New Forestry Corp, expected to show profit

Press, 2 April 1987, Page 8

New Forestry Corp, expected to show profit

Wellington reporter

The old Forest Service had a working annual deficit of $lOO million but the Deputy Prime Minister, Mr Palmer, said all that would change under the new Forestry Corporation.

He launched the new corporation at a ceremony in Wellington last evening. He said the chairman of the new corporation, Mr Alan Gibbs, had forecast that the corporation would be able to turn the loss round and make a profit of at least $2O million in its first year. That sort of unprofitable investment in State trading had made up <i big part of the debt inherited by the Government in 1984.

That deficit had amounted to $3500 million, Mr Palmer said, and without the deficit New Zealand could have had a flat rate of income tax of less than 15c in the dollar.

The cost of. previous policies was still apparent; the high levels of debt incurred had imposed an ever-increasing tax burden.

Pain was inevitable if the chains dragging down

New Zealand’s standard of living were to be broken, he said. People tended to forget that the performance of the public sector was vital to the performance of the economy as a whole. State trading enterprises alone accounted for more than 12 per cent of gross domestic product, and 20 per cent of gross investment.

Some of those present at the launching expected the National Opposition to reiterate that when next elected it would privatise the new Forestry Corporation.

But the Opposition spokesman on forestry, Mr lan McLean, said the corporation had earned the right to prove itself and was not now on National’s priority list for privatisation.

Mr Gibbs described the new corporation as the most radical and most successful restructuring of a big commercial enterprise in NeW Zealand history.

The old Forest Service had been staffed by excellent skilled people who had been utterly demoralised and frustrated by the. system they were beiig compelled to work under, he said.