Low wages not high prices the problem

June 6, 2008

Vernon Small asks in The Independent (not on line) why politicians and many commentators can’t find much to cheer about in the success of the diary industry.

 

What do they want? Dairy products to be dirt cheap and not in demand? And if we don’t want cheese, butter and milk to be expensive – some of our most important exports – just what do we want?

 

As a partner in a dairy farm I am biased but my appreciation of higher dairy prices isn’t entirely selfish because we all benefit from increased export earnings.

 

Would it be better if all those overseas consumers paid less for dairy – and other foodstuffs we export that are no riding high – so we could pay less too?

 

Definitely not. The trouble is that most of those who voice concern see the cost of dairy produce as the problem instead of looking at why New Zealanders aren’t earning more which would make food, and everything else, more affordable.

 

It is our white and yellow gold being sent out into a market where growing middle classes are fuelling demand and where it is not facing a European Union butter mountain overshadowing prices. Certainly these are basic foodstuffs …and consumers are hurting. So you would expect politicians to reach inside their ideological toolboxes for tax cuts, income assistance or regulation.

 

But some lose sight of the overall good to the economy behind a welter of concerns about the inflationary impact of dairy prices and the way consumers are being milked. …The overall impact on New Zealand Inc from high dairy prices must be stronger growth, a boost to productivity, safer jobs and stronger consumer demand – although the environmental impact acts as a counterweight.

There is nothing wrong with high returns on exports. The problem is what’s driving record numbers of New Zealanders overseas – relatively low wages and high taxes.

 

 


More scope for tax cuts

June 6, 2008

National thinks the Reserve Bank’s gloomy economic forecast gives more scope for tax cuts without fuelling inflation and – how surprising – Labour doesn’t.

The central bank’s prediction of a marked slowdown in growth and a rise in unemployment to 6 per cent in 2011 underscores the key role that interest rates and an economic downturn are likely to play in the election campaign.

National’s finance spokesman Bill English said yesterday the outlook was tough for households, and the Reserve Bank’s projections were “quite a bit worse” than the Treasury had forecast. But Mr English was optimistic the economy was resilient, and when asked what impact the Reserve Bank’s predictions would have on National’s plan for tax cuts, he indicated the party could make its cuts without worrying the inflation watchdog.

However, National will still have to be careful about how it funds the tax cuts, and Mr English conceded as much when he noted there could be higher costs for the Government from rising unemployment if the Reserve Bank’s scenario played out.

Even though the economic outlook is souring, Labour does not believe National can offer bigger tax cuts without more pressure on inflation.

That’s the difference between people and a party which understand the benefits of wealth creation and those who just concentrate on wealth distribution.


Sydney seeks self sufficiency and microgeneration

June 6, 2008

  

Grahame Sydney  puts the case for microgeneration and self-sufficiency as the solution to our energy needs.

 We’re learning how little control we have over two of our renewables, water and wind: security of supply is never certain. 

 And not just with renewables, a fault which has closed the Otahuhu B power station is expected to take up to four days to fix.

  If Nature refuses to comply – in this case blow steadily – when the market demands it, wind generation, like hydro generation in a dry year, will be treacherous and unreliable, and of scant value to consumers. Large-scale schemes only multiply the problem. If we must have a wind component, let it be in already modified or semi-industrialised landscapes – in the “grey belts”, not the green; on community-need scale and close to demand.

 The Save Central  support group has been established to muster financial support for the Environment Court appeals against Meridian’s monster Project Hayes, but also beyond that immediate task to stir public interest and informed debate about the nation’s woefully ad hoc energy strategy.

 There are many other alternatives to this Think Big degradation of our treasured landscapes … Our best energy security lies not with massive schemes which depend on undependable nature, but with a solid foundation of proven base-load generation, and an additional structure of other sources.

 

 Sydney suggests geothermal resources, tidal energy, combined cycle plants using gas and geothermal power. He also notes the hypocrisy of exporting coal to countries which haven’t signed up to Kyoto.

 

 The increased incentive for domestic users to install solar water heating is another welcome sign that energy conservation by homeowners can make a difference, but it must go much further than that: a recent government-backed report in Britain says that with changed policies to encourage microgeneration, the number of homes producing their own clean energy could multiply to one million within 12 years, save enough CO2 emissions by 2030 as taking all trucks and buses off British roads, and produce enough power to replace five nuclear stations.

 The Conservative Party …has policies aimed at a “decentralised energy revolution”, enabling factories, schools, hospitals and households to generate their own electricity through independent solar and micro wind. It might not suit the major generators, but a like policy in New Zealand would be something to be proud of.

