Hon Jim Sutton
Speech Notes
1 April 2003

NZ Meat Workers and Related Trades Union meeting, Christchurch

Ladies and Gentlemen: thank you very much for the invitation to speak with you today.

In both my roles as agriculture minister and trade negotiations minister, I am dependent on your efforts in order to do my job properly.

New Zealand is a trading nation. We cannot produce everything we need for life in our modern society, and we are reliant on the earnings from what we can sell overseas to pay for what we import.

So, maintaining and expanding our market access for our meat and other exports is crucial.

More than 80 per cent of all meat grown and processed here is produced for export, so you all have a direct interest in our trade policy.

New Zealand, and I as minister, is reliant on your work. We need high quality cuts of meat, increasingly of chilled meat, rather than the frozen sides that used to be the traditional export. We are reliant on your skills as you turn out high value, safe food, both for the domestic market here at home and the overseas market.

As trade negotiations minister, I spend a lot of time working with other countries' ministers to explain to them why trade liberalisation works.

Basically, we all do better when we concentrate on doing what we do best and trading with others to obtain what they are best at producing. It works at a village level, and it works at an international level. To do otherwise is inefficient and costly, to taxpayers and to consumers.

Agriculture in New Zealand is a classic example.

This country undertook policy reform in our farming sector almost twenty years ago, and our producers are now reaping the benefits. Farmers and meat companies looked to innovation and new markets to replace the subsidies that they once received, and are now world leaders in exporting both commodity goods and many niche products.

The effects are quite impressive: productivity in the agricultural sector has increased 3.9 per cent a year since deregulation; productivity of the economy as a whole has increased at just over 1 per cent a year during the same time.

As meat workers, you played a key role in that productivity increase.

Information from the Meat Industry Association show the changes in the past 10 years: the meat industry has moved from running freezing works to being a food business. It's moved from in 1992 being a seasonal operations earning $3 billion a year to in 2002 being a year-round production earning $5.4 billion a year. The percentage exported has increased from 75 per cent to 85 per cent, from 40 different markets to about 70 different markets.

In both 1992 and 2002, there were 25 million lambs processed. But in 1992, the average lamb weight was 13.7 kilogrammes, and in 2002 it was 16.9 per cent. Lambing percentages increased from 102 to 124.

You as workers play a key role in the changes: there is no question that the readiness and ability of employees to "upskill" has been a major factor in helping drive the shift from the carcass trade to today's focus on added value. Twenty years ago, nine out of every ten workers was engaged on carcass work. Today more than 60% are involved with further processing.

That's come at a price. In the mid-1980s, the average slaughter chain would process 2700 lambs and have 54-57 workers. Today, the average chain does a minimum of 5000 lambs with 26-28 employees. You as workers have taken up the challenge demanded by the changes in your industry. You've accepted fewer numbers on the chain, you've taken on new skills, you've improved labour relations, and lifted productivity.

I am particularly impressed with the number of meat workers studying through the NZITO and improving themselves. NZITO (an organization formed three years ago in the merger of the former dairy and the meat ITOs) runs a series of specialist processing courses that earn graduates a place on the industry national qualifications framework. These qualifications enhance both workers' skills levels and their attractiveness to meat company employers. About 4000 meat workers have been through or are currently moving through these courses. The approximately 2000 currently enrolled is equivalent to 10% of the total workforce ? a spectacular figure!

The Government is keen to encourage workers to improve their skills and to encourage young people to develop skills. The modern apprenticeships scheme combines the best of the apprenticeship tradition with additional features that help more young people to get job-based training towards national qualifications. The scheme makes it easy for employers to recruit and manage talented young people and offer a new generation the chance to access quality workplace learning. Modern Apprenticeships are now available in 25 industries, including primary production. By the end of this year, we hope to have 6000 people enrolled through this scheme.

For our part, the Government is working hard for you.

We restored balance to workplace relationships with the Employment Relations Act. We believe in promoting the free association of workers and collective bargaining.

We brought in a new Health and Safety law that means more comprehensive coverage of workplaces and employment relationships, improves the enforcement capability of OSH, and ensures employees have real opportunities to be involved in the management of health and safety in workplaces

There are other areas where the Government has acted in workers' interests. We have done this because it is important for our country to have a balance in industrial relations. Businesses are vital to the economy ? but so are workers.

I daresay there are Government actions you are unhappy about as well. The Government's role is to take both a long-term and a short-term view of our country, and to do what we see as best for the country and all its citizens.

I spoke earlier of how New Zealand deregulated its economy and removed supports in agriculture. That was not greeted with universal pleasure at the time, but I believe the primary production sector would not have it any other way now.

Now, the battle is to encourage reform in other countries to remove the barriers that restrict our growth. New Zealand can only change so much on its own; we've got to have multilateral agreement to progress further.

International agreement to reform in the industrial sector occurred progressively since the 1950s, but we're still waiting for agriculture to catch up. This is why we're devoting a lot of energy to the agricultural negotiations in the Doha Development round of the World Trade Organisation right now.

As you will be aware, there is a gulf in the negotiations between those countries looking for harmonisation in agricultural trade rules to fulfil the ambitious mandate set at Doha, and those looking to continue on the same old path, subsidising production, subsidising exports, and protecting their farmers from competition from more efficient producers. By harmonization, I mean giving the agriculture and food industries the same opportunities the industrial manufacturing sector already enjoys.

That second group prefers not to look outside their own borders to see how those traditional practices impact on other countries through distorting trade. They are hurting the livelihood of the more efficient farmers not just in New Zealand, but in Africa, in South America, and in Asia. They are damaging the welfare of the world in their own narrow domestic political interests. To give real meaning to the Doha Development Agenda, developing countries must make gains in improved market access and there must be decreased dumping of subsidised exports. New Zealand fully supports these aims.

There is a lot of political game-playing going on in the WTO negotiations right now. New Zealand is working hard to ensure that beneficial changes are made.

The other area we are working hard on is biosecurity.

You will have heard that during the past fortnight, there have been several incursions of new moths, ants, and mosquitos.

A $1 million research project, commissioned by MAF, has investigated sea containers, and come up with several recommendations which we are working through now. I can give you a personal commitment that the Government is not being complacent in this area, and that we intend to have tightened up biosecurity measures for sea containers by the end of this year.

The Labour-Alliance Government, and now the Labour-Progressive Government, is more committed to biosecurity than any previous Government. We spend more than $50 million a year more on biosecurity baseline funding than any previous government.

When foot and mouth disease was raging through Britain, we spent significant amounts of money to install soft-tissue x-ray machines at all international airports and to provide extra detector dog teams. That lifted screening of air crew and passengers from about 80 per cent to 100 per cent. In addition, all mail is screened.

We are still the only country in the world to do that.

There is still a need to address sea container biosecurity. We are not complacent about this. We are working to fix it.

This Government is more than just aware of the risks. We know that an outbreak of foot and mouth disease in our country would cut gross domestic product by around 8 percent after two years. It would increase government debt and lower economic growth, which would flow on to greater unemployment, as for example meat companies would be unable to sell any product overseas and the domestic market can absorb only so much. There would be significant impacts on the financial health of some of our companies and communities.

Ladies and Gentlemen: We can be very positive about prospects for New Zealand. A growing economy means we can do more for essential services like health and education. We are putting in place smart, active policies, and forming partnerships across the economy and society to help us achieve growth, share the rewards of that growth, and build a caring nation.

Working in partnerships with unions and workers representatives, as well as with business and other community leaders, is critical to our success as a nation.

Thank you for your attention today, and I invite any questions.

ENDS

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