Word of the day

October 3, 2013

Ultracrepidarian – noting or pertaining to a person who criticises, judges, or gives advice outside the area of his/her expertise; one who opines beyond one’s own range of experience.


Rural round-up

October 3, 2013

Taranaki study backs landfarming science – Isobel Ewing:

An independent report on landfarming in Taranaki has vindicated the science behind the process, Taranaki Regional Council boss of environmental quality Gary Bedford says.

In a report commissioned by the council, soil scientist Doug Edmeades, of AgKnowledge Ltd in Hamilton, set out to see if landfarms in Taranaki were fit for pastoral farming, in particular dairy farming.

Dr Edmeades investigated soil fertility, heavy metal and barium concentrates and petrochemical residues in the soil at three landfarming sites in the region.

The report found that landfarming made sandy, coastal farmland ten times better for dairying.

“The process of landfarming these otherwise very poor soils, together with appropriate management has increased the agronomic value of the land from about $3000-5000/ha to $30,000-40,000/ha.” . .

Hardwood project promises billions – Jon Morgan:

When arsenic was found in the aquifer beneath Marlborough’s vineyards in 2003 it sent a shiver of fear through the region. The worry was that the deadly poison would find its way into the wine and sink the then-$400 million industry.

Research found the water source was naturally occurring arsenic and not a danger to health. But it also found arsenic in the soil – from thousands of tanalised pine posts.

A search began for an alternative post. It has taken 10 years, but the group formed to undertake the research and grow the wood – the New Zealand Dryland Forests Initiative – has reached a crucial stage.

Seven eucalypt species have been identified as having the ideal qualities. Seed has been collected, trials planted on farms throughout both islands and the best trees are starting to show.

At the same time, new markets far beyond the 450,000 posts a year needed for Marlborough vineyards alone have been discovered. . .

Forum Will Rebuild New Zealand’s Food Safety Image:

A Dunedin woman has accepted the challenge to help rebuild New Zealand’s food safety image.

Dr Helen Darling, a founder of a company which pioneers global food verification systems, is bringing up to 200 delegates to Otago to address the perception that New Zealand must improve its food safety standards.

The Global Food Safety Forum traditionally meets in Beijing but Dr Darling has persuaded the US based, not-for-profit organisation, to hold it in New Zealand from November 13-15.

A strong emphasis will be to consider and seek solutions to the next crisis before it occurs.

“With food safety, prevention is better than cure. We will look at emerging threats and ways to address them before they become a problem to our producers and for trade.” . .

Drought over but affects will linger:

While the drought of 2013 is now officially over, some farms, especially meat and fibre will see its aftermath linger for years to come.

“While the thankfully benign winter and spring has seen a most remarkable come back in terms of pasture, North Island sheep farmers in particular lost capital stock and quality genetics,” says Katie Milne, Federated Farmers Adverse Events Spokesperson.

“Not to mention their wool crop too. The shame being that it came at a time when wool seemed to be finding its feet

“After speaking to my colleague Jeannette MaxwellI, Federated Farmers Meat & Fibre Chairperson, it means we are looking at fewer lambs this year with speculation it could be upwards of three million. . .

Ready and relevant for 21st century: Lincoln University launches new land-based degree portfolio:

This week Lincoln University has marked a number of significant events. 

On Tuesday 1st October, the University launched its new portfolio of bachelor’s degrees – all of which are now focused on knowledge and expertise that creates careers in the land-based industries, globally.

The new portfolio retains flagships such as the Bachelor of Agricultural Science and Bachelor of Commerce (Agriculture), and introduces new degrees such as the Bachelor of Agribusiness and Food Marketing and the Bachelor of Environment and SocietyAll the new majors have a very clear focus on the land-based sector. 

“These changes reinforce what this University exists to do, which is to help feed the world, protect the future and live well.  Our reform has seen us reduce the number of majors within our degrees from 42 to 24 (43 percent).  We have narrowed our focus and deepened our capacity to be world class where it really counts, in the land-based industries,” says Professor Sheelagh Matear , Assistant Vice-Chancellor, Academic Programmes and Student Experience. . .

