Govt seeks to allay forestry fears

Press, 21 April 1986, Page 13

Govt seeks to allay forestry fears

PA Wellington The proposed Forestry Corporation will not become successful through putting its clients into liquidation, says the Under-secretary for Forests, Mr David Butcher.

Timber imports would place a “very firm” limit on the price of State wood, he told a panel discussion on the corporation.

The Forestry Corporation, set up as part of the Government’s sweeping changes in environmental administration, will be fully commercial in its handling of State forest and sawmill production. Mr Butcher noted that the State owned about 50 per cent of plantations and a substantially higher proportion of plantation wood sold on the open market

It is that market position that has led some forestry businessmen to say that the corporation could use monopoly powers to force private timber companies out of

business. Mr Butcher said the corporation would put pressure on the private sector to improve its performance.

But provided the private sector had the safeguard of fair competition for resources and access to imported raw materials, it had nothing to fear.

In setting up the corporation, the Government had considered it was time the taxpayer got a worth-while return from State Investment in forestry.

“Fears that are held in the private sector that State trading enterprises will continue to enjoy generous advantages over the private sector are not at all justified.” He pointed to the announcement that public trading enterprises will be required to fund additional spending from private sector loans.

They will also be required to repay and re finance cheap Govern-

ment loans as well as paying tax and dividends, to the Government The State had made a huge investment in forestry and the corporation would ensure that investment produced a Worthwhile return.

“It is all very well for some people to bemoan the fact that the State has a very high proportion of the total exotic timber resource,” he said. ' But the State had been so dominant because it had been offering its timber to the industry at less than the cost of production, making it uneconomic for the private sector to acquire its own resources.

Mr Butcher said appropriate pricing of the State output was essential to making sure resources were put to their best use.

Underpricing had led not only to a more rapid rundown than necessary of Indigenous resources but to a "slower than desirable” uptake of exotic wood.