Mr Speaker, I would like to begin by congratulating the government on their achievement in winning the general election and the confidence and trust of many New Zealanders.
 
The responsibility the public has handed them is enormous.
 
And though I strongly oppose some of the plans they have made for New Zealand, as a loyal New Zealander the Government has my very best wishes for success in their stewardship of our economy and our country.
 
I hope their promises will come true.
 
They promised to make significant reductions in crime.
 
They promised New Zealanders would stop leaving to live a while in other countries.
 
They promised our wages would equal or pass the wages of Australians.
 
They promised they could radically cut taxes on ordinary working families and increase spending on all our social services at the same time.
 
They promised the government wouldn’t overtax New Zealanders with fiscal surpluses, nor project deficits into the future; but it would instead berth the fiscal supertanker precisely on a low tax, high-spending button every single budget.
 
The Prime Minister travelled to very disadvantaged streets and promised we would no longer have pockets of deprivation in our cities where some kids are left behind in poverty.
 
He promised all our children would be able to read and write because the testing they introduce to the education system will make all the difference in the world.
 
He promised us world class infrastructure, the fastest broadband in the world, and an end to disputes over water allocation, instant resource management decisions and new motorways where today there are only broken dirt tracks.
 
The prime minister spent the election campaign travelling to every marginal seat and making solemn pledges of unbudgeted Think Big spend ups totalling hundreds of millions of dollars. And all those towns and cities are now patiently expecting him to deliver.
 
So I say to the government - good luck with all that!
 
There is not a single item on that list that I wouldn’t wish them to succeed in delivering.
 
As promises go, they are slightly more ambitious than I would have made. I would have recommended that promising absolutely everything to absolutely everybody risked disappointing someone sooner or later.
 
However, I will be the first to congratulate the government if it pulls off a significant portion of its stunningly immodest programme.
 
It will start its term this week with a swag of legislation.
 
It won’t send those new laws to select committee, as democracy and good government would require.
 
This is a government that campaigned in opposition against what it said was the end of democracy.
 
In Opposition it promised a fresh new standard of good government.

And its very first act in government is to throw out democratic standards like select committee hearings on its proposals.
 
The government is entitled, of course, to put in place the policy it has a mandate for.
But it makes a mistake if it thinks every bill it drafts will be perfect at the outset.
 
So it starts out with the defining combination of mediocrity - weakness and arrogance.
 
Too weak to hold public hearings on its laws.
 
Too insecure in the strength of its ideas to truly believe that they will hold up under scrutiny.
 
Too arrogant to admit its ideas could be improved.
 
Too mediocre to deliver on the promises it has made to New Zealand.
 
Already in the short month since the election we have seen one example of a weak arrogant government in action: its reaction to the potential ACC budget.
 
I have listened to ministers bumble through this issue with growing amazement that anyone could enter government so little prepared for its challenges.
 
Confronted with a change in the actuarial calculation facing ACC, ministers panicked.
 
This is an inexperienced government. It has yet to understand that officials will come to them every month, perhaps every week, demanding more money for something they say faces a crisis.
 
This week it is ACC.
 
Next week it will be the hospital system. Will they panic again when DHBs report their annual deficits?
 
Let me make some predictions: Some defence and IT projects will suddenly develop cost over runs worth hundreds of millions of dollars.
 
Some SOEs will reduce their profit projections from rosy to deficits. They will demand huge capital injections to remain viable.
 
A new biosecurity scare will need tens of millions of dollars to eradicate or control.
 
Every other week, another mundane crisis will come before Cabinet.
 
Ministers need to be strong enough to deal with them.
 
But what did we get in the ACC episode? Did we get strength? Did we get sophistication? Did we get the wisdom that says - yes, ACC actuarial calculations go up and down?
 
No. We got the arrogance that is already beginning to look like the colour of this government. We got a massive over-reaction. Even a ministerial inquiry.
The prime minister has set a low bar for ministerial inquiries and we will be having a lot of them at this rate.
 
They need to toughen up.
 
They need to toughen up because they can’t have the free lunch their policy promised.
 
They will have to make some hard choices.
 
In 1999, the last government was elected with Crown net debt over 20 per cent of GDP.
 
By last year, that net debt had gone.
 
We had positive net financial assets.
 
Now this National government wants to blow it all again.
 
Treasury won’t report its current set of forecasts for Crown debt until after the government’s new laws have been passed under urgency.
 
In other words, they will spend the money before they know whether they even have it.
 
This is what National always does in government - it takes from the future for its short term advantage today.
 
National’s rushed increases in overseas borrowing are not to strengthen our economy.
 
They aren’t to fund more research and development; National is cutting that.
 
It’s not increasing borrowing to invest in higher education standards.
 
It’s not increasing borrowing to promote exports as a proportion of GDP.
 
It’s not increasing overseas borrowing to strengthen our regions or to create more jobs.
 
No, the increased borrowing is to fund additional personal tax cuts.
 
Those cuts are more generous to the most affluent, rather than to the people who are most vulnerable in a global economic downturn.
 
Someone in the future will have to pay for National’s irresponsibility.
 
When you borrow from overseas to splurge on tax cuts for people who need them least - someone has to pay for it.
 
Someone in the future will have to pay more tax. Someone in the future will have their services cut.
 
And the problem is being compounded because National is reducing the ability of kiwis to create their own nest eggs.
 
The party that used to say it was all about personal responsibility is slashing Kiwisaver to pieces.
 
At the very time when we most need to strengthen New Zealand for the future, the National government is doing the opposite.
 
It is a mediocre government with mediocre ideas about how to meet the challenges New Zealand faces.
 
How mediocre?
 
The very first bill they announced today is the Tax bill.
 
And the centre piece of that bill is the largest ever increase in tax on business in New Zealand.
 
The very first thing this government does is to increase tax on innovation.
 
The very first thing it does is to say we have too much innovation in New Zealand.
 
Of all the criticisms I have ever heard of the New Zealand economy, National’s claim we have too much innovation, and too much research and development is the silliest.
 
But from this day forward, National will always be the party of higher tax on business.
 
It will always be the party that imposed the highest ever increase in the total business tax burden.
 
And it will reap the consequences in poorer long term economic performance.
 
Let me make a prediction: Under this government, unemployment will rise. Economic growth will be slower than over the average of the last nine years. The wage gap with Australia will grow.
 
That is what a weak government with no vision will accomplish?
 
Let me spell out some more visionary ideas for how New Zealand might prosper in the coming years and months, as the rainfall of global economic crisis both threatens us, and presents us with an unprecedented opportunity.
 
First, they should increase, not reduce, New Zealanders’ ability to own more assets here and around the world.
 
And the way to do that is to push for more saving and investment.
 
The best way to protect the vulnerable in these troubled economic times globally is to direct tax cuts most heavily to those who are most vulnerable - not to those who are most able to protect themselves.
 
But what does this government plan to do?
 
It plans to give the bulk of tax cuts to the highest income earners. It plans to give least to those who need it most.
 
And as the government invests and looks to stimulate the economy through the global downturn, it could ensure that it invests in measures that make the most difference to those who need help the most.
 
Instead of capping state housing, it could invest in more housing.
 
As we read in the news this morning of thousands of predicted job losses in the construction industry, there has seldom been a more opportune time to build more state houses, to employ those builders and construction workers and to make home ownership more affordable for New Zealand families.
 
