Eric Roy

The news that New Zealand meat is now moving off the wharves and into Chinese stores is welcome.  In the last 30 years, China has become a major consumer of our agribusiness.

The challenge over the next 20 years will not be about countries competing to meet a limited demand for high-quality food – it will be about countries striving to ensure there is enough supply.

Fonterra, for example, has three large dairy farms in Hebei Province and is currently developing two more to complete a hub. Its longer-term goal is to produce produce 1billion litres of high-quality milk in China by 2018.

The future for Southland and New Zealand – across all foods, not just dairy – is in partnering with other people and other countries in our region.

We are already doing that and will continue to do so in the future.

Under our Business Growth Agenda the Government has a specific goal of lifting our exports to 40% of GDP by 2025.  We are investing a further $100 million a year over the next four years as part of our Internationally Focussed Growth Package.”

To meet the target of 40% by 2025, the value of New Zealand’s exports will need to double. This requires nominal export growth on average of between 6.7 per cent and 7.6 per cent per year to 2025.  Our nominal exports of goods and services has been growing by a compound annual average of 4.6% in the last four years.

This is a promising start given the on-going headwinds internationally from the Global Financial Crisis and the high New Zealand dollar.

Finally, the weather held off for another Southland success at the weekend in the Bluff Oyster Festival.  Congratulations to all concerned.

Budget 2013 has freed up a further $1.5 billion by redirecting spending to where it delivers the best results.

When the Government’s finances are constrained, re-prioritising spending allows significant additional funding for new or proven initiatives that get better results.

It’s about spending well, not spending up.

New Zealanders were conditioned in the 2000s to believe that Budgets should be about the novelty of new, expensive spending programmes that held out promises of economic and social transformation. Those promises were illusory.

There was no sustainable revenue stream to pay for the increased spending and there was nothing genuinely transformational to show for it.

Governments should be judged on what they achieve rather than on what they spend. The value of our spending is a better measure than the amount of our spending. This Government is focused on results, and it’s paying off.

It is great news that Tuatapere’s Hump Ridge Track has been announced as a finalist for the annual Green Ribbon Awards, which honour outstanding contributions to protecting New Zealand’s environment.

The Hump Ridge Track charitable trust was formed in 1988 to build the track and facilities, and went on to raise over $3 million and spend 25,000 volunteer hours building the track before it was opened in 2001.

Their whole ethos is built around sustainability, enjoyment and integrity and they have made a viable tourist activity for Western Southland as well as a world-class tramping experience.

The variety of organisations, individuals and projects in this year’s nominations demonstrate the diversity of environmental initiatives around New Zealand and the benefits they bring to our country.  Here’s hoping the Hump Ridge Track comes out on top when the awards are announced on June 5.

The Labour-Green ‘plan’ to nationalise the electricity industry is a deliberate attempt to sabotage the economy for their own political gain.

Financial analysts have been unanimous in their condemnation of the reckless announcement. Investors and KiwiSaver account holders will also lose as the value of their assets falls.  Investors in Contact Energy, Trust Power and Infratil saw their shares fall more than $300 million after the Labour-Green announcement.

Investment in new power generation would wither, and investment in the wider economy would suffer.  The National-led Government is focused on attracting investment in new business and jobs for New Zealanders. Labour and the Greens would do the exact opposite.

The last time we had central planning of the power industry, prices went up faster. Even Labour’s own 2006 Cabinet paper said such a plan would push costs up for consumers over time.

New Zealand is doing pretty well and making good progress.
Christine Lagarde, the head of the IMF, recently said  “The IMF is very supportive of what is being done by the Government. The economic policies are… policies we believe are sound and solid.”
The New Zealand economy grew by 3 per cent in 2012, while Australia, with its mining boom, grew by 3.1 per cent.
Net household disposable income is around 20 per cent higher now than it was four years ago.  There are more than 50,000 more jobs in the economy than two years ago, although unemployment remains too high.
The Government is on track to the surpluses that will enable it to start paying off debt. The Budget on 16 May is the next step in the Government’s long-term programme that started when we were elected in 2008.

Everyone is fully aware of the importance of the Tiwai smelter to Southland and to New Zealand.

I have been castigated by some for appearing not to have done enough to keep the smelter here.  Rest assured, I have been in constant contact with the smelter management and shareholding Ministers about what can be done.  It is not a negotiation done via the media.

Last Monday, Yunnan Aluminium, a big Chinese producer, told the Shanghai stock exchange it was expecting to record a first quarter loss of up to NZ$14 million.

The same company wrote down significant losses in the last financial year.

Last month, Bloomberg reported that China’s state reserves manager signed agreements with six smelters to buy 300,000 metric tons of aluminium at a price four percent higher than the spot price in a bid to bolster local prices.

This is just one thing Tiwai’s owners, Pacific Aluminum, is up against.  At the same time, Chinese aluminium production is hitting its own problems.

Lack of security of electricity supply, increasing electricity prices, and higher prices for raw materials such as bauxite are forcing Chinese producers to cut production by up to one-third.  More than half of Chinese smelters are making losses, but the Chinese continue to try and add capacity even if it means running at a loss.

Worldwide aluminium prices will stay low until the Chinese smelters cut production, according to analysts.

What does this mean for Southland?  Well, for one thing it illustrates what Pacific Aluminium is experiencing as a player in a global market.

China, despite what will be ongoing losses, wants to produce 35 million tonnes per year by 2015, up from 25 million last year.

Unless Chinese production collapses, it is always going to be a hard job for the Tiwai smelter to compete, even though we produce the highest quality aluminium in the world.

Southland has one major employer which is foreign owned and we have no influence over their company policy.

The new structure of Pacific Aluminum must be viable as a standalone entity   If this can be achieved Southland can look forward to the continued presence of our biggest single industry player.  Negotiations are continuing with the various parties.

Pacific Aluminum has never asked the Government for a subsidy

The Government is doing what it can.  However, the various debates outlined above illustrate it is not an easy road to a solution.

National campaigned on comprehensively reforming welfare because too many people were trapped in a life of long-term welfare dependence.

The cost to taxpayers of New Zealand’s current beneficiary population will be over $78 billion. 12% of our working age population are on a benefit.

Last week the second stage of National’s welfare reforms passed into law. We are:

• Expecting Jobseekers to be drug free, ready and work available
• Simplifying benefit categories to focus on what people can do, not what they can’t
• Stopping benefits to those with an outstanding warrant to arrest
• Introducing health, education and social obligations so children in benefit dependent homes get a better start
• Supporting sole parents into work

For too long we’ve left people to languish on benefits, dependent long-term on the state. National’s reforms will deliver change.

The Government continues to hear concerns that Resource Management Act processes are costly and time-consuming, and the system is uncertain, difficult to predict and highly litigious.

The system is difficult for many to understand and use, and lack of clarity is actively discouraging investment and innovation.

The costs and time of drawn out processes has real consequences. The Government has already delivered significant improvements to the resource management system. Our first stage of reform involved 150 amendments to simplify and streamline the RMA.

Last week, the Government released a discussion document with a comprehensive package of further resource management reforms.

The reforms are about providing greater confidence for businesses to grow and create jobs, greater certainty for communities to plan, and strong environmental outcomes as our communities grow and change.