Plan A is working

One message from CEOs last week was the government needs to form Plan B in case the dairy slump worsens.

Lisa Owen put this to Finance Minister Bill English on The Nation and he responded:

. . . We run economic policy that underpins a flexible, resilient economy, so if prices are down in one area, we would expect people to— we’ve got a set of rules that enable them to react fairly quickly to that, and we don’t try and hide the message the world is sending us, for instance, about dairy prices. And lots of other countries, they’re increasing subsidies to farmers in order to brush over and hide that price signal. So this economy will diversify if there are other markets which are willing to pay more for our products. That’s where the investment will flow. And the good news on the horizon is that the US economy is recovering. It’s the world’s largest economy. It’s showing signs of sustainable growth. And that New Zealand businesses are responding to that positively, and I don’t agree with politicians—

But, Minister, that’s your plan A. That’s your plan A. Where’s your plan B?

Plan A is a flexible, resilient economy. If plan B is about politicians sitting on the sideline deciding where hundreds of millions of investment should go next, then we’re not interested in that sort of plan B. It will fail, as it’s failed in the past.

But business people who are on the front lines – 75% of the top business minds in the Mood of the Boardroom – they want you to have a plan B. Are they wrong?

Well, I’ve asked them about what their plan B is, and none of them have a plan B. They’re certainly inviting—

Maybe they’re relying on you for plan B, Minister.

They’re certainly not inviting politicians to say, ‘Right, we’re going to shift a couple of hundred billion— a couple of hundred million of investment from industry A to industry B.’ They are backing the Government approach, which is to ensure that we keep our costs down, the Government invests in infrastructure, because no one else can do that, we work on the pipeline of skills into the labour market so there’s people there that they can employ, and they make their risky commercial investment decisions, and that’s what they’re doing right now. Right around the country, businesses will be thinking about where to direct their investment, given that dairy’s not looking so good for the next year or two; tourism, wine, ICT is all looking better for the next two or three years. And they’ll make those decisions a bit more precisely and more sensibly than government would. .  .

Plan A is what got New Zealand through the GFC and the economy growing again.

We need more of it  – lower government spending, concentrating on addressing the causes of welfare dependency, investing in education and infrastructure, opening more trade opportunities . . .

That’s the business of government and private enterprise isn’t as Mike Hosking reminds us:

What’s a bloke buying a farm got to do with the government?
What has any person setting up a business got to do with the government?
When a shop closes is it the government’s job to mop it up?
When a factory down sizes… Is the govt supposed to do something?

Dairy, like all business products and markets is beyond a government scope.

A government is there to provide over arching policy direction… Like tax and trade deals and welfare.

It’s not there to milk the cows, man the tills and set the price for commodities. . .

If the CEO’s know what’s good for them and their businesses they won’t be asking government to get involved in them.

We don’t need Plan B and we definitely don’t need government minding the business of business.

 

 

 

 

2 Responses to Plan A is working

  1. Chris says:

    This is what the left and most media commentators dont understand.They all seem to think it is the Government or in other words the tax payer, who should put money into any business or anything else which is under financial pressure. But that is not Govts job. Their job is to make it easier for business to survive with regulation such as tax and RMA to name two. But all the left want is handouts.

    Like

  2. Dave Kennedy says:

    Plan A was to encourage the growth of dairy production in a similar way as it encouraged Solid Energy to invest in growing capacity. Nathan Guy stated he wanted to double exports and put hundreds of millions into irrigation schemes so that farmers could increase stock numbers. The Government wanted to make changes to the RMA so that consents to grow the dairy industry could be processed much faster. Plan A was about increasing the quantity of production not the
    quality. Limited funding went into R&D and investing into adding value.

    Plan B should be about taking a different approach. Investing more in to R&D, supporting and encouraging diversity and focusing on developing a sustainable agriculture sector that is less reliant on imported feed and fertilizer. We should have a much stronger regional focus, where agriculture can work with local conditions to produce products with less inputs. Southland has an ideal climate for growing apples and oats, if the Government had provided the same subsidies and marketing efforts to these industries, for example, it may have softened the dairy crash.

    http://www.odt.co.nz/news/farming/285489/venture-southland-considers-oat-push

    http://www.3news.co.nz/nznews/southland-locals-trade-in-apples-for-heritage-cider-2015041817#axzz3j820Xv00

    http://www.sces.org.nz/open-orchard-project/history-of-apples-in-southland

    Like

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