Word of the day

August 27, 2013

Cervicalgia – in the neck.

Fonterra ups payout another 30c

August 27, 2013

Fonterra has announced a second increase in its forecast payout.

Fonterra Co-operative Group Limited today lifted its Forecast Farmgate Milk Price for the FY14 season by 30 cents to $7.80 per kgMS.

Fonterra is required to consider its Farmgate Milk Price every quarter as a condition of the Dairy Industry Restructuring Act (DIRA).

The increase – along with a previously announced estimated dividend of 32 cents per share – amounts to a Forecast Cash Payout of $8.12.

Chairman John Wilson said the higher Forecast Farmgate Milk Price reflected continuing strong international prices for dairy.

“Current market views support commodity prices remaining at historically high levels longer than previously forecasted.  

“The two most recent GDT (GlobalDairyTrade) events have seen prices hold, and significant volumes sold. These factors have contributed to our updated forecast,” said Mr Wilson.

At this early stage in the season, however, Mr Wilson said there were a number of uncertainties – and that was why there would be no change to the current Advance Rate announced in July.

“We will provide an update on business performance when we announce our Annual Result on 25 September 2013,” said Mr Wilson.

This is good news and means the company is reasonably confident there won’t be much financial damage from the fallout following its precautionary recall of products containing its whey protein concentrate.

However, events of the last few weeks on top of the knowledge that events beyond the control of the company and farmers among which are the weather and the value of the dollar, require caution.

Budgets will have been set on a lower payout and the wise will stick to them until the final payout is confirmed.


Rural round-up

August 27, 2013

Salmonella kills hundreds of sheep:

Hundreds of sheep in Otago and Southland have died following an outbreak of Salmonella.

The bacteria causes pregnant ewes to abort their foetuses and may cause the death of the ewe.

The strain is salmonella brandenburg and it can be transferred to humans.

Clutha Vets veterinarian John Smart says about 30 farms are affected in the Balclutha area and he knows of others further south. . .

Wine industry looks ‘back to the future’:

Only 40 years ago, the first grapevines selected for the modern New Zealand wine industry were planted in Marlborough. This week more than 550 grape growers, winemakers and industry leaders will converge in Blenheim to attend the annual wine industry conference.

The Romeo Bragato conference is named after one of the early pioneers of the industry. The conference will be held in Blenheim at the Marlborough Convention Centre from 28-30 August.

New Zealand Winegrowers General Manager Research Dr Simon Hooker says that after a few challenging years the wine industry has regained a sense of confidence thanks to successful ventures into new markets and a stellar 2013 vintage. . .

Delegat’s post 62% gain in annual profit as value of vineyards, grapes increase – Tina Morrison:

 (BusinessDesk) – Delegat’s Group, the New Zealand winemaker which has been snapping up the distressed assets of rivals, posted a 62 percent gain in profit as it benefited from an increase in the value of its vineyards and grapes after a bigger grape harvest and higher prices.

Net income rose to $41.2 million in the year ended June 30 from $25.5 million the year earlier, Auckland-based Delegat’s said in a statement. The value of the company’s vineyards, grapes and financial derivatives rose $14.9 million, compared with a $100,000 writedown the year earlier. . .

Giesen increases focus on organics:

Giesen Wines is placing growing importance on its organic plantings, with 15% of its vineyards now converted or in transition.

The winery has has just released its second certified organic Sauvignon Blanc, Giesen Organic Marlborough Sauvignon Blanc 2012, following a highly successful launch last year.

Giesen Wines, privately owned by brothers Theo, Alex and Marcel Giesen, is one of New Zealand’s largest wineries. It owns 13 vineyards in Marlborough’s highly regarded Wairau Valley and this year celebrates the 30th vintage of its acclaimed Marlborough Sauvignon.

Marcel Giesen says the family is committed to environmentally sustainable wine production practice. . .

Employing Kiwis first

August 27, 2013

Why do we need immigrant workers when there are so many New Zealanders unemployed?

One answer to that question is that sometimes immigrants are better than locals.

Immigration Minister Michael Woodhouse broached the issue in a speech last week:

. . . I want to share with you my thoughts on the ‘Kiwis first’ policy in the context of migrant labour because there is debate about the number of overseas workers in our workforce and this raises a number of issues.

The broader context to that debate is simply this: the opposition often cries “Where are the jobs?” And they do so at a time when, for every Kiwi receiving an unemployment benefit there are between 3 and 4 foreign nationals working in New Zealand on various types of visas. So what many of those who ask “where are the jobs?” are really saying is “where are the jobs that are in exactly the place I want, doing the type of work I want, paying what I think I should earn and tolerating all of my shortcomings”.

And the employers who say that prospective kiwi employees are too hard to train, have bad attitudes and are generally unhappy with the quality of some of the New Zealanders they have been offered by Work and Income need to also reflect on their efforts. I appreciate that employers might not always get exactly what they want, and I acknowledge that for some young New Zealanders there are barriers to employment.

Four barriers spring to mind: education and skills, mobility, attitude and recreational drug and alcohol use. But they are barriers to overcome, not immoveable impediments. In the short term migrant labour will ease this problem, but I get the feeling that some employers and some industries have become overly reliant on this as a long-term salve.

In the future I expect industries that are successful in having an occupation added to a Skills in Demand list, or an employer granted an Approval in Principal to employ temporary migrant labour will, as a condition of the continuation of that status, be more energetic in working with Government to find a long term solution, and more diligent in demonstrating to me that they are doing all they can to ease their labour shortages domestically.

I won’t constrain a firm’s ability to grow in the short term, but I will be encouraging and expecting them to invest in New Zealanders by up skilling and training them so they have an opportunity to maximise their potential. . .

When were were applying to employ an immigrant the Immigration Department told us that WINZ had several people on their unemployed list who could work for us.

We went into WINZ to discuss the possibilities. This was a few years ago when unemployment was low. I said we could manage someone without experience but doubted there was anyone on WINZ’s books who would have that attitude we were looking for.

The consultant agreed with me and signed the immigration form saying there was no-one suitable on her books.

Unemployment is higher now so this shouldn’t be the case.

Unfortunately it sill is.

Some people don’t just want a job. As the Minister said, they want a job in a particular place, doing what they choose, paying what they think they’re worth and accepting of their shortcomings.

This isn’t just difficult for employers it makes work difficult, sometimes dangerous, for other employees.

However, while employers’ first responsibility is to their business, employees and customers, we can’t always expect to get exactly the employees we want.

We shouldn’t be expected to take on the unemployable but we can’t expect the government and other employers to do all the training and upskilling of those who, with a bit of time and effort, could be employable.

That said, maybe there’s a role for Landcorp in training agricultural workers:

Outgoing chief executive of the state owned farming enterprise, Landcorp, says it could play a greater role in industry good functions such as training and technology transfer.

But that would require the agreement of Landcorp’s sole shareholder, the Government. . . 

Chirs Kelly . . . says under the SOE Act, Landcorp is required to operate profitably. . . 

“I think if Landcorp can pass on some of its successes and help lift farming generally in New Zealand that will do a lot for the country itself ,so I see we do have a bit of an industry role as well, but it is a bit of a dichotomy with the SOE Act.”

There is such a thing as a social dividend and that would include training, for which Landcorp has a good reputation.

But there’s an awful lot of money tied up in the company which makes very low returns on capital.

Rather than making even less to fulfil a social role it would be better to sell the farms and invest at least some of the proceeds in education and training.

NZ needs more mothertruckers

August 27, 2013

Facebook post of the day:

Paula Bennett MP
I made it into the truck and driver magazine arguing women are great drivers and good workers – NZ needs more mother truckers!
I made it into the truck and driver magazine arguing women are great drivers and good workers - NZ needs more mother truckers!

Lifting achievement in schools

August 27, 2013

Education Minister Hekia Parata has announced the Government is investing $27 million in education initiatives targeted at priority children.

Ms Parata says the initiatives are targeted at children who are falling behind for a range of reasons.

“We know where these children are thanks to much stronger data, including National Standards data. We know our education system performs for a majority of students but it is not as successful for others and we need to continue to take action.  These 11 initiatives are focused on giving these children the great education they deserve.

