Speech – New Zealand Labour Party
Just over one week from Election Day and we look towards an uncertain future. The world economy is in turmoil.Phil GOFF Labour Leader
17 November, 2011
Speech to Federated Farmers National Conference
This election there is a lot at stake.
Just over one week from Election Day and we look towards an uncertain future. The world economy is in turmoil.
Three years ago a banking crisis threatened our stability. Today we find ourselves staring down a debt crisis.
The truth is no one knows just how the debt crisis in Europe will turn out. We don’t quite know how the fallout will affect our key markets: Asia and Australia.
We do know that we will not be immune. We know that complacency will not do And that business as usual is not enough.
While we cannot predict every disaster or foresee every challenge the future might bring, we must act now to plan for a more secure and affordable future.
I’m not talking about short-term, election-driven thinking dominated by the next 3 to 4 years.
We must raise our sights beyond today and consider tomorrow. We must plan for the long-term future; for the next 30 to 40 years.
We need a plan that faces up to our problems, one that tackles the tough issues to put us on a better long-term footing.
This election I have put forward my plan for New Zealand.
My plan will:
* Get the government books back in to shape. * Fix the tax system and increase savings to get more investment into our businesses. * Support innovation to help businesses develop new products to sell to the rest of the world. * Change monetary policy to support exporters against a volatile NZ dollar. * Get youth off the dole and into apprenticeships to help them get the skills they need. * Tackle the cost of living putting more money into the pockets of New Zealanders and stimulating the economy. * And secure the future for our kids by making sure they have the best start in life.
It’s a serious plan for serious problems: high private debt, low savings, over investment in property and an aging population.
This election I’ve faced up to the tough problems. I’ve answered the tough questions and fronted the tough interviews.
My plan stacks up. National are happy to just “muddle through”. I’m not.
A Business NZ survey has found that 66 per cent of businesses don’t think National has a plan.
Selling our assets is not a plan. That’s not good enough. The world has changed. We must get our own house in order to live within our means.
That is why I put forward a plan that will get us back into surplus by 2014/15, allow us to pay off our debt faster than National and keep our assets.
The Reserve Bank has looked at the plan and expressed confidence in it, saying it is “achievable”.
My plan keeps a tight rein on government spending by focussing on priority areas which are phased in over time. Just one example: child poverty.
Over 200,000 New Zealand kids living in poverty is a moral and economic failure. I firmly believe we cannot afford to wait in the hope this problem rights itself. It won’t.
We must act today and Labour’s plan takes critical steps to do so and to end intergenerational disadvantages and dependency.
However, we are phasing the programme in over 6 years to ensure it is affordable.
Balancing the books alone will not be enough. We need a comprehensive long-term plan.
There is no question that agriculture plays a crucial role in that plan. We need to address the underlying structural problems that are holding the economy back.
Your president Bruce Wills pointed out that “the primary sector generates over half of New Zealand’s entire foreign exchange earnings”.
However the farm-gate payout is too dependent on a volatile dollar. When the exchange rate soars the rewards for your hard work falls. When the exchange rate dips prices for inputs like fuel can surge. Your 2011 election manifesto ranks input costs and the exchange rate as two of your top concerns. I agree.
The success of such an important sector should not be wedded to the unpredictable swings in the NZ dollar. Labour will give the Reserve Bank more flexibility in how it runs monetary policy.
We will change the law to ensure the Reserve Bank has more tools. And we will ensure exporters like you have a voice on the Reserve Bank Board.
We are committed to a fully independent central bank that focuses on price stability. However when our economic success is entirely dependent on selling more to the rest of the world, we must be smarter about how we go about it. We can be smarter.
Leading New Zealand scientist Sir Paul Callaghan is clear that there is not enough physical space or water in New Zealand for the quadrupling of cow numbers that would be required to meet National’s goal of catching Australia.
Our future prosperity lies in developing new products to sell to the world and finding better ways of producing and adding value to what we already do well.
Innovation has always been a part of who we are – the irrepressible number-8 wire spirit is a great Kiwi tradition.
However, a more complex and competitive world calls for a better use of this Kiwi tradition. We have seen how innovation can be the difference between high and low wages economies.
We need only look at the development of refrigeration to see the profound impact new technologies have had and can have on our primary sectors.
Allowing our exporters to ship our meat, fruit, vegetables and dairy products to all parts of the world has underpinned the success of the New Zealand economy for decades. Through greater innovation we have excelled at making the grass grow faster and getting cows to produce more milk and adding value to the product.
Innovation settings could be the closest thing there is to an economic silver bullet. That is why we are introducing a 12.5 per cent Research and Development Tax Credit.
Our commitment to ensuring remote areas are given priority under the Rural Broadband initiative for access via satellite, wireless or other means will also spark innovation.
I will also step up our efforts to secure access for our exports into other markets, as I did in the Asean and China Free Trade Agreements.
I started the TPP process, though I tell you this, we shouldn’t be putting Pharmac on the block as part of these negotiations. That has nothing to do with free trade.
As we plan for more opportunities in the future we cannot lose sight of the need to protect what we already have.
That is why yesterday I announced we will restore $2 million in funding for Biosecurity. Cutting front-line biosecurity staff was short-sighted and presents a real danger to our economy.
We need to protect the long-term survival of primary industries from diseases and pests. We only need to look at the devastating effect of PSA to see how dangerous and costly complacency can be.
Your manifesto shows that over the past 10 years the number of agriculture businesses has slowly declined as farms consolidate and land is subdivided for urban growth.
This decline poses a risk to the family farm.
One of the biggest future risks to the legacy of the family farm is the prospect of ever increasing amounts of overseas ownership. We know there are overseas buyers with money to burn who want to control the supply chain for food production. They’re coming here to buy what’s currently ours and they will be doing it more often.
The Crafar farms is just one example. The prospect of large tracts of land being owned by overseas investors leaves less land available for New Zealanders looking to get into farming.
No overseas person has the right to buy our land – it is a privilege. It is a privilege we have granted too easily.
I will increase the protections on our farm land from overseas ownership. If we want to control our future we must keep control of our farms. I won’t let us become tenants in our own country.
Just a few years ago soaring farm prices saw the next generation of farmers either priced out of the property market or forced to mortgage themselves to the hilt.
We saw the same thing in the residential property market. First time home buyers priced out because property speculators are chasing a quick buck and avoiding tax.
And the inflation in house prices caused the double whammy of the Reserve Bank pushing up interest rates and foreign investors chasing those rates forcing up the exchange rate. Farmers were hit on both fronts.
I want to stop that. Family farmers farm for profit, not for capital gain. That is the way it should be.
Introducing a capital gains tax will remove the tax haven in property.
Let’s be clear about what we are talking about. A flat-rate 15 per cent tax on sale of property that won’t be applied to any past gains. It won’t apply on inheritance. It will affect less than 10 per cent of New Zealanders in any one year.
The family farm passed from one generation to the next is untouched. We may disagree on some of the details of the scheme, but I don’t think we can argue about the need to keep speculation under control. A CGT will ensure the continuation of the family farm at the same time as making it easier for first time farmers to get into the industry.
The final area I want to discuss is the ETS.
We disagree about the ETS. That is no secret. We have committed to bringing agriculture into the ETS by 2013.
I want to be very clear about why we took the decision we have. It was not easy. It was not taken lightly. But it is something we have to face up to.
New Zealand is unique in that agriculture makes up nearly half of our emissions. An industry that dominates our exports and our emissions profile cannot afford to ignore this issue.
The most powerful message we have to sell our products abroad is our reputation – a clean, green country which produces the freshest and healthiest produce, a reputation you fought hard to earn. However, in a global economy reputations hard won are too easily lost. Consumers are connected across the globe in ways they never have been before. Communications are instantaneous. Reputations can be undone in short order.
The ETS will protect us against our trading partners using environmental concerns to block our products.
If we let our reputation slip, our export markets and your incomes will be under threat. As Trade Minister and Minister of Foreign Affairs I sat across the negotiating table discussing these issues.
There is no way to escape this issue. I firmly believe that the long-term security of the industry is best served by tackling this issue today, on our own terms.
There is no doubt these are tough issues. I accept that we don’t always agree on the solution.
But the time for inaction has passed. We cannot be held hostage to the election driven timetable of 3 years. If we want a more secure future we must have a long-term plan.
That is the plan I am offering New Zealanders.
This election New Zealanders face a very clear choice.
It’s a choice between an approach that sweeps our problems under the carpet and a plan that faces up to those problems.
It’s a choice between an approach that leaves tougher choices for the next generation and a plan that see our children inherit more opportunities than we were handed.
Authorised by Hon Phil Goff, MP, Parliament Buildings, Wellington