New Zealand elections always bring together some novel alliances. The 2017 Election is no exception on this front for WPMA. For this General Election we have worked up an alliance between the wood, metals, plastics and manufacturing-exporters' associations to deliver the joint policy position (below) to all political parties. While we are diverse in the materials that form the core of our businesses we are united in that we are manufacturers and face very similar challenges in the processes of adding value to commodities.
You will note that right up front in this NZ Manufacturing Industry Alliance Policy Position (2017) is the biggest concern WPMA has been pressing home with politicians for months - that of unfair competition creating trade distortions for NZ manufacturers both at home and abroad. All of NZ manufacturers are up against prohibited subsidies overseas but the wood industry feels this particularly acutely as these create unfair competition in the domestic log market. The Manufacturing Industry Alliance therefore calls on the NZ Government to implement WTO-compliant trade remedies to level the playing field now.
The Policy Statement also requires the incoming government to put in place an R&D tax credit system that is far more encompassing across the manufacturing industry and to implement an accelerated depreciation regime to enable companies to access the very latest manufacturing technologies and know-how. The Policy statement requires government to address the skills shortages in the manufacturing sector. There has been a disproportionate focus to date on skills for the primary sector. This now needs to be a re-balance to address the needs of manufacturers who are running desperately short of the highly skilled workers needed to grow the sector.
But have the politicians heard us?
Well, the NZ wood manufacturing sector has had a much larger public / political profile in the run up to this election.....and, because of that, I believe we have been heard. That being the case, what are the main parties saying that has direct relevance to WPMA's trade and competition concerns?:
National: The large number of WPMA members attending the meeting with Trade Minister McClay on 16 August regarding unfair competition and trade will have heard him acknowledge our trade problems as urgent and important. The Minister has commissioned a cross-Ministry inquiry into our grievances and this is now in its early stages. I assume, therefore, that if a National-led Government is returned next week that this inquiry will continue and expect the recommendations raised to Cabinet for action.
NZ First: Wants to put in place measures to ensure that the vast majority of our raw forest products are processed in NZ. Anyone attending the recent NZ First Forestry Meeting in Northland will have heard the party suggest a log export quota system. NZ First had until recently been talking about setting a "minimum domestic log price to discourage the export of raw logs". Whilst the specifics remain to be nailed down it is clear that NZ First will be looking at regulatory interventions in the domestic market to ensure much fairer competition in the NZ log market.
Labour: Is focussing its attention on tightening the Overseas Investment Act to include forest cutting rights on any land area over 50ha in size. This would be a major regulatory shift as cutting rights are not controlled under the OIA at present unless the overall purchase price exceeds $100 million in value. Labour have also told WPMA that in their OIA reform they would look to enforce commitments made under OIA Section 17(2) that stipulates supporting local processing.
Greens: Have told WPMA that they will prioritise tackling production and export subsidies internationally in order to prevent the kind of trade distortions we are witnessing in the NZ log market. They have also committed to investigating the use of trade measures to provide incentives for the domestic processing of logs. They will also address the advantages given to foreign companies in NZ including the recent Bill on Anti-Dumping and Countervailing Duties, the lack of action on tax treatment of multinationals and the lack of strong competition policy that would include imports into NZ.
From these election promises we can assume, whatever combination of parties are in power next week, that the WPMA's call for government intervention to create fair trade will receive priority attention. Rest assured that WPMA is ready to work with whoever takes the reins next week to ensure that this is the case.
Dr Jon Tanner
+64 21 890 624