 

 That is the problem with our system – the energy companies have no incentive to encourage independent generation and because they’re SOE’s the Government doesn’t either because that would reduce the dividends it receives.

 Fifteen European countries have “feed-in tariffs” which pay householders for feeding the electricity they produce from microgeneration (e.g. photovoltaic cells) into the national grid. Consequently, 130,000 German homes have solar photovoltaic cells, encouraged by generous government installation grants. It would not be difficult here, but where is the political will? This is what the Greens ought to champion, if the Government will not.

 

 Why only the Greens? Security of supply trhough increased generation and the financial and environmental benefits of self-sufficiency cross political boundaries.

 

 

Within two decades, other technologies under development now will be market-viable: utility solar towers (being developed in the United States), pelamis ocean swell technology, and ceto wave power, to name only three. All, or any one, may come through as highly efficient, and make the sacrifice of the Lammermoors and other valued landscapes even more regrettable.

 

 

 Sydney explores the pros and cons of nuclear generation but concludes New Zealand is probably too small and the anti nuclear political mindset would take years to change.

 

 

 All energy schemes have negative impacts, and opinions will always vary over which are least damaging, which are most preferable. It’s a question of how you want this country to look, and how you want it to behave. If the nation wants endless supplies of energy to be provided and its undisciplined energy consumption to grow exponentially regardless of the cost to both consumer and landscapes, then we carry on the present path.

 But I suggest there are other, better ways: with the right incentives, New Zealand could lead the world in microgeneration and self-sufficiency; we could champion renewable schemes which do not depend on fickle nature, but utilise dependable base-load resources; we could retain the unspoiled landscapes as we know and admire them for generations ahead; we could learn lessons from the ugly mistakes of other countries, not repeat them; and we should reclaim the energy industry as an essential service, like health and education, and dissolve the present subdivided, competitive format which has failed so spectacularly, to the detriment of all consumers.

New Zealand could and should be thinking carefully about the consequences of decisions made too hastily, taking us on yet another doomed Think Big strategy which fails to live up to the many promises made to usher it in.

 I thought the opposition to wind generation in Central Otago was nimbyism but I am beginning to support some of the arguments against the proposal not least the sense of locating generation as near as possible to where it’s needed.

 

 I haven’t found a definitive answer to the question of how much energy is lost in transmission but the lowest figure I’ve been given is 20%. Even if it’s half that, it’s silly to waste 10% of what’s generated all day, every day sending power thousands of kilometres from where it’s produced to where it’s used.

 Supporters say more power is needed in the south and cite examples of the Cook Strait cable being used to get power from the North Island as well as too it. I am not sure if that would be needed if water had been conserved in hydro lakes instead of being used for generating power to send north earlier.

 If we want a first world economy, and I do, then we need first world energy supplies. I don’t object to wind generators in general, and I don’t think I’d object if some of the windy hills we own could be used for it. But I am not entirely convinced that the Lammermoor Range is the best place for it.   


Gypsy Month Changes Neighbourhood

June 6, 2008

It used to be Gypsy Day, it became Gypsy weekend, then it took a week and now dairy farm numbers have expanded so much the pressure on home removal and stock transport firms is such it’s more like Gypsy month for dairy farm staff and their cows.

 

Dairy employment contracts go from June 1 to May 31 and hundreds of sharemilkers, dairy workers and managers change jobs and homes at the end of a season. That has an impact not just on the people who move but the communities they move to and from as well. A school with 100 pupils might have a 20% change or more in pupils as some come and some go.

 

That affects the whole school and a principal tells me that a child can lose up to a term of optimal learning each time s/he changes school. However, he said he’s noticed that more parents are trying to change jobs within a school catchment or shift less often so it’s less disruptive for the children.

 

The transitory nature of dairy farm work makes it harder to retain community cohesion too, although that was happening anyway. When our daughter started school in 1990 it had about 80 pupils and we knew all their families. When she left seven years later the roll was down to about 30, thanks to the ad-sag, and we knew only about half the families.

 

The district population has increased again as irrigation has brought more dairying – two years ago there were eight houses on our road, now there are 13. But it’s not as easy as it used to be to get to know new neighbours.

 

A couple who moved in to a house on the farm next door six years ago have moved out again and I never met them. The house is about four kilometres away from ours on an unsealed road we rarely use, so it would have taken a special trip to see them; and I did phone to invite them for a meal a few times but it didn’t suit. However, that doesn’t excuse the fact I didn’t make more effort and I’ve resolved to do better with the new occupiers to ensure that another Gypsy month doesn’t come around without us meeting.


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