A visionary government would look at how it can improve the wellbeing of New Zealanders, instead of how it can get away with stripping as many services as possible.
 
I recommend to the new government that it looks at ways to make dental care more affordable and accessible for New Zealanders. I will be bringing some more ideas about how to do that into this parliament, as I promised I would do during the election campaign.
 
And I will also bring forward some more ideas on reducing crime.
 
Sixty percent of New Zealanders who are arrested are affected by alcohol at the time of the offending for which they are arrested. Two out of three arrests are alcohol related.
 
And the evidence shows very strongly that the problem has got much worse since alcohol laws were relaxed and alcohol became much more widely available.
 
If you want a common element in the crime spree in South Auckland this year, it’s hard to go past the easy availability of alcohol.
 
Alcohol is available on street corners everywhere, at all hours, promoted heavily in all media and sold in ever-increasing quantities to teenagers.
 
But there wasn’t a word about that in the speech from the throne.
 
Instead, the government blames P. It blames sentencing. Well P is a problem, but ask any expert, ask any police officer - what causes the most social and human damage in New Zealand, day in and day out - and the answer is alcohol abuse.
 
And that is not because alcohol is intrinsically the most dangerous drug, but because it is the most widely available drug.
 
So I will be bringing proposals to this House to make alcohol less available and I challenge the government to act on them. Because if you are in favour of the unlimited availability of alcohol, you are pro-crime.
 
And finally I want to say that if there is one area where we have much more to do, it is poverty, both here in New Zealand and globally.
 
I heard the pledges of the government in the speech from the Throne to end the cycle of disadvantage. That is a worthy ambition and I support it. But I listened hard for how they are going to do it, and the cupboard of ideas is as bare as the food cupboards of some of our most impoverished homes.
 
I have watched around the world with fascination at the speed with which governments have been able to act to bail out huge companies and banks when they have been in desperate need.
 
They have shown that with goodwill, action is possible to help in an emergency. That governments can act to help when help is needed.
And it leaves a question for all of us in this parliament - if we can do that for big companies and big banks in times of crisis, why can’t we do it for people in crisis?
 
Why can’t we do it for the hundreds of millions of people who don’t have enough to eat, who don’t have clean water, who can’t hope for basic medicine? Why can’t we bail them out?
 
New Zealand should be a voice for them internationally, and a voice for the compelling new ideas that are emerging internationally to solve these global problems.
 
At a time when global crisis threatens to deepen global poverty and darken even further the skies over the lives of the world’s least privileged, we should be saying that if the world can offer crisis help to the strong, then we must also offer emergency bailout for the weakest and poorest.
 
I call on our government to work constructively across party lines to see how New Zealand can use our almost unique position in the world as an efficient food producer to make a difference.
 
And I pledge my support for any efforts they make to do so.

Tags: Economy

Launch of Wool to Weta
Transforming New Zealand’s Culture & Economy
 
6.00PM Tuesday, 10 March 2009
 
 
I would like to start out by congratulating Professor Callaghan on this book and on promoting the topic of economic development.

This week I saw a comment from Paul. He was responding to a reporter who asked him whether he would want to be called Sir Paul. The question raises some issues similar to those in this book:

The way we honour success and the way we create it are on the move.

We used to be a country that styled itself as a colony of Britain. We sold almost all of our commodity products to one country. Most of our exports came from a single product: Wool.

We are changing.

We are becoming a modern vibrant country proud of our own creativity and talent.

Today, wool exports no longer comprise half our export eanrings.

Today, wool’s proportion of everything we earn overseas has fallen to just two per cent.

And though there are some in New Zealand who are clinging to the vestiges of our ancient british past, we are becoming a different a culture too.

We are more integrated with the rest of the world.

We are creating value more by ideas than by bulk.

But this is a process of transformational change.

Change seems always to come with a couple of steps forward and one or two back.

So I want to suggest to you, that just as the decision about whether to be Professor Callaghan or Sir Paul is a choice we have to make...we also have economic choices to make.

One such choice is whether we want to make more progress toward a more science-based economy, more use of ideas and a more modern way of celebrating success.

I congratulate Professor Callaghan for putting these issues on the table.

This book makes a contribution to our awareness and understanding of what’s at stake.

It is no small coincidence that Paul is the Alan MacDiarmid professor of Physical Sciences at Victoria.

I knew Alan MacDiarmid. His brother, Rod, was a political colleague of mine for many years, and he introduced us when Alan came back to New Zealand for a visit.

Alan MacDiarmid was a passionate and persuasive advocate for the ideas behind this book.

He believed in the power of science to transform our economy.

He believed in the power of ideas, knowledge and research to improve the lives and wellbeing of New Zealanders.

And he understood that it takes a policy commitment to bring science and business together.

It doesn’t ‘just happen’ on its own.

If it did, it would have happened by now.

But it has happened yet - at least, it hasn’t happened enough.

If you open this book and turn to the introduction, there are charts that put in stark perspective the performance of the New Zealand economy relative to other countries in our modern history:

They show we began a decline in the seventies.

We entered a precipitous decline through the late seventies, and all of the eighties, and much of the nineties.

We have never really closed the gap, even though for the last decade we stopped falling behind.

And this is not because we are lazy. It’s not because we don’t work hard.

We work as many hours as any country.

I find one thing very striking about these graphs: They are the same ones I have been using in speeches and presentations for a decade.

And the central point is the same - that we don’t have enough businesses in New Zealand that are making very large returns per employee.

In most developed countries, companies that can make net revenue of a million dollars per employee are common. In New Zealand those figures are virtually unknown.

We don’t have enough high value, high skill, high return companies because we don’t have enough science and innovation lifting the productivity of our economy.

Not enough of our economy is based on ideas and on research.

It’s easy for us to fall into the trap of thinking that this means there is a problem with our existing industries.

I don’t share that view.

Our agriculture, for example, is probably the most scientifically advanced of all our industries.

Many New Zealanders wrongly believe our competitive advantage in agriculture is our climate. But there are many countries with a temperate climate like ours.

Our agricultural excellence lies in our decades upon decades of investment in science.

Over the years we have spent billions - probably tens of billions of dollars - on agricultural science.

This has led to products that are of immensely high value.
I have been to a business where they extract a medical supplement from milk and sell small vials of the extract for thousands of dollars each.

The value is in the science. In the Knowledge. In the Understanding.

Compare the value of that vial to the value of the same weight of dairy produce from New Zealand a few decades ago.

One of the lessons from this example is that our economy can change far more rapidly than we sometimes realise. Another lesson is that science is behind many of the changes.

The decline in the dominance of wool among our export industries is one example.

At the turn of the century, economists pointed out that the United States exported the same weight of goods in 2000 as it had exported in 1900.

The value, however, had increased thousands of times.

The difference in value was created by science and ideas.

I’ve asked Paul Callaghan why he thinks we aren’t better at using science in our economy. I’ve put the same question to dozens of business people whom I have met around New Zealand.

No one says it’s because we aren’t smart enough - Kiwis are enormously creative and talented.

I often tell the story of visiting Singapore and meeting the economic development minister there. He said to me, ‘you are lucky in New Zealand because you have so much creative talent. When we want that creativity, we have to import it for you.’

We are remote and isolated in New Zealand and that has meant we have the freedom to try things out. Necessity has driven a lot of innovation.

Lord Rutherford said, ‘in New Zealand, we don’t have much money so we have to think.’

