Parker David: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers[Sitting date: 19 March 2014. Volume:697;Page:16811. Text is incorporated into the Bound Volume.]10.Hon DAVID PARKER (Deputy Leader—Labour)to the Minister of Finance: Does he agree with the forestry industry that Government incentives to encourage further wood processing in New Zealand such as accelerated depreciation rates on machinery are necessary to maximise New Zealand’s share of the global value chain?Hon BILL ENGLISH (Minister of Finance):No. A few figures might help to assist the discussion. New Zealand exported $4.4 billion of forestry products in 2013 and 60 percent of that was value-added product. New Zealand processes around 50 percent of our production onshore. Employment in first-stage processing has been steady at around 17000 over the last 5 years and mill productivity is up—quite a different picture from Labour’s tired use of the word “crisis”. Just last month the chief executive of the New Zealand Timber Industry Federation called for rationalisation in the sector to deliver a stronger sawmilling sector.Hon David Cunliffe: I raise a point of order Mr Speaker. I seek your guidance. Earlier in this question time I was allowed with the good will of the Government to table a document from the Ministry for Primary Industries that showed that the twice-repeated assertion by the Acting Prime Minister the Minister of Finance that 60 percent of New Zealand’s timber exports were value added was incorrect. The Ministry for Primary Industries document for 2012-13 entitled “Facts and Figures” shows that 55 percent are actually—Mr SPEAKER: Order! I have heard enough. The member is now using points of order to debate. The Minister who is answering the question is responsible for his answer. If in any way he had misled the House then he is certainly responsible for that.Hon David Parker: How can he claim that his current policies are working given that raw log exports have rocketed while processed exports have stagnated?Hon BILL ENGLISH: Raw log exports have not just randomly increased because bad people want to export them; they have increased because the prices have gone up sharply which has increased New Zealand’s national income. Labour has been saying it wants high-value export industries. When the prices go up people tend to export more. It happens that right now exporting logs is higher value than further processing but as people who have watched this industry for 20 years will know those prices can drop as sharply as they can rise and it could be a matter of months or a matter of a few years before the situation is significantly reversed.Hon David Parker: Why is he sticking with policies that see millions and millions of raw unprocessed logs exported each year with no value added?Hon BILL ENGLISH: I simply disagree with that. We are sticking with people in the forestry industry who through quite a long period of time have learnt how to manage the risks of being a grower of raw material and supplier of processed goods to the world when we are a small market a long way away dealing with exchange rate risk product risk and market risk. We back those people to make the decisions that will align best with New Zealand’s national interest and right now exporting logs when the price is so high is good for the New Zealand economy. We certainly do not back a bunch of Labour politicians whose best ideas come from the 1970s to run our forestry industry.Hon David Parker: Does he accept that higher tax allowances will cause more capital investment and thereby improve productivity and create more jobs by helping the wood processing industry to extract more value from the global value chain?Hon BILL ENGLISH: No. What will promote more investment is continuing the Government’s sensible programme of better roading and rail infrastructure into which we poured billions of dollars; better-skilled New Zealanders available to the industry to hire them; a stable and competitive energy market to get the benefits of competition for one of their biggest single costs; and keeping the interest rate cycle low. One thing that will kill the forestry industry is 10 percent first mortgage rates such as were reached under the last Labour Government.Hon David Parker: Does he agree with the Associate Minister for Primary Industries who told the ForestWood 2014 conference this morning that the Primary Growth Partnership “is absolutely about picking winners”; if so why does he criticise the Labour Government for trying to support the wood processing industry?Hon BILL ENGLISH: Well I do agree with the Associate Minister about the Primary Growth Partnership because it is based on science and research and that is the proper role of the Government. But I agree that Labour is good at picking winners. It picked the manufacturing sector as a crisis; it is winning. It picked the regions as a crisis; the regions are winning. It has picked forestry as a crisis and it is winning.Hon Member: And David Cunliffe.Hon BILL ENGLISH: It picked David Cunliffe as a winner and he is a crisis.Mr SPEAKER: Order! That will not help the order of this House.Hon David Parker: Does his $600 million irrigation fund for multimillion-dollar dairy farms or his corporate cronyism for Rio Tinto or Skycity come within his definition of picking winners and what is the difference between his cronyism and an industry-wide support for better forest processing?Hon BILL ENGLISH: No. What it does show is that this is a Government that is willing to be pragmatic when it makes the judgment that it is in the best interests of New Zealand. I know it annoys Labour that we are not rigidly ideological but actually we have made occasional interventions where we have believed that that is in the national interest and we are ready willing and able to draw the line around those. What we are not going to do is try to run whole industries particularly in this case the forestry industry which is doing well. The last thing it needs is to be run by a bunch of Labour politicians whose best ideas come from the 1970s.Hon David Cunliffe: How does the Minister’s “pragmatic” approach to “healthy competition” square with today’s finding by the Commerce Commission of price fixing in the Auckland timber products market by Carter Holt Harvey and Fletcher Building or is that just another example of the Government’s approach to crony capitalism?Hon BILL ENGLISH: The member could not have picked a worse example because in our push to improve housing affordability we identified the pricing of building products as a potential problem and did the first ever market study under the Commerce Act to investigate those issues. We are currently considering the policy issues that flow from that study and the member can expect to see action following on from it. It is exactly the opposite of cronyism; in fact at least one of those firms is vigorously campaigning against the Government’s policy direction.Hon David Cunliffe: I raise a point of order Mr Speaker. [Interruption]Mr SPEAKER: Order! This is a point of order.Hon David Cunliffe: I seek to table this publication—[Interruption]Mr SPEAKER: Order! Can I just have—[Interruption] I am going to ask the member to start again because there were still interjections. This is a point of order and it will be heard in silence.Hon David Cunliffe: I seek leave to table this charming cover on TheEconomist magazine and ask the Minister—Mr SPEAKER: Order! That is a magazine that is available to members if they want it.