Level 2ish

May 12, 2020

New Zealand is being permitted to go to Level 2ish at midnight on Wednesday.

Much of the economy will open including restaurants, malls, cinemas, shops, health services, and hairdressers. People will be able to socialise with others and travel around the country, as well as playing team sports.

The following Monday – May 18 – schools and early childhood centres will open.

Finally on Thursday May 21 bars will be allowed to reopen. . .

While gatherings would be allowed they would be limited to ten people, Ardern said – even for weddings or funerals. This has been changed from a limit of 100 last week.

Bookings for restaurants and the like will not be allowed for groups larger than 10.

A time limit of two hours for gatherings is mentioned on the Covid-19 website, but a spokeswoman for the Prime Minister’s Office said this was not intended to cover private gatherings.

These rules would be reviewed in another two weeks time on May 25. . .

This still won’t be business as usual, or what usual used to be and National leader Simon Bridges says the focus must now be on economic recovery:

“We need to focus on the other wave coming on us: having dealt with the Covid-19 wave, we now have got to be thinking about the real suffering that comes from 1000 people a day going on the dole and growing,” he said.

“We’ve flattened the curve, we’ve got to make sure we don’t flatten the economy in the process and we get it and jobs up and running.”

As the country faced a looming, deep recession, Bridges said he wanted to ensure that the economic hole gouged out by the pandemic wasn’t deeper than necessary.

“We’ve got some banks and economists saying this could be $100bn in debt – that takes it to over 50 per cent of GDP and we want to make sure that whilst there’s investment going into jobs, there’s not a bunch of other low-priority, untargeted things.

“Because ultimately if there is, that’s $50,000 a household that has to be paid back at $100bn dollars, that’s inevitably more taxes and that’s a legacy of debt on our children and grandchildren.”

Despite hospitality businesses getting the green light to reopen – with restrictions – from Thursday, Bridges acknowledged that many won’t make it through the next month.

“Whether it’s retail or hospitality, from restaurants and cafes through to bars, the costs have risen with the rules and requirements and in fact their revenue may be down, so it is tough for them.” . .

Murray Sherwin, Productivity Commission chair, is also worried about the economic outlook:

The die is cast. We won’t see the official numbers for quite a while, but it is already apparent that New Zealand is headed into the sharpest and deepest recession in 100 years.

We know we will experience unemployment at, and perhaps above, levels not seen since the late 1980s, company failures and large income losses across the economy. Amongst the bits we don’t know are just how deep the emerging recession will prove to be and how long it will last. . .

The policy choices we make and how well we execute them can cushion the downturn, accelerate the recovery and shape the nation that we eventually emerge as.

What we learn from previous recessions is that they carry lasting impacts on firms and employees. The Productivity Commission’s recent inquiry into technology and the future of work showed that workers who lose their jobs can be subject to significant “scarring” even when they get back into work – meaning that they may experience a loss of future earnings over an extended period of time – especially if they are young and with lower skills.

In high-performing economies, a major source of productivity growth comes from workers shifting from low productivity firms to high productivity/high growth firms. For that to happen, and to reduce the risk of long-term disadvantage, workers need easy access to training and upskilling.1 Alongside that, firms need a policy environment that encourages them onto a high productivity path that can support high productivity and high-income jobs.

But the impact of recession is not felt just by workers. We should expect some proportion of firms that are closed during the lockdown phase will not re-open in the future – another form of scarring. With firms, as with workers, a dynamic environment that encourages the movement of labour, capital and other resources from low to high productivity entities is an essential element in a successful future. . . 

That environment is one which reduces regulations that add costs and complexity to business; one that makes it easier to employ the right people and let the wrong ones go; one that values the private sector and encourages it to invest and innovate.

It is not an accident that since 1991 Australia has been riding the longest unbroken phase of economic growth recorded amongst OECD economies – a growth cycle only now being broken as Australia slips into recession like the rest of us. When we review that 30 year growth cycle alongside New Zealand’s experience we see that New Zealand is more vulnerable to economic downturns. Where Australia has ridden though shocks such as the 1997 Asian economic crisis, the GFC and others, suffering a growth slowdown, but avoiding recessions, New Zealand has dropped into recessions. On each occasion, NZ slips perhaps 2% or 3%. And while we may quite quickly get back to a growth path matching (and at times exceeding) Australia’s, we never do well enough, for long enough, to close the gap.

The lesson to take from this is that how well we manage our way through shocks has real and lasting effects. And right now we are hitting the biggest shock in a century. The quality of the policy response – over the next decade or more – will determine the living standards of New Zealanders for at least the next couple of generations. It will determine our capacity to make real choices about income distribution, environmental standards, housing quality, income distribution, the capacity and capability of our health and education systems and our progress towards climate change goals.

Nothing will undermine our capacity to achieve high standards on those fronts more than an underperforming, low productivity economy.

Productivity is the key.

Increasing that will reduce the harm and repair the damage faster.

That will take a government that understands its role is to get the policy environment right, keeps its role to the areas best left to government and allows the private sector to get on with the work that is needed to rebuild the economy.

 


Sustainability stool wobbly

November 15, 2018

Environmental gains from reducing carbon emissions will come at a high financial and social cost:

Becoming a net zero carbon economy by 2050 could result in a 16% drop in production from sheep and beef farms as livestock is replaced by trees to sequester carbon.

The Productivity Commission’s report, Low Emissions Economy, said up to 17% of sheep and beef farmland Otago, Canterbury and Manawatu-Wanganui will convert to forestry as part of plans to plant the 2.8 million hectares of new forestry needed for New Zealand to be carbon neutral.

A shift to horticulture and forestry could reduce the dairy area in Taranaki by between 35% and 57% and Waikato by 8% and 22%.

Commission chairman Murray Sherwin acknowledged such a change will affect rural communities. . . 

The financial and social impacts will be huge.

While some jobs will be created, more will be lost and people who work on sheep and beef farms and in businesses which service and supply them may not be willing, or able, to work in horticulture and forestry.

Sherwin said that degree of land use change up to 2050 is comparable to the shift to dairying since the 1990s and the Government will have to manage the social and financial fallout.

“It is a shift in land use, a shift in the nature of rural communities and a shift in the workforce.”

The report is designed to shape thought on the issue rather than be a prescriptive tool.

“It is in a form to shape your thinking rather than anything you could say was a highly accurate, predictive tool.”

That aside, he acknowledged such a reduction in sheep and beef productivity is not to be sneezed at but, as has previously occurred, productivity improvements could temper any decline and returns can be improved by better marketing. . . 

The impact could be as drastic as that of the ag-sag of the 80s when subsidies were cut over night.

The result is a much stronger farming sector but getting there came at a significant cost in both financial and social terms.

Beef + Lamb NZ’s chief insight officer Jeremy Baker says farmers are rightly questioning the commission’s tree planting proposal.

“A lot has been done already and I don’t know if there is much of this so-called unproductive land left.

“I’m not sure how they came up with that figure. It’s a lot of land.”

Baker said farmers feet they are not given credit for reductions in greenhouse gases, which have declined much quicker than other sectors.

Methane emissions are 30% below 1990 levels, achieved while growing production and returns. They also own 1.4m hectares of regenerating native bush and 180,000ha of plantation forest.

“The sheep and beef sector has done its bit and will play its part again but it has to be economically rational and environmentally sensible and everyone else has to come along too.”

National’s agricultural spokesman Nathan Guy says rural people have been forgotten in the commission’s report and the NZ First billion-tree policy, which risks gutting rural communities of people, jobs and services.

He described maps he has seen of proposed tree planting in Rangitikei District as bloody scary.

“Effectively there would be a whole lot of sheep and beef production gone.

“The Government seems hell bent on being carbon neutral by 2050 at all costs and I am concerned at the on-farm production losses and losing our competition edge.”

Guy said farmers will plant more trees if the sequestering value of riparian planting, shelter belts and native bush is counted.

He is confident the Pastoral Greenhouse Gas Research Consortium will discover a methane reducing bolus but that is only part of the solution to reduce greenhouse gases.

Science will play a part. It could play an even bigger part if the illogical opposition to genetic modification could be overcome.

But politics and emotion too often trump science.

In this case politics dictates that New Zealand should reduce stock numbers without taking into account of what will replace the food that we don’t produce if sheep and cattle are replaced by trees.

Most of that meat is exported and if beef and lamb no longer produced here are replaced by meat from less efficient producers elsewhere the global environmental cost will be added to the local financial and social costs.

Sustainability is supposed to be like a stool with three evenly balanced legs – environmental, social and financial.

Failing to take all the consequences of radical changes to primary production into account will make all the legs unstable.

That will make the sustainability stool very wobbly with high environmental, social and financial costs.

 


Local regulation improvements needed

May 14, 2013

A report into local government by the New Zealand Productivity Commission says regulations need improvements.

