Word of the day

April 19, 2013

Conflagration – a large destructive fire; a blaze; conflict; war.


Rural round-up

April 19, 2013

New Zealander joins World Farmers Organisation board:

Federated Farmers President, Bruce Wills, has been appointed to the World Farmers Organisation Board as its Oceania representative. This assures New Zealand a key voice on the peak body representing farmer organisations from over 50 countries.

“It has been a superb General-Assembly in Japan,” says Bruce Wills, Federated Farmers President, speaking from Niigata, Japan.

“Federated Farmers has helped to broker a breakthrough trade policy for the World Farmers Organisation. I need to acknowledge the high level policy work involving not only Federated Farmers’ staff but kindred organisations too. . .

Cracks appear between farmer groups – Allan Barber:

It hasn’t taken long for the cracks to appear in the ‘united farmers for change’ movement started by the Meat Industry Excellence group which held its first meeting in Gore a couple of weeks ago with a resoundingly successful response.

The next meeting organised by MIE will be held in Christchurch this Friday, but without Gerry Eckhoff who chaired the Gore meeting but has resigned over a disagreement with the strategy. Having said on the National programme the morning after the meeting that the new system and structure could be in place by next season at the beginning of October, he is now saying this is completely unrealistic. I told you so, Gerry! . .

Drought Declarations in March Dominate Rural Marketplace:

Summary

Data released today by the Real Estate Institute of NZ (“REINZ”) shows there were 21 fewer farm sales (-5.3%) for the three months ended March 2013 than for the three months ended March 2012. Overall, there were 376 farm sales in the three months to end of March 2013, compared with 379 farm sales in the three months to February 2013, a decrease of 3 sales (-0.8%). 1,433 farms were sold in the year to March 2013, 2.4% more than were sold in the year to March 2012.

The median price per hectare for all farms sold in the three months to March 2013 was $22,317; an 11.3% increase on the $20,056 recorded for three months ended March 2012. The median price per hectare increased by 1.7% compared to February.

The REINZ All Farm Price Index eased by 1.1% in the three months to March compared to the three months to February, from 2,939.42 to 2,907.18. Compared to March 2012 the REINZ All Farm Price Index fell by 7.2%. Further details on the REINZ All Farm Price Index are set out below. . .

Govt supports development of dairy women leaders:

Associate Minister for Primary Industries Jo Goodhew has announced that the Dairy Women’s Network has been approved for a Sustainable Farming Fund grant of $180,000 over three years.

“The Government is investing in the development of female leaders in dairying to ensure the sector is well-placed to face future challenges,” said Mrs Goodhew.

“The Dairy Women’s Network has a track record of linking up and empowering women in dairying.

“The Network has identified the need for leaders to drive reform in the dairy sector so that it’s meeting social and environmental footprint obligations without compromising overall productivity.” . . .

Dairy Women’s Network Chief Executive Resigns :

The Dairy Women’s Network has announced the resignation of chief executive Sarah Speight.
 
Backed by significant national and international dairy industry experience, Mrs Speight joined the Network in 2011 as the first full-time chief executive in its 15 year history.
 
For the past two years she has been commuting from her home in Tauranga to the Network’s Hamilton-based offices. Mrs Speight said that to take the Dairy Women’s Network to the next stage and do the role justice requires someone who is Waikato-based.
 
“Being in Tauranga and with significant family and community commitments has made me rethink my priorities. I have decided to resign from the role of chief executive to spend more time with my family in the immediate future.” . . .

Govt funding to help support eucalpyt forestry:

Associate Minister for Primary Industries Jo Goodhew has announced that two projects focusing on eucalypts have been approved for Sustainable Farming Fund grants.

“The Government is investing in the development of eucalypts as a foresting option,” said Mrs Goodhew.

“Eucalypts offer a useful planting option. They are an alternative landuse for dryland areas and produce a naturally durable timber product.”

A project being run by the NZ Dryland Forests Initiative to share information about how to effectively manage plantations of durable eucalypts in dryland areas will receive SFF funding of $216,000. . .

Change Of Directors On Fonterra Board:

Fonterra Co-operative Group Limited announced today the appointment of a new Director, Simon Israel, following the retirement of Ralph Waters.

Chairman John Wilson said the Board welcomed Mr Israel, a Singaporean who has exceptional governance, consumer and wider Asian business experience.

“Simon is based in Singapore and has worked in Asia for many years. He has significant business credentials in Asia and in consumer and investment businesses. He will bring to the Board invaluable knowledge and insights as Fonterra pursues its business strategy, particularly with its emphasis on emerging markets,” said Mr Wilson. . .

Synlait Milk Launches its ISO 65 Accredited Dairy Farm Assurance System:

Synlait Milk launched its internationally accredited ISO 65 dairy farm assurance system called Lead With Pride to its 150 strong milk supply base today.

