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Crown Forestry is responsible for managing a commercial forestry business that will deliver estimated revenues of $118M with expenditure of $98M during 2012/13. Assuming no major changes, these sums will remain steady until 2014/15. As a direct and significant participant in the New Zealand forest industry, Crown Forestry stands apart from the fundamental policy, regulatory and service delivery roles of MPI.
Crown Forestry administers the Crown's interest in forestry leases on Māori land, residual Crown forest and other forestry assets. Crown Forestry's role is to prudently manage and administer this portfolio of forestry assets to achieve the best return for stakeholders whilst meeting contractual and other legal obligations. Consistent with Government policy, Crown Forestry also seeks opportunities for the Crown to sell its interest in these assets, and works with the Office of Treaty Settlements to resolve Treaty of Waitangi claims over the Crown forestry assets it administers.
On the basis of net stocked area, Crown Forestry is currently the seventh largest forest owner in New Zealand with the following forestry assets:
Day to day operational management of the majority of the forest estate is currently contracted to six forest management companies. Business and strategic planning, audit and administrative functions are carried out by Crown Forestry staff in Wellington (4) and Rotorua (3).
In respect of the forests planted on land leased from Māori landowners, the Crown has a policy of being prepared to sell its interest in the leases to individual lessor groups where lessors are keen to do this. A number of forests have already been sold or have had the leases significantly shortened. Negotiations to effect similar lease variations are underway with several other lessor groups.
For the non-lease forests and afforestation leases, Crown Forestry's role is to manage the forests and the leases to best effect pending the resolution of outstanding Treaty of Waitangi claims and other issues. To this end, Crown Forestry works with other Crown agencies such as the Office of Treaty Settlements.
Crown Forestry is unusual within Government departments in that it has a significant commercial function. Crown Forestry arose from a desire of Māori lessors to retain direct links with the Minister when the Government proposed assigning the leases to the then newly-formed Forestry Corporation in the late 1980s. Other Crown forestry assets were subsequently added to Crown Forestry in 2001 when the residual business of the Forestry Corporation was wound up; in October 2008 when the Crown purchased forestry rights over two forests from Matariki Forests; and in January 2009 when the assets and business of the State Owned Enterprise Timberlands West Coast were transferred prior to the SOE being wound up.
Government's policy is to exit from commercial forestry where there is no reason for continued involvement and where an exit can achieve a sale price that is equivalent to the revenue that would arise from ongoing Crown involvement. This policy assumes that the forestry assets will make their best contribution to sector growth if they are in the private sector, allowing better commercial decisions related to risk and investment to be made. Although the motivation for the exit from forest ownership is primarily driven by the Crown's desire to exit from commercial activities, a byproduct is the contribution made to Māori economic development. This is achieved by selling the Crown's interest in the leases back to the Māori lessors, or by shortening the terms of the leases with a progressive transfer back to the lessors, and by being involved in the transfer of forestry assets to claimant groups in Treaty of Waitangi settlements.