Westland trumps its big brother:

New Zealand’s second largest dairy cooperative, Westland Milk Products, has managed to beat Fonterra Cooperative Group with a $6.34 per kilogram of milk solids (kg/MS) payout before retentions.

“That 2012/13 season must rank as one of the weirdest we’ve had here on the Coast,” says Richard Reynolds, Federated Farmers West Coast Dairy chairperson.

“After a promising start, we had a summer flood which washed out bridges before a drought so severe some sections of our rivers like the Taramakau actually dried up.

“Despite all of this, Westland deserves credit for managing to make a surplus of $6.34 kg/MS. That compares to Fonterra’s $6.30 kg/MS before retentions.

“The difference in the final payout is due to Fonterra retaining 14 cents kg/MS while Westland retained 30 cents kg/MS. We are comfortable with what Westland is retaining despite it leaving us with slightly less cash in the hand at $6.04 kg/MS. . .

And the latest parody from Peterson Farm Bros:


8/10

October 3, 2013

8/10 in the Herald’s test on road rules.

These are the 10 toughest questions from the class 1 learner licence theory test.

I got the first one wrong, as did the Herald reporter.

 


Thursday’s quiz

October 3, 2013

1. Who said: Every government degenerates when trusted to the rulers of the people alone. The people themselves are its only safe depositories.?

2. Who said: Government ‘help’ to business is just as disastrous as government persecution… the only way a government can be of service to national prosperity is by keeping its hands off.?

3. Who said: A government big enough to give you everything you want is a government big enough to take from you everything you have.?

4. Who said; ““Being democratic is not enough, a majority cannot turn what is wrong into right. In order to be considered truly free, countries must also have a deep love of liberty and an abiding respect for the rule of law.”?

5. Have you voted yet, if not are you going to?


Smaller boards generally better

October 3, 2013

Tertiary Education, Skills and Employment Minister Steven Joyce has released the Draft Tertiary Education Strategy.

It aims to improve the way tertiary education supports achievement, industry, innovation, and economic growth.

. . . The draft strategy contains six strategic priorities: delivering skills for industry; 
getting at-risk young people into a career; boosting achievement of Māori and Pasifika; improving adult literacy and numeracy; growing international linkages; and strengthening research-based institutions.

“Tertiary education is a passport to success. Developing strong links with employers will help ensure students have the skills they need to succeed. This in turn will increase employment, boost incomes and help grow the New Zealand economy,” Mr Joyce says.

“We are seeing increased competition from around the world both for skilled graduates and leading academics, in particular from developing nations. For New Zealand to remain internationally competitive, our tertiary institutions need to ensure their relevance in the modern workplace, expand their research links and connections with industry, attract more international students, and invest more in disciplines where they have a competitive advantage.”

More people are attending tertiary institutions and gaining qualifications which is good.

But not all those qualifications make it any easier for graduates to get jobs and employers often find a mismatch between qualifications and what businesses need.

Education has a wider role than providing meal-tickets for graduates but many students seek qualifications as a means to getting a job and in the hope it will help theme earn more. They, and potential employers, are not well served

The Minister also announced plans to reduce the size of university and  wananga councils:

“New Zealand universities would benefit from smaller, more flexible councils which support them to perform at a high level and to be nimbler, more adaptable, and better organised than big overseas universities. . .

The proposed changes would:

  • Decrease the size of university and wānanga councils from 12 to 20 members to eight to 12 members.
  • Make council membership requirements more flexible by removing specific representative requirements.
  • Require the Minister and councils to appoint members with governance capability.
  • Clarify the duties and accountabilities of individual council members.

There would be no change to the settings for the appointment of council chairpersons and deputy chairpersons, which are currently made by councils themselves. University and Wananga Councils would also be free to retain representative positions for different stakeholder groups if they wished. . .

Staff and students oppose this plan.

Mr Joyce says the councils need to be smaller so they can make decisions faster.

