"Obviously we are pleased that she recognises that forest owners should get some financial benefit from the carbon their trees remove from the atmosphere," says association president Peter Berg.

"But for climate change policy to work it must be rational, equitable and transparent. The public needs to understand the logic of what's proposed and be convinced that it's fair and makes sense.

"Ms Fitzsimon's statements meet this test, whereas the government's proposals do not."

Mr Berg says new climate change policies are needed which give previous forestry investors the confidence to invest again, encourage land owners to plant new production forests, and major emitters the incentive to reduce emissions or to offset them with forest planting.

"In the meantime, the reality is that we don't have any incentives for other industries to reduce their emissions, but we do have plantation forests growing trees and storing carbon which will benefit all New Zealanders from 2008.

"The owners of these forests should receive fair payment for this service. If the government handles this correctly there will be no need for deforestation taxes — forest owners will be happy to replant trees following normal harvest."

He says the industry welcomes Ms Fitzsimon's view that government climate change policies should treat forestry as a single industry.

"Its current policies are a confusing pastiche of eligibility dates for plantation forests and permanent forest sinks. These will make management and monitoring unnecessarily costly and confusing."

Mr Berg says climate change policies should also be based on transparency — so that everyone can see where the carbon credits and debits fall.

"Forestry should then be encouraged to add more credits and emitters should be encouraged to reduce their debits.

"In some cases, the government may decide to shield an industry for social or economic reasons. That's their decision … in principle we have no argument with that.

"But whatever the reason it needs to be understood that the costs of shielding any sector must be borne somewhere in the economy. The smart way to allocate this additional cost is to have it distributed widely across all other sectors of the economy.

"The next target must be those emitters who can afford additional charges. The very last resort should be to discourage forest owners, who can help New Zealand meet its climate change obligations — along with a wide range of other economic and environmental benefits.

"Unfortunately the Government seems to have picked on forest owners as the first port of call to shield other sectors and in so doing is threatening the viability of the very industry New Zealand needs if it is to reduce its Kyoto liabilities."