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There is no free lunch

Opinion Piece By
Conor English
Chief Executive Officer
Federated Farmers of New Zealand

There is no free lunch
I went to a restaurant and had lunch last week. Unfortunately it wasn’t free. I had to pay for it. There is no free lunch. If you spend money, if you haven’t earned it, you need to borrow it from someone else who has. And they want you to pay rent for it (interest) and to pay it back. This makes it a more expensive lunch in the long run.

Right now the geopolitical balance is being influenced by those who believe there is a free lunch and those that realise that not only is their no free lunch, but using another cliché, tomorrow does actually come.

People across the USA, continental Europe and the UK are having to adjust to a lower standard of living as their excess are catching up on them. They are now having to pay for the long lunch they enjoyed over the last decade. Recently the UK government announced half a million job losses in the public sector and social unrest is rising across Europe and the USA as unemployment rises and credit tightens. Some voters thought Obama would deliver the free lunch – he’s only done half the job and therefore lost in the halftime elections of his first term.

In New Zealand, over the next four years our public debt will double. This year we are spending about $13 billion more then we are earning. This is to knock the edges off the deepest recession we’ve had in over 70 years. It is appropriate that governments operate deficits at the bottom of the business cycle. However, it is critical that the fact there is no free lunch, and tomorrow does come, is not forgotten.

It was interesting, therefore, watching 4 recent protests in Auckland. The first against just the idea of doing a stock take on the minerals that we have. Secondly the idea that a movie might be made in New Zealand on different terms than in some other countries. Thirdly marching for more pay for teachers, and finally, against New Zealand produced food.

I suspect that some people support all four marches. But they need to join the dots. Some one has to earn the money. It doesn’t grow on some tree out the back of the Beehive. This is true of any business or household, and the country is no different. So if you are marching for “more pay from government” then you should not also be marching against investigating our mineral potential, our creative film sector or indeed our food sector. Right now our primary sector earns more then two thirds of our export dollars. Every export dollar matters, which is why the USA and others are trying to devalue their currencies.
But as a country we all need to do better, because governments only have three ways to get money; taxing or charging others who have earned it; by selling assets; or by borrowing it. Or if you are in the USA you simply print it, which reduces the value of all existing dollars and you get inflation – there is still no free lunch.

So we have some choices to make. They need to be informed choices.

In this context productive infrastructure spending is critical. Water storage and rural broadband should be the priorities because they help make the cake bigger. Roads are OK but for our food supply chain to international markets they form only a very short part of the journey. Rural broadband is not only the next big enabler of productivity and production increases, but it is critical to the social fabric of New Zealand. Rural people are people too!. But it isn’t just about rural communities - it will allow our growing population to be less concentrated on Auckland, thus reducing it’s infrastructure, taxpayer and environmental demands

Attitudes to growth, risk, success and sustainability matter. The RMA’s four pillars of environmental, social, cultural and economic all should be considered when making those choices, not just one narrow aspect. The critical issue is getting the balance right. This isn’t always easy.

This year, Federated Farmers has been focused on getting the balance right with, , environmental sustainability, infrastructure, water (its ownership, allocation, management, quality and storage), farm succession, energy, urban rural understanding, biosecurity, animal welfare, safe food, property rights, skills and human capability, research, and depth of capital markets to name a few, along with other issues that affect farmer’s financial viability through their impact on costs and incomes and possibilities.

New Zealand has some fantastic opportunities in the food production and agricultural technology space. It is one of the few areas that we are recognised as world best. We can make a significant contribution to humanity. We should be proud of this. But rather than celebrate and support that success and champion the exciting opportunities, we have people marching against them. They want to inhibit just the possibility of carefully and environmentally harvesting just some of our resources, inhibit our film production, inhibit our food production. What’s left?

If these marching groups don’t want our fantastic primary exports to be allowed to pay for the country’s lunch, who do they suggest will?


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