Rural round-up

August 7, 2017

Community mourns farmer of the year – Ruby Harfield:

Farming and rugby communities are in shock after the sudden death of Hawke’s Bay Farmer of the Year Paul “Butch” Renton.

Mr Renton, who with wife of 27 years Marie accepted the 2017 Farmer of the Year title at the Hawke’s Bay Primary Sector Awards just four months ago, was found dead on Wednesday morning at Glenmore Station, the Mangatahi property west of Hastings on which he grew up. 

Police have said no foul play was involved and the matter has been referred to the coroner. . . 

The great food disruption: part 1 – Rosie Bosworth:

Milk without the cow, meatless burgers that bleed, chicken and shrimp made from plant matter, and now foie gras without a force-fed goose in sight. A new food revolution enabled by science and biotech is brewing and, if it succeeds, animals will have little to do with the future of food. For some, that future looks rosy, but, as Dr. Rosie Bosworth writes in part one of a series, the implications for New Zealand’s agricultural sector could be less than palatable. 

We humans love to romanticise things – and we particularly like to romanticise our food. When you think about that juicy burger at lunch, last night’s curry or this morning’s breakfast berry smoothie, it’s all too easy for us to imagine a happy cow called Daisy who spends her days roaming across lush rolling hills with her young nearby, leaping lambs, happy hens frolicking in the fields, and trusting, caring farmers, who lovingly ply their trade the old-fashioned way – tractor, straw hat and pitch fork in hand. . . 

Avocado thieves selling stolen fruit on black market:

Police have found small business owners in Bay of Plenty are purchasing stolen avocados, following a spate of orchard thefts in the region.

Police received nine reports of thefts in Western Bay of Plenty since May, and said there had been a number of avocado thefts in Tauranga to Katikati in the last month.

They had found that a number of retailers were accepting the stolen avocados to sell in-store. They urged store owners to support orchardists by only purchasing produce  from legitimate growers. . .

Blue Sky Meats posts $1.9M loss, signals review of unprofitable Gore beef plant –  Tina Morrison

 (BusinessDesk) – Blue Sky Meats, the Invercargill-based meat processor, posted a loss for the second year in a row and said the future of its unprofitable beef plant in Gore is under review.

The company reported a loss of $1.91 million, or 16.54 cents per share, in the 12 months ended March 31, from a loss of $1.96 million, or 16.98 cents, a year earlier, according to its annual report. Revenue slid 17 percent to $97.9 million. It won’t pay a dividend. . . 

Carbon budgets would provide ‘certainty’ for dairy sector:

DairyNZ has welcomed the release today of a report by the Parliamentary Commissioner for the Environment, which recommends New Zealand approach climate change in a similar manner to the United Kingdom.

Dr Jan Wright recommends Government set up an independent Climate Change Commission to propose carbon budgets as stepping stones towards meeting greenhouse gas targets, which would provide certainty and transparency about how New Zealand climate change targets will be met..  .. . 

Australia gets closer to objective carcase measurement – Alan Barber:

In March I wrote about Meat and Livestock Australia’s (MLA) plan to seek A$150 million from the Australian government to assist with the introduction of Dual Energy X-ray Absorptiometry (DEXA) objective carcase measurement (OCM) technology to all Australian meat plants. At that time neither the Australian Meat Industry Council (AMIC) nor the Australian Meat Processor Corporation (AMPC) were completely persuaded of the logic of committing the industry to such a large investment without further analysis and a robust business case.

The resulting review, performed by EY, has recommended that Australian meat processors and producers should go ahead with OCM projects in spite of a lack of consensus throughout the sector. The main finding confirms earlier studies which indicate significant benefits for both parts of the industry, if the technology is adopted. The review recommends AMPC and MLA to work together to achieve alignment between the two sectors which haven’t always agreed with each other. . . 

Farmers lift the lid on repro results:

It’s no secret that many New Zealand dairy farmers are struggling with herd reproduction and this is hurting their profitability. Yet there are some farmers out there achieving above-average repro results. What are they doing right?

Blake Korteweg: 78 percent six-week in-calf rate

Farm Facts
Location: Hedgehope, Southland

Farm size: 175ha (effective)
Herd size: 500 cows
Production: 203,000kg MS

When 50:50 sharemilker Blake Korteweg took over management of the family farm in South Otago from his father, the six-week in-calf rate was only 60 percent. Under his management, that’s climbed to 78 percent. The first change he made was to get mating down from 15 weeks to 11 weeks. . . 