He says the institutions themselves should decide if students and staff should be represented.

However, student leaders say that is not good enough. They say their place at the table, and that of staff, should be guaranteed.

Victoria University of Wellington Students’ Association president Rory McCourt says the Government is showing it does not value students.

The Tertiary Education Union says the proposal treats universities and wananga as if they are businesses, and their wider role in society will be lost if councils are cut back.

However, Canterbury University is already seeking a smaller council, saying it wants to improve its decision-making by going from 20 members to 12, including staff and student representatives.

The plan doesn’t prevent staff and student representation on councils, it just makes it optional.

I am amazed that councils have been operating with 20 members.

A governing body that big would be cumbersome and expensive to run.

Eight to 12 members would still allow wide representation and a range of views and experience, including staff and students if the council deemed that beneficial.

In my experience smaller boards are generally better ones enabling more input from all members which promotes better discussion and better decisions.


LVRs introduced for good reason

October 3, 2013

Reserve Bank Governor Graeme Wheeler explains why it was necessary to impose lower loan to value ratios on banks:

 Many New Zealanders consider purchasing a house to be a rock solid investment, and assume that house prices will continue to rise steadily, having never seen a bear market or experienced rapid rises in mortgage rates.

Over the past 25 years, however, many wealthy countries have experienced periods of substantial decline in house prices.

Falling house prices erode homeowners’ equity, while mortgage lenders experience losses on their loan portfolios. The resulting stress in the financial system can have long lasting adverse effects on the economy. For borrowers, it can mean years of spending cut-backs to rebuild savings. The greatest impact is on borrowers, often first-home buyers, who recently entered the market with the least equity. In the United States, real net household wealth for the median household fell 39 percent from 2007 to 2010, and a quarter of America’s mortgage holders owed more on their houses than what their houses were worth.

Our concern is that excessive increases in house prices in parts of the country, if unchecked, pose increasing risk for the financial system and the broader economy. High and rising house prices increase the risk and potential impact of a major correction in house prices, and consequential loss to lenders. In a severe downturn, such losses would be expected to significantly reduce banks’ willingness to lend. Similar views about the risks from our overvalued housing market are expressed by the IMF, OECD, and the major international credit rating agencies.

New Zealand’s house prices are expensive, based on international comparisons of house prices relative to rents and to levels of household income. And our household debt levels relative to disposable income – having doubled over the past two decades – are also very high.

Could New Zealand experience a sharp fall in house prices? While not anticipated, our economy is not immune to such risks. The world economy still faces major challenges and, if global growth slows markedly, or if China’s financial system experiences major difficulties, it would quickly feed into the New Zealand economy and housing market.

House prices are rising rapidly in Auckland and Christchurch for two reasons: housing shortages and easy credit. It is critical that issues around land availability, zoning restrictions and high building costs are resolved and that the housing targets in the Auckland Accord are achieved. It is also important that credit expansion is restrained to be more in line with housing supply. Restricting lending to borrowers with low deposits can help reduce the upward pressure on house prices, especially as banks have been competing aggressively for borrowers with low deposits – with this borrowing accounting for 30 percent of new mortgage lending.

Some suggest that loan-to-value restrictions should be applied regionally, especially around Auckland, or that we should exempt buyers of lower-priced houses.  We considered both options.  However, regional restrictions would be hard to administer and would shift housing pressures outside wherever the boundary is drawn.  Exempting low-priced housing would be a recipe for rapid increases in the cost of such housing. Broad exemptions to other groups such as first home buyers would substantially undermine the effectiveness of the restrictions in reducing house price inflation.

While new for New Zealand, such restrictions have been introduced in 25 countries, and are currently being deployed in Canada, Israel, Korea, Norway, Singapore, and Sweden. Most countries adopting such restrictions prohibit high loan-to-value lending. We have opted for a more flexible approach, which still allows banks to do some high loan-to-value lending. Nor should such moves be seen as permanent. Restrictions will be removed when there is a better balance in the housing market and less risk that their removal will reignite high house price inflation.

