Forestry companies say the Government wants them to pay big administration costs which would leave less money available for fighting climate change.
So, four large organisations are going to court to try to block financial charges they call "excessive, unreasonable and disproportionate".
They say in some cases, the cost on individual forest owners will be $1 million a year.
The money is being sought by the Ministry for Primary Industries (MPI) and is intended to pay administration costs of the Emissions Trading Scheme (ETS).
But the foresters say using their money for this purpose would undermine climate action and put Iwi, landowners and farm foresters under significant financial pressure.
The parties to the court action are the Climate Forestry Association (CFA), the NZ Institute of Forestry (NZIF), the Forest Owners Association (FOA) and Ngā Pou a Tāne – the National Māori Forestry Association.
They represent the owners of more than 300,000 hectares of local forest, and they have filed a claim for a judicial review in the High Court.
CFA chief executive Andrew Cushen says the proposal will harm a sector that creates jobs and revenue for the regions.
“As well as piling enormous costs onto an industry that many local businesses and communities rely on, MPI’s new fees will disincentivise climate action,” Cushen says.
The NZIF and the FOA share these views and add the demand for payment could devalue land prices by $500 a hectare.
In addition, Ngā Pou a Tāne Chair Te Kapunga Dewes says the fees are in breach of the Crown’s duties as a Treaty partner.
“Many Iwi and Māori landowners are captured participants of the ETS," he says.
"As a result of confiscations and the Treaty settlement process, much of the land Māori have been left with is best – and often only – suited to afforestation.
"In many of these settlements, the carbon value of forests was part of the negotiation and settlement with the Crown, and the value of those settlements will be eroded through this new fees regime."
The ETS has been in place for 15 years with very little cost recovery in that time. A proposal to greatly increase this payback was made in March and finalised after consultation with the forestry industry.
They have been estimated to add around $18 million per year in fees for foresters participating in the ETS, according to the claimants. But Cushen says this sum is a best estimate - it could easily grow - and MPI does not even know what the final cost would be.
But he says the worst thing would be a weakening of climate change mitigation.
"There is a public benefit to the Emissions Trading Scheme that appears to have been under appreciated or not appreciated at all," Cushen says.
"We don't object to paying our fair share but at the end of the day we plant trees to help meet our climate commitments, and this is the only part of our climate solution that is working at scale.
"The imposition of these fees will disincentivise what the industry is trying to do here, at exactly the time when we desperately need more."
The FOA Chief Executive Elizabeth Heeg says the system should be designed so that polluters pay, rather than penalising the people who are doing the vital work of capturing carbon dioxide.
"Ultimately all of us as taxpayers will be forced to bear the cost of New Zealand’s failure to meet its climate targets," she says.
"We are already projected to fall short of the target and the uncertainty created by measures like this just makes for a bigger bill.”
MPI is saying little about this case because it is before the courts.
But it points out there was a government decision that ETS participants should pay 63% of administrative costs of the system, with the remaining 37% still funded from the public purse.
Public consultation began in March to work out how to do this.
MPI says the principle behind these changes is that participants who benefit from having forests in the ETS pay for a proportion of the administration costs and not taxpayers.
MPI says it costs $29.8 million per year to administer the forestry ETS, of which $18 million will be met by the industry.
This contrasts with anticipated annual voluntary emission returns of $600 million per annum at current carbon prices.
22 Comments
I have an idea. Why don't polluters pay for the costs of administering the scheme, rather than further nationalising private property of people storing carbon in their trees? At the end of the day money made from selling credits is a taxed loan, rather than actual income.
The speculators that jumped in hoping for another bubble candidate must be gritting their teeth now, especially if they've already hawked some of their stored carbon. Imagine having cashed in and facing perpetuity with increasing "administration costs" until the grave?
Personally I have a few thousand tonnes of carbon locked up in my trees. It's sitting there providing free storage for all those choosing to burn their way to Australia for a weekends shopping etc. Now apparently this carbon has some sort of value in keeping the global climate within survivable parameters, quite an important public service I would have thought? Of course I could sell these tonnes of carbon to a polluter, but then that creates a liability for me and future owners of my land for an equal quantity of carbon. In other words my land has to be permanently planted in trees and locked into paying whatever "administrative costs" a future govt can conjure up, for the next XXXX? years.
The saying goes there's money in muck. Also in administration. But not in trees.
Personally I love planting trees and have/would do it for free, but my enthusiasm has been extremely curbed by my subsidy to self entitled burners I am paying admin fees to.
While I sort of agree with you (I'm not in favour of 'excessive' profits) the problem here is the Government applying 'User Pays' which the country just can't afford. What is happening here is the Government imposed a requirement, and are now charging everyone they can get for the cost of that requirement. BS really.
There is some irony isn't there, that we have a proposal to allow tenants to dip into their 'retirement' fund to satisfy a bond for a tenancy. Yet 'good for the economy' overseas investment get to walk away without having had to pay a bond and leave tax payers to clean up the mess left behind.
Caveat emptor.
This impasse was obvious - we are over-drawing the planet, and trying to otherise the costs. Sort of like watching a fight on the Titanic, at this stage.
We need trees, firstly to replace what we've already chopped down. Then - and only then - we could ask if there's area to do any sequestration of the ADDED carbon from extracting/burning fossil energy.
All irrespective of money....
I wonder if the real reason is that MPI and other public sector depts now realize their Govt subsidies are about to reduce so these charges become a revenue source enabling them to maintain at least some of their empire. The recent release of David Seymour's open letter to CEO's in the public sector is a long overdue warning of ACT's future expectations - I expect the sale of adult diapers to soar in Wellington.
The best thing the world can do is simply switch to a worldwide carbon tax. Per tonne, start off small, increase it. Easy to administer, tough to avoid and doesn't create all sorts of perverse distortion. Ring fence the money into climate change action and mitigation. Tried and true method for getting rid of something that is bad for people. Some stupid market based approach like the ETS is doomed to failure.
$29.8 million per annum to administer (just) the forestry component?
I wonder how much it costs to administer the NZX? Or, perhaps the TAB is a good comparison.
For goodness sake, when will we dump this carbon trading noose around our necks?
And ACT think it's the one and only solution to meeting our climate obligations.
Couldn't have said it better myself.
And at a time when there is so much real good we could be expending our time, money and effort on.
A quote I pass on to my students, from Shapiro (2010):
The carbon market is based on the lack of delivery of an invisible substance to no one
And my opinion/conclusion to them is: Scrap the ETS in favour of a PES (Payment for Ecosystem Services).
A similar approach already employed in NZ is the QEII National Trust model. We just need to expand that kind of thinking beyond land covenants and into freshwater quality improvements, biodiversity (non-monoculture) improvements, fertiliser-use reduction, toxic land remediation, recycling, feed-in tariffs and so on.
The industry dosnt mind paying reasonable costs. The costs imposed are out of all proportion- that happens when they employed Sales force to set up a new IT system with over $100 million plus spent already plus ongoing fees. The industry wasnt asked or had any input into this. Alongside that the system is inefficient due to silly inane rules. Native and small farm forestors are the ones who will struggle most. I keep telling them what do they want? They have lost sight of the reason for being and what we are trying to achieve. The systems need streamlining and the polluters should pay the bulk of the cost as they get the right to pollute.
By the way PDK is right. We need to put back what we destroyed first. I can't remember the number, it's huge, but the loss of our forests is the largest release of carbon by miles in NZ in the past and future.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.