The only system of its kind in Australasia, Lead With Pride recognises and financially rewards certified milk suppliers for achieving dairy farming excellence.

“It is about demonstrating industry leadership in food safety and sustainability, and guarantees the integrity, safety and quality of pure natural milk produced on certified dairy farms .

“It enables our world leading health and nutrition customers to differentiate their products using Gold Plus or Gold Elite certified milk that has been sustainably produced,” says Synlait Milk CEO Dr John Penno. . .

Funding to help sustainable aquaculture porjects:

Five important projects focusing on aquaculture will benefit from the latest round of Sustainable Farming Fund grants, Minister for Primary Industries Nathan Guy has announced today.

“New Zealand seafood is a premium product and it’s great to see groups looking to improve their production and value by developing aquaculture,” says Mr Guy.

The projects with funding are:

  • Koura Aquaculture, by Wai-Koura South: $119,420
  • Farming Premium Salmon, by the Salmon Improvement Group: $600,000
  • Management of the GLM9 Greenlipped Mussel Spat Resource, by GML9 Advisory Group: $20,000
  • Tuna (Shortfin-eel) Aquaculture, by Te Ohu Tiaki o Rangitane Te Ika a Mauri Trust (MIO): $600,000
  • Aquaculture custom bacterial vaccines, by Aquaculture New Zealand: $115,686. . .

Easy lamb roast (hat tip: Whale Oil):


LabourGreen power plan will increase prices

April 19, 2013

The LabourGreen plan to power us back to the socialist seventies will increase the price of power – and at least one of their MPs knows it.

Electricity consumers should be under no illusion that the Labour-Greens power plan will hit them in the pocket, says Energy and Resources Minister Simon Bridges.

“Harking back to the 1970s with a half-baked nationalisation plan will ultimately cost consumers as it returns the country to the days of supply constraints, power blackouts and ultimately higher prices.

“David Parker himself said this in advice to the Cabinet in 2006.

“As Minister of Energy he said that “a single buyer would likely result in higher capital and operating costs”. He went on to say that: “The risks involved in changing arrangements could be significant. The resulting uncertainty could lead to investment proposals being put on hold. Direct implementation costs could be large.” And, he admitted that “The single buyer would be relatively poor at sustaining pressure on operational costs.

“Competition is by far the best tool for delivering electricity at competitive prices,” says Mr Bridges.

“Our 2010 reforms mean that there is more competition amongst generators and retailers than under Labour. We are seeing more innovation and efficiency with 800,000 smart meters operating in New Zealand homes without any need for state intervention.

“Kiwi consumers have the power in their own hands. They are switching in their thousands for a better deal from suppliers and saving hundreds of dollars a year in the process.

“The Labour-Greens policies will actually result in higher prices over time because we’ve seen before that politicians and central bureaucracies do a bad job of setting prices and ensuring supply. Anyone who remembers the power blackouts of the past will know this.

“So does David Parker.”

The Cabinet papers are here.

Parker said publicly on more than one occasion that he stood for Labour because of Max Bradford’s power reforms.

He also said publicly that Labour hadn’t made any major changes to them because it couldn’t.

The Cabinet Papers back that up and show the LabourGreen plan won’t work.

 


Friday’s answers

April 19, 2013

Andrei provided the questions for yesterday’s quiz.

(1) Where was Prometheus chained to a rock to have his liver eaten by an Eagle as punishment for giving fire to mankind

(2) Who wrote the Novella “Prisoner of the Caucasus”?

(3) What does the city of Vladikavkaz’s name mean if translated to English?

(4) What was at Maykop that was important to the Germans in WW2?

(5) Where will 2014 Winter Olympics be held?

He wins an electronic chocolate cake for providing the questions which stumped everyone and can claim it by leaving the answers here, please.


Rainfall and logic missing

April 19, 2013

Could the dairy price rise offset the cost of the drought?

That was the question I asked yesterday to which Roger answered a very clear no.

Federated Farmers is even more forthright in a media release headlined rainfall missing in some areas like economists’ logic.

When this drought does fully break, its effects will be felt for two seasons or more as herds are rebuilt and pasture repaired. The most recent rains may have taken the pressure off some areas, but others remain in a precarious state.

“Farmers I speak to in the areas that have been dry remain concerned,” says Katie Milne, Federated Farmers Adverse Events spokesperson and West Coast provincial president.

“If it rains in central Auckland or Wellington, it does not mean it is raining in Taihape.

“That said things are looking up in the Bay of Plenty but they remain tough in Hauraki-Coromandel.

“The West Coast of North Island, from South Auckland all the way north, remains pretty dry. I can add to that the North Island’s East Coast, parts of the Waikato and the Central North Island. While Manawatu is out of the woods, Rangitikei remains firmly gripped by drought.

