Nash StuartFORESTS (LEGAL HARVEST ASSURANCE) AMENDMENT BILLFirst ReadingHon STUART NASH (Minister of Forestry): I present a legislative statement on the Forests (Legal Harvest Assurance) Amendment Bill.ASSISTANT SPEAKER (Hon Jenny Salesa): The legislative statement is published under the authority of the House and can be found on the parliamentary website.Hon STUART NASH (Minister of Forestry): I move That the Forests (Legal Harvest Assurance) Amendment Bill be now read a first time. I nominate the Primary Production Committee to consider the bill. Today I stand to explain to the House why the introduction of the Forests (Legal Harvest Assurance) Amendment Bill is a priority for the Government and should be of importance to everyone with an interest in the integrity of our forest and timber industry.The introduction of an insurance system for timber products is a tangible step New Zealand can take to support the international efforts to curb the trade in illegal timber products. At the same time it provides importers and our domestic processors and exporters with a framework for demonstrating that due diligence has been completed on the legal harvest of timber products they are trading. This bill will be comprehensive and will cover exported and imported timber products as well as our domestic supply. How New Zealand responds to the issue of illegally harvested timber has been debated since before I entered this House. A number of voluntary actions have been taken and I would like to recognise the efforts of importers and domestic producers in this respect. But we have reached a point where consumers and markets are expecting more in the way of formal assurances.If we do not respond to these calls consumer confidence could be impacted and log and timber product exporters could face increasing difficulties in maintaining market access in an increasingly competitive global environment. The sale of illegally harvested timber is a major problem in the world today. It is the harvesting of timber in contravention of the laws and regulations of the country of harvest and there are many ways that this might happen. It is difficult to assess the extent of illegal logging; however Interpol estimates the illegal timber industry is worth around US$152 billion a year. And the World Bank estimates that the global annual market value of losses from illegal cutting of forests at over US$10 billion. Approximately 10 percent to 30 percent of the global timber trade involves illegally harvested timber.Illegal logging not only destroys forests and fragile ecosystems it strips the economic livelihood of local communities and responsible companies. Timber that is logged without payment of duties and tax pushes down the market price of timber which acts as an incentive for other loggers to follow the same practice. This further increases losses to communities and Governments and starts a vicious circle in the market.When it comes to New Zealand we are mainly an exporter of timber products; however timber imports have increased by approximately 70 percent over the last decade to $2.35 billion of timber products imported in 2021. The rising volume of timber imports into New Zealand increases the risk that we become a destination for any illegally harvested timber products. This is because we do not have any mandatory timber assurance measures and we are largely dependent on the voluntary assurance measures that are in place through industry initiatives and environmental certification. This bill will create a due diligence system that will shut the door on illegally harvested timber products and will show the global community that New Zealand is committed to helping eradicate this problem. Our primary processors—importers and exporters—will need to check and validate the integrity of the information provided by the grower or person they bought the timber from to assess whether it has been illegally harvested. This due diligence system may be streamlined through using an approved template or by being a member of an existing forestry certification scheme such as the Forest Stewardship Council or the Programme for the Endorsement of Forest Certification. This is to alleviate the burden of the new regulatory system.The second issue this bill will seek to address is how we maintain market access for our exporters who are trading timber into markets that are introducing timber legality requirements. Forestry is an important industry for New Zealand it contributes around $6.7 billion to our annual gross income and employs approximately 35000 people. Timber products are our fourth-largest export earner behind dairy meat and horticulture and forestry export revenue is forecast to increase by 3 percent in 2022 and 2 percent in 2023.More and more countries are introducing formal requirements to prove legal harvest. Several of our key forestry trading partners—including Australia the United States Indonesia Republic of Korea Japan Vietnam and China—have implemented or are developing their own legislation to prevent the import or export or trans-shipment of illegally harvested timber. We export nearly 85 percent of our timber products to these countries. Third-party environmental certification has to date been accepted by most of our trading partners as a means of demonstrating legality. However private certification is not a viable financial option for the majority of our smaller growers who represent approximately 30 percent of the estate and who are supplying up to 40 percent of the harvest during the 2020s due to the age of their forests. With the building of international efforts to ensure that traded timber products are legally sourced we also need to ensure that we have a legal harvest assurance in place. If we do not do this we run the risk that we no longer can export to these markets.This bill has several components. One is the due diligence system I mentioned earlier. But there are other key components such as a definition of what is legally harvested" a registration system and harvest and exporter statements. These will form a robust programme which will simultaneously strengthen the international reputation of our foreign sector and safeguard and enhance market access for our forestry exports. Guidance for our registered parties will be provided at each step of the process and we are drawing on international experience to identify how this works in overseas jurisdictions. Forest owners will not need to be registered but they will have an obligation to provide a statement confirming their right to access the timber.By curbing the importation of illegally harvested timber products it ensures that New Zealand's forest growers are operating on a level playing field and that pricing reflects the cost of production. In developing the regulatory proposals the Ministry for Primary Industries has worked with affected parties to ensure that the system is fit for purpose cost-effective and not overly burdensome for the individuals and companies operating in this space. In 2020 the Forests Act was amended to introduce a new registration system for forestry advisers and log traders as log traders will need to also register for legal harvest this bill aligns with the registration system currently being implemented for log traders.The purpose of the 2020 amendment was to ensure forest owners received better advice and there was more transparency in the market. This bill complements the amendment Act by strengthening the resilience of the supply chain and the reputation of New Zealand forestry. I commend this bill to the House.ASSISTANT SPEAKER (Ian McKelvie): The question is that the motion be agreed to."