Local body forest investment pays big dividend

29 September 2015

A joint forestry venture between Palmerston North city and Manawatu district, named after former Palmerston North deputy mayor Gordon Kear has returned more than $4.3 million in profits to the ratepayers, and is still giving.

The total value of the councils' forestry investment, taking out the costs of forest management and stumpage and repayment of forestry incentive loans, stands at $4,328,696.
Palmerston North's share is $3,445,042 heading into what is expected to be the last summer of harvesting before a new crop grows to maturity.

The success of the venture has vindicated the results of a mid-term review of whether the councils should retain their commitment to the project.

Kear was a city councillor from 1968 until his death in 1983. He brought with him a wealth of experience in the timber industry. He was Manawatu general manager for timber giant Carter Holt, president of the Timber Merchants' Federation, and head of the Building Performance Guarantee Corporation.

Not only did he know his wood from his trees, he was also an astute businessman who chaired finance and economic development committees in various guises during his 15 years on the council. As deputy mayor he was very much the right hand man to former mayor Sir Brian Elwood.

In the 1970s, when both men could see the imperative to have an income to supplement rates to support the city and region's growth. Forestry offered the potential to create a long-term, sustainable revenue stream that was also kind to the landscape and environment. Incentives offered by the government of the day sweetened the proposal.

By 1987, $1.4m had been spent on the forest's establishment. With anticipated annual returns of $400,000 to $450,000 still 13 years away, Elwood's successor as mayor, Paul Rieger, had a serious attack of cold feet, which spread among councillors.

The experts were called in. Anton Meister from Massey University and Ian Cain from the Ministry of Forestry ran the ruler over the pluses and minuses. They predicted that even if costs rose by 20 per cent, and timber prices fell by 20 per cent, the return would still be around 7.5 per cent.

That might have looked tame in the heady days of double-digit interest rates, but these days, totally respectable.

Story by Janine Rankin, Manawatu Standard (edited). To read the original >>