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Anderton speech to the Rural Vets conference

Anderton speech to the Rural Vets conference

The success of our animal-based primary industries is underpinned by many factors and sectors, and of course by our veterinary services


I want to begin by saying how proud I am of our primary industries. There are many sectors that contribute to the success of our primary industries. From veterinarians, to farmers, to scientists, to entrepreneurs, to public officials patrolling our border...and many more.

The combined efforts of the sector have made our primary industries the backbone of our economy. Over 70% of many of our primary goods are exported. Two thirds of our foreign exchange comes from primary sector industries. The earnings of the primary sector pay for the goods and services we import.

If we want to keep importing high value products, like cars for example, and we want to buy the oil to run them, we need to generate the earnings to pay for them. We all want to improve our standard of living and in doing so we need to earn higher and higher incomes.

The best way we can earn more for New Zealand is for our primary industries to earn more. It's only in industries in the primary sector that we have companies with global reach and scale. The market capitalisation of our five largest meat and dairy co-operatives is greater than the entire NZ stock exchange.

It's fashionable to think primary industries are declining in importance. But the facts tell a different story. Over the last fifteen years agriculture, forestry, and related industries have increased their productivity at more than double the rate of the rest of the economy.

The contribution of agribusiness to New Zealand's economy has been rising.
The success of our animal-based primary industries is underpinned by many factors and sectors, and of course veterinary services are one of them. I saw a recent study by BERL, which analysed the contribution of the sector. It estimated our animal production industry each year produces a 'farmgate' value of $11 billion. This production relies on vets in a number of ways.

Vets contribute to disease prevention as well as to research and education. And rural vets are the vital first line of defence against diseases that could threaten our whole economy. Rural vets will be the first to detect suspected exotic diseases like foot and mouth. So it's obvious that if we want to ensure the continued success of our animal-based primary industries, then we also need to ensure every part of the industry is in strong shape.

In common with many sectors of our economy, there is a growing problem of a skills shortage within the veterinary sector. I'm keenly aware of the problem, and especially the problem of attracting veterinary professionals to work in rural areas.

I recently met with the Veterinary Council and the New Zealand Veterinary Association. We're not alone in confronting this issue. There is a worldwide shortage of suitably qualified veterinarians. The world shortage only makes it even more important for us to make New Zealand an attractive place for young professionals to live and raise their families.

We're going to have more of these problems in future in all industries. Populations are ageing in most developed countries. There is already more competition for skilled workers than there has ever been. There will only be more competition in future. Next time you hear someone saying we don't need immigration - or we can be relaxed about living standards in New Zealand, bear this in mind.

But it also means we have to take skills shortages very seriously. We need to work across all fronts - industry and government - to plan sensibly for the future. This is true not only of the veterinary sector, but of many of our industries. Other countries are facing much greater shortages than we do. The UK, for example, commissioned a major report in 2004 to investigate the situation of "large animal" vets. We are highly dependent on overseas-trained vets.

For the last few years we have needed about a hundred a year, with around a quarter to a third staying here permanently. There are many reasons behind the shortage. We have limited capacity to train new professionals. Massey is the only university providing veterinary training. At the moment their capacity won't cope with more students. Still, it is expected to produce around ninety graduates this year - forty percent more than last year.

We also need to recognise the demographics of the industry are changing. Far more women than men are graduating into the industry. Most young graduates - and especially women - are putting a heavier emphasis on work-life balance. In turn, this puts more pressure on clinics that provide 24-hour services.

There is some evidence shortages are caused by increased demand to service dairy herds, which are substantially larger, especially in the South Island. To put that in perspective - the number of dairy cattle has increased by more than a million over the last SEVEN years; from four million to five million.
In the South Island, dairy herds have almost trebled, from 560,000 to 1.3 million.

But many other sectors have heavily reduced stock numbers. There are barely ten percent as many goats today as there were in 1988, for example.
Pig numbers are down by a quarter over the last decade. Beef cattle down from five million to four million. And to work with these sectors we have 2135 vets - two thirds of them engaged in clinical practice. That compares to just 1600 vets in 1999, and 855 in 1977 when we had 2.9 million dairy cows, six million beef cows and sixty million sheep.

These figures should tell us the problem of shortages is complex, and therefore it needs a comprehensive response. The solution to getting more vets into rural practice will require both direct measures to overcome obvious barriers. And it will take better support for rural lifestyles.

There is never any such thing as a magic bullet to fix problems. There has been some positive action. The Labour-Progressive Government has already got initiatives underway.

Last year the government introduced a new Veterinarians Act. It provides more flexible registration systems. More overseas trained veterinarians with qualifications not recognised here will be able to sit the examination prescribed by the Veterinary Council.

The Veterinary Council needs to exercise its new powers to help overcome the barriers to bringing more vets to rural areas and keeping them. I know the Veterinary Association is playing a role too. For example it is working with members to provide for improved career paths and better working conditions.
Both industry and the government have to work together in partnership to resolve the issues where we can.

Everyone who has a stake in the success of our agricultural businesses has a part to play. I want to make a commitment to you that while I am here, the government will play its part. I get tired of hearing people say the government should sit on the sidelines and wish you luck. We tried that for a long time, and it didn't leave us adequately prepared to meet challenges...not just in the skills area, but in many areas and in many industries. When you hear people say 'government shouldn't pick winners', they are actually saying it should leave you to sort out these workforce issues on your own.

I would like to hear more industries standing up for the importance of a partnership approach. An example of the contribution the government has made already is that more places are being funded at the Massey veterinary school. The tuition subsidy for undergraduates has been bumped up. In addition the cost of studying has been substantially reduced, for example by removing interest on student loans. Selected students who remain in New Zealand will be eligible to write off part of their fees.

I personally believe that if we wanted to attract more young people into professions like veterinary practice, then we could go a lot further. When I was starting out we had a shortage of schoolteachers and students were paid to study teaching.

Today, a student who tries to gain new skills is punished with a brutal extra tax at the start of their working life. We impose that even though we know some will never be able to pay back their loans and even though it drives some young people overseas.

So I would like to see us solve the skills shortage by caring for our young better. We should, at the very least, be meeting the costs of education and training in the highest priority sectors. We also need to ensure we support rural communities as proactively as we can. The government is working with every region in New Zealand to identify and progress the highest priorities for development.

When I came into government after the nineties, the biggest issue in rural communities was not the shortage of staff - it was the loss of services and job opportunities. In one community after another, essential social services were being removed: Hospitals were being closed, even petrol stations. Banks were disappearing. That's why I wanted to do something about it.

Has anyone noticed the banks are not in such a rush to close their branches any more? Why do you think that is? Competition from a profitable government competitor is the sole reason. Remember that next time anyone tells you that the government should sell Kiwibank.

When essential services disappeared, it became harder to keep people in rural communities. And so other services would disappear as well. I'm not saying we needed to keep every post office open that was ever there. In fact a blunt approach is a good way to ensure services become unviable. But we do need to ensure a rich mix of services is available to rural communities if we want families and young professionals to settle there. Whether banks, or fast Internet, or other services, better services will help to attract more people.

We need to sustain the flow of skills and talent into the industry. It helps if we celebrate the success of our primary industries. We want it to be a career choice young people are drawn to. We need our best and brightest talent to be attracted to our high-tech and highly skilled primary industries. We need these industries to be successful, just as they have been over the last six years.

It's true the last half of last year saw the economic cycle enter a slower period.
But our gross domestic product grew by over 25 percent in the six years to March last year, and it has grown further since then. As a result real national income per head - that is, the average income of each of us adjusted for inflation - rose by nearly nineteen percent. Put another way, twenty cents of every dollar that we earn comes out of the growth that has been achieved in only the last six years.

Only eighty cents comes from investment and development over the entire span of the rest of our history. We have added over 300,000 new jobs in six years and now we have the lowest unemployment in the developed world.

This is a profoundly strong platform on which to build the future success of the industry. But we still have to develop further. We are no longer the world's lowest cost producer of milk. Argentina and Chile are cheaper than us now.
Brazil India and China are building their milk production capacity.

The last couple of years have not been easy for many of our primary sectors. The high exchange rate and low commodity prices were brutal. The dollar may have come down to more competitive levels now. And many sectors can look forward to higher commodity prices. It will take time but these will provide relief. But relief from the immediate challenges is not a long-term solution to lock strength and resilience into our primary industries. We need to develop better resilience against the business cycle.

There is no magic bullet that will lock in export returns and insulate the industry against future challenges. But nor are we helpless. We are custodians of our own future. Our future is best guaranteed though innovation, and steady progress in everything we do. We will meet these challenges though our edge in excellence. We need more high value products, and better exports because we won't get far competing as the lowest cost producer. We're going to grow our share through our skills base, our science, our innovation and the quality assurance of world-class animal management and tracking.

Veterinarians have contributions to make at many levels along the way. And so too does the government as a partner to the industry. We have to get a lot of things right: Investment in skills and infrastructure; Innovation, driven by science and superior business processes;

Global marketing networks that ensure we are responsive to the demands of consumers. As Minister I am putting my hand up for the challenge. We are all on the same team. We all want a prosperous and sustainable future for New Zealand. We are all reliant on our primary industries succeeding.

We should celebrate and build on these advantages we have, and make a virtue of necessity. New Zealand needs to do a better job of recognising success in all our businesses. We need to unleash our potential. We need to keep moving to new, higher-value markets and protect the valuable markets where we have gained a foothold. I'm committed to working in partnership with the sector to overcome the barriers to faster growth. We have a lot of work to do. The job will never be finished. But tomorrow's success will be harvested from the seeds we plant today. It's time to get out in the fields.


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