Rural round-up

August 16, 2017

Paying for water should be a consistent policy:

A consistent policy on water for everyone is required, says BusinessNZ.

An ad hoc policy on water charging would be prone to political manipulation, with regions, councils and businesses all lobbying for favourable royalty regimes, BusinessNZ Chief Executive Kirk Hope said.

“Business needs an agreed, consistent water policy that applies to all water users and where rights to use water are tradable, fairly apportioned and can be known in advance.

“It would not be helpful for business to have to operate and make investment decisions in an environment where the cost of water is determined on an ad hoc, changing basis. . . 

Unwanted, Unknown, Unnecessary – Labour’s New Water Tax on Auckland’s Rural Northwest:

The water tax recently proposed by Labour would deliver a sharp blow to the economy of Auckland’s rural northwest, says National’s candidate for Helensville, Chris Penk.

“It’s unwanted because farmers, horticulturalists and viticulturists provide a significant number of jobs in the region … and slapping them with a water tax would completely undermine this growth. And the inevitable price rises for consumers would hardly be welcome either.”

“It’s unknown because Labour aren’t saying what they’d actually charge. There’s almost no detail associated with the threatened tax, even on such key aspects as how much it’d be and where the money would go.” . . 

The realities of Mycoplasma bovis – Keith Woodford:

The recent outbreak of Mycoplasma bovis in South Canterbury has come as a shock to all dairy farmers. It is a disease that most New Zealand farmers had never heard of.

Regardless of whether or not the current outbreak can be contained, and the disease then eradicated, the ongoing risks from Mycoplasma bovis are going to have a big effect on the New Zealand dairy industry.

If the disease is contained and eradicated, then the industry and governmental authorities will need to work out better systems to prevent re-entry from overseas. And if the disease is not eradicated, then every farmer will have to implement new on-farm management strategies to minimise the effects. . . 

Slowing supply growth to impact NZ dairy supply chain – new industry report:

New Zealand dairy processors will struggle to fill existing and planned capacity in coming years as milk supply growth slows, leading to more cautious investment in capacity over the next five years, according to a new report from Rabobank.

The report Survive or Thrive – the Future of New Zealand Dairy 2017-2022 explains that capital expenditure in new processing assets stepped up between 2013 and 2015, but capacity construction has run ahead of recent milk supply growth and appears to factor in stronger milk supply growth than what Rabobank anticipates.

Rabobank dairy analyst Emma Higgins says milk supply has stumbled over the past couple of production seasons and, while the 2017/18 season is likely to bring a spike in milk production of two to three per cent, Rabobank expects the brakes to be applied and milk production growth to slow to or below two per cent for the following four years. . . 

Synlait Milk says US approval for ‘grass-fed’ infant formula will take longer –  Tina Morrison:

(BusinessDesk) – Synlait Milk, the NZX-listed milk processor, said regulatory approval for its ‘grass-fed’ infant formula in the US is taking longer than expected.

Rakaia-based Synlait is seeking approval from the US Food and Drug Administration for its ‘grass-fed’ infant formula to be sold in the world’s largest economy ahead of a launch of the product with US partner Munchkin Inc. The companies said in a statement today that the FDA process, which had been expected to be completed this year, is now expected to take a further four to 12 months. The stringent process, known as a New Infant Formula Notification (NIFN), includes a range of trials, audits and documentation. . . 

New Zealand’s beef cattle herd continues to grow:

Beef + Lamb New Zealand says that during the past year, New Zealand’s beef cattle herd increased by 2.8 per cent – to 3.6 million head – while the decline in the sheep flock slowed sharply as sheep numbers recovered in key regions after drought and other challenges.

The annual stock number survey conducted by Beef + Lamb New Zealand’s (B+LNZ) Economic Service highlights the continued growth in beef production, as farmers move towards livestock that are less labour-intensive and currently more profitable. . . 

Grad vets encouraged to apply for funding:

Associate Minister for Primary Industries Louise Upston is encouraging graduate vets working in rural areas to apply for funding through the Vet Bonding Scheme.

Since the Scheme was launched in 2009, 227 graduates vets have helped address the ongoing shortages of vets working with production animals in rural areas of New Zealand.

“The 2014 People Powered report told us that by 2025, we need 33,300 more workers with qualifications providing support services, such as veterinary services, to the primary industries,” says Ms Upston. . . .

