Primary sector attacked from all sides

By Winston Peters, NZ First leader

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The challenges farmers face equate to more than just low exports and the Global Financial Crisis, writes Winston Peters.

There is an old military maxim that warns against fighting a war on two fronts. But right now it's much worse than that for the New Zealand primary sector which is contending with heavy economic flak on three fronts - and a fourth is looming.

First, the world economy has not recovered from the Global Financial Crisis. International trade and economic growth is still suffering and there appears no end to the bleak outlook in the foreseeable future.

The recession was triggered four years but the consequences of the financial and economic crisis are still being felt. For our exporters this means weakening demand for many of our products.

Second, the agricultural sector is struggling with New Zealand's chronically overvalued exchange rate which makes our products expensive and less affordable for overseas markets.

The third front that completes a black future is the National-led Government's woeful incompetence in areas that are of critical importance to the primary sector.

The recent release of the investigation into how the Psa kiwifruit virus entered New Zealand was an indictment of border control failure. There was inadequate screening of imported goods that posed a biosecurity risk.

As a result of the Government's biosecurity failure, an estimated loss of up to $400 million to the kiwifruit industry over the next five years. It will spell ruin for many individual growers.

The dairy sector is also facing gloom. Prices are at their lowest level in almost three years. It is only an increase in production that is helping offset the price declines.

We all know that dairy is our single-biggest export sector, and milk powder our single-biggest export product. The challenges facing the dairy sector are large, but not insurmountable. Action is needed now to address the root cause - an overvalued New Zealand dollar.

Everyone, from the International Monetary Fund to local economists, agree our exchange rate is overvalued by about 20 per cent. It is crippling our international competitiveness and severely distorting and damaging our economic prospects.

The Government is content to sit by and let its money speculator chums make astronomical profits by dealing in our dollar as a commodity. Make no mistake, this is damaging our tourism, manufacturing and exporting industries.

New Zealand First has a solution. We have legislation prepared that would give the Reserve Bank the flexibility it needs to promote growth, employment and our export base.

It would expand the Reserve Bank's focus from its current responsibility for keeping the rate of annual inflation between 1 and 3 per cent. That is the historical role of the Reserve Bank that was legislated for in the 1980s during the time of rampant inflation.

But inflation has not been a major problem here for a number of years, yet the Reserve Bank still operates as if it is-.

The legislation prepared by New Zealand First would allow the Reserve Bank to take a wider view of the economy and tackle our overvalued dollar head-on. We aren't saying that restricting inflation isn't important, but it is just one aspect that should be considered by the Reserve Bank when it sets monetary policy.

We have twice tried to introduce the legislation into Parliament and both times National refused.

The fourth front looming for the primary sector is the Emissions Trading Scheme (ETS). Its implementation has been slowed down by the National Government, - but only slowed down. They are just delaying the blow to the farming community and industry so their paper-shuffling mates behind the ETS can make even bigger profits.

We are realistic and know the ETS would mean higher domestic commodity prices as farmers are penalised with another tax.

A much better way to achieve a reduction of greenhouse gases is to identify problem areas and target appropriate responses through research and development. In other words, address the issue by direct action from government and industry and not by making huge payments to an ETS in which faceless outsiders and non-compliant nations will profit at the expense of our industries and workers.

It would lead to the introduction of cutting-edge technology to combat environmental problems which would be a win-win situation for New Zealand producers and the environment.

- Hamilton News

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