Horticulture Conference ChristchurchAssociate Minister for Food, Fibre, Biosecurity and Border Control
The Prime Minister Jenny Shipley is sorry she cannot attend today.
However, I am delighted to have the opportunity to address you in her place.
The theme of your Conference, "Knowledge Harvest", is extremely appropriate.
Not just for your industry, but for New Zealand as a whole.
We have reached the point in our economic development where it we have pulled out the weeds and pruned back the dead wood.
The challenge now is to stay alert and open to new ideas so we can be constantly building our knowledge and putting that knowledge to work for the harvest.
And the harvest in your industry, horticulture, is indeed rich.
Despite the growth in other areas such as tourism, it is the agricultural and horticultural sectors that still fuel this country's economy.
The agriculture and horticulture sectors, combined, contribute more than half our export earnings.
They account for around 16 percent of our GDP and provide employment for about 14 percent of the labour force.
That's a huge contribution. But its under threat.
Internationally commodity prices are in decline. New Zealander farmers and horticulturalists know this and they're taking action.
People in your business are developing a high-value specialist market. I congratulate you on your many success stories.
I don't need to repeat them here today.
But one that recently caught my eye was the opportunities being opened up with the discovery of the high levels of anti-oxidants in boysenberries.
As you know proven health benefits open markets.
New Zealanders have always faced adversity with determination and innovation.
Your knowledge harvest is putting that determination and innovation to work.
As both a country and a culture, New Zealand can develop its knowledge economy.
We need to make ideas work for New Zealand.
You are playing a leading role in your move away from agricultural commodities to branded differentiated products.
The Government has done its work creating an environment where you have lower cost structures, greater stability, and a business community that is flexible and able to respond quickly to changing world markets.
We saw this recently with the Asian downturn, and our exporters, including your own, rapid response into new markets.
In response to the downturn in exporters incomes the automatic stabilisers in the of the Reserve Bank saw our currency and interest rates decline.
We in the Government made modest cuts to our spending leaving greater leeway to the rest of economy to adapt.
You became more competitive, while the costs of importing increased. We shared the pain of adjustment across the whole economy, and gave our exporters a boost. In a more closed economy this would not have happened. The worst hit Asian economies where those with the greatest controls.
As a highly exposed economy (relatively highly exposed than say Australia), we moved quickly out of the brief depression.
Our economy is growing again.
These things do not happen by accident. They happen because of good economic management.
And we must not go back.
Rural industries share this view.
Eric Roy and John Carter, supported by other MPs and Minister's along the way, recently travelled over 8,000 km through the provinces. They listened to concerns raised by rural communities. I was pleased to join Eric when he visited Canterbury.
The messages from Canterbury echoed the rest of the country.
Rural people told us clearly:
-to keep prices under control;
-be careful with our money by spending our taxes wisely and continuing
-to pay off debt;
-leave more of our hard earned cash in our pockets by reducing taxes;
-give New Zealanders the best the world can offer at the best prices, and
-give our exporters the best access to overseas markets;
-get rid of red tape; and
-let people sort out their own workplace issues.
We have delivered on these things and with your support we will lock in, and progress them.
This is the platform we have created for our next stage of growth.
The future will pose similar challenges and choices.
We are committed to bringing taxes down. The next step will be a cut to 20 cents in the dollar up to $40,000 from 1 April next year. After that we will move to bring the top tax rate down to 30 cents.
The removal of tariffs and introduction of parallel importing is making a difference to prices on things that matter to you such as vehicles, chemicals, tools and fuel.
Those in the productive sector, of which horticulturists are a major player, are the wealth creators for New Zealand. You need to be able to do business in a timely and effective manner.
The Resource Management Act is a case in point.
After extensive consultation we have introduced an Amendment Bill to reduce unnecessary delays and costs in the administration of the Resource Management Act.
The Government is committed to continue to give New Zealanders the choice of the best that is available. Choice and competition encourage innovation and help to keep prices to the minimum.
Changes in the accident compensation, parallel importing and the electricity industry are three recent examples where the Government has moved to increase competition.
But we have not stopped there. The Government has changed the law so Local Government spending has to be much more clearly justified. This is making it easier for ratepayers to see where their rates are going, and to question poor quality expenditure.
Where competition is not possible National insists on full information disclosure, and a credible threat of regulation. This is difficult and complex work.
Government is also clear in our stand in foreign affairs and the benefits of trade. We work on our relationships. They pay dividends. New Zealand's horticultural sector cannot afford a Government that is not clear about its trade goals.
Market access is a major challenge for rural industries. These are not problems that are solved overnight. They require persistent pressure over long periods. We are making progress. National is committed to freeing up trade access for New Zealand exports into all markets.
APEC and the coming World Trade Organisation round offer opportunities to advance the cause of trade liberalisation. With National you have both a Prime Minister and a International Trade Negotiations Minister with strong rural backgrounds.
New Zealand needs to constantly work to expand and, where necessary, contest those who intend to hinder the growth of markets.
The challenge for New Zealand is to preserve and where possible grow the income from existing rural industries, while rapidly developing new industries using produce from the land. These new industries will need to build on the strengths of our existing rural industries.
In this I am preaching to the converted. You know, and your Conference attests, that to get a sustainable competitive edge over the rest of the world, rural industries will need to exploit and develop the knowledge base contained within their sectors.
Consumers world-wide increasingly buy produce that is not only high quality and best price, they also consider how they think and feel about its nutritional value, environmental value, health and fitness value, sustainability value, longevity and high performance value.
This will mean new products and industries feeding into new and exciting markets. Greater diversity, more players, significant new investment, a greater premium placed on innovation and better understanding of new market opportunities.
The Government believes this shift in direction is not just an issue for rural New Zealand. Because of the importance of our rural industries to our economy, getting behind this shift and helping it to happen is an issue for all New Zealanders.
Central to this shift is how our producer boards perform.
This represents one critical component in encouraging new growth in the New Zealand economy.
In the next few months, every dairy farmer, every kiwifruit grower, and quite possibly every apple and pear grower in the country, will be voting on new industry proposals.
The Government, while we place great emphasis on the need to solve the problem, is not in the business of dictating commercial answers to any rural industry.
The commercial future of an industry is a matter for the people in that industry. Their money is at risk on the consequences of action or inaction.
Each industry has done its own homework, and come up with its own individual recipe for a better future.
The industries are coming to Government for changes in the legislation regulating their industry, to let them implement more commercial programmes in future.
Dairy, Kiwifruit and Apple and Pear Board legislation have all been introduced over the last fortnight.
What we are seeing is the transformation of statutory monopolies into commercial monopolies, but with safeguards built in, to protect both minority producer interests and the interests of the New Zealand consumer.
Each industry is taking a slightly different route.
The kiwifruit industry proposes that growers will, directly and indirectly, put directors on the board of Kiwifruit New Zealand. It will be the regulatory body and watchdog of the industry. Kiwifruit New Zealand will delegate all commercial and marketing tasks to a commercial company, Zespri.
Zespri will be owned by growers, and freely tradable among growers, but unlike dairying, they will not be linked to the volume of fruit a grower supplies. Unlike dairying, Zespri will for the time being retain its present single export desk.
Obviously, single-desk operations always involve some risks. Counter-measures have been set in place to keep any risks to manageable levels. Proposals for the apple and pear industry are, generally speaking, very similar to the restructuring plan put forward by the kiwifruit people. Their grower-owned commercial and marketing company is called ENZA.
There are just two big differences from kiwifruit. The Apple and Pear Marketing Board has a very large onshore investment in cool stores. It considered selling, but in the upshot, opted deliberately to keep all of them.
A single-desk marketing operation is placed in a very dominant position if it also owns most of the cool stores. It controls the onshore flow of fruit.
So three things have been agreed to mitigate that:
The Board has to put those onshore assets into a separate subsidiary. The subsidiary must be run at arm's length from ENZA, as if it were separately owned, with a lot of transparency. As for kiwifruit, ENZA takes legal ownership at the ship, not the coolstore. The onshore chain will be fully contestable from 1 October 2000.
All of these industries have moved a long way since November, but there is still work to be done. Producers and industry leaders must continue to work to find solutions. They deserve the credit. They have made their own decisions, and they are working flat out for progress.
Another major component in encouraging our next stage of growth is the skills of our people, and the effectiveness of our R&D.
You will be aware of (and I trust many of you have participated in) Max Bradford's consultations on the Five Steps Ahead program.
Max and his Innovation and Enterprise ministerial team spent much of the earlier part of the year consulting with scientists, educationalist and enterprising New Ze alanders. The question was how to unlock higher growth rates for New Zealand by making ideas work for New Zealand.
The Government will be presenting the result of its deliberations on 18 August. And it won't come as a surprise to here one of the key ideas is to get tertiary education, R&D and enterprising New Zealanders working more closely together.
That is why it gives me special please to see your industry working with researchers and others to help the Knowledge Harvest.
This Government has vision and commitment to moving New Zealand ahead. It is built on the sound foundations of the past.
In conclusion I would like to wish you luck in your industry.
The signs are good for your products. The challenge is to harness your excellent productrs, your good ideas and your commitment to your industry and to exploit the economic environment the Government is building, in partnership with you.