Production and profit gains catalyst for joining programme:

The opportunity to look at their farm system and strive to make production and profit gains was what spurred Alfredton farmers, James and Kate McKay, to become involved in the Red Meat Profit Partnership (RMPP).

RMPP is a seven year Primary Growth Partnership programme aimed at driving sustainable productivity improvements in the sheep and beef sector to deliver higher on-farm profitability.

Encouraged by their ANZCO livestock rep, Ed Wallace, James and Kate joined the programme in 2015 and have had the opportunity to look at some key aspects of their farming system. This has included sitting down with local BakerAg consultant, Richmond Beetham, who has helped the McKays look at their ultimate goal of mating a 50kg hogget. Increasing weaning weights and looking to diversify their forages has also been a goal for the McKays. . . 

Fonterra Dairy Duo Claim Awards at Top International Cheese Show:

Two Fonterra NZMP cheeses have scooped silver awards at the prestigious international Cheese Awards held recently at Nantwich, UK.

One of the most important events in the global cheese calendar, the International Cheese Awards attracted a record 5,685 entries in categories that ranged from traditional farmhouse to speciality Scandinavian. Cheeses from the smallest boutiques to the largest cheese brands in the world vied for top honours in the Awards, now in their 120th year of competition. . . 

Dairy farmers spend over $1b on the environment:

Federated Farmers and DairyNZ have conducted a survey on New Zealand dairy farmers’ environmental investments, revealing an estimated spend of over $1billion over the past five years.

Five percent of the nation’s dairy farmers responded to the survey and reported on the environmental initiatives they had invested in such as effluent management, stock exclusion, riparian planting, upgrading systems and investing in technology, retiring land and developing wetlands. 

“It is encouraging to see the significant investments farmers are putting into protecting and improving the environment,” says Andrew Hoggard, Federated Farmers Dairy Chair. . . 

Criticism of farming gas emissions tells only half the story  – Paul Studholme:

It is imperative that political decisions on reacting to climate change are based on science, writes Waimate farmer Paul Studholme.

I write because of frustration with the sweeping generalisations and half-truths critical of the farming industry in this country that are presented by the mainstream media and environmental groups as facts.

One in particular, repeated frequently, is this: Farming produces more than half the greenhouse gases in New Zealand. This is only telling half the story or one side of the equation.

What is referred to here are the gases methane and carbon dioxide emitted by cattle and sheep. This is part of the carbon cycle. . .

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Rural round-up

August 19, 2015

Dairy price correction a confidence boost – BusinessNZ:

The uptick in dairy prices at the latest auction should put some confidence back into the economy that should never have been lacking anyway, says BusinessNZ chief executive Phil O’Reilly.

Prices at the latest GlobalDairyTrade rose an average of 14.8 percent, with the all-important whole milk category rising by more than 19 percent, ending a five-month run of 10 consecutive falls.

“It’s been a long time coming, but I guess we’ve got to remain cautious,” says Federated Farmers spokesman Andrew Hoggard. . . 

Auction result welcome but industry needs to remain vigilant:

Federated Farmers has welcomed the outcome of this morning’s GlobalDairyTrade auction, but says those in the dairy industry need to remain vigilant.

Dairy Industry Chair Andrew Hoggard says “The outcome of this morning’s auction suggests there might be light at the end of the tunnel, but what the industry needs is for this to continue and hold.” . . .

Fonterra calls for a halt to having to accept all milk and supply other large entrants –  Fiona Rotherham:

(BusinessDesk) – Fonterra Cooperative Group, the world’s largest dairy exporter, said it should no longer be required to accept all milk from new suppliers or to have to make milk available to large processors, apart from Goodman Fielder.

In submissions to the Commerce Commission, which is undertaking a government-ordered review of the industry’s competitiveness, rival processors have said they either want the status quo or the regulations tightened.

Fonterra said it recognises part of the Dairy Industry Restructuring Act (DIRA) continues to benefit the dairy industry and New Zealand but some parts are no longer “necessary or efficient” given significant industry changes since 2001, particularly the continuing entry of well-resourced competitors. . . 

Fonterra’s submission is here.

Auditor General to examine Saudi farm deal:

The controversial deal that saw $11.5 million of taxpayer money on a Saudi farm is to be examined by the Auditor-General.

