Budget assists farm productivity & competitiveness

Media Release

28 May 2009

Budget 2009 assists farm productivity and competitiveness

Federated Farmers has lobbied hard to promote policies that will ensure farmers, the economy and the country are all on the road to success. Farming is New Zealand’s backbone and will lift New Zealand out of recession. Federated Farmers is pleased to see delivery on research, infrastructure, water and regulatory reform during challenging economic times.

“The agricultural sector accounts for 65 percent of all exports and Budget 2009 emphasises agriculture as New Zealand’s largest and most important industry. It’s welcome realism,” says Don Nicolson, Federated Farmers President.

“The Government has walked a tightrope in looking to boost productivity and competitiveness without flaming debt.

“That said, business is facing a very difficult environment and many New Zealanders are being insulated at the expense of business. Its okay to ‘preserve entitlements’ for workers but without business owners, there would be no jobs.

“Despite this, Federated Farmers is pleased to see the projected debt track trending downwards. This means we will be returning to surplus a lot earlier than previously forecasted.

“Any credit downgrade would have seriously impacted the interest rates farmers pay when farm incomes are highly constrained. Every one percent on interest rates takes around $450 million out of farm incomes.

“Some key initiatives that Federated Farmers has been lobbying for have been lifted from Federated Farmers pre-election manifesto. It shows the Government has listened to balanced and costed arguments,” Mr Nicolson added.

Research & Development

“The Minister of Agriculture ought to be congratulated for the Primary Growth Partnership. He has won this during a very difficult economic period and it will boost Research and Development (R&D) by $321 million over four years,” Mr Nicolson says.

“This includes the separate $190 million primary sector innovation fund that will be matched dollar-for-dollar with industry. Aside from a successful conclusion to the Doha trade round and water storage, agricultural R&D is a potential economic game breaker.

“Federated Farmers believes this is something that can be built upon in the years to come. New Zealand R&D has to hit three percent of GDP by 2029 for us to transform the economy.

“Agricultural R&D will greatly help the development of drought proof pasture through to the new environmental tools that farmers need.

Broadband

“Federated Farmers looks forward to speaking with the Minister about the $48 million rural broadband fund. On the surface it seems underweighted to meet the needs of a quarter of all New Zealanders.

“At least it’s there and leverages off our support for Telecom’s plan to roll out fibre to all schools and hospitals within three years of the project’s commencement. This provides vital wide geographic coverage but $48 million would need to stretch a very long way.

Transport

“This Budget recognises that rural New Zealand, as the economy’s engine room, needs to get goods to market effectively and efficiently. The state highway network is vital to on-farm efficiency and the economy.

“That’s why the Minister of Transport’s cancellation of the $2.77 billion Waterview tunnel in Auckland was bold and courageous. By doing the right thing by taxpayers, it frees up money to be invested into other transport projects.

Water

“With the appointment of an Infrastructure Board, Federated Farmers is extremely happy to hear the Minister of Finance use the word water in the Budget speech.

“Federated Farmers campaign for water storage appears to have traction and this is another potential economic game breaker.

“While we have a finite amount of land, New Zealand still has a long way to go before we reach full utilisation of all land and water is the key.

Insulation

“While initially dubious, Federated Farmers has been won over by the long term economics of insulation and the way it promotes a healthier home environment. It was encouraging to see a positive Green policy picked up by the National Government.

“It would be encouraging to see insulation materials sourced from natural and sustainable materials such as low quality wools. If we are making a long-term investment in healthier homes, it could make for a healthier wool industry too.

Regulation

“Federated Farmers welcomes the Government’s commitment to continue reforms to the Resource Management Act, Building Act and electricity markets.

“Reforms need to be continued and the Federation maintains that compensation provisions have to be introduced. We look forward to council and Department of Conservation powers to lock up private land at the landowner’s expense being wound back.

“The Federation is happy to see the Government tackle the electricity market too This has added cost to business and consumers without the full benefits of competition.

“That said, the Federation looks to see a push from Government that enables farmers to receive a fair rental return from electricity transmission assets on their land.

Conclusion

“Federated Farmers understands the tightrope walked by Government in its first Budget. Fonterra’s revised forecast, announced yesterday, tempered any expectations we had.

“That said, there are positive indications for the future in respect of infrastructure, regulatory reform, water and research and development. What Federated Farmers will be looking for is for acceleration in the areas that will drive the economy forward,” Mr Nicolson concluded.

ENDS

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