The Sails Are Set - Who Do You Want On The Tiller?

Otago Federated Farmers Annual Conference
Carisbrook, Dunedin

Ladies and gentlemen, Otago Federated Farmers members, President Ian Bathgate, Hon Jim Sutton, guests...

Let me start with a question. Do New Zealand farmers support free trade reforms?

It's kind of a no brainer. Why? Because New Zealand farmers are free traders.

While they have geographical advantages in their local market they effectively have no protection against imports, hence cans of Italian tomatoes, Nestle condensed milk and Dutch cheese on New Zealand supermarket shelves.

And this is not a situation that has arisen recently as many on the left will sometimes attempt to confuse people into believing.

It was the Labour Government of 1984 that lifted the New Zealand farm subsidy regime. They did it overnight and it caused considerable hardship and pain out in the heartland as everyone here well knows.

With the benefit of hindsight, many economists have since concluded they now know where the mistake was in New Zealand's economic reforms. Why rather than bouncing back in 1984, the economy went into a period of high inflation and deep recession under the Labour government?

The flaw in the reforms was that when Labour attacked farmers it failed to address its sacred cow, labour market reform.

As the winds of free trade were loosened on farmers, New Zealand's processing, transport, telecommunications and shipping industries remained dominated by inefficient organised labour which, surprise, surprise, Labour treated with kid gloves.

And we know what happened next. The New Zealand economy got seriously fouled up. Interest rates and inflation skyrocketed Then after the asset bubble burst, in 1987 we saw the recession where the New Zealand economy shrank, which was hardly surprising as stock numbers and export returns had plummeted.

And then what did the Labour Party do? It tried to cover it up. Its budget surpluses covered huge deficits with asset sales.

It took the National Government in 1990 to complete the job of freeing up the New Zealand economy.

Rural audiences these days often ask me what has the National Government done for me?

What National has done for rural NZ

- The Employment Contracts Act
- Shipping Deregulation
- Electricity Reforms - Competition
- Fuel Price Competition
- Tariff Elimination From Farm Inputs
- Economic Stability
- Record Low Interest Rates
- Parallel importing

The Employment Contracts Act is arguably the most significantly positive governmental reform that National has implemented to benefit farmers. Costs of processing, transport, wharf transit, shipping have all plummeted.

If it still cost what it used to to process a lamb from a Balclutha farm, Otago farmers would now be getting $10 less per lamb. Local dairy farmers would be

paying $100 more to process a cull cow. And Labour promise to wind the clock back to reinstate union power and bring back strike action!

What else have we done? Shipping deregulation so that fertiliser is shipped south for just a few dollars per tonne and eggs going north. Transport reforms sees milk sent across the North Island by train. Electricity reforms.

On my farm in the Waikato I am now paying 15% less for electricity than last year.

Consumers all around the country can now exercise rights in a market which have previously been the domain of only the largest enterprises. Namely the right to competition. What the media do not tell you, is of the First Electric households in Christchurch now paying up to 20% less than 12 months ago for their power.

Fuel prices are at their lowest in 30 years. Tariffs have been removed from all farm inputs.

So the Government has done a remarkable job in reducing farm costs and so too have farmers in changing their management practices.

What else has National done for farmers? As your leadership often observes, perhaps the most important thing government can deliver farmers is economic stability.

What are your current interest rates? Undoubtedly they are better. Interest on mortgages are the biggest cost for most farmers. Now mortgage rates are at record low levels.

And why is that? Because the Government has ensured that we have economic stability in New Zealand.

The National Government knows New Zealand is a food producing nation. Hence my new title, Food and Fibre Minister. This was a deliberate decision by the Prime Minister to focus our attention on our markets and our consumers.

National also knows we have some very serious challenges as a food producing nation coming at us thick and fast.

The urgent challenges posed by international trade reform and the rise in consumer interest in food safety, are among the greatest challenges New Zealand's food and fibre export industries have ever faced.

Simultaneously we are faced by the long-term decline in commodity prices, seemingly across all agricultural product groups.

Declining commodity prices You will most probably have seen this graph several times before. It makes sobering viewing and shows, possibly more than anything else, why it is that New Zealand needs to develop new competitive strategies for the 21st century.

The only solution is to add value to the agricultural sector through innovation. Innovation is a driving force for economic growth. New Zealand is known as a nation of innovators with our number 8 wire kiwi ingenuity. In future, our ability to create wealth will not be bound by physical limits but by our ability to come up with new ideas. The opportunities are unlimited. Solving problems