the best way to encourage anyone to plant new forests.”

Mr Clark said the prime minister’s December 2006 assurances that there would not be a $13,000 deforestation tax followed similar guarantees from senior government ministers over a number of years, including:

“The Government, rather than forest owners, will assume the liability created by the Protocol for deforestation, although the liability will be capped nationally at 5% of the area of forest expected to be harvested over the first commitment period.”
- Hon. Pete Hodgson, Media Release, 30 April 2002

“The government is managing both the credits and liabilities arising from Kyoto forest sinks, meaning foresters will face no harvest or change of land costs for post-1990 forests. The Government is also providing capped cover for the deforestation of pre-1990 forests, which do not attract credits, at a level far in excess of historical deforestation rates. This approach means there is … no climate change related costs for expected deforestation of pre-1990 forests.”
- Hon. Pete Hodgson, Media Release, 5 October 2004

“[Pre-1990] forests generate no credits but the government has nonetheless agreed to accept a capped liability for any deforestation, with the cap set well above the historic deforestation trend. The Crown accepts liability, because to do otherwise would lead to a freezing of land use, even where some trees have been planted in the wrong place.”
- Hon. Pete Hodgson, Media Release, 13 June 2005
Mr Clark said the NZFOA was advocating that a Forestry Offset Scheme be included in any planned legislation as part of a full compensation package, and it was confident there was a parliamentary majority in favour of the idea.

“The alternative to supporting a Forestry Offset Scheme is for a political party to say it believes there should be different rules depending on which side of the road a forest is replanted. That is clearly a nonsense,” he said.

Under a Forestry Offset Scheme, forest owners harvesting their land would be able to meet their liabilities under the ETS either by replanting the exact same land or by planting an equivalent area of land elsewhere in New Zealand that is not currently in forestry. This would be part of a wider compensation package for land owners and would help mitigate the land-value losses associated with the introduction of the ETS, which are estimated to be in the vicinity of $3 to $4 billion, including up to $2 billion of Maori land-value losses.

Mr Clark said the Finance & Expenditure Select Committee had been provided with draft legislation to give effect to either a capped or uncapped Forestry Offset Scheme.

He said that even Mr Anderton appeared to support the principle of the scheme when he told Morning Report that “land-change use – which we’ve always had in New Zealand – [where] you can change from beef-lamb farming to dairy farming to forestry and back again – that’s one of our competitive advantages”.

Mr Clark said this statement was encouraging.

“There is general acceptance that New Zealand and other countries’ negotiators made a mistake by not including offsetting in the Kyoto Protocol for Commitment Period One. The New Zealand Government is now working hard to fix this mistake for Commitment Period Two because of the importance of flexible land use to New Zealand and the world.

“It would be perverse to impose huge costs over the next five years on the one sector capable of sequestering carbon – forestry - because of a obvious problem with the current wording of the Kyoto Protocol,” he said.


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