Kupu o te ra

18/09/2020

Whakahoahoa – to make friends; be friendly.

To celebrate Wiki o te Reo Maori.


Leaving us with more

18/09/2020

National is promising tax cuts to help us through the Covid crisis:

National’s massive tax stimulus package will put more than $3000 extra into the pockets of hard-working Kiwis on middle incomes, National Party Leader Judith Collins says.

You can read a copy of National’s Economic & Fiscal Plan here.

Ms Collins has announced the next National Government will let Kiwis keep more of what they earn by lifting the bottom tax threshold from $14,000 to $20,000, the middle threshold from $48,000 to $64,000 and the top threshold from $70,000 to $90,000.

These changes will be in place from December 1, 2020 until March 31, 2022. The total cost of this over the 16-month period is estimated to be $4.7 billion.

“Today we are facing the biggest economic downturn the world has seen since in living memory. But with the right leadership and economic plan we can grow our economy and keep Kiwis in jobs,” Ms Collins says.

“To keep our economy ticking, New Zealanders need money to spend. National will deliver temporary tax relief that puts more than $3000 – or nearly $50 a week – into the back pockets of average earners over the next 16 months.

“This will give Kiwis the confidence to go out and spend, which will be crucial for our retail, tourism and hospitality businesses to survive this economic crisis.

“New Zealand is facing a much longer and more painful economic shock than earlier forecast. We need a serious plan for economic growth to get us back on track.”

National’s Finance spokesperson Paul Goldsmith pointed to higher taxes as Labour’s only plan to get New Zealand out of this economic hole.

“No country has ever taxed its way out of a recession – and this is a big one we’re in now.”

As well as tax relief for households, National will double the depreciation rate for businesses that invest in new Plant, Equipment and Machinery over the next twelve months. This will bring forward the amount a business can claim in depreciation for new investments, which will stimulate investment by increasing the return on capital.

Doubling the depreciation rate is expected to cost $430 million a year for five years, while increasing tax revenues in out years.

“Our stimulus package has been fully-funded and costed, and is included in our independently reviewed Economic and Fiscal Plan released today,” Mr Goldsmith says.

“National’s plan carefully balances the need to drive economic stimulus, increase investment in core public services and restore government debt back to prudent levels.

“Labour, on the other hand, has announced it will increase taxes during a recession. The contrasting approaches to the economy at this election could not be clearer.

“Judith Collins and her strong National team will bring the leadership, experience and vision needed to get our country back on track.”

You can read a copy of National’s Economic & Fiscal Plan here.

You can view a copy of National’s Personal Tax Relief Policy here.

You can view a copy of National’s Double Depreciation Rate Policy here.

David Farrar has worked out what the tax cuts mean for different income levels and conclude:

This provides New Zealanders with a real choice – a Government that will help people through the tough times by temporarily reducing taxes, or a Government that will increase taxes.

If you’re not sure which would be better, ask yourself who would make better use of the money you earn – you or the government?

If you’re still not sure, think about what’s more efficient, letting us keep a bit more of what we earn and giving us the choice about how, and how much we spend, or having the government take more and absorbing some of that in the bureaucracy before the rest can be spent and only then dribble through the economy?


Sowell says

18/09/2020


Rural round-up

18/09/2020

Dr Doug Edmeades responds to Green Party agriculture policy:

The Green Party’s plan to help Kiwi farmers transition from traditional agriculture to regenerative and organic practices is a bit redundant, according to Dr Doug Edmeades.

Most farmers are already using many regenerative agriculture practices, such as rotational grazing, and zero tillage, the soil scientist told The Country’s Jamie Mackay.

“Let’s not delude ourselves that if we follow RA, we will improve soil health, we will reduce greenhouse gas emissions and improve water quality – that’s nonsense.”

Edmeades listened with interest to yesterday’s interview with Green Party co-leader James Shaw, where the Minister said regenerative agriculture would result in better profits for farmers. . . 

‘This just cannot happen’: $9.5 billion at risk as horticulture sector struggles to fill $25-an-hour jobs – Bonnie Flaws:

The shortage of horticultural workers due to Covid-19 border restrictions is putting $9.5 billion of the country’s economy at risk, says New Zealand Apples and Pears chief executive Alan Pollard.

About 10,000 seasonal workers would be needed starting from next month to prune and pick $1 billion worth of fruit across Hawke’s Bay alone, he said.

The shortage had the potential to cripple the region’s economic recovery.