So its not lack of talent.

If we want more innovation and science in our industry then we need the leadership and co-ordination that will create it.

Everywhere you go around New Zealand and put the ideas in this book to businesspeople, and to scientists, they will agree with you.

They will say, ‘yes we need more of this.’

But we don’t see more of it.

The vision of more innovation and a vision for the leadership to create more innovative companies is not universally shared.

It is a choice.

Uncomfortable as it is for many people - especially in business - Support for science has become a fault line between differing political philosophies.

There was a very public example of this divide between pro- and anti-science politics only this morning in the United States.

President Obama this morning signed a law allowing stem cell research to proceed in the US. At his press conference he repudiated the previous President’s opposition to stem cell research in the US, saying the distinction between science and morality in this case was false.

Politicians should never get into the position of being anti-science.

We have to harness science, harness research and harness ideas if we are going to improve our living standards and those of our children and future generations.

Supporting more innovation in our businesses is a matter of making some hard choices.

In the last three months in this country, those choices have been made and they have been made against science.

A two billion public-private partnership in scientific research called New Zealand Fast Forward has been cancelled.

That wiped out the largest single investment in science ever made in this country.

A tax credit for research and development worth a billion dollars over three years was canceled.

That was the largest business tax increase in our history.

All this took place without much of a squeak - specifically from the business community itself.

So, as I said at the outset, the forward progress of the New Zealand economy inevitably involves taking steps backwards as well as forwards.

People are entitled to make choices.

And it is up to those of us with a passion and commitment to the power of ideas, to advocate for our vision of a more dynamic and vibrant economy.

I will give you one example that inspires me, and that is relevant to the concerns we all share about the drain from New Zealand of our best and brightest.

It was at the launch of New Zealand Fast Forward here in Wellington about a year ago, when we invited some graduate students from Massey University.

One of the science postgrads who spoke that day was off to the UK to take up a scholarship, and he made an announcement that no one present knew he was going to make: he said the launch of that fund and its potential to finance brilliant, game-changing science in New Zealand had made him change his mind.

He said that when he finished his course in the UK he no longer believed his only chance for a science career would be overseas; He would come back to New Zealand to give it a go. The long term investment we made gave him confidence about a future here, he said.

There will always be brilliant young New Zealanders who go overseas to develop their skills. Alan MacDiarmid was one; Lord Rutherford was another.

Our problem is that we haven’t been able to offer enough of a choice back here. We haven’t been able to use enough of our connections to the world, and of the trails blazed by our best.

And we haven’t brought enough of their innovation into the boardroom, and into the soul of innovative, large scale companies based here.

This book we are launching today has many examples of the brilliance we have available to us.

It has many insights into how we can do better.

It is crucial for us to have this conversation, and I congratulate Paul and the people he spoke to on playing their part in this conversation.

I wish you all the very best in continuing this conversation and in making a real difference to the transformation of New Zealand’s industry.

Tags: Agriculture, Economy

Taxing rural communities more to pay for Auckland’s roads shows that National doesn’t understand the importance of agriculture for New Zealand’s economy, Opposition agriculture spokesperson Jim Anderton says.
 
“The whole country can benefit from roads that boost Auckland’s economy; But Auckland can benefit from the economic activity of the rest of the country too. How many farms are in Queen Street? When rural communities have to pay for roads they don’t use, it is a drag on them.
 
“The decision to make farmers pay more for Auckland roads is a decision by Auckland money market dealers who don’t understand our primary industry.
 
“It’s fairer to pay for extra projects locally, because local communities can best decide their top priorities and also decide whether the extra cost is worth it.
 
“The National Government has no new ideas so it’s going back to its old form in government – asking farmers and rural communities to pay more and more, while providing less and less services.”

Tags: Agriculture, Transport, Economy

Response to Daniel Silva's comments for Country-wide magazine

So Daniel Silva thinks that the current international recession isn’t going to affect New Zealand much.  Well that’s all right then?  Actually – no.  He’s quite wrong to think so for two significant reasons quite aside from the fact that any nation which earns its living as an international commodities trader is going to be affected by what happens to purchasing power in our major markets.

The first of these reasons is that it’s perfectly true that the New Zealand banking and finance sectors have not to anything like the same extent been in the business of offering the sorts of ‘toxic loans’ that banks in the United States and Europe have been.  That’s to say they have not been lending large sums of money on securities which are wholly inadequate to cover the loans, to people who can’t afford the repayments and then packaging the loans in ways that make it almost impossible to untangle the debt and which spread it far beyond the originating banks. 

But we have nevertheless experienced an overheated speculative housing boom which has now come to an end.  At the same time our financial securities market which, although it was re-regulated to an extent following the excesses of the nineteen eighties and nineties remains significantly less regulated than others in the OECD, has paid the price in an unprecedented series of finance company crashes.

All of this exacts a toll that leads to recessionary pressures which when coupled with the impact of the international recession means a significant downturn in our economic growth.  Fortunately for the incoming government they have two major advantages to assist them in responding to this situation.  The first is the healthy state of the New Zealand economy because of the prudent, some thought over conservative management, of the economy over the last nine years by Finance Minister Michael Cullen. 

The irony of that is that had he followed the then advice of his successor Bill English and engaged in significant tax cutting three or four years ago the current Minister of Finance would be far less well placed to cope with recessionary pressures than he actually is.  No doubt that irony is lost on Mr Silva. 

The second is that there is the backstop of local financial institutions, including the Kiwibank, which are able to pick up a certain amount of the slack although they obviously don’t have the capacity of the major Australian banks which do business here and which we know are more significantly affected by the international downturn.

The second reason why Mr Silva is wrong is that we are already feeling the negative effects.  It may be, of course, that he leads a very cloistered life and has not picked up on the reports of job losses which are beginning to come with increasing rapidity. 

The unemployed stand at 115,000 for the quarter to March or 5% with more job losses reported daily and the Treasury reporting a possible high of more than 8%. 

This compares very unfavourably with the figures for the past nine years which reached lows of just over 3%, a figure not seen for over two decades.

In another of life’s little ironies these unemployment rates were largely the result of the Labour-Progressive government’s emphasis on regional growth and development.  Both as Minister of Economic Development and Agriculture I was intent on placing considerable emphasis on regional development to the extent that we inherited an economy in which many regions were in negative growth mode and within three years we had all regions growing at rates which had not been seen for decades in some cases. 

We maintained this throughout our nine years in office and thereby provided a cushion against subsequent unemployment.  It will be interesting to see if the current government can maintain that record.  I do know however that they will not do it by building bicycle tracks or by cutting back on the working fortnight which are measures which are no more likely to resolve unemployment than similar schemes did in the Depression of the thirties.  Nor will they do it by cutting public expenditure which didn’t work in the thirties either.

The other area in which the impact is being felt, but which is possibly outside the ken of Mr Silva, is in the voluntary sector in which many organisations rely upon charitable and community trusts and similar bodies to underwrite their activities, many of which are vital to the well being of our communities.  These trusts, for very good reasons, have traditionally diversified their investments and in some cases had significant sums invested in overseas securities. 

The Auckland Community Trust alone is reported as having suffered losses amounting to two billion dollars and has had to regretfully tell some of its long term beneficiaries that they can no longer be supported.  The potential ripple effect of that sort of loss may be incalculable.

Mr Silva is, however, right about one thing.  We won’t get through the current downturn by panicking.  We need to keep our nerve and mange our way through the recession by continuing to invest in our future as an exporting nation.  But hiding our head under the blankets and pretending it isn’t happening is not going to get us there.

Tags: Economy, Jobs, Regional Development

This is a budget that has all the competence that you would expect from the people responsible for Melissa Lee’s Mt Albert by-election campaign.

The good news: Inflation is no longer a problem. We have finally got the low inflation economy the National Party always said would deliver us its dream economy. How’s that working out now?

National has produced a lacklustre budget that Bill Birch would have been proud of.

In troubled times, when the economy is rocking on the waves of global economic storms, the government has responded weakly.

Not with a vision for the future.

Not with bold steps that will lead New Zealand on a developmental path.

But with a weak, uncertain, sitting on their hands response.

Governments around the world are investing in the future.

This one has slashed the future.

This one is the Broken Promise budget.

The total value of primary sector science investment falls from $2 billion in NZ Fast Forward under the last government to as little as $1.2 billion now.

It is cutting nearly as much out of science and research in the primary sector as it is investing in infrastructure.

Government spending on science and research, on a like for like basis, falls from around a billion government dollars in the NZ Fast Forward Fund, to $610 million in National’s replacement.

With matching private sector funding, the total investment in primary sector research and development falls by $800 million, or about 0.4 per cent of GDP.

In addition, the government has not replaced a cent of the cancelled research and development tax credit.

This is huge cut in science and research.

It is a disaster for the future of New Zealand’s economy.

It is a disaster for the future of our most important economic sector.

Other developed countries are preparing themselves to come out of this recession stronger.

New Zealand is preparing by switching from science and research to poltergeists and UFOs.

The government promised the primary sector it would spend more on science and research.

That is what David Carter repeatedly promised.

He promised it as recently as this year.

Farmers  and our agri businesses will be looking it up.

And they will find not increases, but cuts.

It has broken that promise as surely as if it has broken its promise on personal taxes.

I want to turn to some other features of this disappointing budget.

I want to draw the House’s attention to the table on Page 55 of the fiscal strategy report.

In there the government points to its expected increases in nominal average wages over the next four years.

If you deduct those from the CPI – the cost of living index - there will be no increases in real wages for four years.

No increase in real wages for four years!

This is the curious branch of economics that says the way to make New Zealand better off is to make everyone worse off.

Not since the eighties have we had an economy that didn’t increase real wages for four consecutive years.

It’s hardly conducive to keeping working New Zealanders here.

If they were leaving before, wait until John Key’s policies result in no increase in real wages for four years.

I have to give the National party credit for one thing.

There was a time in the past when National would have said the way to fix that would be to spend up on tax cuts.

At least Bill English and John key have now accepted that tax cuts do not stimulate the economy.

But that is not what they said when they wanted to get elected.

They promised New Zealanders tax cuts.

They now say they can’t afford them. Fair enough. But that’s not what they said when they wanted a vote.

Back then they said their promises took into account the worsening economic climate.

Back then they said
“National has structured its economic package to take account of the changing international climate.”

They weren’t telling the truth when they made the promises that got them elected.

They said: “Our tax cut programme will not require any additional borrowing”.

They weren’t telling the truth when they made the promises that got them elected.

The only way that promise could have been true is if his tax policy wouldn’t require borrowing because it was never going to go ahead anyway - and John Key knew that even before the election

Last year John Key said his tax policy was  "appropriate for the current conditions" and would require "no additional borrowing.”

There is no excuse for this.

John Key was here in the eighties and he was here in the nineties when governments got elected and immediately tossed out the promises they got elected on.

I was in here in 1991.

I remember the Bolger government got away with the 1991 budget to begin with.

People gave them the benefit of the doubt that the economy had been wrecked by Roger Douglas and needed hard measures.

But over time it was a disaster.

This one will be too.

Those tax cuts needed to be cancelled.

But they should never have been promised in the first place.

John Key owes New Zealand an apology for getting himself elected on a promise that could never have been kept.

Did he know before the election that the international economic situation was deteriorating, or did he only find out when the Treasury told him?

Neither possible answer reflects well on his fitness to lead a country through a crisis.

I want to turn in the time left to the cuts to the Super Fund.

This is very sneaky politics.

Cutting the Super Fund now reduces the ability of any government in the future to provide for super at anything like existing rates or retirement age.

So what Bill English is doing is pushing out by ten years the hard decisions about the huge tax increases or cuts to super that will be needed to make super affordable.

He has calculated he won’t be finance minister in  ten years.

He is right about that!

After this budget he won’t be finance minister in three years.

But he has delivered an enormous burden to future taxpayers.

The affordability of superannuation in the future must decline because we are no longer putting aside something now to pay for some of it in the future.

It was going to pay for around fifteen percent of the future cost.

Now it will pay for less than seven per cent.

That means the age of eligibility for superannuation will be increased to around 67; or else there will be huge tax increases required to pay for it.

That is the doozy the government has announced today.

This is not a budget that prepares New Zealand for the challenges of the future.

There is not a word in here about preparing New Zealand for the effects of climate change.

The Green party will be disappointed that the sum put aside for home insulation has been slashed from a billion dollars to $244 million.

Then we look over at the infrastructure spend, and we can see that the government is shifting $258 million of spending from rail to roads.

So this is what the Greens have got for their cooperation deal with the National party.

They have actually lost money!

They have lost $14 million!

Then what about the Maori party?

Who do they think is going to be hardest hit by this recession?

The National party is not doing anything for new jobs, and the Maori Party is voting for that!

At least Pita Sharples can wave at the unemployed as he drives by in his new car.

Tags: Budget, Economy, Agriculture, Research & Development, Jobs, Superannuation

Budget Day 09 - Huge cuts in primary sector science
28.05.09
Nearly as much is being cut out of science and research in the primary sector as the government is investing in infrastructure.

The total value of primary sector science investment falls from $2 billion provided for in NZ Fast Forward under the last government to as little as $1.2 billion now.

Like for like government spending over ten years falls from around a billion dollars in the NZ Fast Forward Fund, to $610 million in the government’s replacement. “With matching private sector funding, the total investment in primary sector research and development falls by $800 million, or about 0.4 per cent of GDP.

In addition, the government has not replaced a cent of the cancelled research and development tax credit. Overall, the government is cutting innovation spending by more than the value of the personal tax cuts.

This is huge cut in science and research. It is a disaster for the future of New Zealand’s economy.

Other developed countries are preparing themselves to come out of recession stronger. New Zealand is preparing by switching from science and research to poltergeists and UFOs.

The government promised the primary sector it would spend more on science and research. It has broken that promise as surely as if it has broken its promise on personal taxes.


Winter rebate from electricity companies would be appreciated
22.05.09
The knowledge that many elderly New Zealanders huddle under blankets rather than turn on unaffordable heating should be a wake-up call to the power companies to return a winter rebate to their consumers this winter.

For many New Zealanders, this wintry weather brings on a bitter struggle with the cold and the dilemma of whether they can turn on a heater or not. Low income households, the elderly and students fear their electricity bills and well they might. I remember when the electricity bills came every two months – now the monthly bill is the same – or more – than the bi-monthly one was.

The Commerce Commission’s investigation into the wholesale and retail electricity markets showed that the electricity companies have not breached Part 2 of the Commerce Act but their extra $4.3 billion in earnings from 2001 to mid-2007 reveals they are charging with a take no prisoners mentality. The electricity companies’ profits are at the expense of New Zealand’s most economically vulnerable.