Opening Agcarm conference – David Bennett:

 . .  Agricultural compounds and veterinary medicines, or ACVM, play an important role. Their use is essential to address animal welfare and to produce safe and suitable food we can sell with confidence in New Zealand and overseas.

Farmers and food producers around New Zealand depend on them to:
• improve the quantity and quality of their produce;
• keep people, animals and crops healthy; and
• reduce the spread of diseases, weeds, parasites and other pests. . . 

Planning is Key to Success in New Zealand Dairy Industry Awards:

The runners-up of the 2017 New Zealand Share Farmer of the Year Award believe the earlier potential entrants begin preparing for the awards, the better, and they should be starting now.

Entries for the 2018 New Zealand Dairy Awards open in October, and Carlos and Bernice Delos Santos say gathering information and records takes time, and now is a good time to start this if they haven’t already. . . 

Image may contain: text

Barbed wire, ruining farmers’ jeans since 1867.


Rural round-up

May 8, 2017

Finding alternatives to dairy – Keith Woodford:

New Zealand dairy production has increased by 80% since Year 2000. This has come almost equally from both more dairy hectares and more production per hectare. However, the limits to pastoral dairying in New Zealand have largely been reached. Where do we go from here?

First, there is a need to recognise the two reasons why pastoral dairying has largely reached its limits.

The most important reason is that society is no longer willing to accept the effects of cow urine leaching from pastures into waterways and aquifers. Huge progress has been made in fencing off livestock from waterways, and in tree planting alongside the streams, but that does not solve the problem of the urine patch. This 2013/14 year is therefore the last year of large-scale conversion of sheep and beef farms to pastoral dairying. New environmental regulations have effectively closed that door. . .

Lifting water quality and profit too – Nicole Sharp:

Southland farmers are continuing to be proactive when it comes to changing regulations within Environment Southland’s Water and Land Plan. Mid-Oreti and Hedgehope farmers held a catchment field day recently to discuss the plan and what more they could do on farm to continue to improve water quality. Nicole Sharp reports.

How can you make looking after the environment profitable?

That was the hot topic at the mid-Oreti and Hedgehope catchment field days recently, where farmers gathered to discuss Environment Southland’s Water and Land Plan and what more they could do. . . 

Farmers hold back wool from auction in weak market  – Tina Morrison

(BusinessDesk) – Less wool than forecast was offered at New Zealand’s weekly auction as farmers held back bales from sale in a weak market.

Just 6,821 bales were put up for sale at yesterday’s South Island auction after 11 percent of the expected bales were withdrawn before the sale started, according to AgriHQ. Even with the low number of bales on offer, the clearance rate fell 2 percentage points from last week’s auction to 73 percent, lagging behind last year’s levels, AgriHQ said. . . 

Comvita shares slump 9.4% on Deutsche Bank downgrade, news of Myrtle Rust in NZ  – Paul McBeth:

 (BusinessDesk) – Comvita shares sank 9.4 percent as investment analysts cut their valuation for the manuka honey products maker, coinciding with yet another problem out of the Te Puke-based company’s control with the discovery of Myrtle Rust in the Far North.

The shares fell as low as $6.07 in early trading today, the lowest since Jan. 23, and were recently down 65 cents to $6.25 after Deutsche Bank cut its price target for the stock to $7.05 from a previous target of $9. Deutsche Bank owns a stake in broking and research firm Craigs Investment Partners, whose executive chairman Neil Craig also heads up Comvita’s board. .. 

New South Wales agricultural region showcased to leading New Zealand and Australian farmers:

Puketapu beef finisher Rob Pattullo was one of nearly 50 leading farmers from across New Zealand and Australia to tour North-western New South Wales recently.

Hosted by specialist agricultural bank, Rabobank, the tour group gathered to visit some of the region’s most progressive farming businesses. . . 

Harraway Sisters Help Celebrate 150 Years of Harraways Oats

New Zealand’s iconic oats company, Harraways, is celebrating 150 years of providing Kiwis with delicious oats.

Since 1867, Harraways has been operating from its original site in Green Island, Dunedin and remains privately owned.

