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Labour to boost forestry with pro-growth tax reform

David

PARKER

Spokesperson for Finance
19 March 2014 MEDIA STATEMENT

Labour to boost forestry with pro-growth tax reform

EMBARGOED UNTIL 11.30am

A Labour Government will give targeted tax incentives to encourage much-needed capital investment in the wood processing industry, Labour’s Finance spokesperson David Parker says.

“The proportion of our forestry products exported as higher value processed goods is decreasing. Every year New Zealand is exporting more and more raw logs; millions each year.

“A Labour Government will change that.

“A targeted tax incentive is needed to overcome the increased risks which wood processors face in a small economy. This will encourage the substantial capital investment needed to maximise value from our wood industry.

“It will enable the modernisation of our wood products industry and allow the sector to link into the global value chain.

“New Zealand’s internal market means large-scale wood processors are more reliant upon exports than those based in large economies like the United States or China.

“Processors with a greater exposure to exports face higher risks such as concentrated exchange rates, cultural barriers and the added difficulties of maintaining trading relationships with more distant clients.

“Unless those risks are reduced, the investments in the capital equipment needed to improve scale and productivity in forest processing based in New Zealand are unlikely to be made.

“Labour will work with domestic and foreign capital to make this work.

“Our accelerated depreciation will help attract the capital needed to migrate from ‘volume’ to ‘value’.

“We want to partner with industry to ensure an increasing amount of the output from forestry moves up the value chain – from raw product to light processing; from light processing to elaborate processing; and from elaborate processing to high-technology and product innovation.

“Today’s policies represent a major step in achieving that ambition, with accelerated depreciation by itself predicted to increase capital expenditure in forest processing by between $40 and $80 million a year,” David Parker says.

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