Since 2002, I have pushed for a return to consumers of some of the big profit increases from the state-owned power companies to help them with winter power bills. Low income households could be given $200 toward winter heating costs and power companies would still contribute as much to the government as they did last year. $200 would mean some households had a month of relief from winter heating costs. For superannuitants, beneficiaries and people who have lost their jobs in the downturn, it would make a huge difference.

The Commerce Commission’s ruling on the power companies should not be seen as a sign off for a return to business as usual. I am sure that New Zealanders would be hugely relieved to see the companies acting in the interests’ of their consumers with a winter rebate during this winter.


Comment on economics and the recession Response to Daniel Silva’s article in the Country-wide magazine

21.05.09
So Daniel Silva thinks that the current international recession isn’t going to affect New Zealand much.  Well that’s all right then?  Actually – no. 

He’s quite wrong to think so for two significant reasons quite aside from the fact that any nation which earns its living as an international commodities trader is going to be affected by what happens to purchasing power in our major markets.See website for full response


Aucklanders should have elected, not appointed leaders

19.05.09
Letting Auckland vote would be a better way to make appointees to the Auckland super city transitional agency than a secret process in a government where decision-making is melting down.

Why is the government even appointing a board? The way we find people to run local government in New Zealand is we have democratic elections.

A government that listened to New Zealanders would not have a problem making a choice of leadership. The people do the appointing for it. In a democratic election, you are much more likely to get leadership that looks like Auckland. National seems interested only in leadership that looks like the National or ACT Party.

I am very concerned that the quality of decision-making in the government is falling apart as the pressure of actually governing comes on. The National government is making poor decisions or refusing to make them at all. It created a sense of urgency for itself over Auckland’s super city, and now it can’t even meet its own urgent timetable.


Needle Exchange Programme proven it worth

19.05.09
On the 21st Anniversary of the Needle Exchange Programme (NEP) - and the 4th year of the free one-for-one exchange of needles, I again would support and expand a needle exchange programme that provides free needles for intravenous drug users.

The Progressive Party successfully bid in 2004 for $4 million over four years to fund free-to-users, one-for-one exchange of used needles because we wanted to minimise the harm caused by drugs”.

Back in 2002, I was appointed as the Associate Minister of Health and the minister responsible for drug policy. I received an independent review of the needle and syringe exchange programme. It reported that the programme saves lives. It said the programme saved - back then, seven years ago - $35 million in treatment costs since it had been established.

The report said plainly that the needle exchange programme reduces the harm caused by drug use. It told me the programme had helped to prevent twenty deaths from AIDS and more than two thousand cases of Hepatitis C and HIV/AIDS.

When you get a report like that in government, you sit up and take notice.
It makes a pleasant change from all the doom and gloom about things that don’t work. Here was clear evidence of a programme that worked.

There were people who sneered at that as liberal political correctness. I can tell you from personal experience there aren’t many votes in being wise or liberal about this stuff. But it was then, and is now, the right thing to do anyway.

The results have been very worthwhile. Obviously, I wish we didn’t need this programme. I wish we didn’t have drug use causing the harm it does, wrecking the lives of many people, and wrecking many communities.

But it does happen. It will keep happening. And if we care about vulnerable victims then our responsibility is to reduce the harm to them as much as we can. The needle exchange programme does just that and I endorse it for that reason.


Anderton brands Auckland bill as the “Removal of Democracy” bill

18.05.09
The Local Government (Auckland Reorganisation) Bill which will usher in Auckland’s “supercity” should be renamed the Removal of Democracy Bill.

The Local Government Act would have given Aucklanders a say in one of the most significant changes in local government in their region that they will see in their lifetime, but they are not going to have a chance to have that say.

In essence it is a great leap backwards to the days when 21 out of twenty two councillors lived east of Queen Street. It was the reason why a ward system had to be introduced so that all Aucklanders could actually be represented on their own Council. The conservative right-wingers have always resented that change and this proposal returns Auckland to the past they have always hankered after.

In real life terms it means, for example, the end of free swimming pools for the kids of South Auckland and any other future say for most Aucklanders in the way they want their local communities to deliver for them.  Does anyone believe that those pools will continue to be free under the government’s proposal?  I can already hear the self appointed Mayor of the super city, John Banks, making speeches about why the ratepayers of Auckland City shouldn’t be subsidising the swimming pools of south Auckland. 

I support a strong regional government for Auckland.  There used to be one – the Auckland Regional Authority (ARA) and I know about it because I was elected to it in 1977. We bought all the major regional parks and replaced the entire ancient bus fleet with new Mercedes Benz vehicles. 

In 1989, the Labour government replaced the ARA with the Auckland Regional Council (ARC). In 1992, the then National government wanted to sell the Ports of Auckland and the water services, so they diverted ownership of these and other profitable assets into the newly established Auckland Regional Services Trust (ARST) with the plan to sell. What a shambles that would have been if it had been allowed to happen. It took all of the strength of the political group I led at the time to put a stop to that.  Auckland has reaped the benefit ever since,” Jim Anderton said.

Now they’re having another go.  This is a privatisers’ dream to sell the community assets of Auckland, and is entirely in line with Rodney Hide and the ACT party’s ideologies.  Does anyone believe that this is in the best interests of Aucklanders? 

You can understand in those circumstances why the National ACT government doesn’t want people to have a say as to whether or not they want this outrageous piece of community destruction to go ahead.
 
Tribute to Senior-Constable Len Snee
12.05.09
I join with other party leaders in expressing my deepest condolences to the family of Len Snee. I too wish a speedy and full recovery to the injured as they lie in their hospitals.

I send my best wishes to their families who must be desperately worried as they pray and wait at the bedsides of the fallen.

Maybe the most sombre thing we do in Parliament and government is send men and women into danger on our behalf. We send them out knowing that sometimes, on our darkest days, they won’t come back alive. When we send them out, we send them to defend New Zealanders. They are there for us.

They go out as our bravest, and when they fall, some of us all falls with them.

Every police officer knows that they go about their duty on every apparently normal day, with danger and unpredictability lurking. They take on that danger on our behalf. We can never repay sufficiently our debt to them, and we can not begin to repay the debt we owe to those who give their lives for us.

Most of us have learned a lot about Len Snee in the last few days. We learned about his professionalism as an officer. We learned about his popularity in his community. So I pay tribute to him personally and I hope his family, as they grieve, can find some small condolence in the respect and admiration his country is expressing.

I hope New Zealanders will show respect by declining to seek political mileage from this death while this wound is still so raw.
It is very easy to exploit the strong emotions we all feel over a tragedy like this. It is easy, but it’s wrong.

I want to congratulate the prime minister, and say I agree with his reaction when he said he was not going to be stampeded into a call for arming the police in their day to day operations. That was the right response. There will be lessons to be learned from this tragedy, and we will all have to reflect carefully on them. But the time for making political points isn’t here yet.

I am sure the family of the murdered officer are not yet ready to have him used for point-scoring about guns, nor for political mileage about drugs nor crime, nor about policing, nor mental health, nor any of the other issues that will inevitably give us pause.

This is a time to give thanks to the men and women whom we ask to protect us, to share the grief of Len Snee’s family and friends, and to express our strength as a community that comes together and makes our bonds stronger when we are confronted with tragedy.


Launch of the Finsec Banking petition
05.05.09
I would like to express my support for the Finsec petition, and for the retention of New Zealand jobs. Banks in New Zealand have been making enormous profits by mistreating customers and exploiting staff.  
In the current global financial situation - the overseas owned banks in New Zealand are some of the most profitable in the world.  
But they are still firing staff.  
It’s time for them to give something back. It’ time for them to support New Zealand as good corporate citizens.  
The taxpayer is giving the banks a crucial government guarantee. The government is right to do so. The banks need the guarantee to keep functioning. In a crisis, New Zealanders should be prepared to help each other out. And we should be prepared to use the power of government to make our economy stronger.  
But there is a quid pro quo. It is perfectly reasonable to ask that in exchange for getting support from New Zealanders, the banks should, in return, support New Zealand in general and their own staff in particular.

MPs should not be able to fight by-elections 
05.05.09
It’s a farce that sitting MPs are standing for election to parliament. I am drafting a members’ bill to stop MPs from standing for parliament in by-elections. In Mt Albert, there are three MPs standing for parliament. They are already MPs. If they want to represent the electorate, they already can. Any list MP can open an electorate office in Mt Albert and be a good representative.  
What those MPs are really doing is using their parliamentary salaries and resources to bring in someone on a party list who has nothing to do with Mt Albert. For example, if the National candidate were to win she would be an MP just as she is now. But she would bring in a new MP who virtually no one has heard of, and who might never have visited Mt Albert in his or her life.  
MPs who contest the seat but lose bring MMP into disrepute. Since there are three MPs contesting the seat, at least two of them have to lose and maybe all three will lose. If they are going to test their mandate, they should be prepared to live with the result.  
In a general election, no MP has insurance. They have to get enough votes in their electorate or for their party, or they are out. It’s a democratic farce to have different rules in a by-election.  
A simple bill that stopped a sitting MP standing in a by-election would force MPs to make a meaningful choice - if they really want to contest a seat, they should resign from parliament  and contest it on the same basis as anyone else.   
MPs shouldn’t fight a parliamentary by-election while they’re drawing a full parliamentary salary.

Tags: Budget, Science, Economy, Winter Power Rebate, Energy, Auckland Super City, Good government, Drug and alcohol abuse, Progressive Party, Crime, Law & Order

Banks repatriating ‘enormous amounts’
 
New Zealand bank branches paid their overseas owners $11.7 billion in interest and profit last year.
 
Progressive Wigram MP Jim Anderton told a Federated Farmers conference today that the situation poses a risk for the agriculture sector, which is facing a ‘perfect storm’ of input price rises, threats to demand and now finance risks.
 
Total bank lending to agriculture in April this year was $43.7 billion, or 13.8 per cent of the total lent to New Zealand.
 
“Two thirds of that is lending to the dairy industry - at a time when one estimate says Fonterra could be forced to cut its payout from the current $4.55 if our dollar stays over sixty US cents. This would be very hard on some farming businesses that thought the last couple of years’ high prices would last longer. If interest rates came down just one per cent, farmers would save $450 million,” Jim Anderton said.
 
“The banking system has begun repatriating enormous amounts of New Zealand money.”
 
Remittances by banks in New Zealand to their overseas owners climbed from $3.8 billion in 2000, to 4.6 billion in 2004, and then began climbing steeply: $6 billion in 2005; $7.8 billion in 2006; $9.1 billion in 2007 and $11.7 billion last year.
 
“That’s more than the entire GST revenue of New Zealand. It is more than the entire education budget. And in a single year it is far more than the entire proceeds of the asset sales programme that caused so much pain through the eighties and nineties.”
 
“The huge remittances to banks are the result of the Australian banks funding our balance of payments deficit, now at sixteen billion dollars a year. They are taking an enormous clip of the ticket for doing it. We need to rely more on our own savings, instead of spending the savings of others.
 
“Interest rates are too high at a time when banks should be reducing them. In a recession, while banks around the world have been under pressure, the big banks here have been smirking. In the current environment, a lot of farms are facing a squeeze and they will struggle to meet the payments on their debt.”

Tags: Banks, Interest rates, Economy, Agriculture

Speech to Federated Farmers conference, 12 Noon Wednesday, 1 July 2009
 
I would like to thank you for the opportunity to talk to you as the Opposition spokesperson on agriculture. Can I also acknowledge the generous comments I have received from many farmers in recent months.
 
I have always been confident in the future of New Zealand’s agricultural industries. You have to be, because agriculture is intrinsic to our economy’s strength and our success. And it has been the backbone of our economy for most of our economic history because of our competitive advantage as a farming nation.
 
But while I am confident, I am realistic as well. There are a number of issues we need to deal with:

• Farm profitability is uncertain in stormy international economic conditions.
• There are broad risks in the financial strength of the agricultural sector.
• Global awareness about environmental impacts and animal welfare are forcing change in our markets, and changing the business environment - as well as affecting the raw materials farming depends on, like climate and water.

 
I’m glad you’re meeting here in Auckland, because it emphasises that the prosperity even of our largest city is dependent on the performance of our farmers. Agriculture is as relevant to Queen Street as it is to Hokitika, to Matamata, to Geraldine or to Carterton.
 
For that matter, the services that cities can provide can be crucial to our primary industries, too. In my home town, Christchurch, some of the most innovative scientists in New Zealand are rivaled only by their contemporaries in cities like Palmerston North and Hamilton in their research contribution to New Zealand.
 
There is always a risk that our economic backbone will be ignored in public debate about our economy.
 
At the start of this year, when the then new government opened its year in parliament with the Speech from the Throne, the word ‘agriculture’ didn’t even get a mention. It was the first time in at least a decade that our farmers were ignored. There is not much chance of developing the right policy for the agricultural sector, when farming isn’t even being contemplated by the government.
 
The policy environment in Wellington today, like every capital around the world right now, is occupied with the difficult global economic environment. Many developed countries are in recession. Some of them are in deep recession. We can take some comfort that demand for food holds up better in a recession than demand for the cars of General Motors or Chrysler.
 
But we can’t be too comfortable.

Reduced demand around the world is likely to result in reduced prices for our exports. Ultimately that means incomes will fall. And because the same reduced prices affect farmers everywhere, we can expect farmers in every country to redouble efforts to increase productivity and production, because this lowers costs per unit of output.

And since every farmer around the world is in the same situation, total production will increase, with prices falling and demand increasing only slowly.
 
On top of that, there is input price pressure. One of the critical elements in soil fertility is nitrogen. Industrial fertiliser is produced from gas or coal, and the price of fossil fuels are high. Persistent increases in the price of oil and gas would lead to higher fertilizer costs, so you get higher input costs and reduced demand.
 
Hand in hand with that picture, we can expect to see rising protectionism in many markets, particularly in agriculture. So that makes market access more difficult.
 
This is a tough recipe for farms.
 
There are only two ways to increase farm profitability: reducing the costs of inputs, or increasing the value of production from given inputs. A combination of both strategies is inevitable.
 
The underlying trend in the export prices for our commodity agricultural products is down, over the long term.  With some medium term exceptions, such as China’s expansion and climate events, prices for agricultural exports have been under long-term downward pressure. The strong expansion of China in recent years has helped to push up the prices of many raw materials - including some that farmers compete for, such as energy - while also increasing the price for agricultural products.
 
But relying on that to continue forever is not a prudent long-term strategy for New Zealand.
 
At the same time that we are confronting the difficult environment for farm prices, agricultural finance is under stress as well.
 
This is what I call a perfect storm: input price rises, threats to demand and now finance risks.
 
I’ve been looking at New Zealand’s accounts with the rest of the world. When you look at our merchandise trade - our exports against our imports, the deficit is large but manageable.  But we face a massive deficit in one crucial area - investment income.
 
We have been using the savings of people in other countries instead of our own earnings or our own savings to pay for our lifestyle. And the bill for that is starting to come in. The bill is coming in from banks.
 
How much do you think New Zealanders send overseas each year to the big Australian banks?
 
In the nineties we sent overseas about three billion dollars a year in profits and interest on loans extended to New Zealand banks. For the first half of this decade it was stable around about four billion dollars a year.
But something dramatic has happened. The banking system has begun repatriating enormous amounts of New Zealand money.
 
Last year, calendar 2008, the banks repatriated 11-point-7 billion dollars in profit and interest paid on loans.  That is, the New Zealand branches paid their overseas owners $11.7 billion in interest and profit.
 
The total has risen from $3.8 billion in 2000 to $11.7 billion last year.  That’s more than the entire GST revenue of New Zealand. It is more than the entire education budget. And in a single year it is far more than the entire proceeds of the asset sales programme that caused so much pain through the eighties and nineties.
 
Behind this enormous repatriation of New Zealanders’ money is a serious balance of payments deficit. It now stands at $16 billion - that’s about nine per cent of GDP.
 
In other words, our total overseas debt increased by sixteen billion dollars last year.  Debt like this is easy to run up and hard to pay back. It poses a risk for the agriculture sector specifically. Total bank lending to agriculture in April this year was $43.7 billion, or 13.8 per cent of the total lent to New Zealand.
 
Two thirds of that is lending to the dairy industry - at a time when one estimate says Fonterra could be forced to cut its payout from the current $4.55 if our dollar stays over sixty US cents. This would be very hard on some farming businesses that thought the last couple of years’ high prices would last longer.
 
Relief from interest rates would help. As Federated Farmers’ Lachlan McKenzie pointed out yesterday, every one per cent drop in interest you pay on that debt is worth $450 million. That’s a lot of money that comes straight off farmers’ bottom line.
 
How refreshing it is to hear the farming sector focussing on this issue.  In the nineties, some farming leaders used to applaud higher interest rates and the monetary policies that deliberately punished the productive sector.
 
Today, interest rates are too high at a time when banks should be reducing them.
In a recession, while banks around the world have been under pressure, the big banks here have been smirking.
 
In the current environment, a lot of farms are facing a squeeze and they will struggle to meet the payments on their debt.
 
This is serious, and it needs serious attention urgently. I’m not confident it will get it.
I’ll tell you what I would do if I were still the agriculture minister: I would immediately convene a taskforce of the best and brightest in the sector to develop a short-, medium-, and long-term strategy to the deal with the issue.
 
The huge remittances to banks are the result of the Australian banks funding our balance of payments deficit. They are taking an enormous clip of the ticket for doing it.
 
We need to rely more on our own savings, instead of spending the savings of others.
 
And we need some fresh thinking on the balance of payments problem too.

We need a broad-based focus to reduce our imports. We could make a start if we were able to reduce our dependence on imported oil.
 
If we could develop reasonably-priced biofuels and other forms of new energy, and reduce waste energy, we would score a huge opportunity for farming:

• Potentially a new source of revenue for farmers.
• Potential cost-savings.
• A contribution to a better climate and the natural resources our farms depend on.
• And a substantial reduction in our trading deficit with the rest of the world.

 
On top of all these advantages, it would help us to prosper in a world where consumers are becoming more demanding, and asking more searching questions about sustainability.
 
This is partly about how we manage our emissions - but it’s about a lot more than that as well.
 
If New Zealand is going to achieve a higher price for our production than our competitors, then quality and a perceived advantage as being more environmentally responsible will be part of our national brand.
 
As every responsible study shows, clean performance means we need to be responsible about our carbon emissions, too.
 
That’s why the Opposition is taking a constructive approach to working with the government on emissions trading. Only yesterday we voted with the government on a new climate change bill, in a spirit of working in the best interests of all our industry sectors.
 
Some conclusions are inescapable. As a general principle, polluters, one way or another, will have to bear the cost of their emissions.  There are developments on the table, such as Gordon Brown’s proposal yesterday for a global development fund to help poor countries replace their emissions with cleaner alternatives.
 
The world is also moving closer to a global carbon trading scheme. Once that happens, New Zealand taxpayers will not long pay to subsidise polluters, as we are now. Any government of New Zealand is going to have to deal with emissions if we are a prudent country. What won’t work is hoping that the problem goes away.
 
And I continue to believe environmental sustainability is a competitive advantage for New Zealand. When you see the ugly factory farms in many parts of the world, and you compare their practices to the clean and open countryside we farm in New Zealand, you can see we have a huge opportunity.
 
I know there are few New Zealanders as passionate about the land as our farmers.
And so as the world cares more about the good of our planet, this should be an enormous opportunity for us.
 
It will require care to seize the opportunity, though, because it is implicit in seizing the opportunity that we will live up to our promise.
 
We can’t just say we are cleaner and higher quality than our competitors. We have to BE it.
 
Consumers will not be impressed if we are seen to be dragged into better environmental performance kicking and screaming.
 
If you want to know what happens when change takes too long, ask the pork industry how its animal welfare standards are perceived by the public.
 
Now I support giving that sector time to change. I also hope that a review of the animal welfare code for pigs this year will impose higher standards. But none of us should be uncertain about the costs to the entire industry of the strategy it followed.
The public saw it as too slow to change, instead of adopting a strategy of having the highest quality.  The reputational damage has made the pork industry the subject of more letters to my office than anything else right now, including the smacking referendum.
 
If it can happen in that sector, it can happen in any other. We cannot be seen to be the source of dirty water or unsustainable users of resources.  We cannot be seen as polluters when our industry is based on healthy growth, on food and on good health.
 
So overall, we have an environmental challenge.  We have a challenge to the industry’s financial stability. We have a squeeze on its cost structure. We have a struggle in global markets.
 
The solutions will be discovered by science. Sustained, deep and ongoing investment in research and development in the industry is crucial - to identify cost-saving opportunities, and to identify new processes and new products that will extract more value.
 
As has been well rehearsed now - I put my stake in the ground for research and development in the primary industries sector.  The NZ Fast Forward Fund was a commitment of seven hundred million dollars, which would earn interest and private sector partnerships and grow to be worth two billion dollars over its lifetime.
It’s been replaced by a relatively puny seventy million dollar annual commitment - for just four years.
 
There is no guaranteed long term commitment. There is no chance to earn interest and fund very large projects from an annual appropriation when science has to compete with every other demand on taxpayers’ purses.
 
It would be unfortunate if the message that politicians drew from this episode is that there is no political problem with cutting r&d. I believe there is a huge divide over this issue between the different sides of politics. Our side says the way out of our problems is investment in r&d and people. Our side says the way out of our problems is investment in knowledge, training and skills.
 
This is an important debate, and it is crucial for farmers. But whatever choice government makes, it is now up to our agricultural industry to lead investment.
 
Investment in science and in research and development is the most significant commitment we can make across all of our agriculture, to determine our own future.
 