Lyn Provost has announced she will carry out an inquiry into the expenditure of public money on the Saudi Arabia Food Security Partnership.

Mrs Provost received several requests, including from members of Parliament, the New Zealand Taxpayers’ Union, and in a petition from over 10,000 New Zealanders, to inquire into aspects of the deal. . . 

 

Dairy prices set for ‘substantial recovery’ by mid-2016, Rabobank says – Tina Morrison:

(BusinessDesk) – Dairy prices, which have slumped to a six-year low, are set for a substantial recovery by mid-2016, according to agri banking specialist Rabobank.

Average dairy product prices plunged to the lowest level since August 2009 at the last GlobalDairyTrade auction a fortnight ago, amid increased supply and weak demand. Still, the factors to trigger a turnaround are now in place and a substantial improvement in prices is expected by mid-2016, Rabobank said in its dairy industry note ‘Riding Out the Storm’.

Rabobank says dairy prices are set to rise as milk price reductions in China start to choke off domestic production growth, lower New Zealand production leads to a supply-side adjustment in export regions, the collapse in international commodity prices reduces supply growth from the US and EU, and as accelerated dairy consumption growth depletes current accumulated stocks. . . 

The short, the medium and the long term for dairy – Keith Woodford:

With calving in full swing, most dairy farmers have no time to think about anything but today. Things are indeed grim and the short term focus has to be on survival. For the next few weeks, there is some logic to focusing on the simple day to day things that can be influenced. Even in the good times, these are the things that often separate out the best from the not so good.

Despite the gloom, most of the farmers I know do seem to have things well under control. Perhaps that is because most of my mates have lived through tough times before, back in the 80s and 90s. They have always assumed that at some time a storm would burst upon them and so they have not panicked. Rather, they have been quietly and sequentially battening down the hatches for more than 12 months. . . 

Meat industry shareholder groups merge to push their case for reform – Fiona Rotherham:

(BusinessDesk) – The two shareholder groups representing Silver Fern Farms and Alliance farmers have joined forces in a bid to encourage the two meat cooperatives to follow suit and work collaboratively.

Each shareholder group has separately gained the 5 percent farmer support needed to call special meetings of their respective cooperatives to try and force the boards to investigate the benefits and risks of a merger, though dates have not yet been set for either.

Alliance shareholder Jeff Grant said it is best to wait on the outcome of Silver Fern Farm’s current capital raising before holding either meeting.

“If the capital raise changes the structure of the cooperative to be a non cooperative or in foreign ownership then it would be pointless having an SGM (special general meeting) at all,” he said. . . 

 High Beef Prices Are Fueling a Revival of Cattle Rustling in the Plains States –  Michael Graczyk:

Doug Hutchison wears a badge and carries a gun but his most effective weapon in the pursuit of livestock thieves in the nation’s largest cattle-producing territory may be his smartphone.

With it, Hutchison, one of 30 Special Rangers with the Texas and Southwestern Cattle Raisers Association, photographs suspected stolen livestock, accesses the association’s databases of livestock brands and reports of missing animals and consults with sheriff’s offices.

“I think it’s one of the greatest tools in the world,” said Hutchison, wearing a cowboy hat and jeans, his boots mired in the mud and manure of noisy auction stockyard corrals filled with nervous cattle. . .  Hat tip: AEIDEAS

Outdoors Lobby Wants Recreational Only Fisheries:

A national outdoor recreational advocacy group wants freshwater fish species such as whitebait, eels and some saltwater species ”recreational only.”

The call by the Council of Outdoor Recreational Associations (CORANZ) an umbrella group of outdoor recreational organisations, was in response to Massey University researcher Mike Joy’s call to remove whitebait and eels from commercial status and protect them by a “recreational only” classification.

Bill Benfield, co-chairman CORANZ, conservationist and author, said that commercialised species, almost without exception, struggled to be sustainable in the face of human greed. . .

 And from Kansas Department of Agriculture:
Kansas Department of Agriculture's photo.


NZ 2nd least corrupt

December 4, 2014

New Zealand has cemented its global reputation for being among the least corrupt countries:

New Zealand remains one of the top countries in the world for low levels of perceived corruption, says Justice Minister Amy Adams.

Transparency International’s Corruption Perceptions Index released today ranked New Zealand second out of 175 countries. The index scores and ranks countries and territories based on how corrupt their public sector is perceived to be on a scale of zero to 100.

New Zealand retained last year’s score of 91, taking out second place to Denmark which moved up one point to 92.

Ms Adams says New Zealand’s high ranking reflects the Government and the public sector’s strong commitment to protecting New Zealanders’ rights and freedoms.

“New Zealand is perceived as one of the least corrupt countries in the world. We’ve got a strong track record of open and transparent government and our public sector is internationally renowned for low levels of corruption,” says Ms Adams.

“The Government is continually working to prevent and address the risk of corruption. Our robust legal frameworks encourage transparency, criminalise bribery and corruption, and facilitate collaboration with other countries to tackle such practices.

“I note Transparency International have noted a concern that we have not ratified the United Nations Convention Against Corruption. However, the legislation to enable this has passed its first reading and is currently before a select committee for consideration.”

“This year we’ve progressed a range of initiatives to strengthen anti-corruption measures and further enhance transparency,” says Ms Adams.

Anti-corruption initiatives progressed by the Government this year include:

  • introducing  the Organised Crime and Anti-corruption Legislation Bill to strengthen New Zealand’s bribery and corruption offences
  • formally joining the Open Government Partnership (OGP) which is a multilateral initiative aimed at promoting open and transparent government and fighting corruption
  • enacting the Companies Amendment Act 2014 and the Limited Partnerships Amendment Act 2014 to prevent overseas criminals from using  New Zealand’s companies registration systems to create shell companies
  • implementing an information sharing agreement between Inland Revenue and the New Zealand Police
  • reviewing New Zealand’s extradition and mutual legal assistance laws
  • the Serious Fraud Office’s collaboration with Transparency International NZ and BusinessNZ to create a free online anti-corruption training course
  • introducing the Crimes (Match-fixing) Amendment Bill to combat match-fixing risks during the Cricket World Cup and the FIFA Under 20 (football) World Cup.

Transparency International says corruption is threatening economic growth.

Poorly equipped schools, counterfeit medicine and elections decided by money are just some of the consequences of public sector corruption. Bribes and backroom deals don’t just steal resources from the most vulnerable – they undermine justice and economic development, and destroy public trust in government and leaders.

Based on expert opinion from around the world, the Corruption Perceptions Index measures the perceived levels of public sector corruption worldwide, and it paints an alarming picture. Not one single country gets a perfect score and more than two-thirds score below 50, on a scale from 0 (highly corrupt) to 100 (very clean).

Corruption is a problem for all countries. A poor score is likely a sign of widespread bribery, lack of punishment for corruption and public institutions that don’t respond to citizens’ needs. Countries at the top of the index also need to act. Leading financial centres in the EU and US need to join with fast-growing economies to stop the corrupt from getting away with it. The G20 needs to prove its global leadership role and prevent money laundering and stop secret companies from masking corruption.

New Zealand has topped the index for several years.

Our second place is due to Denmark’s improvement not a reduction in our own performance but it is not something about which we can be complacent.


Labour’s two levels of minimum wage

July 2, 2014

BusinessNZ is not impressed by Labour’s intention to create two levels of minimum wage if it implemented its immigration policy:

The policy released on the weekend says low-paid migrants push wages down for New Zealanders, and a Labour government would make it compulsory for businesses to pay migrant workers at least the living wage, after accommodation deductions.

BusinessNZ Chief Executive Phil O’Reilly says having a minimum wage for New Zealanders and a higher minimum wage for migrant workers makes no sense.

“Whether it is called a living wage or any other name, it would basically be a higher minimum wage for migrant workers.

“The policy appears to be based on advice from a Lower Hutt church agency that promotes an arbitrary wage level without bearing accountability for that advice.

“This is hardly the way to make public policy.

“New Zealand’s skills shortage is a complex problem. It requires the education system to be delivering more needed skilled people. It requires students to be making more realistic study and career choices. In the absence of these, many employers are forced to seek migrant workers.

“Labour’s policy proposal to require higher rates of pay for migrant workers than New Zealand workers does not address our skills shortage problem and would create problems of its own.

The idea would create problems for workers and employers.

Local workers on one wage would rightly feel hard done by doing exactly the same work as immigrants but knowing they were paid less.

Problems employers already have getting enough staff willing and able to work would be exacerbated if immigrants were priced out of the market.