“Ensuring each and every child gets a good education is the single most important thing our Government can do to raise living standards and create a more productive and competitive economy.’’

The new or expanded initiatives include:

  • $5 million over three years to scale up Building on Success which is designed to increase the capability of secondary and area schools to improve outcomes for Māori students.
  • $8 million over four years to implement both Ka Hikitia – Accelerating Success 2013-17 and the Pasifika Education Plan.
  • $3 million over the next two years to support children in the first year of school to develop literacy and numeracy skills.
  • $3.15 million over the next two years to work with over 100 schools to increase NCEA Level 2 achievement and help students transition to tertiary study, training or employment, including through Starpath.
  • $1.75 million over four years support teen parents in main stream schools

“The Government is determined to make sure that we’re doing everything we can to ensure every single child crosses the line and achieves their education potential.

“To achieve this we have introduced Better Public Service Targets at early childhood and secondary level. We have also introduced National Standards at Primary and intermediate School level so we can see how kids are doing and identify those who are falling behind early.

“We now have a good set of data across our whole education system which has allowed to see where we can better target our resources.’’

Ms Parata says there is already success in many areas of education through greater investment and targeting and the Government is building on this.

“For example, we’re seeing some great results in NCEA.  Last year 77.2 per cent of 18-year-olds achieved NCEA Level 2, which was up nearly three per cent on 2011.

“So we know targeted work and initiatives are delivering results.”

The long tail of underachievers is a problem for all of us.

That 20% of school leavers who finish 12 years of education with no qualifications are most likely to feature in other negative statistics – crime, benefit dependency, poor health . . .  and the social and financial problems they lead to.

Investing more in lifting achievement for those who need it most will be good for them and have social and economic benefits too.

This afternoon we announced initiatives targeted at children who are falling behind at school – many of whom are Maori or Pasifika, come from poorer homes, or have special needs. national.org.nz/Article.aspx?articleId=41808

Tax and spend harms not helps

August 27, 2013

New Zealand is coming through the Global Financial Crisis better than most other countries for several reasons.

One of those are policies put in place by previous governments which have made us a relatively free and open economy.

Another is the sound financial management of National-led governments since 2008.

Among the policies which have helped are lower taxes and as a result of that lower government spending.

Government departments have been required to do more with less and it’s working.

Unlike the Labour-led governments before it which increased spending with no increase in services or other positive result, this one has required government departments to become more efficient and more productive.

If Labour is in a position to lead the next government that will change.

Tax and spend is in that party’s DNA.

David Cunliffe has already said if he’s leader he’ll increase taxes for the wealthy.

Labour leadership candidate David Cunliffe says wealthy people should pay more tax.

He won’t go into detail about the policy he’ll develop if he wins the contest but he’s giving clear signals.

Asked at his press conference on Monday whether taxes on wealthy people should be raised, he replied: “You bet. I’m not going to put a number on it but I worked hard when I was finance spokesman to get a capital gains tax across the line.”

The next question was whether he would raise income tax.

“Labour’s policy argues for a more progressive tax and I support it,” he said.

“I’m not going to pre-empt the process of finalising our policy but I certainly believe we need a more equitable society – we will finalise our manifesto and everyone who earns a fair share should pay a fair share.”


Wealthy people already pay a great deal more than poorer people, many of whom pay no net tax at all.

You’d think a man with his undoubted intelligence and education would understand that the tax take doesn’t mirror tax rates.

Increasing tax rates can and does reduce the tax take. Higher taxes are a disincentive to higher earning and people and businesses waste time and money trying to reduce what they pay.

Reducing tax rates can and does increase the tax take because it incentivises higher earnings.

There are two other leadership aspirants.

It’s very unlikely that Grant Robertson would favour lower taxes and less spending.

The third candidate, Shane Jones who is in a very small minority of Labour MPs who appears to understand the importance of business, might be more likely to do so but he’s also least likely to be leader.

National’s policies which are reducing the burden of government are the ones which do most to help the poor.

Labour’s big government tax and spend policies are those of the Clark-Cullen governments which put us into recession before the Global Financial Crisis.

%d bloggers like this: