THE NEW ZEALAND MEAT INDUSTRY ASSOCIATION CONFERENCE

Sir David Beattie, members of the New Zealand Meat Industry Association, ladies and gentlemen.

Thank you for your invitation to address your important conference in the middle of the election campaign.

I will want to reflect on that.

I know that Dr Lockwood Smith is going to speak to you later in the conference and thus I will avoid detailed comment on the subject of improving the marketing of New Zealand meat.

His enthusiasm for meat promotion is such that I suspect he would take serious issue with Saint Paul who wrote, in his letter to the Corinthians:

But meat commendeth us not to God: for neither, if we eat, are we the better; neither, if we eat not, are we the worse.

Heretical stuff.

As you listen to my remarks and the presentation of Dr Smith, remember that we do not just speak as politicians who have flown down from Wellington.

Both of us are farmers who not only have a deep love of the land, but also have a deep and abiding personal interest in what happens to both the meat industry and the rural way of life.

The first point I would make is that it is impossible to divorce rural New Zealand, and the meat industry specifically, from the general economic picture.

After years of hard work, of putting new policies in place, of endlessly explaining the need for change to the electorate at large, we can report that the picture is much more robust today than it has been at any time since the 1950's.

Consider the latest estimates released by Treasury:

1. after growth this year of 2.5 per cent, the economy will expand by 3.7 per cent in 1997/98;

2. after growing 14.3 per cent over six years the economy will grow by a further 13.5 per cent over the next four years;

3. our operating surplus will increase over the next four years to reach $6.4 billion in 1999/2000;

4. our public debt will fall from 32.5 per cent of GDP last year to 23.6 per cent next year; and

5. by the turn of the century it will be halved to just 13.3 per cent of GDP.

What does all of this mean?

It means that all New Zealanders urban and rural alike can look to the future with renewed confidence.

It means that Government revenues will continue to grow in the years ahead and that we will be able to increase spending in key social areas like education and health, as well as further reducing debt and carrying through our tax cuts.

But the questions that concern you are 'what are we doing for the meat industry specifically and the rural community in general?'

First, as far as the industry is concerned, we recognise its outstanding contribution to the nation over many years and we support it.

I am pleased to note and support progress made by the industry in developing a meat industry research strategy.

And the Foundation for Sheep Production Research will provide integrated research into sheep production.

The Government has introduced the Producer Board Acts Reform Bill which will provide a platform for greater cohesion and focus within the industry.

Our aim is to encourage companies to develop more market orientated ways of paying farmers and so improve their returns.

Next, we are committed to the speedy removal of tariffs and their eventual elimination.

We are working particularly hard in Asia to get the access that you need to expand your exports to the world's fastest growing region.

The development of APEC is important in this objective and I thank you for your support.

In this respect our negotiating position is greatly assisted by the fact that our agricultural exports are no longer subsidised.

We are also highly vigilant at our borders to ensure that disease is kept out given the recent UK experience with mad cow disease we'd be crazy if we weren't.

We will spend $20 million in the next three years on hi-tech X-ray machines, expanding the quarantine detector dog programme, and checking on passengers.

And $70 million will be spent over the next five years on the possum control strategy.

It's expensive, but then so too are possums.

We will also ensure speedy decisions on whether or not to introduce Rabbit Calicivirus as soon as the public consultation process is complete.

All of these things along with our social programmes are made possible by a strong economy, and it is our responsibility to ensure that the economy remains strong.

We cannot do that if we were to try and fiddle around with the exchange rate in the hope of producing a short-term lift in export incomes.

This is not to underestimate the problems faced by meat exporters.

Because, according to the New Zealand Meat and Wool Economic Service Yearly Review issued last week sheep and beef farmers face another difficult year.

Again the problem is beef.

It is gratifying that the price received by farmers for lamb is continuing to strengthen with companies confident of paying a minimum of $40 for a 15 kilogram lamb, and considerably more will be paid for heavier lambs suitable for the chill trade.

Despite current difficulties, I have no doubt that the meat industry will not only survive but grow in strength, if you do the right things.

You are already doing many things to improve your efficiency.

I know that productivity has increased greatly over the past decade and that, as a result, processing costs have been cut by around 25 per cent.

I know that you are adding value to sheep meat exports.

That chilled lamb exports increased from 15,378 tonnes to 21,166 tonnes in the year ending June 1996.

And with the GATT Agreement, this shift to chilled exports can continue.

I know that beef exporters are now working hard to diversify away from the United States grinding beef market.

To spread the risk and to seek higher paying markets.

Exporters have already made progress.

Figures show that.

In the year to June the USA accounted for 41 per cent of total beef exports down from 50 per cent a year earlier.

And that exports to Asia were up from 32 per cent to 36 per cent during the same period.

That response by those marketing beef is good news for beef producers back on the farm.

It shows that you are seeking to make the adjustments that are necessary to ensure a strong future for beef from New Zealand.

To retain farmers' confidence, so that they continue to produce beef, means you don't have much time in which to get much better prices back to beef producers.

It is also important that beef remains a major export earner for New Zealand.

Export earnings from beef total $1 billion for the year ended June 1996.

Sheep meat total $1.3 billion.

Hides $724 million.

Offals, Tallow and other meat products $494 million.

Venison $143 million.

That means that the meat industry earns in total $3.75 billion, an impressive 18.6 per cent of total exports.

You can then add in wool exports of $1 billion, dairy exports of $3.5 billion, and livestock exports of $139 million, and you reach the very impressive sum of $7.42 billion in total from traditional meat, wool and dairy exports as 36 per cent of total exports.

These figures underline just how important traditional grass land agriculture remains to New Zealand.

The word traditional really no longer applies because of the far-reaching changes that have taken place and are taking place in production, processing and marketing.

A dramatic example of this is that 21 per cent of dairy exports last year were from products that didn't exist only five years ago.

That is an example of dynamic product development and marketing strategies.

It's that type of energy and flair that is going to keep agriculture in the forefront of New Zealand industries.

You and I want to see a strong rural community based on a vigorous rural economy and first-class social services.

The most important of all the social services are in my Government's opinion education and health.

In investing heavily in both we have kept the special needs of rural communities uppermost in our minds indeed both are the responsibility of Ministers from rural constituencies.

Health is in the hands of the Hon Jenny Shipley who hails from mid-Canterbury and her task, by any measurement, is a demanding one.

Thanks to Jenny's energy and helped along by $1 billion in new funding we are building a first-class health care system for all New Zealanders, including those in rural areas.

It doesn't look quite like the old system, it has involved major change and that will understandably worry some people.

That is a natural human reaction.

We know there is comfort in doing things today the same as yesterday.

But life isn't like that - as I have just pointed out for the meat industry - you have to modernise and change if you want to achieve the best.

To give New Zealanders access to the wonders of modern medicine, we had to change the way health is delivered.

The expense, the technological sophistication and the expertise needed to perform today's remarkable procedures cannot be delivered in small provincial hospitals, or even in every city when you talk about the most sophisticated surgery.

But great things are happening.

I visited 'Good Health' Wanganui last week.

It is the public hospital complex serving the Wanganui region.

They have had between $15-20 million spent on upgrading facilities.

The GPs and some of the specialists in the city, 67 in total, have come together in an organisation called Progressive Health Inc which has made sufficient savings by working together to be able to offer free health care for the under five year old patients they look after.

Again the ingredients are that the Government guidelines are sufficiently flexible and the practitioners show energy and innovation to develop and deliver better and cheaper services.

Even small hospitals like my home town one in Te Kuiti are adapting to the changing ways of delivering health care.

Modern roading and air transport mean that trauma patients can be moved to life saving facilities far more rapidly than they ever could in the past.

At the same time we are developing mobile facilities that will bring the most advanced techniques directly to rural people.

Changes in the delivery of health care will continue to be driven by changes in medical technology, just as technology drives change everywhere else in society.

My Government has already put an extra $1 billion into health care, a further $600 million is earmarked by the year 2000, and that's before we have even considered any additional new policies over the next four years.

Only one thing is certain, even more money will go to health care in the future.

The other area that is vital to the rural community is education and training.

We're spending $1.5 billion more on education than was being spent when we came to office.

This crucial portfolio is in the hands of the Hon Wyatt Creech from the Wairarapa, whose contribution to new land usage was to encourage and invest in the Martinborough wine industry.

These days he's planting the seeds of learning in young and inquiring minds.

To make the progress we consider necessary we have started hiring and training 5,000 more teachers on top of the 1,300 extra already in the system and building 50 new schools and 5,000 new class rooms over the next decade.

This is the biggest school building and upgrading programme seen since the post-war baby boom.

It is the biggest teacher recruitment programme ever.

And I assure you that, when it comes to social spending, rural New Zealand is not being left out nor will it be.