BusinessNZ sees other problems with Labour’s policy:

Labour’s new immigration policy would mean Immigration New Zealand would be given the power to make employers train New Zealanders before getting the nod to employ workers from overseas.

BusinessNZ says the policy released by Labour this weekend appears to convey employers are to blame for skills shortages in New Zealand.

BusinessNZ Chief Executive Phil O’Reilly says Labour’s policy is “wrongheaded.”

“What Labour’s doing is a bit worrisome because what they’re saying is they are going to be much tougher on employers.

“They’re saying you’ve got to skill up your workforce before you come knocking on the immigration door.”

He says the government needs to work with businesses to help solve the skill shortage.

“You can’t just train them all up in a week. Sometimes, no matter how much good work government does with employers and the likes in terms of training for some of those skills, they go overseas too.

“This is always going to be an issue, with the gap between the skills a business needs at any given time and what the skills system in New Zealand can deliver them.” . . .

Sometimes businesses can afford to take on someone and train them, sometimes they need someone already skilled.

Locals are usually the preferred option as it is because there’s usually extra administration involved in hiring immigrants.

But sometimes an immigrant will be more suited to the job than a local and employers don’t need more hurdles to jump before they can fill a vacancy.

New Zealand needs productive businesses to contribute to economic growth.

Their ability to do that will be compromised by Labour’s policy which is a thinly disguised attempt to limit immigration and looks like its been written by unions.


More tax, higher costs, fewer jobs

June 2, 2014

The Green Party plans to impose a carbon tax on us:

. . . Co-leader Russel Norman wants to scrap the current carbon pricing system – the Emissions Trading Scheme.

In its place would be a tax of $25 per tonne of carbon on industry polluters. . .

Critics of the tax claim the tax is a burden on households, who pay higher electricity and fuel costs.

However, the Greens say their levy would be offset by a ”climate tax cut” on the first $2000 of income. 

”We can reduce our emissions without hurting household budgets,” he said. ”Households will be on average $319 better off every year under the Green party policy.” . .

Imposing a tax with one hand and giving a tax with another won’t make anyone better off because the tax will lead to other cost increases on fuel, power and food which will passed on, in part or full, to consumers.

Agriculture – which is currently exempt from the ETS – would pay a reduced rate of $12.50 per tonne. This works out as an 12.5 per cent hit on farmers’ income. This includes 2 per cent on the working expenses of the average farm. A Berl Economics report, released with the policy, said dairying will be ”adversely affected.”

Dairying won’t just be adversely affected by the carbon tax, it will be hit by other Green policies too.

But it adds: ”However, at the currently projected pay-out for milk solids, even dairy farms in the lowest decile would remain well above break even in the face of an emissions levy.”

What happens when the payout drops to its long-term average which is well below the $7 forecast for the coming season?

What about the environmental impact of less efficient farmers in other countries increasing production because our produce is more expensive which makes it easier to compete with us?

And what about the poor people who will face higher prices for dairy products, power and fuel?

Other gas-emitting industries – such as electricity and road fuels – are less likely to be affected because they would be able to ”pass-on any production cost increases to households.” . . .

That will be the households whose earners will be getting a tax cut, the benefit of which will be less than the cost increases from the extra tax.

BusinessNZ Chief Executive Phil O’Reilly said the levy may threaten jobs. 

“Our approach should be unlocking business solutions rather taxing business more,” he said. 

As a “small open trading economy” New Zealand should participate in international emissions trading schemes.

Federated Farmers president Bruce Wills said the tax will make dairy farmers “less competitive” in international markets. . .

Less competitive means lower returns which means less export income which means less economic growth which means we’ll be less able to fund the first world education, health and other services we need.

However green they want to paint it, this is a red policy which will add costs, put downwards pressure on wages and threaten jobs.

Bernard Hickey told last week’s  Alliance Group Pure South conference that the election will be close.

He then went on to list the policies that farmers could expect to adversely affect them under a Labour/Green coalition with whichever other left-wing parties they’d need to govern.

They included: capital gains tax, compulsory KiwiSaver and water restrictions and charges.

Those are three very good reasons to vote National and the Green carbon tax is another.

And Steven Joyce points out some inconvenient truths:

 

 

 


Labour no longer champion of poor

April 30, 2014

Labour once claimed to be the champion of the poor.

The monetary policy announced by its Finance spokesman David Parker yesterday is further proof that it has strayed far from that because it would hit the  poor hardest.

Labour’s plan to use New Zealanders’ retirement savings as a monetary policy tool would hit low and middle-income New Zealanders hardest, and not achieve what Labour thinks it would, Finance Minister Bill English says.

“This idea mixes up people’s own retirement savings – which require certainty over a long period – with the Government’s monetary policy, which the Reserve Bank reviews and can change every six weeks. The two are completely different and should stay that way.

“Labour’s approach will force people to save at least 9 per cent of their wages, plus more when the Government decides to up the contribution rate. This cut in take-home pay would hit hardest those low and middle-income families who are unable to save much, or who are focusing on paying their mortgages.

“Our current monetary policy settings are considered world-best practice. In the last few years we’ve come through a domestic recession and a global financial crisis and now have sustained economic growth, increasing wages and jobs and interest rates are just coming off 50-year lows.

“Labour’s ‘tool’ is a confusing solution looking for a problem. This is wishful thinking and there is no evidence it would actually work. Even if it did it would  require Kiwi families to accept a higher cost of living and higher compulsory savings at the same time, which would be a double squeeze on them.

“Labour has a recent history of over-spending in government. It should commit to spending less itself, rather than forcing householders to do the hard work for it.

“Low and middle-income earners would be paying the price for Labour’s lack of discipline,” Mr English says.

Compulsory savings isn’t going to appeal to people who have little or no spare money to save.

Compulsory savings with a variable rate which means you could be forced to save even more of the money you don’t have to spare will have even less appeal.

The idea behind the proposal is to give the Reserve bank and alternative tool to interest rates for fighting inflation.

No-one with borrowed money welcomes interest rate rises but at least most people have some control over how much they borrow and how quickly they repay it.

When interest rates go up they could choose to reduce their debt.

With compulsory savings they would have no choice about how much they pay, and no choice about reducing the amount they had to pay.

Increases in compulsory savings rate will hit everyone but interest rate rises affect  a relatively small number of people directly: *

Only  26% of single families and 55% of couples have mortgages.

Then there’s the impact on wages.

Labour’s compulsory scheme would require greater contributions from employers over time.

When working out what they can afford to pay staff it’s the total cost not where the money goes that matters so a greater contribution to KiwiSaver accounts will leave employers with less for wage increases.

Rob Hosking explains why Labour’s big tool won’t work:

. . . The  entire policy rests on the assumption a lower interest rate will also lead to a lower exchange rate. This is by no means a given. . .

The second issue is more political.

Forcing people to save more is not a costless move for them. Someone on an average income who suddenly has another chunk of their cashflow taken out of their weekly income is going to feel the pinch. . .

Forcing people to give up something is going to be fraught with political difficulty.

When it to implementation you can expect a wave of applications for exemptions, and this can be expected to lead to an administrative catscradle  and a political tangle. . .

BusinessNZ  chief executive Phil Oreilly has concerns about the workability of the policy:

. . . The proposed policy would ‘mix the targets’, he said. Instead of a sole focus on inflation, the Reserve Bank would also have to focus on achieving a positive balance of payments, stable economic growth and stable employment. This raises the risk of not achieving some or all targets.

“New Zealand’s external balance is a result of a number of factors, including over-consumption, over-regulation and inefficient government spending. It’s hard to see how the Reserve Bank can be particularly influential in changing these.”

Mr O’Reilly said there was potential for uncertainty and confusion from having different levers over interest rates and KiwiSaver rates.

“While the Reserve Bank would apparently retain control over its existing interest rate lever, it would probably need to go to the Government for the power to use the KiwiSaver savings lever each time it sought to do so. This would not only slow down the Reserve Bank’s decision-making ability, but would undoubtedly introduce politics into the decision making process. All of this would potentially add a great deal of political uncertainty to New Zealand’s macroeconomic settings.

 “New Zealand’s current Reserve Bank system is scrupulously apolitical. That is why other countries have followed our lead in monetary policy.

“Labour’s policy brings the risk of a future government politicising what has until now been an apolitical process.

“Can you imagine a future Government agreeing to a Reserve Bank recommendation to raise KiwiSaver rates three months before an election? “ Mr O’Reilly asked.

He said restricting immigration numbers as a way to reduce house prices could have negative consequences, potentially leading to wage inflation and constraints on firms unable to gain the skills they need.

“The policy announced today makes little mention of the key role played by other government policies in reducing house prices and making our economy more competitive. We note for example the recent Productivity Commission report on housing affordability which pointed to the key role played by land supply constriction in increasing house prices. ”

There would also be more uncertainty about incomes as a result of the proposed policy, he said.

“Income earners would be uncertain as to whether or not their KiwiSaver or their mortgage rates might rise, or both. This would have impact on private sector wage setting. . . “

So the policy won’t necessarily achieve it’s aim which is to reduce the exchange rate.

It would threaten the political neutrality of the Reserve Bank.

It would also leave people with less money to spend and it would leave them with no certainty over how much they would have.

Even the best budgeters are used to unexpected expenses but in the normal course of events we can all expect certainty over income.

With Labour’s proposed Variable Savings Rates, we won’t have any certainty.

It would be like being subject to possible changes in tax rates every six weeks and it’s the poorer people whom Labour used to champion who will be hurt most by that.

* Hat tip Lindsay Mitchell

 


Why stop at $15?

February 25, 2014

Labour Minister Simon Bridges announced the minimum wage will increase from $13.75 an hour to $14.25.

 . . The Starting-Out and training minimum wages will increase from $11 an hour to $11.40 an hour, which is 80 per cent of the adult minimum wage.

“Setting these wage rates represents a careful balance between protecting low paid workers and ensuring jobs are not lost,” says Mr Bridges.

“The increase announced today balances the needs of both businesses and workers and will have minimal impact on the wider labour market and inflationary pressures.

“This increase will keep the minimum wage at around 50 per cent of the average hourly rate, which is the highest rate in the OECD.

“The Government is firmly focussed on growing the economy and boosting incomes. Through our Business Growth Agenda we are creating opportunities to help grow more jobs in New Zealand, for New Zealanders.” . . .

That nearly half those surveyed think that’s not enough goes to show most people don’t understand the issues.

The only sustainable way to increase wages is by economic growth.

Without an increase in productivity and profit, an increase in wage rates will result in a decrease in job numbers.

The Green Party doesn’t understand that.

The Greens would have immediately raised the minimum wage to $15 an hour, Green Party Co-leader Metiria Turei said today. . .

Why stop there?

“Around 125,000 kids live in families where the adults earn less than the living wage. It is in the government’s hands to end poverty for working families and improve the lives of those kids. . .

Those families get Welfare for Families through which those with two children pay no net tax until they earn $50,000. Any increase in their pay will reduce their welfare. That’s less money from public coffers but they’ll be no better off and could be worse off if jobs are lost.

That living wage is an arbitrary figure and last week’s increase in it was based on different methodology from the original figure:

The ‘new’ living wage has shifted the goalposts and appears to be more about politics than public policy, says BusinessNZ.

Last year the living wage campaign said $18.40 should be the living wage, calculated on the basis of the living costs of a family of four.

The promoters now say the living wage for this year should be updated to the higher rate of $18.80.

“But the report shifts the goalposts,” BusinessNZ Chief Executive Phil O’Reilly said.

“The increase from $18.40 to $18.80 is not based on the same methodology as last year.

“Using the same methodology, for the same family of four, would show the new living wage should really be $22.89.

“If last year’s formula said $18.40 was needed for a living wage, and the same calculations now show $22.89 is required, why isn’t the campaign seeking $22.89 an hour?” Mr O’Reilly asked.

“Either the original calculations were flawed, or the campaign is just picking numbers out of thin air.”

Mr O’Reilly said decision makers could not have confidence that the living wage figures were soundly based.

“This switch in the figures used is important for taxpayers and ratepayers who are being asked to pay for the campaign. Wellington ratepayers are now funding the living wage policy for council employees and taxpayers would be funding it for all government employees under Labour Party policy.

“There can be no confidence in a living wage proposal set on an arbitrarily changing basis.”

The whole concept of a living wage which decrees everyone should be paid enough to support a family of four, regardless of what the work they do is worth, is flawed.

For the record, all our staff are paid more than the minimum wage.

That’s a decision we make in negotiation with them taking into account their skills and experience, what they’re required to do, the value of all of that and what the business can afford.


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