“This just cannot happen.” . . 

Fonterra set to return to profit, but will it pay a dividend? – Jamie Gray:

Fonterra’s annual result this week is expected to show that the dairy giant is back in the black, but will it pay a final dividend?

The co-op last year posted a net loss of $605 million, driven mostly by writedowns of its overseas businesses, dwarfing the previous year’s shortfall of $196m, and sparking a major change in direction.

Fonterra did not pay a dividend in its previous financial year but in its latest earnings update, it said it would reassess a payout at the end of the latest year to July 31. . . 

The future of food – Greg Bruce:

Most of New Zealand’s lowland areas are now devoted to food production. How we produce food for consumption, sale and export continues to shape our landscape and lives, but the 90 per cent of New Zealanders who live in cities have little contact with those processes and the social and environmental considerations they create.

Can farmers improve yields and use resources more efficiently? Can consumers reconnect with the land and farm practices to make more informed choices and reduce waste? What is the future of our food?

THE LATE MAY EVENING my wife and I went to Coco’s Cantina for dinner, it was appallingly cold, probably the coldest night of the year. I wore a long black double-breasted wool coat, which I call ‘The Aucklander’ because it so obviously marks me as a stereotypical city person, which I am—lacking DIY skills, any sort of self-sufficiency, and any idea of what it takes to survive without a supermarket within easy driving distance. . .

Ewe’ll be seeing spots with quintuplets – Daisy Hudson:

You could be forgiven for thinking you were going dotty.

Sue Rissman certainly did when one of her ewes delivered five spotted black and white lambs on Sunday.

The quintuplets, four girls and a boy, seemed perfectly unaware of the interest in them yesterday as they trotted around after their mum on the 21ha lifestyle block Mrs Rissman and her husband, Grant, own inland from Palmerston.

The pair have 47 ewes, which have overwhelmingly delivered twins and triplets. . .

Two farming families form state of the art dairy business :

Two farming families from the Conwy Valley in Wales have gone into a partnership to run as a single state-of-the art dairy business.

The families decided to join together for a better work-life balance, more stock, less pressure and the prospect of new opportunities.

Young farmer Emyr Owen, 30, from Bodrach, near Pandy Tudur, farms in partnership with his parents on a 185-acre former beef and sheep farm.

He joined up with his next door neighbour Gwydion Jones, 38, whose family formerly farmed a herd of 150 dairy cattle at the neighbouring 95-acre Ty’n Ffynnon farm.. . 


When they don’t learn from mistakes . . .

18/09/2020

New Zealand is in recession for the first time in 11 years.

Gross domestic product (GDP) fell by 12.2 percent in the June 2020 quarter, the largest quarterly fall recorded since the current series began in 1987, as the COVID-19 restrictions in place through the quarter impacted economic activity, Stats NZ said today.

“The 12.2 percent fall in quarterly GDP is by far the largest on record in New Zealand,” national accounts senior manager Paul Pascoe said.

There’s no surprise about being in recession when the country was locked up  down for weeks., but how did we compare with other countries:

Measures to contain COVID-19 have led to historically large falls in GDP in many parts of the world, with countries’ results reflecting the nature and timing of their responses, and the structure of their economies. For example, New Zealand’s result compares to falls of 7.0 percent in Australia, 11.5 percent in Canada, 7.9 percent in Japan, 20.4 percent in the United Kingdom, and 9.1 percent in the United States. . . 

New Zealand did worse than all of those countries except the UK, including our nearest neighbour which had a less harsh lockdown and, the debacle in Victoria excepted,  similar health outcomes; and our performance was worse than the OECD average.

Contrary to the government’s line of going early and hard, it was lax, late and harsh.

We should have locked down sooner, been much rigorous about returnees from overseas self-isolating and introduced MIQ sooner then used safe rather than the arbitrary essential  when determining which businesses could operate during lockdown.

That could have been excused the first time had the government learned from its mistakes, but it repeated them and made more when it locked Auckland down again.

Businesses and greengrocers weren’t allowed to open and there was an omnishambles at the region’s borders with staff not able to get to work. That was compounded by animal welfare issues when farmers couldn’t get into Auckland to look after their stock and millions of bees died when beekeepers couldn’t get to their hives.

The economy isn’t just about money, it’s about businesses, jobs, livelihoods and lives and both physical and mental health.

The government admits that health and the economy are linked but, as in so many other instances in the past three years, its actions haven’t followed its words.

