Rural round-up

May 8, 2020

Concern farmers’ wellbeing affected: –  David Hill:

North Canterbury Rural Support Trust chairman Andy Munro is concerned for the wellbeing of farmers as they negotiate the ongoing effects of a dry season and the Covid-19 lockdown.

He said last month’s rain was “a great morale booster” for farmers in the drought-affected area in North Canterbury.

“Since that rain four weeks ago, things went pretty quiet. But it’s just a pity we haven’t had a follow-up rain and we really need a good warm follow-up rain, particularly for the farmers from Waipara north to get some growth before winter.

“It’s starting to get dry and cold in that northern part, but other than that it’s business as usual. . . 

Farmers need to be heard not patronised:

The Government’s drought recovery advice fund announced today is merely a drop in the bucket for supporting farmers affected by drought, National’s Agriculture spokesperson Todd Muller says.

“The fund is specifically for providing affected farmers with recovery and planning advice, but does not contribute to farmers’ rising feed costs or general business costs.

“Most farmers already know what is needed to help their business recover and it is insulting for the Government to tell them they simply need to seek more advice to get through the drought. . . 

Rural GPs not just another business – Peter Burke:

Rural General Practice Network chair Dr Fiona Bolden is disappointed that the Government is treating rural general practices the same as any other business in the community.

Bolden told Rural News that rural GPs were expecting to get two payments from the Government to assist them financially.

However, she says while they had received the first payment, Cabinet vetoed the second payment – just days before it was expected to be paid.  . .

Differing responses to wage subsidy scheme – Allan Barber:

The country’s meat processors have followed two distinctly different paths in response to the government’s wage subsidy scheme which is available to all businesses for 12 weeks, providing they can substantiate a 30% drop in revenue during the period. Silver Fern Farms, Alliance, ANZCO, Taylor Preston and Blue Sky Meats have all claimed the subsidy to varying extents, whereas AFFCO, Greenlea and Wilson Hellaby have decided it is not justified or necessary, at least partly on ethical grounds.

The contrast in approach has already been commented on by independent economist, Cameron Bagrie, who has slammed the two largest claimants, SFF which has claimed $43 million and Alliance $34 million, for taking advantage of taxpayer funding when they are classified as an essential business, operating in lockdown. Equally Bagrie complimented those companies not making a claim because they were getting on with business as usual. Speaking to The Country’s Jamie Mackay, he said “the wage subsidy is out there to support businesses that are getting clobbered, that are effectively in lockdown.”

I am not convinced this interpretation is either totally fair or even correct. Both SFF’s Simon Limmer and Alliance’s CEO David Surveyor are clear the wage subsidy is not a company entitlement, but is paid directly to various categories of employees: firstly it maintains standard wage rates at normal processing speeds despite the 30-50% reduction to meet distance requirements, it retains those who would have to have been terminated seasonally, and it is used to pay those who cannot work e.g. because of age,  compromised immunity or family circumstances. . .

Community to the rescue for harvest – Toni Williams:

CharRees Vineyard owners Charlie and Esma Hill put a call out on social media for help to harvest during lockdown.

They were so overwhelmed by community response, including some from Christchurch, they had to turn people away.

The lockdown harvest, approved by Ministry for Primary Industries as essential for food and beverage production, attracted about 20 people from Ashburton and Methven — many who had never harvested grapes before — to put their hands up to help.

The pickers worked alongside family members of the couple and vineyard workers to pick the first of three annual grape harvests. . . 

Red meat exports top $1 billion in March 2020, a first for monthly exports:

The monthly value of New Zealand red meat and co-product exports topped $1 billion for the first time, according to an analysis by the Meat Industry Association (MIA).

Total exports reached $1.1 billion in March 2020, an increase of 12 per cent on March 2019.

While overall exports to China for the month of March were down by nine per cent compared to last March as a result of COVID-19, exports to all other major markets increased, demonstrating the agility and resilience of the New Zealand red meat sector. . . 

Time to take ag reform out of the “too hard basket” – Fiona Simson:

Regional Australia is well placed to be the engine that powers Australia’s COVID-19 recovery. The bush has done this before, with strong exports helping keep recession at bay during the Global Financial Crisis.

And, after a challenging period of drought, bushfires and floods, widespread rainfall has seen the fortunes of farmers begin to improve. Agriculture is ready and raring to grow.

As we dare to cast an eye to the world post-COVID-19, now is the opportune time to consider the changes agriculture and regional Australia needs to best contribute to the recovery task. . . 


Rural round-up

May 6, 2020

Turning the environmental table on urban households – Cameron Bagrie:

Farmers have worn the pointed fingers on the envirionment despite most playing by the rules and many doing even better than what the rules require. It is rural communities we can thank for much of the environmental progress we’ve already made.

There are isolated instances of poor behaviour – just as in any industry, but in aggregate, farmers are moving forward.

Increasingly, farmers have been required to operate under Farm Management Plans (FMPs), against which their environmental performance is audited.

City folk should consider what their equivalent of an FMP – call it a Household Management Plan – would look like. . .

New Zealand Agricultural Show cancelled  – Tracy Neal:

The South Island’s largest springtime event, the New Zealand Agricultural Show, has been cancelled for the first time since World War 2.

Organisers said public safety concerns and a fragile financial position were behind the decision to cancel this year’s November show.

The Canterbury A&P Association made the announcement today, saying the likelihood of a lingering response to the Covid-19 crisis made planning for such a large event untenable.

It was now also calling for public help to secure the event’s long-term future. . .

Two-pronged approach needed to address dairy staff shortfall:

DairyNZ is calling on the Government to work with the dairy sector to address a looming staff shortage for the coming season, that has been exacerbated by the impacts of COVID-19.

By the end of September around 2500 visas are due to expire for migrant staff currently working on dairy farms. Many are based in Canterbury, Waikato, Southland and Otago. Both farmers and farm staff are desperately seeking certainty.

“We estimate that even if all migrant dairy workers currently in New Zealand were retained, there could be a shortfall of up to 1000 employees for the coming dairy season,” said Dr Tim Mackle, DairyNZ chief executive.

“This suggests that we are going to need to take a two-pronged approach to address the staffing shortfall that will include both retaining our migrant workforce and recruiting new Kiwis into our dairy sector. . .

NZ coconut and avocado oil producer to expand into the Pacific :

A New Zealand coconut and avocado oil producer, who is promising Pacific farmers much higher returns than they currently get, hopes to start operating within just months.

Whangarei-based Cocavo is headed by Chris Nathan who has been trying to set up operations in Fiji since 2018.

He said it’s taken awhile to find the right piece of land, and there were other difficulties, but they now have equipment, and building should soon be underway.

Mr Nathan said there is also strong interest from Luganville on Vanuatu’s Espirito Santo. . .

Safe domestic travel should be considered at Level 2:

The New Zealand Professional Hunting Guides Association and Game Animal Council are joining other tourism and recreation organisations in calling for an easing of domestic travel restrictions at Alert Level 2.

“Hunting guides, helicopter operators, accommodation providers and outfitters have suffered considerably through the lockdown,” says New Zealand Professional Hunting Guides Association President James Cagney. “Domestic travel will allow some of these businesses to restructure their offerings to New Zealand customers and keep operating.”

“While the industry has missed out on this year’s roar there is still fantastic late-autumn and winter hunting available, particularly for bull tahr, chamois, red stags and late rut sika. It would be fantastic if New Zealand hunters were able to get out and enjoy these opportunities and at the same time support the livelihoods of those in the industry.” . . 

Dairy processors warn on coronavirus disruption – Carlene Dowie:

Executives from two of Australia’s biggest dairy processors have warned that the COVID-19 pandemic is disrupting markets in ways not seen before.

Bega chairman Barry Irvin and Fonterra chief financial officer Marc Rivers told the Pac Partners/Westpac 2020 Agfood Virtual Conference on Wednesday having diverse manufacturing options had allowed them to adapt.

Both pointed to immediate lower commodity prices but saw glimmers of positivity for the future.

And both said there was a need for further rationalisation of Australia’s dairy manufacturing base. . .

 


Quotes of the month

April 1, 2020

NZ is the Possible. We care equally about our environment, our consumers, our people, our animals and hope to make enough profit to keep going again next year. We are genuinely world leading in our approach. – Trish Rankin

So one way to think about Covid-19 is as a test of various systems around the world — political, medical and economic. Markets believe those systems are failing that test. – Tyler Cowen

A coalition government that struggles to implement meaningful policies. A prime minister at ease schmoozing with other leaders amid the glitz and glamour of the world stage. A second-in-charge who clearly sees himself as a co-prime minister. – Liam Hehir

There are far fewer people out there celebrating the real, powerful stories of Indian migrants. Like my sister-in-law, who moved to South Auckland from India as a kid, won top of the year at Auckland Uni, won a full PhD scholarship to Cambridge University, was awarded a Leader of Tomorrow at the Gellen Symposium of Switzerland, and is currently lecturing at Harvard while running a start-up. She’s probably the best poster girl you could possibly find for everything New Zealanders want to be known as: smart, determined, ballsy … and proudly Kiwi. – Verity Johnson

We were focused on being statistically safe, rather than being actually safe, which is a trap we are all guilty of falling into. . . They all said we put far too much focus on paperwork and forms and controls and not enough on engagement with people.  Jono Brent

After three years, we have books of inquiries and less than a pamphlet of implementation. Richard Prebble

But the epidemic might well have effects far beyond any that its death rate could account for. The world has suddenly woken up to the dangers of allowing China to be the workshop of the world and of relying on it as the ultimate source for supply chains for almost everything, from cars to medicines, from computers to telephones. No doubt normal service will soon resume once the epidemic is over, even if at a lower level, but at the very least supply chains should be diversified politically and perhaps geographically; dependence on a single country is to industry what dependence on monoculture is to agriculture. And just as the heart has its reasons that reason knows not of, so countries may have strategic reasons that economic reasons know not of.

The danger is that the epidemic will be used as a justification for beggar-my-neighbour protectionism, and for zero-sum game economics, to the great impoverishment of the world. Judgment, that mysterious faculty that is so difficult to define or quantify, but which undoubtedly exists, will be needed to adjudicate the claims of strategic security and economic efficiency. Even in situations in which there is hard scientific evidence to guide us, such as the present epidemic, judgment is still required. The present highly-charged political atmosphere, in which opponents can hardly bear the sight of one another, or conceded any value to their ideas, is not conducive to its exercise.- Theodore Dalrymple

Remember what they’ve suffered and don’t make other people suffer the way some of them have been suffering because they are no different, while they may look different and they may sound different but we’re all the same. – John Sato

Donald Trump takes comfort from the fact that it has killed only a handful of Americans so far. He forgets that the chart of an epidemic is exponential, as each person infects several people, and the power of such compound interest is, as Albert Einstein supposedly said, the eighth wonder of the world. The economist Tyler Cowan points out that it’s hard to beat an exponential process once a certain point has passed.

Last week Greta Thunberg was still telling the European Parliament that climate change is the greatest threat humanity faces. This week Extinction Rebellion’s upper-class twits were baring their breasts on Waterloo bridge in protest at the billions of people who they wrongly think may die from global warming in the next decade. These people are demonstrating their insensitivity. They are spooked by a spaniel when there’s a wolf on the loose. – Matt Ridley

Dairying was an economic sword for New Zealand against the GFC. Now we will be looking to exporter Fonterra and the dairy industry it leads to wield that sword again against a pandemic scourge.Andrea Fox

Clearly,  however  much  New Zealanders  might  believe  there is  much to gain  from a united  front  in this  time of  crisis,  the  role of a  vigilant   Opposition   is  perhaps  just  as  vital. – tutere44

He waka eke noa – the canoe which we are all in without exception. We are all in this together. – Simon Bridges

Farming has been unloved and beaten up by the Government for the last two or three years but the Government is going to need farmers for the next few years. Cameron Bagrie

The world has not “completely changed.” What was good economics last month is good economic policy today. To come out of this recession we need to reform the Resource Management Act, have more flexible and less onerous employment laws. We need a welfare system that discourages dependence and an education system that does not turn out one in five functionally illiterate. We desperately need a health system that is not crippled with deficits. Richard Prebble

I also expect to see increasing but at times grudging acknowledgement over the next six months that agriculture and food are the fundamentals of the economy that provide the funds for most of the items we have to import. Further, within agriculture, it is our pastoral products that are the products with most reliable international demand. Unfortunately, there will still be some who remain unwilling to acknowledge that reality. – Keith Woodford

The size of a bureaucracy is not necessarily a sign of its strength or efficiency, any more than the swelling of an oedematous leg is a sign of its strength and efficiency; rather the reverse. A small bureaucracy concentrates intelligence, while a large one disperses it. Theodore Dalrymple

Farmers are an optimistic bunch. We’re used to things going in cycles: weather patterns, commodity prices, market demand … but we also know that sometimes the wheel doesn’t turn the whole way round, sometimes the change is permanent.Philip Todhunter

We who are adults need to be exactly that: adults. Not spread panic or rumours. No one is alone in this crisis, but each person has a heavy responsibility. – Stefan Löfven

I have long thought that if it were not for complaint, we should have very little to talk about. Complaint is like crime in the theories of the first real sociologist, Émile Durkheim: It is the glue of society. Without opposition to crime, society would fall apart. Without complaint, most of us would remain silent and have no relations with others at all. – Theodore Dalrymple

But the fact is that writing helps one to endure what might otherwise be unendurable. I suppose I should know exactly why, but I don’t, except to say that the knowledge that you are going to write about something unpleasant puts a screen between yourself and your own experience.Theodore Dalrymple

Laughing together is as close as you can get without touching. – Gina Barreca

Humour rewards originality, offers diversion, enhances intellectual functioning, encourages emotional endurance, promotes a sense of alliance and releases tension without dismissing the seriousness of the situation.

Out of emotional chaos, humour devises a form and crafts a meaningful sense of control.

Humour insists on the most significant forms of freedom of assembly: the assembly of souls and minds, the community of the anxious and the brave (all of us at different moments), the gathering of storytellers, truth-tellers and eager listeners. – Gina Barreca

  Do you really need to drown those people in red tape and bureaucracy? I think we’re going t ave to look to lighten the load on them and let business start to flourish a bit. These aren’t normal times – John Key


Rural round-up

March 28, 2020

After the lockdown, the economy’s recovery will be dependent on dairy farms and their milk – Point of Order:

The planet is  in a state of   flux,   economies are tumbling into  recession, no-one (not even Donald Trump) can predict  when the agony will  end.

Suddenly, the streets  are  empty:  life  as  we have  known  it is  now  very  different. The  nation  is  in   lockdown.

As  the  London  “Economist” put it:

“The struggle  to  save  lives  and the  economy  is  likely to present  agonising choices…As  that  sends economies  reeling, desperate  governments are trying to tide over  companies and  by handing out millions of  dollars in  aid and loan guarantees. Nobody can be sure how these rescues  will work”. . . 

Don’t stress weakening economy – Neal Wallace:

Economist Cameron Bagrie is joining a chorus of calls for the Government to delay introducing policy imposing new environmental rules and costs on a rapidly weakening economy.

Bagrie says Government borrowing as a percentage of gross domestic product has doubled from 20% to 40% in the last few weeks as it tries to protect jobs and businesses from the impact of measures to control the covid-19 virus pandemic.

He expects Government borrowing will increase further and warns now is not the time to introduce more costs on businesses in freshwater regulations and the new minimum wage, which applies from April 1.

“Farming has been unloved and beaten up by the Government for the last two or three years but the Government is going to need farmers for the next few years.” . . 

Virus adds to woes of North Canterbury farmers – David Hill:

The uncertainty around the Covid-19 pandemic is adding yet another headache for North Canterbury farmers.

Federated Farmers North Canterbury president Cameron Henderson and North Canterbury Rural Support Trust chairman Andy Munro say dry conditions, the ongoing effects of Mycoplasma bovis and coronavirus, and this week’s 5.1-magnitude earthquake near Culverden are creating uncertainty.

‘‘The effects of the virus seem to be changing day to day as we have seen with share markets and travel bans,’’ Mr Henderson said. . . 

Meat matters to sector stalwart – Colin Williscroft:

Tim Ritchie retires as Meat Industry Association chief executive on April 7 after a career in primary sector roles that began in the 1970s. Colin Williscroft reports.

THE meat industry has come a long way since Tim Ritchie got involved and a decision made on the far side of the world about then that has provided the biggest advantage to the sector here in the years since.

Though it might not have seemed like it at the time, in retrospect Britain joining the then European Economic Community in 1973 was the best thing that could have happened for New Zealand farmers. . . 

Leader learnt a lot in dairy industry – Yvonne O’Hara:

‘‘It was like being dropped into the mothership of emergency management.’’

That is how Katrina Thomas describes her involvement with the recent flood recovery effort in the South.

The Wreys Bush dairy farmer was Dairy Women’s Network (DWN) southern regional hub leader for Otago and Southland since 2016, and regional leader for Southland since 2012.

However, this year she decided she wanted to try other challenges. . . 

Wine industry faces worker accommodation woes during lockdown:

The wine industry is facing criticism for continuing harvest during the Covid-19 lockdown, and is facing problems with worker accommodation

The government says the grape and wine industry can continue to operate as an essential business, but strict conditions apply as the country moves to contain the spread of Covid-19.

Some Marlborough people have noticed the hundreds of workers travelling to work in vineyards all over the district, and have questioned whether this was safe in the current climate. . . 


Rural round-up

February 24, 2020

Dairy farmers must increase risk – Hugh Stringleman:

Dairy farmers have to learn to take more risk because staying put is no longer risk-free, independent Cameron Bagrie says.

The pace of change will accelerate not slow and farmers face three to five more years of this grumpy growth, which stems from rising costs and more regulations, he told a DairyNZ farmers forum.

“Stop being so polite and drive the key changes in the things that you can control.” . .

Net zero goal needs new tech – Colin Williscroft:

Agriculture and land use systems will have to be transformed to achieve net zero greenhouse gas emissions, Scottish academic Professor Bob Rees says.

While all sectors of the economy will have to play their part cutting emissions, the likely consequences for agriculture are stark, the keynote speaker at the Farmed Landscapes Research Centre workshop said.

Rees, an agriculture and climate change expert at Scotland Rural College, said emissions from the sector urgently need to be reduced but costs and inertia are significant barriers. . .

Cavalcades bosses keep coming back – Sally Rae:

When Chris Bayne and Sandra Cain drive around the Otago hinterland, they know what lies behind the hills.

For they have been there, among the tussocks, during their combined involvement of more than 50 years with the Otago Goldfields Cavalcade.

The two trail bosses are preparing to head off on this year’s event, which will see hundreds of riders, wagoners, walkers and cyclists arrive in Patearoa next Saturday.

Mrs Bayne’s light wagon and riding trail will meet today at Ardgour, near Tarras, while Mrs Cain’s walking trail will start on Wednesday from Ida Valley Station. . .

Winemaking need not drain reservoirs– Mark Price:

Robin Dicey cannot quite turn water into wine, but he is turning grapes into wine without water. The Bannockburn wine industry pioneer tells reporter Mark Price about his recent vino experiments.

Imagine  growing grape vines in Central Otago without pumping millions of litres of water to them through millions of metres of plastic pipe.

Without an irrigation system, surely they would wither and die in the heat of a Central summer.

Retired Bannockburn wine industry pioneer Robin Dicey is not so sure they would, and has begun an experiment to test that theory. . .

New regional leader award:

A new Regional Leader of the Year Award has been established by Dairy Women’s Network.

Chief executive Jules Benton says more than 70 volunteer regional leaders provide an important point of contact for farmers and play key role in their communities through to organising, hosting and promoting regional events.

They are the face of the network while also in some cases are running million dollar businesses. . .

Farmer confidence plummets amid Brexit and bad weather:

Continued weather conditions and Brexit uncertainty has led to a significant drop in farmer confidence, new figures suggest.

Political unpredictability surrounding the terms of the UK’s post-transition period and the recent flooding is taking its toll on industry confidence.

Results from the latest NFU survey of farmers across the UK shows that short-term (one year) confidence has reduced further from last year, dropping 11 points, to its 3rd lowest level since the survey began in 2010. . .


Paying for poor policies

August 31, 2018

Business confidence has dropped to the lowest point for 10 years:

In the August ANZ Business Outlook Survey headline business confidence dropped a further 5 points to a net 50% of respondents reporting they expect general business conditions to deteriorate in the year ahead.

However, firms’ perceptions of their own prospects are a much better gauge of actual economic outcomes. This series stabilised at a net 4% expecting an improvement, well below the long-term average of +27%. By industry, manufacturers’ expectations dropped 11 points to become the least positive about their own activity (-4%), while retail and services improved somewhat.

Turning to the survey detail:

* A net 5% of firms are expecting to reduce investment, down 6 points. It is rare for this series to be negative.

* Employment intentions fell 8 points to -6%. No sectors are positive.

These two points are most concerning. Businesses reducing investment and with negative employment intentions will have a direct and negative impact on the economy.

* Profit expectations were flat at -17%. Retail and manufacturing are the weakest sectors at -27% (up 1%pt) and -28% (down 12%pts) respectively.

* Firms’ pricing intentions fell 2 points to +27%. They are strongest for construction but also lifted for retail. Inflation expectations were flat at 2.2%.

 * Residential construction intentions eased 3 points to +13%, while encouragingly, commercial construction intentions bounced 13 points to -4%. . . 

The economy is delicately placed. But it seems increasingly inevitable that wariness amongst firms will have real impacts, in the near term at least, as investment and employment decisions are deferred. . .

The outlook isn’t all bad.

But firms have real concerns about industrial relations policy, minimum wage hikes and costs more generally – and particularly about their ability to pass on higher costs and maintain profitability. Troubles in the construction sector appear to be starting to cause stresses in related firms. And exporting firms will be keeping a nervous eye on signs that global growth has peaked. . .

The Taxpayers’ Union says the drop in confidence shows the urgent need for tax reform:

. . .Taxpayers’ Union Economist Joe Ascroft says, “Businesses need more than a working group. They need real changes in policy direction, including tax reform. Business breakfasts with CEOs and Cabinet Ministers simply won’t cut it for the average small business.”

“Company tax rate cuts – accompanied by full capital expensing – would put a rocket under business investment and put an end to the doldrums. If focused at measures to boost productivity, the evidence shows that tax relief would flow through to workers in the form of higher wages.” . .

Tax reform would help and not just for businesses.

The lower dollar helps export returns but increases the cost of imports, including fuel, the price of which is also being boosted by extra taxes:

The Government’s obsession with fuel taxes shows it doesn’t care about the cost of living for ordinary Kiwis, National’s Transport spokesperson Jami-Lee Ross says.

“Now is the time for solutions to the cost of living, not new taxes. National is taking the initiative with a bill lodged today to repeal regional fuel taxes within three months.

“Fuel prices are sitting at record levels across the country and are set to rise further because the Government is proposing three additional rounds of national fuel tax increases totalling an extra 12 cents a litre of fuel in new taxes.

“In addition, there is an 11.5 cents a litre regional fuel tax in place in Auckland that will be rolled to other regions in a few short years. It adds to this Government’s sorry record of driving up costs for households and businesses and choking economic growth. . .

 

But tax is only part of the problem. The Government has several other poor policies that we’re all paying for:

The message from economists is loud and clear: the Government’s bad economic policies mean New Zealanders will be thousands of dollars a year worse off, says National Party Leader Simon Bridges.

“In the last three months alone NZIER has revised down their GDP growth forecasts which means every man, woman and child will be $1600 a year worse off on average by 2022. That is $6400 for a family of four.

“NZIER are clear that the decline in the economic outlook isn’t just sentiment. Profitability has deteriorated and businesses’ own activity, a measure closely correlated with GDP growth, has weakened. There are real implications for businesses, workers and New Zealanders trying to get ahead.

“The reason GDP growth is now faltering is because this Government has imposed a wide range of policies that are bad for growth. They have imposed more taxes, shut off foreign investment, significantly increased labour and compliance costs, banned oil and gas exploration and wasted billions on low-quality spending.

“And what was the Prime Minister’s solution this morning: another working group. The Government needs to understand that lower growth has real consequences for New Zealand families. Working groups do not drive economic growth, good policies and hardworking New Zealanders do.

“So the goal is simple. We must grow the economy if we want New Zealanders to be better off. A growing economy means more jobs, higher incomes and more revenue to pay for the things we need.

“We need to be pro-growth as that is the only way we can improve our standard of living. National wants New Zealanders to keep more of what they earn. Higher taxes, more regulation, compliance costs and a rising cost of living do nothing to help families get ahead.

 

Added costs and uncertainty are a poisoning business confidence and this week’s announcement of a business council is no antidote.


In fiscal hole and still digging

August 10, 2018

Economist Cameron Bagrie has found a hole in the fiscal bucket:

Steven Joyce is going to be proved right. There is a fiscal hole and a softening economy is making it wider.

I don’t like the term fiscal hole. Good policy should dominate over strict debt targets and economic cycles come and go which are often beyond government control.

But the Labour-led Government’s fiscal hole is looking deeper by the day – and bigger than the $11.7 billion of additional borrowing that Joyce identified. . .

Growth is weaker, the Government is already borrowing creatively to the tune of $6.4 billion via Crown entities (keeping it out of core government net debt metrics) and spending demands are headed one way.

That combination will pressure its fiscal position.  . .

The lack of money left in the kitty post the 2018-Budget raised issues of credibility, but the fiscal parameters were technically achievable.

It wasn’t going to be easy, but it was possible, so the Government was given the benefit of the doubt.

Giving them the benefit of the doubt was a mistake given their record, policies and the knowledge that coalition partners would add to costs.

But the picture is changing and the Government’s ambitions are looking more and more like pipe dreams.

So, what has changed?

Budget spending and investment demands needed funding, whilst at the same time sticking to the narrative of hitting debt objectives and being fiscally responsible.

The result was crown entities borrowing an additional $6.4 billion between 2017 and 2022.

That is an accounting fudge to get it out of the core Government debt figures.

Just because we can’t see it doesn’t mean it’s not there.

Public sector pay and spending demands are only heading one way.

Few bemoan the need to pay teachers and nurses more but that money needs to come from somewhere.

The realities of a coalition Government meant more needed to be spent. Spending allocations in the 2019 and subsequent Budgets were increased by $525 million to $2.4b per year.

That looked fine against a backdrop of solid projections for growth. But it was a risky strategy with the economy late cycle as opposed to early cycle.

The government can’t be held responsible for external problems but they can be blamed for not taking a more prudent approach given clouds gathering on the economic horizon.

They can also be blamed for wasting money on fripperies like fee-free tertiary education and good looking horses without leaving enough for necessities like improved pay and conditions for nurses and teachers.

They’ve dug the hole and there is nothing in their performance that could give any confidence in their ability to get out of it especially as they are still digging.


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