“We seem to be getting through the worst of it on the South Island’s West Coast but Southland and Otago could use a good soaking followed by sunshine.

“Yet the cold reality farmers like me know is that it is getting colder. As each day passes we lose vital sunshine hours and if winter does come early, we will swing from one set of conditions not conducive to pasture growth to another.

“While this drought will break it does not suddenly mean it is all over for farmers. Pasture is the engine room of any farm and farmers are drilling in seed like no tomorrow.

“As any home gardener knows, grass growth tails off over winter and winter is close. Getting seed away before the weather flips will be a close run thing.

“With feed at a premium we could be facing a tough winter of constrained feed; a winter of discontent if you like that will put us on the back foot for spring.

“Knowing these effects personally and professionally, I am amazed Westpac’s economists could believe the drought will have no effect on the economy.

“It is news to Federated Farmers Rotorua Dairy Chair Bryan Osborne. The drought has cost his farm some 30,000 kilograms of milksolids or around $180,000. We are not using this to get the violins out, but to challenge Westpac over its claim this drought will cost New Zealand nothing.

“Milk production out of the North Island has dropped like a stone and you cannot export what you are not producing, no matter what price you get.

“The effect on sheep and beef farms is also dire. Capital stock numbers have been cut to the bone and these animals provide the basis for a farms future crop. Red meat also happens to be New Zealand’s number two export.

“Unlike cows which went to the bull in October or November, ewes have only been going to rams in the last two months, during the peak of the drought, to get in lamb. This will affect fertility, so sheep farmers will likely be hit with lower lambing percentages next spring.

“Farms are biological systems and not a factory. For sheep and beef farmers capital stock and stocking numbers will need to be rebuilt. That could take several seasons so this drought’s after effect will be felt for years,” Ms Milne concluded.

Droughts are like chronic illnesses, the impact lasts long after the rain comes.

The increase in dairy prices will help to compensate for decreased production and other costs of the drought but won’t cancel them out altogether.


Why Thatcher matters

April 19, 2013

Quote of the day:

. . .The reason Thatcher still matters is symbolic – symbolic but important. She ended an era of apologetic conservatism.

The accepted dynamic of democracies like the UK – and, yes, like NZ – was of two main political parties, with one the party of radicalism and change, and the other party being of consolidation and minimal change. In practice, because the party of change was always of socialist inclination, this meant an ever-Leftward policy shift towards a larger state and higher taxes.

Thatcher called this the “ratchet effect” and set her Govt towards turning the ratchet the other way. Her success was mixed, in the case of her own government. But in her wake came conservative governments with a more confident belief in values such as private enterprise, lower taxes and a smaller – well, in practice, a contained state.

This is why Thatcher still matters. Trans Tasman

 


Powering back to socialist 70s

April 19, 2013

BusinessNZ calls the Labour/Green plan to nationalise electricity wholesalers economic vandalism.

Chief Executive Phil O’Reilly says the proposal would destroy a functioning market and replace it with heavy-handed bureaucracy.

“Inserting an army of bureaucrats between power generators and retailers would destroy price signals, so prices would not reflect the cost of generation.

“In that situation, the taxpayer would continue to pay ever higher subsidies of the electricity system. This is not sustainable.

“The Electricity Authority said only yesterday that the electricity market is as competitive as it has ever been. It can always be improved, and this is where the focus should be.

“It’s only competition that can drive prices down. Governments can’t do this, not without subsidising the sector from taxes.

“A state-controlled sector as envisaged by Labour would drive out private investment. Why would the private sector invest in generators when the state can determine the prices they can charge, while subsidising state-owned competitors?

“The private sector power companies would have to seriously consider their future in the market. Those who have invested heavily would basically find their profits confiscated.

“Interfering in the market in this way would send a signal to the rest of the world that it is not safe to invest anywhere in New Zealand. The knock-on impact from that, on jobs and growth, would dwarf any short-term benefit from artificially reduced electricity prices,” Mr O’Reilly said.

Energy and Resources Minister Simon Bridges says the Labour-Greens power plan is incoherent and will kill competition in the electricity market.

“Under the previous Government, electricity prices increased by 72 per cent. It has taken the National-led Government’s reforms to arrest these ridiculously steep increases on New Zealand households,” says Mr Bridges.

“The 2010 electricity market restructure is working. The market now has more players and much more competition than it ever had under Labour.

“New Zealanders are increasingly taking advantage of greater competition and are switching companies for a better deal – in some cases, saving up to several hundred dollars a year.

Since the Electricity Authority’s What’s My Number? campaign began in May 2011, there have been almost 700,000 consumer switches.

“Why scrap the whole electricity market when consumers can already save more than the economically illiterate promises the Opposition is making?

“These types of policies have been considered in the past and rejected for very good reasons. Consumers should be very afraid of them. They may look simple but all they will ultimately bring is higher costs to households,” Mr Bridges says.

