Labour has decided that they want to give tax breaks to forestry companies. Their premise is that it will build capacity in the industry and increase their ability to produce higher grade products that are worth more.
They don’t extend this to other industries though, and bizarrely the policy which would necessitate the chopping down of more trees is in stark contrast with their ETS policy which penalises people who cut down trees. They use weasel words about encouraging growth, but the mechanism involved heaps penalties upon landowners if they cut down their own trees.
As trees grow, they absorb carbon dioxide from the atmosphere and store it as wood (with forests therefore sometimes being referred to as âcarbon sinksâ). When forests are felled, they release carbon.
Forestry is rewarded under the ETS. That is because forests, as carbon sinks, have a big role in reducing greenhouse gas emissions, and in helping New Zealand meet its international climate change obligations.
Labour will therefore encourage increased forest cover, and particularly the planting of native forest that will not be harvested.
Labour will encourage landowners to plant forests to act as carbon sinks, and provide incentives and information on suitable trees to plant.
Several schemes are already in place to encourage the planting of forests. However, trees vary in their ability to capture and store carbon. There are also biodiversity issues to consider when determining the optimal mix of planting.
Is that going to change or are the new tax breaks a case of giving with one hand and taking away with the other? Â Labour’s ETS policy says nothing of promoting wood as a produce, which by necessity must come from trees, which they want to grow more of. The two policies are incompatible.
The ETS is a red herring in forestry terms – overly complicated – but the forester is largely revenue neutral providing they replant… however, the processing industries that Cunliffe is promising tax breaks to are not neutral and will pay through the nose. Â So there is a question about how much of the tax breaks they’ll actually see once Labour’s super-charged ETS is imposed on them.