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PM Address To Federated Farmers National Council

Rt Hon Helen Clark
Prime Minister



Grand Chancellor Hotel, Christchurch

18 July 2000

Thank you for the invitation to open the 55th National Council/Conference today.

I have accepted your invitation to speak both because of the importance of the primary sector’s contribution to our economy and way of life, and because I welcome the opportunity to brief you on the vision the new government has for our country and on the vital role the primary sector has in that vision.

I also want to stress that the Labour Party represents many parts of regional New Zealand in Parliament and consequently has many MPs keenly aware of the importance of the primary industries.

I was pleased to see in your chief executive’s annual report to this conference that in his view the Federation “has developed a good working relationship with the new government” and that “Federated Farmers has also opened up good lines of communication with the new ministers whose portfolios impact on the economy or are of importance to farming.”

I can assure you that our doors are open to the Federation and that we seek an ongoing and positive relationship with you.

It goes without saying that we will not always agree. But as New Zealanders we need to work together in a pragmatic way to get the best results we can for our country.

Our vision for New Zealand is for a sustainably growing economy, capable of producing ever more sophisticated goods and services which can guarantee us higher standards of living across the board. We need that stronger economy to help us support better health and education services, a first-class infrastructure, a clean and green environment, and a strong creative identity through our arts and culture which will mark us out as a unique nation with a high quality of life.

The role of the primary sector in building that future is vital.

Too often, I believe, the primary industries are seen as part of an old economy on which the sun must inevitably set. The term, “new economy”, is more often attached to the “” companies and the software writers.

Yet, the economic transformation which our country must undergo to maintain and improve its living standards will be based in significant part on the value we add through science, research, technology and innovation to our primary produce and on our marketing and entrepreneurial skills in selling our products.

While I am sure there will always be a commodity base to our economy, we will see and we must see more of our produce elaborately transformed, and commanding a consistently higher price.

There is also a big economic contribution being made by those who design the equipment and services for our agricultural industries using advanced technologies and whose products from milking sheds to electric fences are world leaders.

The impact of globalisation on a small country like ours at the end of the world’s trading routes is so great that it would be easy in one’s more depressed moments to wonder whether our fate is to be an incubator for bright people and their businesses who then leave for greener fields elsewhere.

It seems to me that our greatest chances of establishing and retaining in New Zealand strong businesses with an export orientation lie in basing them around the primary industries where we enjoy both natural advantages and the results of decades of research and development. More and more sophisticated food and natural fibre production and their associated servicing industries and technologies based in New Zealand will provide a firm anchor for the New Zealand economy. Of course these sectors on their own cannot carry the whole economy, but they are an indispensable and vital part of our future.

Right now our regional economies, based on the primary industries, are outclassing performance in the metropolitan centres. Much of regional New Zealand is benefiting from a remarkable coincidence of good commodity prices, an overly competitive dollar, and weather conducive to production.

But we all know that those factors are largely beyond anyone’s control and can quickly reverse. So, while it is important to make hay while the sun shines, it is also important to be constantly innovating, diversifying, and looking for ways to add value to traditional products.

That is why the government’s economic strategy is built around far greater investment in science and research, regional development, and greater participation in education and skills training.

An extra $43 million a year is going into science and research, with about half the new money directly funding private sector initiatives.

There is a new Regional Partnerships Programme to be administered through Industry New Zealand. Throughout our regions, enterprise agencies have emerged which bring together local chambers of commerce with Federated Farmers, community organisations, Maori and local government. They are generating local and regional development strategies. Our role as central government is to help fund the development of strategies and the promotion of investment into the opportunities identified.

Stronger, more diverse regional economies are essential for maintaining the population base of our provinces and their infrastructure of health, education, and other services. We are all too well aware that when the population declines, so do the services. We don’t accept that decline is inevitable, and we do believe that there is a strong spirit across all sectors in regional New Zealand to regenerate.

On education and skills training, we have worked hard to bring down the cost to increase participation. That is why full time students and part time students on low incomes now pay no interest on their loans while they study. That is a big saving. And for next year we have made an offer to our tertiary institutions which enables them to hold their fees at year 2000 levels. This will be the first time in many years that tertiary fees have not spiralled.

Higher levels of education and skill are critical across the economy today. I know that our farming communities particularly value more educational opportunity for young people and for mature people retraining.

Producing the best goods and services in the world is one thing – but getting access for them in the world’s markets is another.

In our small export-oriented economy, market access has to be a national preoccupation.

I want to assure you that the government I lead places a very high priority on trade liberalisation and that we are advocating strongly in all the international forums available to us.

Jim Sutton is travelling widely in the New Zealand interest as Trade Negotiations Minister, and he, Michael Cullen, and I will be playing our full part in APEC this year, and in continuing to push for a new World Trade Organisation round.

I have myself been knocking on doors from Singapore to Latin America and Turkey to get our products and services better access. I am also working with Trade New Zealand on prime ministerial-led trade missions to parts of the world where that will make a difference.

In the next few weeks we will be launching a new New Zealand strategy towards Latin America which has our trade interests at its centre. Next year I will open a new New Zealand Embassy in Latin America’s largest and huge market, Brazil.

I know that Federated Farmers has worked tirelessly on trade access issues and I look forward to a very strong partnership with you in this area.

In the short time available to me this morning, let me touch briefly on a number of other issues.

I know that the Federation sees a big future for primary industry advancement through biotechnology – and so do we. As you know there has been a lot of public interest in genetic modification and that has led us to establish a Royal Commission to examine the issues surrounding it.

The Commission has been given a year to do its work. This is an area where the potential of science can move beyond our ability to comprehend and where it can raise new ethical issues.

It seemed to us that New Zealand should make an informed choice about its future so that it does not unwittingly foreclose options which it later regrets.

I know that the Federation will take the Royal Commission seriously and ensure that your voice is heard through the open submission process.

A related issue is that of food labelling which is soon to be considered again by the New Zealand and Australian health ministers. The New Zealand Government will be arguing for an outcome which is well aligned internationally and does not cause damage to the export of our food products.

On biosecurity, we are as appalled as you are at the continuing encroachment of pests which threaten our primary industries. Our country has no overall national biosecurity strategy, and so we are beginning the work to develop one. We will need input from all stakeholders, and that of the primary industries is especially important.

We have increased MAF’s border protection funding by 8.5 per cent this year, and there is extra funding for plant and forestry biosecurity risk analysis.

I regret that we were not able to proceed to eradicate the varroa bee mite. Eradication was the option we hoped for, but we could not pursue it in the face of very strong technical advice that there was a very low likelihood of success. It would have been irresponsible to proceed in those circumstances. MAF will do everything it can working with the affected industries to get effective long term management of the varroa mite and to get a National Pest Management Strategy for it in place.

In so many areas of policy development and implementation the government needs strong partnerships with stakeholders. One which is particularly challenging is meeting our obligations under the Kyoto Protocol on Climate Change. We want to ratify the Protocol by mid-2002. That means we must find a way of stabilising our greenhouse gas emissions at 1990 levels, on average, over the period 2008 – 2012. That is a tall order. Our gross carbon dioxide emissions for example, have actually risen 19.2 per cent since 1990! Carbon dioxide, however, represented only 34 per cent of our emissions in 1995, while methane and nitrous oxide, predominantly from the agricultural sector, represented 62 per cent.

This means that the challenges facing us in reducing emissions are rather different from those facing other first world and more industrialised countries.

Our ministerial group, led by Hon Pete Hodgson, will be seeking input from across our industries, local government, scientists and ecologists on how we plan a strategy which will enable us to wear the badge of a good international citizen on climate change.

Last year a tremendous amount of pressure was placed on the primary industries to change radically their producer board arrangements.

One of the first actions of the new government was to remove the threat of forced reform and to disband the group of officials dedicated to forced reform.

In the meantime the boards in some sectors have undergone substantial change. The changes in the kiwifruit sector seem to have widespread support, while the road for the apple and pear growers has been more rocky, partly because of the poor returns.

The dairy industry has not to date found consensus around the proposals in last year’s legislation, nor will it be pressured by the government to do so. We believe that commercial realities in the future are likely to drive further change, but that change must be broadly supported by farmers, address minority interests, and be in the interests of New Zealand overall. If the dairy industry comes to government with proposals which meet those criteria, we will be happy to work with the industry to achieve its goals.

On roading, as you know we abandoned the last government’s proposals and have elected instead to work constructively with local and regional government on ways to fund and manage roading better. The Minister of Transport would welcome Federated Farmers’ input into his review.

I know that Federated Farmers is also concerned about the digital divide between urban and rural New Zealand which stands in the way of equal access to telecommunications. In the age of the internet and e-commerce, e-government, and e-everything else, the lack of band width access in rural areas is a significant problem. I come not with answers, but with an acknowledgment of the seriousness of the issues, and would urge you to make contact with the Minister of Commerce and Communications, Mr Swain, if you have not already done so. This is a new area of policy for government, and we, like you, are on a steep learning curve.

Finally, I turn to two issues where Federated Farmers has been expressing concerns similar to others in the employer community.

On ACC, I thank you for your constructive approach to the new legislation which resulted in important changes for farmers.

The premium issue is complicated and was the subject of a major speech by Dr Cullen last night. The new ACC employer premium is cheaper for 90 per cent of those crop farmers and 42 per cent of those livestock farmers who are employers.

For the self-employed, premium rates drop as earnings rise. If a self employed farmer were earning $15,000 a year, the rate would be $2.23. But if the self employed farmer earned $50,000 the premium falls to $1.47 for every $100 of wages.

Across the economy, employers will pay $25 million less on ACC premia this year than they did last. But of course on the law of averages, some will pay more, as indeed occurred in the transition to the privatised system.

The Employment Relations Bill is due to pass through Parliament in August and become law on 1 October. There has been a very lengthy hearings process and a lot of reconsideration of details in the Bill within the government itself. The changes that the government has proposed to the select committee go a long way towards addressing the key cluster of concerns consistently raised by employers.

I recognise that Federated Farmers would be happiest if no change were made to the Employment Contracts Act at all. Labour, however, has never accepted that the balance struck in that Act was fair. For nine years in opposition we campaigned openly on a platform of repealing and replacing the Act, and we believe we have a mandate to do that. We also believe in keeping our word. In my view it is a very moderate piece of legislation, which, if we had introduced it in the 1980s during the time of the Fourth Labour Government, would undoubtedly have been denounced as a sell out of our supporters! How times change!

Once again, thank you for your courtesy in inviting me to open the conference today.

Everything I know about New Zealand’s economy, society, and history, and everything I know from my own farming family background, convinces me of the importance of the primary sector.

While we will have our differences, I want you to know that our government does want to work with you on the wide range of issues which are of concern to and are challenging us both.

Ours is a classic third way government – all for a market economy, but not for a market society. We want a strong, competitive, export-oriented economy, and we want it to deliver the goods in terms of the quantity and quality of life for our citizens.

We acknowledge the limitations of governments, but we also accept the responsibility of leading, facilitating, enabling, brokering, and funding where appropriate to get results.

We need New Zealand Incorporated working together to achieve the strong and sustainable economy and society our country yearns for. You are a big part of New Zealand Incorporated and we look forward to working with you to make a difference.


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