Farmers Urge Restraint

22 May 2008

Farmers Urge Restraint

The president of Federated Farmers, Charlie Pedersen says he is pleased to see the setting up of a $75 million contestable fund over five years for rural broadband and an extra $5.3 million to be spent on weed and pest control announced in today’s budget.

He says farmers weren’t expecting anything specific relating to farming in today’s budget mainly because of the $700 million fast forward initiative announced earlier this year. He says this initiative will benefit both food producers and the New Zealand economy.

Mr Pedersen says the Federation was looking to see a cut in government spending which would benefit the overall economy and relieve inflationary pressures. On the face it nothing has changed and that’s disappointing. The budget is forecasting a 2.3 percent of GDP fiscal impulse which must be concerning to the Reserve Bank at a time of continuing inflationary pressure.

“Many farmers are struggling with high interest rates, a high dollar and large cost increases coming on top of a severe drought. Over the past several years large rises in government spending have overly stimulated the domestic economy which makes it harder for the Reserve Bank to do its job of controlling inflation. The result has been high interest rates which has been a factor underpinning the high dollar.

“Cuts in personal tax rates are vital for farms and other small businesses, most of which are not structured as companies. As well as the size of government spending it is critical we get better value for money from existing spending and that any new spending is of high quality. But, as recognised by economic commentators (most recently ANZ-National Bank), far too much of it is of poor quality and wasteful, for example big increases in the bureaucracy.

“Federated Farmers wants all political parties to fund promises to cut taxes and/or increase spending in ways that are fiscally responsible and minimise inflationary pressures. For example, taxes must be cut substantially and rampant growth in government spending must be slowed.

“Budget 2008 could have and should have signalled bolder moves to get New Zealand heading in the right direction,” said Mr Pedersen.

ENDS

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