Road user charges hike will increase timber costs

Media Release

Wood Processors Association
2 April 2007
Road user charges hike will increase timber costs

The Wood Processors Association is staggered by the Government’s decision to hike road user charges (RUC) by a further 11% (effective as of April 1), which will add further costs to an industry already struggling to sustain any level of profitability.

“Given the size and consistency of cash surpluses enjoyed by the Government, this massive RUC increase is completely unnecessary. More importantly, it will create further pain for a forestry sector already reeling in the face of such a high Kiwi dollar,” says WPA chairman Dave Anderson.

Transport is a major cost input for the forestry industry and a significant factor in the competitiveness of our timber exports.

Mr. Anderson emphasized the inflationary knock-on effect of escalating RUC costs.

“At a time when the Reserve Bank Governor is already struggling to keep a lid on inflation, this is going to create even more pressure. Every time the Governor is forced to lift the OCR, the forestry industry gets whacked twice. Our exports get squeezed by the exchange rate of course, but we also face higher costs servicing short-term debt.”

He also pointed out the counter-productive effect of the RUC increases in relation to carbon neutrality objectives.

“It is counter productive to further stretch the viability of the very industry fundamental to achieving carbon neutrality. Uncertainty over carbon emissions liabilities and the ongoing profitability challenges stemming from high compliance costs, energy costs and the exchange rate are marginalising the forestry sector. This is a sector the country needs to be expanding to earn carbon credits, not contracting as will be the result of measures like this.

“It’s bad news and bad timing no matter which way you look at it,” concluded Mr. Anderson.

ENDS

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