Business Scoop

Economic Misdirection At it’s Finest

Press Release – Primary Land Users Group

A report by the New Zealand Institute of Economic Research (NZIER) has suggested that the government’s proposed clean-up of waterways will not harm New Zealand’s overall economy.
A report by the New Zealand Institute of Economic Research (NZIER) has suggested that the government’s proposed clean-up of waterways will not harm New Zealand’s overall economy.

That was because the dairy industry was smaller than was commonly supposed, averaging just 3.9 per cent of the New Zealand economy over two and a half decades.

But the report admitted some regions might suffer economic hardship more than others.

The research was commissioned from NZIER by three environmental bodies, Forest & Bird, Greenpeace, and Fish and Game.

It followed this month’s launch of the Action Plan for Healthy Waterways by the government.

That plan aimed to improve the ecological health of wetlands and streams via a range of measures.

These included setting higher standards of water quality in popular swimming spots, putting interim controls on land intensification, launching accelerated planning processes and other measures.

The announcement spurred strong complaints from some farmers that agricultural production could be made untenable in some regions.

But the NZIER report said this would not translate into overall economic harm for the nation.

This report only mentions the dairy industry as a basis for making the assumption that there will be very little economic harm done to New Zealand and totally ignores the facts of this whole situation.

Right…so the replacement of 68% of our beef and lamb exports and 13% of our dairy exports (as modelled by the Regional Sector Water Subgroup, and quoted by the Chair of that group & Chief Executive of Waikato Regional Council Vaughan Payne) with speculative, largely foreign owned, carbon farming is going to have a minor impact on the economy – yeah right.

It was stated that the total profit estimated to be obtained from land-use declines only by around $7 million per year, but this is because the falls in profits for the dairy sector (of around 7%) and drystock sector (around 40%) are offset by very large increases in forestry profits (190%).

Given that the projected large increases in forestry profits will not eventuate for at least twenty five years and the costs for development and planting of these forests, it is no more than idle speculation to state that there will be a 190% increase in profit from forestry.

Who knows with any certainty what is going to happen twenty five plus years into the future. Will there be a market for forestry products and if so will there be higher or lower levels of demand with the attendant effects on prices either up or down.

This statement is nothing more than an educated guess backed up by some crystal ball gazing and a huge gamble by government using private equity with no rights of recourse for the true stakeholders (i.e. the owners of that private equity).

Given that the replacement of these farming operations with forestry, goes ahead, there has been no recognition given to the fact that not only are we talking about a very significant part of New Zealand’s income but also that it will take approximately thirty years (time till trees are ready to harvest) for the replacement operation to show a return on investment.

There is also no recognition given to the fact that the change to forestry will come with reduced levels of employment and virtually guarantee that there will be another large move from the rural towns into the cites to allow the population to try to find stable employment.

We will see more rural ghost towns when the effects of reducing populations in these rural centres see the local doctors, dentists, supermarkets, hotels etc. unable to sustain operations with a reduced number of customers due to this drift away, because of the lack of employment opportunities.

You only need to go and spend some time in the Tokomaru Bay and the whole East Cape area, to get a taste of what happens to communities where farming is deliberately replaced with forestry (as it was in the Northern cape post cyclone-Bola) Then let’s see if they can write another report on the amazing economic opportunities in the East Cape that have come about from the development of forestry…… Yeah Right!

There is no mention whatsoever about the effects from urban developments on the water quality even though it has been publically acknowledged by the government that some of the worst polluted waterways have come about from urban development discharging to natural waterways.

In addition to the Rural Ghost Town effect, this population drift into the cities can only exacerbate this problem in relation to the water quality, caused from discharge to natural waterways from urban developments.

Whilst I believe this report may be a true indication of the impacts from the changes to dairying I also believe that it amounts to a blatant distortion of the true situation by wilfully omitting to mention the effects from the changes to the overall rural outcomes from the changes to all types of farming that will result from the “Action Plan for Healthy Waterways”.

The Prime Minister is on record as saying that in bringing agriculture into the ETS (and working within the water quality restrictions) her government wishes to avoid the traumas of the 1980s when subsidies were removed.

She is concerned about rural communities and their welfare.

In actual fact I believe that this type of acting without adequate overall economic analysis, will lead New Zealand into a situation that will create a much worse trauma than anything that we experienced as part of the removal of subsidies in the 80’s.

I challenge the government to show me how these reductions in farming, farm employment and consequent reductions in export commodities will maintain our current overseas income levels and allow New Zealand to service our loan commitments.

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