Thursday, 09 June 2022 06:55

Budget a masterclass of smoke and mirrors

Written by  Nicola Grigg
Nicola Grigg Nicola Grigg

OPINION: The Government's claim it is investing over $1 billion of new money into the primary sector is a masterclass of smoke and mirrors.

Damien O'Connor's Budget 2022 press release announced a $1 billion spend on primary industries, but this really needs close scrutiny. It is full of vague waffle like $118 million for 'advisory services' to 'support farmers', $40 milion for Stuart Nash's 'transformation' of the forestry and wood processing sectors, and $32 million for Meka Whaitiri's fund to crack down on farmers - with increased compliance, enforcement and on-farm inspections.

Close inspection of Treasury's Appropriations document shows this announcement conflates a number of initiatives to reach that impressive-sounding $1 billion.

For example, the Government has included the likes of a $68 million collective agreement for some MPI staff in this figure, and $95 million for 'integrated advisory services' - whatever they are.

What worries me the most is the large sums of money being poured into compliance, policing and inspections. Right at a time when most farmers are fed up with regulatory change and time-consuming auditing, it looks likely there'll be a whole new wave coming at them.

This Labour Government has unleashed unprecedented levels of spending in the 2022 Budget, with more than $9.5 billion in new spending forecast this year alone. To put it in context, it is now spending 68% more – or an extra $51 billion per year – since coming into office.

While we’d all agree that spending to boost the likes of biosecurity measures is essential, Grant Robertson’s refusal to rein in spending and take meaningful action to dampen inflation is piling pressure on our primary sector.

This is putting huge pressure on the economy and is driving inflation to a record 30-year high, with the cost of farm inputs rising by 9.8% since the March quarter last year.

Last month, we saw another 50 basis point jumps in the OCR, the first back-to-back 50 point increase since the OCR was introduced. It will effectively double interest rates on this time last year. A farm carrying $4 million in borrowings that sees a 100 basis point increase in their interest rates will need to pay an additional $40,000 a year in interest costs.

New Zealand’s agriculture exports are rapidly climbing towards $50 billion, but the cost of doing business on-farm is skyrocketing.

For the sector to continue to carry the New Zealand economy during these turbulent times, it is my view the Government needs to rein in spending on compliance and ‘advice’ and cut costs in order to increase productivity.

Nicola Grigg, National Party associate agriculture spokesperson

More like this

Govt invests in wool

The Government says it is investing to create new product categories and new international markets for strong wool and is calling on Kiwi businesses and consumers to get behind the environmentally friendly fibre.

O'Connor attends WTO meeting

Trade Minister Damien O'Connor is currently in Geneva for the World Trade Organisation (WTO) 12th Ministerial Conference.

O'Connor heads to Europe, Canada

Trade and Export Minister Damien O’Connor is off to Europe, Canada and Australia with the aim of advancing New Zealand’s economic interests.

Food, fibre exports soaring

Export revenue from New Zealand's food and fibre sector is expected to reach a record $52.2 billion in the year to June 30, 2022.


Machinery & Products

Making life easier

Many temporary sheep fencing systems can be troublesome, with reels jamming or breaking and the bugbear of silly hooks on…

Valtra's following grows

With the release of its N5 and T5 series of tractors, Valtra continues to expand its presence in the Australia-New…

» The RNG Weather Report

» Latest Print Issues Online

The Hound

No free ride!

OPINION: This old mutt is getting somewhat tired of multi-national, tax-dodging, fund-raising group Greenpeace always given front and centre mainstream…

How come?

OPINION: A mate of yours truly is questioning exactly why the Māori ag sector have been given special budget funding by…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter