Rural round-up

April 20, 2019

Better data will help us do a better job – Federated Farmers:

The Environment Aotearoa 2019 report released today will help all New Zealanders, not just farmers, identify the priorities for action.

But we can only manage what we have information on, Federated Farmers environment and water spokesperson Chris Allen says.

“Our message during the last central government election campaign, when various candidates and commentators were putting the boot into farmers for environmental impacts, was that all Kiwis were in this together. This new report underlines exactly that. . .

Irrigation sector committed to continuing to improve environmental practices:

IrrigationNZ says the recent Environment Aotearoa report highlights the need for farmers and growers to continue work underway to: improve practices on-farm and upskill farmers; invest in cutting edge technology; and implement Farm Environmental Plans to change the way water is used for production.

“In partnership with national and regional government, it’s essential we continue to research, trial and adopt new practices and technology,” says Ms Soal.

“It is critical that we recognise that water is a precious resource which is essential for primary production and regional resilience in the face of climate change and that we use it in a way that is environmentally responsible,” says IrigationNZ Elizabeth Soal. . .

Dairy committed to a better environment:

DairyNZ says today’s Environment Aotearoa 2019 report gives honest insight into New Zealand’s environment and where the opportunities lie for the dairy sector, particularly for water quality, biodiversity and climate change.

Strategic leader for DairyNZ’s environmental portfolio, Dr David Burger, said while the report shows the dairy sector has work to do, there is no doubt farmers are working hard to look after the environment – with significant work already undertaken over the last 10 years to improve environmental practices across New Zealand. . .

Living affects the environment – Neal Wallace:

Our way of life is putting the environment under pressure.

A report produced by the Ministry for the Environment and Statistics New Zealand with evidence and trends of what is happening to the environment highlights nine key issues.

It is based on a comparison with previous reports, analysis of more than 60 indicators and new methods.

It found native plants, animals and ecosystems are under threat, changes to land vegetation are degrading soil and water, farming is polluting our waterways and water use affects freshwater ecosystems.

Urban centres create environmental pollution with urban sprawl occupying the best soils and destroying native biodiversity, it said. . .

Water tax decision allows environmental improvements to be targeted:

IrrigationNZ says the government’s decision not to introduce a water tax in the near future is good news for all New Zealanders.

“The Tax Working Group proposed a nationwide tax on all water use including for hydroelectricity, household, business and agricultural use. That would have resulted in higher power and food prices for households and businesses and higher rates bills for everyone,” says IrrigationNZ Chief Executive Elizabeth Soal. . .

Wrightson gets OIO approval to sell seeds unit, still mulling size of return – Paul McBeth:

(BusinessDesk) – PGG Wrightson has cleared the final hurdle to sell its seeds division to DLF Seeds for $434 million after securing Overseas Investment Office approval, but still hasn’t figured out how much to return to shareholders.

Now the OIO has signed off on the transaction, the rural services company anticipates the deal to settle either this month or May. . .

Whio ducks make a comeback after predator programme :

A nationally vulnerable duck species is making a comeback following a programme to curb predators in Fiordland.

About 64 breeding whio have been found during surveying of a security site for the blue ducks.

Department of Conservation Senior Ranger Andrew Smart said extended trapping efforts and predator control enabled the whio to make a strong comeback. . .


CGT based on dodgy stats

April 5, 2019

Assertions about the impact of the proposed capital gains tax are based on dodgy numbers.

Troy Bowker writes:

The Tax Working Group (TWG) used an unreliable survey by the Department of Statistics as the basis for its argument that the majority of the proposed capital gains tax (CGT) will be paid by the top 20 per cent of households measured by wealth.

Repeatedly, since the final report was published, Sir Michael Cullen has quoted the “statistic” to the media that 82 per cent of the assets that will be subject to CGT are owned by the top 20 per cent of New Zealand households measured by net worth.

He goes on to state (as factual) the second 20 per cent of wealthy households will be responsible for another 11 per cent , then only 4 per cent for “middle” New Zealand.

In reality, this information is based on what most reasonable people would describe as little more than guess work.

It has been used for political purposes to argue that the majority of the public have nothing to worry about, and it will be mostly the “rich” that will pay CGT.

If it is correct (which it isn’t), it’s a very good argument for Labour and the Greens who desperately want to see a comprehensive CGT implemented.

The problem for those wanting CGT is that the data is completely unreliable and should never have been used. We need to know why public officials used it in the first place when they knew, or ought to have known, it was dodgy statistics. . . 

The stats came from the annual Household Economic Survey (HES) carried out by Statistics NZ.

It was done by conducting interviews of 8000 households, out of approximately 1.7 million households, in New Zealand. That’s only 0.47 per cent of households — s a ridiculously low sample size.

The other reason it is unreliable is most of the information provided is unverifiable. The Department of Statistics asks all sorts of questions about the assets and liabilities of each household and records the answers given. People can guess, underestimate or overestimate or not even volunteer information.

As you can imagine, it’s an extremely invasive and intrusive process that attempts to delve into the most personal financial information of New Zealand homes.

By the Department of Statistics own admission, it contains data that is so unreliable they cautioned against its use. . . 

In spite of the caution Treasury used them in its report to the TWG.

It beggars belief that Treasury decided to use this information in its report to the TWG.

Senior Treasury officials who wrote this report to the TWG obviously knew the information couldn’t be safely relied upon.

Hidden in the fine print of the Treasury report, it states “care should be taken when interpreting wealth estimates because the confidence intervals around any point estimates vary widely”.

In layman’s terms, this is like Treasury saying to the TWG: “You probably shouldn’t be using this information as we really don’t know if it’s accurate and some of it’s completely unreliable.”

This raises some very serious questions about the probity of the process that need answering by Finance Minister Grant Robertson, and the TWG chair Michael Cullen (who is still on the Government pay roll). Hopefully he’s still being paid to answer the question of why the TWG used this data.

Did the TWG specifically request Treasury to dig up statistics to support the political argument that only the top households would pay CGT? Did the TWG know the data they were using was largely unreliable? Treasury obviously had concerns about using it and told the TWG in its report. So why did the TWG use that data? Does the Finance Minister now accept this data is unreliable and shouldn’t have been used for political purposes to justify Labour’s proposed CGT?

These are very serious questions that need to be answered and answered publicly.

The reality is, we don’t have enough reliable information to draw any conclusions at all about which households will pay the most from the proposed CGT.

We do know, however, that there are hundreds of thousands of farmers, business owners, lifestyle block owners, bach owners and sharemarket investors who will pay a lot more tax if Labour are successful in implementing CGT.

There are an awful lot of hardworking ordinary Kiwis who don’t consider themselves wealthy who will pay CGT if Labour are successful in convincing Winston Peters to support it.

For Labour to use these dodgy statistics to mislead the public would be to underestimate the intelligence of the voting public of New Zealand.

The CGT debate has a long way to go. But Labour need to come clean and be honest about the many hundreds of thousands of middle income Kiwis who will pay CGT. They also need to answer some serious questions about how, and why, the HES was used to support the main argument on fairness by the TWG.

This proposal is the most significant tax reform in many years in New Zealand and we deserve better than public officials using dubious and unreliable data to support a preconceived political agenda.

Significant tax reform should not be based on dodgy stats for both ethical and practical reasons.

Ethical because it’s wrong to base assertions on wrong numbers, and practical because if the stats are dodgy there can be no certainty about the outcomes.

It’s not just who would pay how much that matters, but how much tax a CGT would raise.

If the stats on which the assertions of who would pay what are dodgy the conclusions on how much that would raise are also completely unreliable.

The TGW was told any proposals must be revenue neutral – that is, the amount raised by any new tax would be offset by cuts to old ones.

There can be absolutely no certainty about how much it would raise and therefore how much other taxes could be lowered if the whole proposal is based on numbers based on guesswork.

Almost all those favouring a CGT do so based on an ideological and political idea about fairness. 

There is nothing fair about assertions based on dodgy numbers and a tax full of loopholes that would disincentivise investment and sabotage the economy.

 


Working group to review working groups

April 1, 2019

The government has announced the formation of a working group to work on reviewing all the working groups it’s formed.

“The government has been listening to the public’s growing concerns about the number of committees and working groups in operation and the uncertainty and lack of action that results from this,” chair of the new committee, Ann Overseer, said.

“They decided that the best way to ensure all these bodies were actually doing something worthwhile was to form another committee with complete oversight of all of them.

“Policy is a complex best and if the government is to get the outcomes it wants that are both practical and politically saleable, it needs to ensure the working groups are working and working well.”

Ms Overseer declined to comment on whether her group was formed because the report from the Tax Working Group (TWG) was such a dog’s breakfast.

“It’s not my job to comment on the whys and wherefores of what’s gone on before. My committee and I will be busy enough focussing on ensuring that no canine fodder will be delivered in any other report.”

The new group will be called the Committee to Review all Panels (CRaP).

In order to minimise costs it will be expected to work expeditiously and report its first findings by midday today.

 

 


Politics changed, facts haven’t

March 28, 2019

Sir Michael Cullen is being paid $1000 to sell the capital gains tax.

It’s a task made more difficult by records of his views on a CGT  which the parliamentary library holds from his time as an MP:

Stuff reported that although the chairman of the Tax Working Group once called a capital gains tax “extreme, socially unacceptable and economically unnecessary”, he has since changed his mind.

New documents compiled by the Parliamentary Library for the ACT party reveal just how far he shifted since leaving Government in 2008.

The 84 pages of research included every reference Cullen ever made in the House in reference to a CGT between 1987 and 2008. . . 

They include:

. . . “I think it is extremely hard to make that connection between a capital gains tax and the affordability of housing, insofar as there has never been a theoretical argument put forward about a capital gains tax on housing. It is more in the direction of a level playing field around investment; it is not around the notion that it will make houses cheaper. Indeed, it is very hard to see how it would necessarily make houses cheaper,” Cullen said at the time.

On June 20, 2007, when Bill English asked Cullen about explicitly ruling out a capital gains tax, he responded saying: “One of the problems with a capital gains tax – apart from the fact that if it were done, it should apply to all asset classes—is that countries overseas that have capital gains taxes have significant inflation in house prices on occasion”.

Then on June 21, 2007, he was asked about the possibility of combining ring-fencing with a capital gains tax on all investments except the family home, and more Government investment in low-cost rental housing.

He responded saying: “I think it is fair to say that, if one was looking at a capital gains tax, which I am certainly not, it would apply to all asset classes. I think the arguments in favour of such a tax, which probably 20 years ago were quite strong, become much, much less strong in the intervening period of time, for a whole host of reasons. So I think that that is actually not a very worthwhile avenue to explore, not least because it comes, in effect, at the end of a process, rather than trying to address the over-investment at the start of the process”. . . 

He says he was Finance Minister at the time and following the government line.

When asked why he changed his mind, he quoted John Maynard Keynes: “When the facts change, I change my mind”.

What facts have changed? It wasn’t a good idea then and it still isn’t, for the same reasons.

As Robin Oliver, former deputy head of Inland Revenue, former Treasury advisor, an expert on the tax system, and one of three dissenters on the Tax Working Group said:

There’s a strong argument for taxing capital gains, as you put it, in theory, the problem is the practicality and of making it work. . .

Kathryn Ryan asked him if, all things being equal and as a tax expert would it be good to do it and her replied:

In the actuality of what you have to do to get such a tax in place, no.

Most of the arguments in favour of a CGT are theoretical ones based on a notion of fairness, whatever that is.

Most of the arguments against it are practical based on facts including that it has done nothing to rein in house prices elsewhere and has led to overinvestment in housing, underinvestment in business, and acts as a handbrake on succession.

The politics have changed but the facts haven’t.

A CGT with exceptions as recommended by the TWG would be expensive to administer, contain loopholes which would only provide work for lawyers and accountants, promote over-investment in housing, stifle investment in productive assets, and result in lower tax revenue in tough times when capital gains fall.


Rural round-up

March 13, 2019

Tax recommendations threaten future prosperity:

Federated Farmers is calling on the Government to reject the majority of the raft of new taxes proposed by the Tax Working Group.

“Small business would pay the costs, large business would spend thousands avoiding the costs and tax advisors and valuers would have a field day,” Federated Farmers Vice-President Andrew Hoggard says.

“There is possibly an argument for a Capital Gains Tax aimed at rental properties if there was some sound evidence it would dampen investor speculation, and reduce price pressure and first home buyers being out-bid. But even with that, we haven’t given the tougher ‘bright line’ test rules a chance to really kick in. . .

Despite rising prices farmers are feeling oppressed from all sides and confidence is low. FIckle urban voters are driving a flood of rules and imposing costs that make little sense to the business of farming – Guy Trafford:

The results of the January Federated Farmers farmer survey have recently been published and makes fairly sober reading – especially in the context that prices for most commodities are reasonably sound.

Only 5.1% of respondents expected economic conditions to improve and but nearly 46% expect economic conditions to worsen, this is the worse result since July 2009.

Given the recent rises in milk prices and solid returns coming for sheep and beef farmers this level of pessimism is somewhat surprising and perhaps is a reflection of where farmers heads are at rather than a measure of what the ‘true’ economic conditions are. . . 

Looking to Generation Z for the future of  food – Sarah Perriam:

The rural sector is rapidly changing.

Consumer demand and global trends means New Zealand farmers need to embrace innovation to be able to compete and thrive in this new and exciting environment.

The next generation is vital for success. . . 

Greenpeace billboard ruled misleading  :

Federated Farmers is pleased the Advertising Standards Authority has ruled that a Greenpeace billboard aimed at fertilizer companies and the dairy industry is misleading and takes advocacy a step too far.

“Federated Farmers believes everyone has the right to express strong views but as the ASA Complaints Board ruling underlines, over-simplification of issues and targeting of two farmer-owned companies is misleading and overly provocative,” Feds environment spokesperson Chris Allen says. . .

Zespri. Appoints Bruce Cameron as chairman – Luke Chivers:

While the kiwifruit industry is having its day in the sun it is not short of challenges. Luke Chivers spoke to new Zespri chairman Bruce Cameron about the future.

New Zespri chairman Bruce Cameron is taking over at a time of strong continuity and volume in kiwifruit exports.

He replaces Te Puna grower Peter McBride who has stood down to pursue other primary industry interests, including a Fonterra directorship. . .

Butter prices go into meltdown :

Butter prices fell 10 percent in February 2019 to a 19-month low, Stats NZ said today.

The average price for a 500g block of butter fell to $5.20 in February 2019, down from a record high of $5.79 in January 2019.

“In January we saw milk prices fall to a 19-month low. This price fall now looks to be flowing on to other dairy products,” consumer prices manager Gael Price said. . . 


Govt can’t cope with CGT oppositon

March 8, 2019

The normal course of events for government working groups is to do the work, submit a report and leave what happens next to the politicians.

That this government feels the need to keep the chair of the Tax Working Group, Sir Michael Cullen, on at  $1000 a day to explain and defend the group’s recommendations is a sign the politicians don’t think they’re up to explaining and defending it themselves.

Paying a working group chair $1000 a day might be the going rate while he’s actually chairing for a day but continuing to pay him that to lobby is outrageous:

The Tax Working Group process has become blatantly politicised with the Government’s decision to pay Sir Michael Cullen to continue lobbying for a capital gains tax, says the New Zealand Taxpayers’ Union.

Taxpayers’ Union spokesman Louis Houlbrooke says, “The advertised purpose of the Tax Working Group was to deliver an expert-driven appraisal of the tax system along with a series of recommendations. That advice has now been received, but Sir Michael is still being paid over $1000 a day to argue for higher taxes. Funding for expert advice is one thing, but taxpayer-funded public campaigning is outrageous.”

“If the National Party set up a Steven Joyce led Working Group and paid Mr Joyce to get on radio and attack the Labour Party and advocate for lower taxes, the political left would rightly get up in arms. It’s the same principle here: expert advice should not be politicised at taxpayers’ expense.”

“Grassroots organisations like the Taxpayers’ Union campaign using voluntary donations. Proponents of the capital gains tax should try to do the same.” . . 

Paying Cullen is in effect a government vote of no-confidence in themselves and their ability.

Government MPs have had remarkable little to say on the TWG’s report, with the exception of James Shaw who asked if the government deserved to be re-elected if it didn’t introduce a capital gains tax (CGT).

That it needs to hire the group’s chair to speak for it, shows it doesn’t deserve to be re-elected anyway.


Rural round-up

February 28, 2019

Farmers tired of bearing blame – Hamish Walker:

Farmers are working hard on improving water quality and should be supported, writes Hamish Walker.

It’s all farmers’ fault didn’t you know?

Those fenced-off waterways, new sediment traps, wetlands, all the riparian plantings, not cultivating near waterways, strategically winter grazing and everything else farmers do on-farm to protect the environment, it’s still all their fault.

What is it, you ask?

Well, Fish & Game’s anti-farming crusade would have you believe it is the water quality issue, one solely caused by farmers. . . 

Farms firmly in taxman’s sights – Neal Wallace:

Agriculture will be firmly in the sights of the tax collector should the Government adopt the Tax Working Group suggestions, which propose a suite of environmental taxes and a broadened capital gains tax.

The group recommends including agriculture in a more tax-like emissions pricing scheme, introducing a nitrogen tax and taxing those who pollute and extract water, though it concedes establishing a mechanism to do that is problematic.

The report says more work is needed to develop tools to more accurately estimate diffuse water pollution and extraction but in lieu of such a system it recommends a general fertiliser tax. . . 

Applications open for Trans-Tasman agribusiness management programme :

Applications for the prestigious Rabobank Business Management Programmes have opened for 2019, with the Farm Managers Programme – the course for up-and-coming young farm leaders – returning to New Zealand for the first time in a decade.

Announcing the opening of applications for this year’s intake for the two residential programs – the Executive Development Programme (EDP) and the Farm Managers Programme (FMP), which are designed for progressive New Zealand and Australian farmers looking to take their businesses to the next level – Rabobank New Zealand chief executive Todd Charteris says it is fantastic news to have the Farm Managers Programme returning to Kiwis shores for the first time since it was last held in Christchurch in 2009.

Ahuwhenua finalists named:

The three finalists in this year’s Ahuwhenua Trophy for the top Māori sheep and beef farm have been announced.

They are Whangara Farms, Gisborne; Te Awahohonu Forest Trust – Gwavas Station, Tikokino near Hastings and Kiriroa Station – Eugene & Pania King, Motu, near Gisborne. . . 

Gold and silver found on conservation land in Coromandel – Gerald Piddock:

OceanaGold​ has discovered gold and silver buried under conservation land on the Coromandel Peninsula.

But a local environmental group has vowed to fight the multinational company every step of the way if it decides to mine the precious metals.

The discovery after exploratory drilling at Wharekirauponga, inland from the holiday resort town of Whangamatā lies near the Wharekirauponga Track in the Coromandel Forest Park, which is classed as Schedule 4 land. . . 

 

Farmers launch ‘Mission 4 Milk’ to help promote the white stuff

A new campaign has been launched by dairy farmers to promote the health benefits of milk to the public.

Mission 4 Milk is a campaign which sets to raise awareness about how milk can be part of a healthy lifestyle.

The campaign states: “With the rise of plant-based alternatives, the reduction of free milk in schools, and the shift away from milk marketing, the average shopper doesn’t know why they should drink milk.

“But cow’s milk is packed full of essential, natural vitamins and nutrients – many of which you won’t get anywhere else. It’s great for your bones, it’s great for your teeth, and perhaps most importantly – it’s great for your brain.”


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