Worse given there is a very real risk that there will be other leaks at the border it hasn’t learned from its mistakes and, should it be re-elected, there is a very real risk it will repeat them.


Wrecking ball politics

18/09/2020

David Clark writes:

Over the weekend I had a phone call from a mate who lives in urban Auckland and he wanted to have a yarn about the new Green Party Agricultural Policy, that to his mind seemed logical, fair and reasonable, almost an exciting step forward, but he wanted to see the policy through the lens of a farmer as well,

I have been reflecting on his question regarding the launching of the Green Party Agricultural “Policy” trying to quantify the feeling of hopeless that I and many farmers feel.

So let’s unpack this a bit.

How our business works is we have a farm income, that is the culmination of all the stock we sell and the grain and seed crops that we grow and sell to processors as it’s eventually makes it way to your local Supermarket.

Out of that income, we pay our farm expenses, seed, fertiliser, fuel and electricity, farm supplies, and various other goods and services. Most of this expenditure benefits businesses in our local town Ashburton and across the wider Canterbury economy.

Once we have sold our produce and paid for our expenses, there is hopefully a wee bit left over, which is what most business owners refer to as their return on investment.

Last year our arable and stock farming business made a pre-tax return on total assets of 3.6%.

The Greens intend to impose a “Wealth Tax” of 2%.

That leaves us with 1.6% return on assets before we pay any Income Tax.

The Greens then plan to “charge a fair price” for the Methane burped by our sheep. I have previously heard prices of $50-$250/t of Carbon Equivalent suggested by the Greens, but let’s say at the low end of that range, our Climate Change cost just for Methane will be 1.5% of total assets.

That leaves us with 0.1%.

The Greens intend to develop a Water Charge in consultation with Iwi.

Previously the Greens have stated that charge should be 10 cents per cubic metre. David Parker publicly stated an intention for a water charge of 2 cents per cubic metre.

Here a Valetta, even at the lower charge of 2 cents per cube, the cost of watering our arable crops would be another 0.4% of total assets annually.

That leaves us making a 0.3% loss.

The Greens then want to impose a levy of fertiliser, want us to run a zero-till or minimum-till system, not sure how that works in a long term seed production system and adopt Regenerative principles.

But here’s the clanger, they intend to impose a Dissolved Inorganic Nitrogen (DIN) level of 1mg/litre for all waterways in NZ. Currently water flows out of DoC land at western side of Mid Canterbury at 3.2mg/l.

To meet a DIN of 1mg/l, Environment Canterbury’s own report from 2017 found that land use in the neighbouring Selwyn Te Waihora Catchment would have to revert to dryland sheep grazing.

We have budgeted that impact on this farm and it looks like this-

Crop Income, down 92%

Sheep Gross, down 62%

Expenditure, down 70%

Wages, down 91%

EBIT, down 68%

Capital Re-investment, down 74%

Net Profit, down 105%

Tax Paid, down 75%

The actual numbers are irrelevant, because the percentage drops will be seen across many or most farm businesses, regardless of size.

Of course, that is before any of the other new taxes and levies they wish for detailed above.

This conversation hasn’t even begun to touch on the significant investment in technology and infrastructure we have made in the last 15 years to reduce our environmental impact, all of which would be both unaffordable, and irrelevant because none of it will get us even close to meeting the limits the Greens wish for.

The end result of all this is we would now own a totally unviable, un-bankable business that is not much more than a glorified life style block and has no economic future in food production. The knock on impact is that land values will collapse.

My suggestion to my mate, or anyone else in urban New Zealand reading this is to enjoy and savour the standard of living that you currently enjoy, make diary notes, take photographs so that you can look back on the “good ole days” as we embark on our journey to becoming a Zimbabwe or Venezuela of the South Pacific.

It was not sensible policy announced this last weekend, it was the framework for economic destruction.

Given the catastrophic economic news released in the PERFU today, I’m not sure we can afford to take a wrecking ball to the agricultural and horticultural sectors right now.

We definitely can’t afford the wrecking ball approach to agriculture and horticulture which are two of the country’s very few bright economic bright spots and we don’t need to.

Most farmers and horticulturalists have been doing, and are continuing to do, everything they can to operate sustainably environmentally, socially and economically and they are using science to guide them in the best way of doing it.

The Green policy isn’t science based and focuses on the environment with no consideration of the enormous economic and social costs.


%d bloggers like this: