Good evening ladies and gentlemen.

Thank you for the opportunity to speak tonight.

I would like to thank Tony Wilding for his introduction, and congratulate him on his long service to agricultural training, including his seven years stint as Chairman of Ag ITO.

I would also like to acknowledge Chief Executive Kevin Bryant who I have come to know well over the years.

Kevin is well regarded right throughout the tertiary sector.

Welcome also to members and staff. It is good to see you all here this evening.

I will briefly outline my observation of the current economic situation, and what this means for our sector, particularly with regard to agricultural education.

Economic situation
First I want to give you a feel for where the Government is at - especially from an economic point of view.

We are facing extraordinary times, everyone will be aware of that. But New Zealand by comparison with major economies, such as the USA, Europe and Japan, is in far better shape.

This is for a number of reasons.

We have a deregulated, unsubsidised and open economy, which by its very nature is immediately more responsive to all economic signals.

It wasn't easy to get there. The mid 80s and early 90s were a real case of short-term pain for long-term gain.

We used to get frequent criticism from some exporters around the Reserve Bank Act and the way it worked - but not lately.

Reserve Bank Governor Alan Bollard has used the official cash rate as a tool to drive down interest rates in response to the world recession. Only 12 months ago the OCR was 8.25%. Now it is at a record low of 2.5%.

Still many borrowers have complained to me that their interest rates haven't fallen to the same extent.

I have spoken to the banks and I buy some of their arguments.

They are finding it more difficult to source their capital, which stands to reason at a time of international credit crisis. Interest rates have still dropped significantly and this is helping businesses.

The economic crisis has also been top of the agenda for Ministers as we worked through the budget process with Finance Minister Bill English.

It's been a tough and bruising contest. To be fair to Bill, he has had to cope with rapidly falling tax revenue as well as massive funding commitments imposed by the previous government.

What I have to say next should alarm you.

Over the past five years, during a period of international economic buoyancy, the New Zealand economy grew by 24 percent. Government spending, on the other hand, grew by 51 percent - an unsustainable mess that our Government has to sort out.

This is why Prime Minister John Key gave all his Ministers very clear instructions:

• Deliver on election promises.


• Do line-by-line reviews of government expenditure.


• Cut any expenditure not delivering top outcomes.


• And finally don't ask for any more money.

So that is the bad news. Here is the good news for New Zealand agriculture.

Despite the global recession, there is also a developing global food shortage.

Our agricultural sector produces a product that the world needs.
Our agricultural sector is the answer to New Zealand getting through and recovering from the recession.

Opportunities in agriculture
Agriculture is where this country's natural advantage lies.

One of my aspirations as the Minister of Agriculture is to reinforce to all New Zealanders the absolute importance of our industry to New Zealand's economy.

Farmers are business men and women who run complex operations, often in a difficult environment of high asset value, high turnover, low margins and in a climate they can't control.

All of us in the sector need motivated, keen young people to help run our farms.

We need farm assistants, managers, sharemilkers, contractors, and ultimately, farm owners. Off farm, we need more research scientists, farm advisors, bankers and vets.

The challenge, it seems, is to make the industry appealing.

We must make agriculture more attractive. Money is certainly a key attraction.

Keeping returns high enough to get young farmers interested is a start. But to ensure our future, our industry must offer a plan - a path, where top operators can see themselves climbing a ladder of success.

We must make New Zealand's young people aware that in these tough times there is plenty of opportunity in the agricultural sector.

Production systems can not be easily turned off. The grass will keep growing and cows will keep calving and producing milk.

Perhaps more than any other sector in New Zealand there is job security and prospects.

Challenges to training providers
Currently we are disjointed in our approach to education and training. It is confusing to students and employers alike.

This is an area I would like to see develop. It will take some co-ordination.

Collectively we need to attract the right people to do the right training. We need to make sure this training is relevant to industry demand.

We must make sure our young people complete these courses.

Then we must ensure there is a connection into the work force.

Strong leadership and vision is required in order to improve the state of agricultural training in New Zealand.

This will help future and current employees in the sector plan their careers, which will in turn aid the sector's recruitment and retention rates.

I encourage agricultural training organisations to work together to create pathways, and I would suggest that Ag ITO has an important leadership role in this.

To this end, I understand that a primary sector group of ITOs, collectively representing 35,000 trainees, is being formed to cooperate in several areas including policy development, the development of joint qualifications, staff training and joint careers promotion.

I commend this kind of initiative, and I wish you all the best in getting this group up and running.

Conclusion
In summary, while there is concern over the world economic situation, there is plenty of optimism in our sector.

Industry training organisations are places that focus on potential, development and growth. It is only right they are also optimistic.

Thank you.