A couple of weeks ago in a television discussion I labelled Anderton, Clark and Peters the 'gloom gang', and the name seems to have stuck.

They are very gloomy.

According to those three everything is wrong with New Zealand and nothing is right.

Its not true now but it soon would be if they were to gain power after October 12th.

As business people representing one of New Zealand's largest export sectors you need to know what's at stake on October 12th.

The collective policies of a three headed Government of the left would have the following characteristics.

The Employment Contracts Act would be repealed and we'd be back to the days of union domination and industrial anarchy.

And just think what that would mean in terms of the meat industry.

Remember what happened before. And how the Act changed the situation overnight.

From 1991 to 1995 after the Act was passed the average yearly number of working days lost had fallen to less than 2.5 per cent of the previous figure!

And our opposition says bring back union control - they must be mad!

At the same time that work stoppages have gone down, employment has gone up.

New Zealand faces a very serious decision on October 12th.

If the high spending policies of the three parties on the left are followed, one of two things will happen.

Either the Reserve Bank's inflation targets are ignored and inflation increases sharply along with interest rates, or the Reserve Bank seeks to hold inflation with even tighter monetary policies and a much higher valued dollar.

Either way, disaster for industry -just as repeal of the Employment Contracts Act would be a disaster for industry also.

So too is the strong opposition of the Alliance and New Zealand First to foreign direct investment.

Stop that and development and jobs stop.

So welfare payments would go up again and taxes go up again.

Increased spending means tax cuts can't be afforded and will be reversed.

Slow down or stop debt repayment and we are back on the old treadmill of borrow and hope.

I have said all along this is a stark choice election.

We are not claiming everything is perfect. Far from it, there is still much to be done, but we are well and truly on the way to a sustainable strong economy.

But if New Zealand elects an Alliance, Labour, New Zealand First Government then we will have the crash of '97 around our ears.

That needn't happen, it won't happen if New Zealand stays with what the world recognises as 'the New Zealand Way' of managing our economy.

It is based on what I have called our 'five economic principles for the future'.

First, we will have an open, accessible economy; ensuring that the finest goods and services the world has to offer are allowed to flow freely across our borders.

Next, we will maintain stable prices. We are firmly committed to the Reserve Bank Act and the low inflation target.

It is this commitment that has seen inflation, which averaged 12.4 per cent per annum from 1975 to 1990, brought down to an average of 1.9 per cent since September 1991.

12.4 per cent inflation for 15 years means that in real purchasing power a 1975 dollar was reduced to only 35 cents in 1990.

We mustn't allow that to happen again. That was theft.

We are also committed to maintaining a modern labour market brought about by the Employment Contracts Act.

In the past four years 209,000 new jobs were created, cutting the unemployment figure from 10.9 per cent to 6.1 per cent; less than one per cent above that of the USA the world's strongest nation.

The fourth fundamental is what the economists call 'responsible fiscal management' - more simply described as 'a little self-discipline'.

The result of that discipline is that New Zealand will have no net foreign currency public debt by the end of the year and that all public debt will be reduced to a very manageable 13.3 per cent of GDP by the year 2000.

And finally, in our list of 'five economic principles for the future', we will maintain a low-rate, broad-based tax system.

We gave New Zealanders tax cuts this year, we will do the same next year if we are returned to office.

Labour won't, New Zealand First won't and the Alliance certainly won't.

Their policy is that if it moves, tax it.

If it keeps moving, regulate it.

If it stops moving, subsidise it.

They have got to be joking if they call that progress.

We do have a tremendous story to tell about the future.

As you know, our approach has attracted much attention.

Each year the European-based World Economic Forum issues a 'medical report' on the health and fitness of the world's leading economies.

This year it rated us third in the world for 'economic competitiveness' ahead of the USA (which came fourth) and Australia (which came twelfth).

I am told the Forum goes further and predicts that:

The fastest growing nations in the world in the next 5 to10 years will be Singapore, New Zealand, Thailand, Hong Kong and Malaysia, in that order.

What does all this mean?

It means that the things we have done so far have been but the beginning - the foundation stones upon which we are now about to build a brilliant future.

Providing that New Zealand stays with the strategy.

Providing we don't let the fruitcakes take over the kitchen.

The choice is up to you, the New Zealand voter.

The party vote determines the outcome, nothing else.

Which is why in the first MMP election, with many claims on how to work the system and much confusion, we adopted a clear direct slogan to assist.

It says simply First Tick National.

Thank you for the opportunity to speak to you this morning.