With humble beginnings as a small family business producing flour for the growing population of Dunedin, oats weren’t the company’s sole focus at the time. Replacing the old method of stone grinding flour with an oat roller milling plant in 1893, a thousand tonnes of oats were produced in the first year, expanding Harraways into the breakfast cereal producer that they are well-known as today. . . 

Star gazing tours and new pools are ‘hot’ attractions at Tekapo Springs:

The introduction of star gazing tours married with the launch of new pools have put Tekapo Springs firmly on the global tourism map. 

Star gazing tours in one of the world’s top ‘clear sky’ locations was launched by Tekapo Springs in New Zealand’s Mackenzie country just two months ago, taking viewing the Southern night sky to whole new levels. . . 

 Manuka Health unveils $3.5 million Wairarapa Apiculture Centre
Minister for Food Safety officially opens state of the art processing plant:

Leading honey manufacturer Manuka Health has today officially opened its expanded national apiculture business after a $3.5million build that will significantly expand the organisation’s export capacity.

Joining CEO John Kippenberger, the Minister for Food Safety Hon David Bennett opened the Manuka Health Wairarapa Apiculture Centre in an event attended by MP for the Wairarapa, Alastair Scott; Mayor John Booth of Carterton District Council; Chief Executive of Carterton District Council, Jane Davis; industry and government representatives; neighbours; beekeeper partners; site design and build companies; and Manuka Health staff. . .


Rural round-up

May 1, 2017

$6 a kilo for greasy wool is realistic – Alan Williams:

A wool price of $6 a kilogram greasy is being targeted by a Federated Farmers strategy being developed as necessary for the industry to achieve sustainable returns.

An industry levy was not part of the work being done, federation national meat and fibre group chairman Rick Powdrell said.

Getting detailed information on what happened to New Zealand wool overseas and where it went were key parts of the project. . . 

Fight for Feds top job likely – Annette Scott:

Competition is ramping up as nominations open for the Federated Farmers national board’s changing of the guard.

Speculation pointed to a challenge for the national leadership as president William Rolleston ended his three-year term.

The annual meeting was scheduled for June 22 in Wellington. Both the president and vice-president roles would come up for grabs.

Current vice-president Anders Crofoot, also at the end of his three-year term, confirmed he would stand for president. . . 

Meat co-ops search for winning formula – Tony Benny:

New Zealand’s two big meat co-ops, Silver Fern Farms and Alliance Group have both had new CEOs at the helm for the past two years, each charged with improving returns to their farmer-shareholders. Dean Hamilton and David Surveyor talked to Tony Benny.

When Dean Hamilton and David Surveyor each came from Melbourne to take top jobs in the New Zealand meat industry, little did they know they’d almost been next door neighbours before coming here.

Silver Fern Farms chief executive Hamilton recalls his first meeting with Surveyor when the subject of where they’d lived in Melbourne came up.

“I said I was in East Melbourne. He said, ‘So was I, what street?’. I said, ‘Central Park Road’. He looked at me and he said, ‘I was in Central Park Road too’, and it ended up we were only ten houses away but I’d never met him.” . . 

ACCC court action against Murray Goulburn applauded – Shan Goodwin:

FEDERAL Court action instigated by the competition watchdog against big dairy co-operative Murray Goulburn has been heralded a significant first step to bringing long overdue fairer trading practices to the milk supply chain.

Milk producers say the move shows the Australian Competition and Consumer Commission (ACCC) is serious about addressing breaches of competition law in the dairy industry and lays a good foundation for the results of it’s current inquiry into the competitiveness of milk prices. . . 

Hemp seeds to be legalised as food:

An agreement reached between New Zealand and Australian food safety authorities will see hemp seed legalised as food in New Zealand, Food Safety Minister David Bennett says.

Ministers at the Australia and New Zealand Ministerial Forum on Food Regulation in Adelaide today approved a standard to allow safe levels of low-THC hemp seed as a food.

“I stated my support at the Forum today and was pleased a change to the Australia New Zealand Food Standards Code was approved,” Mr Bennett says.

Mr Bennett says hemp has no psychoactive effect and has historically been used as a source of fibre and oil because it contains proteins, vitamins, minerals and fatty-acids. . . 

Rural Kiwis swipe right for country love on new farmer dating app – Jill Galloway:

Lonely Kiwi farmers are hooking into a United States based dating app to find love.

