Rock-star economy unplugged by China log jam

The collapse of log prices due to oversupply in China threatens to wash the gloss off what remains of National's so-called rock-star economy, says Labour Leader David Cunliffe.

“Already this year the price of milk solids has plunged by more than 40 per cent. Now the price of raw logs has halved in the past six months, highlighting the risk of exporting so much unprocessed timber.

“Almost half the value has been knocked off our expected future milk and wood export receipts in the last few months and that spells economic gloom.

“The timber industry has already lost 500 jobs in the past few months and thousands more are at risk. Our regions will continue to suffer. The knock-on effects will be felt from our rural centres to our cities.

“New Zealanders who already face rising power bills, rising rents and mortgages, rising costs of basics, and static or declining real-term wages, were told by the Government good times were just around the corner. But now they face a terrible hangover without having been to the party.

“Under this National Government more than 600,000 hectares of forestry land has been approved for sale to overseas interests. And instead of processing timber here – keeping local sawmills open, Kiwis in jobs, and adding value to wood products – we are now exporting more than half our logs as raw product. We are then re-importing dressed timber to rebuild Christchurch.

“That is not rock-star economics.

“Labour’s forestry policy will encourage the journey from volume to value in wood products – through tax deferral, R&D tax credits, security of supply, monetary policy to keep interest rates and the New Zealand dollar lower for longer, and a government pro-wood policy.

“We will reinvest in the regions with a $200 million infrastructure development fund.

“Through industry, investment and innovation, we will encourage the development of a diversified, modern, high-value economy – so that when commodity prices fall and the earthquake insurance checks are spent, our children will still have a future.

“National’s foolhardy, short-term approach – to bet the farm and the forest, or worse, sell it – threatens all our futures. A Labour government I lead will not let that happen,'' David Cunliffe says. 

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