Economic Development Minister Steven Joyce calls it a a half-baked Soviet Union-style nationalisation “plan”:

“This is truly wacky and desperate stuff obviously made up in the last minute in the Koru Lounge between comrades Norman and Shearer,” Mr Joyce says.

“Their crazy idea to have both a single national purchaser of electricity and to exempt Government-owned companies from both company tax and dividends would effectively demolish private investment in the electricity industry overnight. It would also raise real questions as to why any individual or company would want to invest in businesses in New Zealand.

“Even the idea of it is economic vandalism of the highest order, with the timing designed to try and disrupt the mixed-ownership company floats. What we are seeing here is a desperate Opposition that is prepared to sacrifice economic development in New Zealand on the altar of political opportunism.

“The sad truth is that Labour has no idea how to operate a competitive market that keeps downward pressure on prices. Labour made a number of reforms to the electricity market in the early 2000s and the result was power prices rising 72 per cent over nine years.

“This Government’s reforms have halved price increases while maintaining investment in generation and transmission. Labour’s suggestion today is no more than a belated apology for their mismanagement, with a back-to-the-70s solution that would only make things worse.

“You seriously have to question the quality of economic advice the Labour Party is getting. They really need to get a lot more serious if they are ever to be considered fit to manage the New Zealand economy.”

It’s not just the government questioning the policy.

Colin Espiner asks has Labour actually gone insane? As in stark, raving, Monster Loony Party mad?

I’m assuming the answer is yes, judging by today’s incredulity-creating announcement that, if elected next year, Labour will essentially nationalise the electricity industry. . .

The Opposition says it’s going to create a single buyer, NZ Power, that will buy all the country’s electricity generation “at a fair price” and then onsell it to consumers. 

It’ll pretty much give away a 300KW bloc to every household and then charge for additional units. 

At a stroke, Labour is proposing to dismantle the electricity market, ruin Contact Energy and Mighty River Power and decimate the Government’s share float plans for both MRP and Meridian. 

Oh, and sell thousands of mum and dad investors down the Mighty River, since MRP’s share price would almost certainly plummet if the company was forced to retail only through a government department at whatever price it deemed to be fair. 

Already Contact shares dipped 3 per cent on the news, and that’s just a taste of what would come if this policy was ever implemented.

I’m no fan of high power prices – and I don’t own any Contact or MRP shares – but what Labour is proposing is essentially nationalisation a la Brazil or Argentina. This is Third World, funny-money stuff. Goodness knows what the financial markets will make of it. And what message does it send to overseas investors? . . .

It’s extremely rare that I agree completely with Economic Development Minister Steven Joyce, but his comment today that the plan was “a return to the 1970s-style monopoly provision of electricity…Only North Korea and Venezuela did not think such ideas are nuts” is pretty much spot on.

I agree with Joyce that Labour is virtually sabotaging the economy. 

It is, in my view, also an indication that Labour does not believe it has any hope of winning the next election. In my experience, only political parties that know they have no realistic hope of winning an election propose things they know they will never have to try to implement. . .

There is no virtually about the economic sabotage this policy would inflict.

I was in parliament for Question Time yesterday.

The Government benches were enjoying themselves and Ministers made the most of the opportunity Labour and the Green Party gifted them:

Hon STEVEN JOYCE: The Electricity Authority yesterday released its review of the electricity market in 2012. The report showed 18 percent of customers, around 32,000 people a month, voted with their feet by switching electricity providers in 2012, presumably for lower prices. For the benefit of the Opposition, that is called “competition”. Since November 2008 annual electricity price increases have halved from the 8 percent year-on-year increases suffered by hard-working New Zealanders during the previous 9 years. This follows a number of pro-competitive reforms by this Government, which apparently the Opposition is not aware of. We have reconfigured State owned enterprise assets to increase competition, created the Electricity Authority and made it responsible for promoting competition, allowed line businesses to compete in the retail space, and funded promotion of consumer switching through the What’s My Number campaign.

Todd McClay: Has the Minister seen any other proposals to try to lower electricity prices?

Hon STEVEN JOYCE: Well, weirdly, yes, I have. Just before lunch today I received one report, which I believe came from the “North Korean School of Economics”. Apparently, the suggestion there was that nationalising the entire electricity industry would somehow lead to lower power prices. . .

That got a point of order call from Winston Peters to which the Minister responded:

Hon STEVEN JOYCE: If I could perhaps clarify my answer, I should clarify that I received a report from the local branch of the “North Korean School of Economics”.

I’d like to believe Espiner’s theory that this is the policy of parties which know they’ll lose the next election and therefore never have to implement it.

The only other explanation is that the people promoting them are so economically illiterate they don’t understand what they’re talking about.

Either way, it shows they haven’t learned from history because these policies would power us back to the socialist seventies and it would be all downhill from there.


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