About 500 single New Zealanders are already members of the FarmersMatch dating service which has only been going since March.

Founder Derek Ma said the app could bring together single people with a love of the country. . . 

New Zealand olive oil scoops medals at international competitions:

Winners in two prestigious international Olive Oil competitions have just been announced and New Zealand features in both.
In the New York International Olive Oil Competition (NYIOOC), which is arguably the largest of international Olive Oil Competitions, Robinsons Bay and Old French Road both won GOLD with their Extra Virgin Olive Oil entries.

Both olive groves are from Akaroa and were Best in Show and Reserve Best in Show respectively at the 2016 New Zealand Extra Virgin Olive Oil Awards.
The 2017 NYIOOC attracted more than 800 entries from 26 countries and was judged by an international panel of experts. For more information see https://nyoliveoil.com/ . . .


Rural round-up

April 13, 2017

Stockmanship and work ethic leads family to win Otago Ballance Farm Environment Awards:

East Otago sheep and beef farmers Simon and Kirstin Engelbrecht have won the Otago Ballance Farm Environment Awards.

The win was announced at a gala dinner at the Glenroy Auditorium in Dunedin on April 7.

The Engelbrechts also won the Beef + Lamb New Zealand Livestock Award and the Hill Laboratories Harvest Award.

The Engelbrecht’s 7500 stock unit East Otago sheep and beef business is based on their 611ha home farm, Stoneburn, near Palmerston. The couple have four children, Oscar, 19, Sam, 16, Anna, 14 and Charles, 12. . . 

Aim tech at firms not farmers – Richard Rennie:

As the internet of things (IoT) becomes more of a reality for New Zealand farmers its success might lie in promoting it harder to farm service businesses than to farmers themselves.

KotahiNet chief executive Vikream Kumar tipped the usual pitch for farmers to adopt the IoT on its head to delegates at the MobileTech conference in Rotorua.

His company specialised in connecting businesses with sensors and wireless networks that enabled devices to communicate within businesses and beyond, including farms, orchards and processing operations. . . 

Tauranga animal health CEO finalist for Fonterra Dairy Woman of the Year:

A Tauranga woman described as “successful yet so down to earth” is in the running to take out the 2017 Fonterra Dairy Woman of the Year Award.

A qualified veterinarian, Dr Claire Nicholson is the Chief Executive of Sirona Animal Health, a company she set up to develop and promote unique products that address current areas of economic loss in the dairy and sheep and beef industries.

She’s also a director of Paraninihi Ki Waitotara (PKW), past associate director for AgResearch and has worked with Massey University researching the epidemiology and economic cost of Neospora. Her family farms are in Gropers Bush, Southland. . .

Regions win battle to keep GE-free status but confusion remains – Gerard Hutching:

Lobby group Pure Hawke’s Bay is claiming victory in its fight to be free of genetically modified fruit and vegetables, but Federated Farmers describes the new situation as “a mess”.

Pure Hawke’s Bay feared Environment Minister Nick Smith would remove the powers for local and regional councils to declare themselves GE-free when the Government pushed through the Resource Legislation Amendment Bill this week.

However, in last minute changes, Smith amended the Bill so the minister could not refuse councils the right to become GE-free – but only for crops, which he defined as cereals, vegetables or fruit.

Smith’s definition did not include GE grasses, trees or livestock. . . 

New ground broken on rural fibre:

Federated Farmers has successfully negotiated a significant benefit for rural property owners who allow telecommunications fibre to cross their land.

The Telecommunications (Property Access and Other Matters) Amendment Act, which was passed by the Parliament this afternoon, facilitates the installation of fibre optic cable along overhead electricity lines. It includes a unique provision that provides a quid pro quo to landowners whose land the lines network crosses, Federated Farmers communications spokesperson Anders Crofoot says.

In exchange for the right to string high-speed fibre along existing overhead powerlines, the amendment act guarantees fibre connections to farmers whose land is crossed. . . 

New Zealand mānuka honey science definition:

Food Safety Minister David Bennett has welcomed the Ministry for Primary Industries’ release of a proposed scientific definition for mānuka honey produced in New Zealand.

“Overseas regulators and consumers have expressed a desire for an independent, Government-backed definition to safeguard the authenticity of mānuka honey products.

“This Government-backed definition will provide an important starting point for the industry to promote New Zealand mānuka honey in world markets,” Mr Bennett says. . . 

Government science definition of mānuka honey an important step forward:

The industry organisation for the honey and beekeeping industry, Apiculture New Zealand, is pleased the Ministry for Primary Industries has released its proposed science definition of mānuka honey for industry review and consultation.

“The introduction of a regulatory science definition is a major milestone in the history of the mānuka honey industry. It is a relatively young industry growing very rapidly and with huge potential.

“We signalled our willingness to work with MPI to ensure its proposed science definition is robust in meeting shared objectives around consumer confidence and authenticity, and will be making a detailed submission on behalf of industry,” says Karin Kos, Chief Executive of Apiculture NZ. . . 

Foreign Wine Looking for Greater US Market Penetration:

The US wine market continues to represent an attractive opportunity for many foreign wine companies, according to the Rabobank Wine Quarterly Q2 2017. However, increasing competition and ongoing wholesaler consolidation, among other factors, make it increasingly difficult for small wineries to penetrate, with a particular complexity for foreign wineries. An increasing number are seeking alternative structures and strategies to deliver greater penetration in the market. Each strategy has the potential to achieve success, but also carries risks and pitfalls.

While the US market has attributes that make it attractive to many foreign wineries, it is also a crowded, complex, and daunting market. The traditional approach for foreign wineries looking to enter the US market has been to identify an appropriate importer, and to work the market with the importer and/or distributors to sell their product.. . .

More evidence that the key to allergy-free kids is giving them plenty of dirt — and cows – Rachel Feltman:

People who grow up on farms — especially dairy farms — have way fewer allergy and asthma problems than the rest of us. Now one research team thinks they’ve brought science closer to understanding why.

In a study published Thursday in Science, researchers report that they were able to pinpoint one possible mechanism for the allergy protection in mice they studied. Surprisingly, the protein that they fingered as the likely allergy-preventer doesn’t actually affect the immune system — it affects the structural cells that make up the lining of the lung.

The research is related to something called the hygiene hypothesis, where a lack of exposure to microbes as a tyke leads to more allergy and asthma. . . 

 


Cabinet changes

December 18, 2016

Prime Minister Bill English has announced changes in and outside Cabinet:

Prime Minister Bill English has today announced his new Cabinet line-up which builds on the success of the last eight years and provides new ideas and energy heading into election year.

“Over the last eight years National has provided a strong and stable Government which is delivering strong results for New Zealanders,” says Mr English.

“This refreshed Ministerial team builds on that success and provides a mix of new people, alongside experienced Ministers either continuing their roles or taking up new challenges.

“This new Ministry is focused on providing prosperity, opportunity and security for all Kiwis, including the most vulnerable in our communities.”

Deputy Prime Minister Paula Bennett will remain the Minister of State Services and Climate Change Issues and will pick up the Police, Women and Tourism portfolios.

“I am looking forward to working with Paula as my deputy and I am delighted she is taking on the Police and Women’s portfolios.

“As only the second woman Deputy Prime Minister of New Zealand Paula is well placed to take on the Women’s portfolio and represent the interests of women at the highest level of the government.”

Steven Joyce will pick up Finance and Infrastructure, while Gerry Brownlee will remain the Leader of the House and retain Supporting Greater Christchurch Regeneration, Defence, and the Earthquake Commission portfolios. He will also be appointed as the Minister of Civil Defence.

“Steven and I have worked closely together in the Finance portfolio over the last eight years, and as Economic Development Minister he has delivered strong leadership of the government’s Business Growth Agenda.

“As Infrastructure Minister Steven will have a key role in overseeing the significant investments the government will be making in the coming years.

“I am delighted to have Gerry continue in his senior roles, including Leader of the House, and also to have him pick up the Civil Defence portfolio in which he has provided such leadership during the aftermath of the Kaikoura earthquake.”

Simon Bridges and Amy Adams have both picked up additional senior ministerial responsibilities.

Simon Bridges continues as the Minister of Transport and will pick up the Economic Development and Communications portfolios and Associate Finance, while Amy Adams retains Justice, Courts and picks up Social Housing, Social Investment and Associate Finance. Amy Adams will take a lead role in driving the Government’s social investment approach.

“Simon and Amy are two high performing Ministers who are ready to take on more responsibility. I am confident they will work well with Finance Minister Steven Joyce,” says Mr English.

At National’s Mainland conference, Amy told delegates she’d asked for money to be directed into social portfolios because that was the way to address the causes of crime.

She is well qualified for the extra responsibility for social investment.

Jonathan Coleman continues in his Health and Sport and Recreation portfolios, and will play an important role on the front bench.

“All New Zealanders care deeply about the health system, and Jonathan’s focus on ensuring that the needs of people young and old in accessing quality health care is a very strong one.”

Michael Woodhouse has also been promoted up the Cabinet rankings, retaining Immigration and Workplace Relations and Safety and picking up the ACC portfolio.

“I would like to congratulate Michael on his promotion. He has been a solid performer and I know he still has a lot more to contribute.”

Anne Tolley has picked up Local Government and will also be appointed Minister for Children, where she will continue her work on improving outcomes for children and young people.

Hekia Parata will retain the Education portfolio until May 1, at which point she will retire from the Ministry to the back bench.

“I am keen for Hekia to see through the education reforms which she is well underway on, and she will work closely with other Ministers to ensure there is a smooth transition in May.”

There will also be a transition of ministers in the Foreign Affairs portfolio.

Murray McCully will retain the Foreign Affairs portfolio until May 1at which point he will retire from the Ministry to the backbench. A decision on his replacement will be made at that time.

“I am keen for Murray to stay on for this transitional period to ensure I have the benefit of his vast experience on the wide range of issues that affect New Zealand’s vital interests overseas.”

This ensures there will be no need for a by-election if he leaves parliament when he’s no longer a minister. It also leaves the door open   for another couple of back benchers to get promotion next year.

Judith Collins takes on new responsibilities in Revenue, Energy and Resources and Ethnic Communities, and is well placed to oversee the significant business transformation work occurring at Inland Revenue.

A number of Ministers largely retain their existing responsibilities, including Chris Finlayson, Nathan Guy, Nick Smith, Todd McClay, Maggie Barry and Nicky Wagner.

Paul Goldsmith and Louise Upston have been promoted into Cabinet.

“I would like to congratulate Paul and Louise on their promotions which are all well-deserved,” says Mr English.

There are four new Ministers. Alfred Ngaro who goes straight into Cabinet and Mark Mitchell, Jacqui Dean and David Bennett who have been promoted to Ministerial positions outside Cabinet.

I am especially pleased that Alfred and Jacqui are being promoted.

He was an electrician before entering gaining a degree in theology and has extensive experience in community work. (See more here).

Jacqui is my MP, serving one of the biggest general electorates in the country. She c0-chaired the Rules Reduction Taskforce and was Parliamentary Private Secretary for Tourism and Local Government.

“The National party Caucus is a tremendously talented one, and as Ministers finish their contribution it’s important for the government’s renewal that we give members of our caucus an opportunity. Alfred, Mark, Jacqui and David have worked hard and performed well in their electorates and as select committee chairs, and deserve their promotions.”

There will be 21 positions in Cabinet until May 1 and a further six outside Cabinet (including two support party Ministers) keeping the total number of Ministerial positions at 27 plus the Parliamentary Under Secretary David Seymour.

“I would like to thank our support party leaders Peter Dunne, Te Ururoa Flavell, and David Seymour for their continued contribution to a strong and stable government.”

Mr English said that he expected to make announcements on the two further new Ministers to replace Ms Parata and Mr McCully just prior to their 1 May retirements from the Ministry.

Ministers Sam Lotu-Iiga, Craig Foss and Jo Goodhew are departing the Ministry.

“I would like to thank Sam Lotu-Iiga, Craig Foss and Jo Goodhew for their service to New Zealand as ministers. I am sure they will continue to be great contributors to New Zealand society in the years ahead.”

The full list of portfolios and rankings is here.


The case for partial floats

July 6, 2013

The Green Party is continuing to spit into the wind with its attempt to get a politician’s initiated referendum on the partial float of a few state owned companies:

P.S. This is our last week to get Keep Our Assets petitions in, so if you have any signatures yet to send, freepost them to me today at:
Russel Norman . . .

Perhaps he wasn’t listening to Question time when Bill English explained the benefits of the policy:

1. DAVID BENNETT (National—Hamilton East) to the Minister of Finance: What are the advantages of using proceeds from selling minority shareholdings in energy companies to buy new public assets, instead of borrowing that money from overseas lenders?

Hon BILL ENGLISH (Minister of Finance): Very significant advantages. In the case of the share sales programme, the Government is swapping one asset—that is, a minority stake in an energy company, which it can only hold and collect dividends—for another asset, which is cash, which it can use for all sorts of purposes. Over the entire programme we expect to free up between $5 billion and $7 billion of cash as a replacement for the asset that we are selling. This will be invested in schools, hospitals, irrigation schemes, the rebuild of Christchurch, and other infrastructure projects. The alternative is to borrow the money from overseas bankers rather than get it from New Zealand savers.

David Bennett: How are proceeds from the share sales programme being allocated to reinvest in other priority public assets? . . .

Hon BILL ENGLISH: The Government has set up the Future Investment Fund. The money going into that fund comes mainly from New Zealand savers who have had the opportunity, and chosen, to invest in large New Zealand companies. The Opposition despises them for this, but we think it is good for the country. The Future Investment Fund will show transparently where that money is going, and it is going to other public assets.

David Bennett: What investments in new public assets has the Government so far confirmed will be made from the Future Investment Fund using proceeds from the share offer programme?

Hon BILL ENGLISH: As the Opposition has pointed out, it is amazing just how many new public assets you can procure. Last year’s Budget allocated $33.8 million for modernising schools, $250 million towards a KiwiRail Turnaround Plan, $88 million for health sector capital, and $76 million for the new Advanced Technology Institute. This year’s Budget allocated $426 million for the Christchurch and Burwood hospitals, $50 million to speed up the School Network Upgrade Project, $94 million for the 4th year of the KiwiRail Turnaround Plan, $80 million for irrigation projects, $700 million in contingencies for projects such as new schools in Christchurch, Christchurch’s justice and emergency services precinct, and supporting Canterbury’s tertiary institutions to recover from the earthquake. The Government also agreed that over the life of the fund $1 billion will be allocated to other health capital projects. . .

David Bennett: How does New Zealand’s approach to investing in new public assets while limiting extra debt compare with approaches in other countries?

Hon BILL ENGLISH: Although some regard this idea as extreme, in fact it is very common around the world. The following OECD countries have Governments that partially own companies that are floated on the stock exchange: Austria, Belgium, Chile, the Czech Republic, Finland, France, Greece, Japan, Korea, Norway, Poland, Slovenia, Switzerland, and the United Kingdom. Unfortunately, the Labour Party models itself on Albania, which does not have any of these sorts of companies.

The alternative to selling minority shares in a few state assets are: print more money, borrow more money, tax more or do less.

 


NZ not so sorry savers

March 2, 2013

New Zealanders have been accused of being poor savers for years, but are we really?

This exchange in parliament last week suggests otherwise:

David Bennett: How has household savings changed recently and what reports has he received on household wealth?

Hon BILL ENGLISH: I think, as we are familiar with, official measures show a significant improvement in the last 3 years, from dissaving of 7.1 percent of household income in 2007 to just positive household savings more recently. Alongside that, though, there is a maybe confusing report from the Reserve Bank, which has recently highlighted that in measuring household wealth its statistics exclude some important items. For instance, when it measures household wealth it does not include equity in farms. It does not include equity in shares in some businesses and commercial properties and forests, and nor does it include some types of foreign assets held by New Zealanders. It estimates that when these items are included, household net wealth is in fact $167 billion higher than it thought, or around 25 percent—that is, the Reserve Bank’s revision of the numbers indicates households may be 25 percent wealthier than they thought.

Trans Tasman offers further explanation:

. . .  The reworked figures put NZ not as an outlier among developed nations for its low rate of savings but more in the mainstream. For the best part of a generation it’s been part of the NZ economic story that Kiwis focus on housing as their main form of saving, but the revelation household wealth, following a re-estimation of non-housing assets , is more evenly balanced between property and other assets, will have implications for several major areas of Govt policy ranging from retirement to housing needs. As a result of the information from the RBNZ, Finance Minister Bill English has Treasury testing the figures and reviewing the implications.

This is encouraging, better savers have more security, more choices and are better able to look after themselves.

Better domestic savings also reduce reliance on foreign savings for investment and growth.

Government’s role in encouraging savings include policies which encourage economic growth and discourage inflation.

The first helps lift incomes and the second protects the real value of wages and savings.


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