War On The Homefront

The Government's dream run for the economy looks set to end as rural New Zealand's chequebooks slam shut with a resounding snap, ACT New Zealand Rural Affairs Spokesman Gerry Eckhoff said today.

"New Zealand's so-called boom economy has, largely, been due to consumer spending. We had a `catch-up' economy but, now, the proverbial is about to hit the Government fan," said Mr Eckhoff.

"Despite Fonterra's best efforts, we will see a massive reduction in dairy payouts. The looming energy crisis will also hit the rural sector hard, as energy costs subsequently rise - especially for dairying and processing.

"Massive rises in valuations will result in high rate increases. Government-imposed cost structures - including ACC, which has risen 40 percent - mean rural New Zealand is set to be hit on all sides.

"All of this means that general costs structures in the farming sector, that were masked by a significant commodity price increase over the past three years, will be exposed as commodity prices retreat.

"Although the wind down to the rural economy may take up to 12 months to flow on to urban New Zealand, the result will be no less significant. As the world looks to war on Iraq, we may soon face a battle here at home, as Labour faces the first real economic challenge it has had since it has been in Government," Mr Eckhoff said.

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