Government funding packages need to be flexible

Friday 27 Mar 2020

 
New Zealand Forest Industry Contractors Association (FICA) is appealing to Government to offer some flexibility in the funding packages announced last week as the industry remains in an unstable and complex environment.

It has been well over 6 weeks since emergency meetings were held by forest owners with their contractors to advise some of them that their work would be stopped immediately, within a month or that their work schedules would be reduced ongoing. That followed a 27 January announcement from Zhejiang Province that returning to work and school would be delayed to 9 February post the Chinese New Year.

Since then, there has been a steady stream of contracting businesses that have closed and without work for many weeks have had to turn their workforce off. Younger says the Government response although criticised for being slow initially, has been generous to the forestry sector in most areas that were identified as hot spots for support but businesses without contracts and without a future ahead of them are left with high debt and little confidence in the industry and little support for the funding packages albeit to register on the benefit.

The media and Government have singled out the East Coast region as the epicentre of crisis for forestry, but the extent is much broader. “I applaud the work that collaboration has achieved in the East Coast with the regional council, economic development agency and the regional wood council taking on the responsibility of advocating for a very important industry in their community, where 1 in 4 are associated with forestry,” says Younger.

FICA are constantly monitoring the national situation and again last week identified that 30% of the industry remained without work and have been like that since announcements from forest owners were made. There is not one forestry region that is not reporting closures of contracts, losses of jobs and financial demise of businesses.

While Younger acknowledges the economic relief package last week was good for those that had been on reduced production under 70%, it did not address those without any work and those that have been forced to shut down their businesses.

“We have been at the forefront of this crisis and the rest of the country is catching up”, Younger says, “we need to have further discussions with Government about the $100M funding that has been offered for redeployment for forestry workers, as there are many exceptional cases in different areas. Firstly, we need to ensure those contracting business owners are relieved of their excessive debts before moving into other work”.

Younger also reports that in Nelson, they were in a crisis this time last year with fires and so reporting on income at that same time is irrelevant. “As responsible taxpayers, we also have a desire to make sure the funding is spent appropriately and where it is truly necessary. Our industry is telling us that financial support and tax relief is more a priority than redeployment, so we urge the Government to be flexible,” confirms Younger.

“We are still not out of the woods and could see more contractors out of work as domestic processing yards full up and the alerts around COVID-19 put workplaces under pressure to close, says Younger. If the market starts correcting itself next month as indications have predicted, there is a strong message from the contractors represented by FICA, to forest owners, export traders and forest management investment companies. There needs to be a supported strategy not to over supply as has been seen in the past as a sustainable industry that values the “whole of supply chain” is what is being asked for by FICA.

Source: FICA

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