While the Reserve Bank’s mandate is to promote financial stability, there are clear implications here for housing affordability. Over the next two years interest rates are likely to rise in order to restrain an expected increase in broader inflation pressures. We currently expect that the official cash rate could increase by 2 percent from 2014 to the beginning of 2016. This could result in interest rates on first mortgages of 7-8 percent. If the loan-to-value speed limit is unable to slow house price inflation, larger increases in the official cash rate would be required.

We are keen to see house price inflation moderate significantly and, in doing so, reduce the risks to the financial sector and the broader economy. Speed limits on low deposit lending are designed to help achieve this. Loan-to-value restrictions are expected to give the Reserve Bank more flexibility as to when and how quickly we have to raise interest rates, but the more fundamental solution to reducing pressure in the housing market lies in addressing the issues around housing supply.

We had good equity, well over 50%, in our farm until the ag-sag of the mid 1980s hit.

Stock prices and land values plummeted, North Otago was plagued by drought and to compound our problems inflation and interest rates soared.

At one stage we were paying more than 25% for seasonal finance and our equity had disappeared.

Had the stock firm to which we owed so much had pushed us to sell we’d have been left with nothing but debt.

Fortunately for us there was safety in numbers and few farm sales were forced. We eventually farmed our way out of our problems and the policies the opposition still describe as “failed” dealt to inflation and interest rates.

The experience taught us some very valuable lessons which those criticising the Reserve Bank’s policy, don’t understand.

Labour’s threat to the Reserve Bank’s independence and stated intention to exempt first home buyers from loan restrictions show no concern at all for the stability of banks and the danger of borrowing too much.

Interest rates are very low now. A small increase would add a significant cost to servicing a big mortgage, unforeseen costs, which always arise, would put further pressure on budgets, make paying off capital more difficult and increase the risk of losing most if not all equity if property prices fall.

The bank can’t do anything about land availability, zoning restrictions and high building costs but it can address easy credit and it’s doing so to protect the financial system and broader economy.


Knowing when to go

October 3, 2013

National list MP Chris Auckinvole has said he won’t be standing at next year’s election.

. . . Auchinvole said yesterday he intended to resign. “One could say leaning towards retirement. You never have enough, but I am 68 now, I’d be 70 shortly after the next election. It is my intention to retire from party politics.”

He said he had a “number of really good opportunities in the commercial world” to pursue.

The Scottish-born MP entered Parliament, as a list MP, in 2005 “along with half the caucus”.

In 2008 he won the West Coast-Tasman seat from Labour MP Damien O’Connor, who regained it in 2011. . .

I’ve enjoyed the interaction I’ve had with Chris who did a lot of work behind the scenes to help the families of the Pyke River mine victims.

He’s the second National MP to announce his retirement from parliament this week. Napier MP, and Minister, Chris Tremain won’t be seeking re-election either.

. . . Prime Minister John Key indicated he anticipated “one or two” more would follow suit, but declined to say who. . .

One of the few silver linings to the dark cloud of National’s 2002 election defeat was that it cleared out a lot of longer serving MPs. That allowed a big influx of fresh blood in 2005 and there was a good intake of new MPs in 2008 too.

National had a couple of mid-term resignations which brought two fresh faces into the house before 2011, eight new MPs at the election and two more new ones since then.

This has given National the mix of experience and freshness which a caucus, and government, need.

Good MPs know when to go and it’s better to go on their own terms than lose a selection challenge – although challenges have brought in some excellent MPs including John Key, Bill English and Judith Collins.

A few more announcements of end-of-term retirements, in plenty of time for the party and prospective candidates to prepare for selection would be healthy.

It would also reinforce the difference between National and Labour which hasn’t had nearly as much fresh talent and is still saddled with too many MPs who haven’t accepted they’re near or past their best-by dates.

This could be a positive reflection on the potential employability of former National MPs in contrast to those in Labour who might not be as attractive to would-be employers.

But being unemployable outside parliament is not a good reason for clinging on to a seat.


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