In releasing the inquiry report, Commission Chair Murray Sherwin said, “Local councils have a big influence on the success of communities and local economies. A large and diverse set of regulations is managed by councils. They cover things like urban development, building safety and standards for air quality, right through to dog control and food safety. It is critical to community wellbeing, and New Zealand’s overall performance, that these local regulatory systems perform well.

“Most of the regulation undertaken by councils has its origins in legislation passed by Government. Having central and local government jointly thinking about what regulation is necessary, to what purpose and how best it can be implemented, enforced and monitored is critical for getting good results. This inquiry shows that we are well short of that ideal.

“At the council level, there is a need for greater attention to quality management processes to lessen the inconsistency in regulatory decisions that we see between different councils and even within individual councils. That would reduce much of the frustration reported by businesses in their interaction with councils.

“Our work has resulted in 29 recommendations for improvements in how regulation is designed, implemented, evaluated and governed. Both councils and Government need to lift their game on regulation, and work together more effectively to produce better outcomes for the community.

“Amongst the Commission’s recommendations for improving regulation are:
•                    a tool for helping to decide what regulations, and which parts of implementing regulation, are best performed by Government or councils;
•                    use of standardised formats and increased transparency to better demonstrate how key council regulatory decisions have been made;
•                    more focus by government departments, when preparing new regulation intended to be implemented by councils, on the costs and benefits of the proposed regulation, where those costs and benefits will fall, whether or not councils have the capability and capacity required to effectively implement the new regulation, and the likely costs of building that capability and capacity where it does not exist;
•                    the development of a ‘Partners in Regulation’ protocol to better guide Government/council engagement;
•                    the development of new or enhanced joint Government/council forums for overseeing improvements; and
•                    greater use of risk-based approaches to monitoring and enforcement of regulation by councils, together with enabling greater use of infringement notices to support regulations in place of more costly formal prosecutions.

“The Productivity Commission has taken a ‘whole of system’ approach to its review of council regulation. What is clear is that improvements will require both central and local government to be well connected to achieve improvements.”

The public service is more efficient and productive than it was before National came to power.

Local government has in general done little to improve its efficiency and productivity.

A review of regulations and how they are managed is a good place to start.

 


Kitchen Dame’s well deserved honour

December 31, 2010

There would be very few kitchens in the country which doesn’t have at least one of Alison Holst’s recipe books.

She is now a Dame in well deserved recognition to her services to the food industry and charity.

Her honour citation describes her as ”one of New Zealand’s best-known food experts”.

She is also being honoured for her charity work, having raised more than $4 million for schools, churches, Plunket groups, kindergartens and playcentres, mostly through cooking demonstrations which have drawn crowds of up to 700 people.

Since she published her first cookery book in 1966, more than four million copies of her books have been sold.

She has continued to encourage young parents to cook ”healthy and reasonably-priced family meals” and still advocates for ”strong family values through a shared appreciation of food”, the citation says.

”She has been a positive role model to New Zealand families for more than 40 years,” it says.

If there are few kitchens in New Zealand without an Alison Holst recipe book I doubt there’s any farms without a Gallagher fence. The company’s principal, Bill Gallagher, receives a knighthood for services to business.

Others in the New Years Honours List are high country advocate, business woman and philanthropist Christine Fernyhough for services to the community and former Director General of Agriculture Murray Sherwin who both get a CNZM.

Michael Hill receives a knighthood for services to business and the arts.

Dr Keith Maslen, who tutored me at Otago, receives an ONZM for services to literature and bibliography.

One of the more controversial recipeints is Garth George who has been awarded a MNZM for services to journalism.


MAf finds significant issues on some Crafar farms

October 9, 2009

MAF has found significant animal welfare problems on a number of the 22 Crafar-owned properties it inspected  MAF Director-General Murray Sherwin announced today.

His media release says:

“Over the course of the last week, MAF animal welfare inspectors, assisted by New Zealand Food Safety Authority veterinarians and industry organisations, have visited all Crafar properties. A number of properties were found to have significant animal welfare issues. Action was taken at some others to alleviate immediate problems.

“On the properties where a response was necessary, MAF had issued explicit directions of what is needed to remedy particular problems such as under weight animals with underlying health issues, inadequate feed, overstocking, and lack of shelter for calves. Regular and consistent input from veterinarians and farm consultants has also been instructed and organised.

“MAF and the Crafar farm receivers are working together on remedial activity where necessary and will continue to collaborate and stabilise these properties for the long term.

“Animal welfare is our highest concern and the most important aspect of any investigation is the animals. While on farm inspections have been completed, and some serious animal welfare issues identified investigations are ongoing and evidence is still being gathered. It will take time before specific prosecution decisions are made.

“MAF has been supported in this work by industry groups such as Dairy NZ, Fonterra and Federated Farmers, who are all committed to animal welfare and expediting recovery on Crafar properties.

“From a broader perspective, MAF and industry groups have agreed to work together to better co-ordinate early warning systems to identify potential issues at both a systemic and individual farm level.”

Animal welfare ought to be the first priority on any livestock farm but finding an early warning system to alert authorities to problems where it isn’t won’t be easy.

DairyNZ, Federated Farmers and Fonterra have all been supporting MAF. All are rightly concerned about animal welfare but all are limited in what they can do to monitor individual farms when it’s possible no-one except staff could go near stock for days, and sometimes weeks.

Some of Crafar’s critics have blamed Fonterra and said it should should play a bigger role in protecting stock.  I’m not sure how that would happen when the only regular presence the company has on farms is the tanker driver who arrives, picks up the milk and leaves.

Unless there were cows or calves on or close to the tanker track, drivers wouldn’t see them. Even if they did see stock they might not recognise anything was amiss.

The problems on Crafar Farms aren’t because of the size of the operation by itself. It’s because the business grew too fast without goo systems and processes. But, as I’ve said in previous posts on this issue, the best systems and processes are only as good as the staff who implement them and you get good and bad staff on farms of any size.


Irrigation funding

August 26, 2008

The Government’s finally come up with some money to help investigate  community irrigation and water storeage schemes.

The Ministry of Agriculture and Forestry has allocated $390,000 under its Community Irrigation Fund to seven schemes, including the Strath Taieri Irrigation scheme, Dairy Creek Irrigation scheme, Mount Ida Dam and Tarras Community Water Scheme.

Two others are in Canterbury and the other in the Wairarapa.

MAF director-general Murray Sherwin said in a statement the $6.4 million fund aimed to help rural communities adapt to climate change and reduce the risk of water shortages.

The money can meet 50% of valid costs and can be put towards paying for support staff, promotional and communication activities, developing a prospectus for potential investors, investigating funding arrangements, facilitating farmer investment and to investigate multiple use of water.

This is great news and long overdue. No-one expects the tax payer to contribute to on-farm costs but the development of community irrigation schemes should be treated like other infrastructure with a public benefit.

When the North Otago Irrigation Company was doing the ground work for its scheme to pump water from the Waitaki River then pipe it under pressure to irrigate up to 20,000 hectares in the Waiareka and Kakanui Valleys there wasn’t a cent of government money available.

Then Minsiter of Regional Development Jim Anderton met NOIC directors several times, accepted there was no better form of regional development foe the area, and each time he promised some assistance but never once delivered.

The NOIC Scheme which opened two years ago has provided an amazing economic, environmental and social boost not just to the valleys but the wider District too with flow-on benefits for the national economy. It would have been a bit easier for all concerned had their been the financial assistance MAF is now providing.


Solid growth ahead for primary sector

August 7, 2008

The Ministry of Agriculture & Forestry  is forecasting sunny times for the primary sector over the next five years in spite of a stormy outlook for domestic and international ecnonomies.

The 2008 Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) 2008 report , expects international demand for food products to keep key commodity prices buoyant for the next five years.

MAF says while traditional Western markets are slowing, this is expected to be offset by continued growth in fast-developing Asian economies such as China, India and other developing and oil exporting markets.

“Individual sectors all face their own challenges, but overall the combination of strong commodity prices, growing global food demand and new market developments – such as the China FTA signing – presents positive opportunities for the primary sector over the next five years,” MAF Director-General Murray Sherwin says.

Challenges at home include the 2008 drought, which continues to have a significant affect across the sectors. In the meat sector, this has resulted in wide-spread de-stocking that will lead to falling beef and lamb export volumes next year.

Export returns, most noticeably in the meat, kiwifruit and forestry sectors have also been eroded by the high New Zealand dollar. And high fuel and fertiliser costs have undermined improved commodity returns. The economic outlook in some of the key markets, such as the United States, is also constrained.

Lamb and beef prices are improving and the outlook is brighter in both sectors than it has been for sometime, Mr Sherwin says.

Beef export earnings, for example, are projected to increase by more than 40% over the forecast period.

Based on Treasury assumptions of easing exchange and interest rates, MAF also expects farm gate returns to be boosted.

This is encouraging – but the low dollar which increases returns also increases the price of major inputs including fertiliser, fuel and machinery.


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