Investment in marketing, and in market-responsive structures. Investment in talent, in creativity and in the strong communities that attract people to rural lifestyles.
 
Our r&d, our talent, and the structures underpinning them give our agriculture a competitive advantage over competing countries with temperate climates. Our competitive advantage is our science and research. It is our people and our lifestyle.
 
Our competitive advantage in the future will be in our superior products. In costs driven down by innovation, not exploitation. In processes focused on delivering a better product to consumers. In environmental sustainability driven by science, not wishes.
 
And the agriculture sector is going to have to lead investment to keep us at the forefront in all these areas, because innovation is not going to come from anywhere else.
 
It won’t happen on its own.
 
And it isn’t happening fast enough in other parts of the economy. When you look through our economy to where the wealth has been created, there are some pretty compelling facts to confront. One is that our corporate sector has spent most of the last twenty years - overall - destroying shareholder wealth.
 
When you compare stock market results to the performance of farms and agri-business, you get a clear picture of where the strength of our economy resides. I understand the stock exchange chief executive was invited along to Treasury recently to lecture State Owned Enterprises about behaving more like the corporate sector.
If they were to behave like our corporate sector, they would destroy value.
 
They would grow productivity more slowly than comparable overseas businesses.
They would focus not on doing a better job, but on sending more of New Zealanders’ cash to overseas owners.
 
The stock markets agenda is to lobby for more privatisation of our SOEs, rather than focusing on growing more successful New Zealand corporates that deliver returns to shareholders by doing well in global markets.
 
I would have more New Zealand corporates behave more like our most successful agri-businesses. Then they would grow productivity faster than the average of the New Zealand economy. They would focus on expanding their international connections. They would grow the scale and and expertise they need to be world class businesses. They would build on genuine, science-led innovation and send the returns back to creative and entrepreneurial businesspeople in the many communities around New Zealand that are at the heart of our agriculture.
 
As I started out saying - there is a lot to be confident about in our agriculture. But I am a realist too.
 
Realistic that we need to deal with the massive debt problem, and the too-high interest rates we are paying to Australian banks. $11.7 billion a year in profits and interest payments? That’s where earnings from agriculture are going.
 
Realistic that we need to invest in r&d and creativity to come out of tough global conditions stronger.
 
Realistic that we need to turn environmental challenges into an opportunity.
 
And realistic that we can do all of this.
 
But it will take a fierce commitment of energy and co-operation across the sector.

I saw a comment from Don Nicholson that New Zealand's best exporters are found out there, in the fields and paddocks of New Zealand under rain, sun or snow working every single day, to bring wealth to New Zealand. I agree with that, and it’s up to the rest of us to match that commitment and to add our work to their success.

Tags: Agriculture, Economy, Banks, Interest rates, Biofuels, Oil, Environment, Research & Development, Climate change

National is talking big about agriculture, but it’s running up a surrender flag with no new ideas, Opposition agriculture spokesperson Jim Anderton says.

“Today John Key billed his speech as a major statement on the economy, but he had no new ideas while unemployment is increasing.

“Unemployment in a region like Gisborne increased from 3.8% in 2006 to 7.8% in March this year and it will be inevitably higher now. Yet while unemployment is rising quickly in regional New Zealand, National has no ministry or policy for regional development or industry development. They never did and they don’t have now.

“National imposed a massive tax increase on research and development and it cancelled a two-billion dollar partnership between the government and private sector to invest in primary sector innovation.

“While John Key talks about the economic performance of agriculture, he has no idea about why our farms, businesses and homeowners are paying much higher interest rates than Australians, when the same banks are doing the lending.

“John Key is all talk and no jobs,” Jim Anderton said.

Tags: Agriculture, Jobs, Economy, Gisborne, Regional Development, Research & Development

 
Warnings of a credit downgrade because of our current account deficit are a wake up call about the sums we are paying foreign banks in interest and profit to fund the deficit, Progressive Wigram MP Jim Anderton says.
 
The Fitch rating agency warns that New Zealand has a fifty-fifty chance of a credit downgrade because the current account is very high. Unless it halves, we will be downgraded, and households, farmers and businesses will have to pay higher interest rates.
 
Jim Anderton says the external deficit is already costing New Zealand too much.
 
“We sent $11.7 billion in interest and profit to overseas-owned banks last year, more than the government collected in GST revenue. Farmers alone are paying interest of around six billion dollars in farm debt.
 
“Interest rates charged here by the Australian-owned banks are higher than the same banks charge in Australia. Their margins are higher.
 
“We are sending that money to the overseas-owned banks because they are financing the current account deficit. When house prices rose, New Zealanders borrowed against the capital, bought new plasma tvs, but didn’t increase our capacity to earn more.
 
“Now the bill is starting to come in.
 
“Current account deficits have a history of reversing themselves sharply, with very sudden falls in consumption. That amounts to a poor outlook when the government is already hoping the recession will end by itself.
 
“Unfortunately the government doesn’t have any economic plans to reduce the current account deficit and it doesn’t even recognise the level of profits going to overseas-owned banks are a problem.
 
“Rogernomics was meant to end the current account deficit problem for ever. It failed abysmally.”

Tags: Economy, Interest rates

Treasury’s claim that privatisation boosts productivity is an old song that Treasury should be embarrassed about, Progressive Wigram MP Jim Anderton says.
                                            
“Treasury made the exact same claim about the privatisation of rail. It could not have been more wrong. The privatisation of rail was a disaster on any reasonable measure.”
 
Jim Anderton tabled in parliament Treasury’s 1999 report “The Privatisation of New Zealand Rail.”
 
In the report, produced when Bill English was finance minister, Treasury claimed, “welfare increased from the privatisation of rail. This reflects the remarkable improvement in productivity that took place.”
 
“Treasury has long made a habit of calling for the same medicine regardless of the facts. When the facts showed Treasury’s advice about privatising rail was hopelessly wrong, they made up a case that said it was great anyway! You can’t beat this for poor quality advice. If Treasury was a doctor, the patient would be dead.
 
In an ironic twist on Treasury’s call for other government departments to contract out more work, the discredited rail report was produced under contract for Treasury.

Tags: Economy

Banks are charging interest rates in New Zealand that are higher than the same banks charge in Australia, Progressive Wigram MP Jim Anderton says.

He is supporting a cross-party inquiry into bank profits, because he says the banks have questions to answer about why there is a difference in the rates they charge.

“Overseas-owned banks took $11.7 billion out of New Zealand last year in interest and profits. That’s more than the entire sum collected in GST revenue. The amount they have been paying themselves has increased rapidly over the last three or four years.

“Interest rates charged by the overseas banks are especially affecting farmers.

“Total farm debt at the moment is around $43 billion. At farm lending rates of 13-14 per cent, that means our farmers are having to pay $5.5-6 billion a year in interest alone to the Australian banks.
 
“Every one per cent of interest charged represents $450 million off the bottom line of New Zealand’s farms.
 
“The Australian banks charge interest on unsecured loans of 17.95%, compared to 16.9% charged by Kiwibank.
“Interest on a standard Westpac credit card is 19.45%. In Australia, the comparable interest rate charged on a standard Westpac card is 17.74%. Australia has a higher official cash rate than we do. Kiwibank is able to charge 12.9% on its standard credit cards.
 
“An inquiry will help to establish why Aussie banks charge us more than they charge Australians.”

Tags: Banks, Economy, Interest rates