Budget 2025: Agriculture needs protection and investment
Memories return of pre-birthday decisions of whether the 'surprise' present would be a new school bag or boots.
As a student, before loans were the norm, travelling home by train or bus for Easter was evaluated for affordability against staying in hostels.
Now we see media coverage of decisions having to be made about which bill to pay, and what that means about feeding the children.
Fixed income means making choices. It is a zero-sum game.
The Green Party has offered its alternative budget.
Analysis by The New Zealand Initiative's Dr Oliver Hartwich has revealed that the utopian vision for a different country 'is based on ludicrous assumptions and bad economics'.
Dr Hartwich explains that the cornerstone of the Green revenue plan, a wealth tax raising $72.5 billion over four years, is optimistic.
Germany, France and Sweden abandoned similar taxes because of capital flight, tax avoidance and administrative nightmares.
The Opposition has also indicated that it would have made a different decision in order to keep the pay equity promise.
When asked how, the answer was 'we'll have to find it'.
This is less convincing than the leader's statement that they can't possibly yet say how any funding will be achieved.
In launching her Budget, Finance Minister Hon Nicola Willis stated that without the savings from the pay-equity promise, 'new initiatives would need to be funded from extra taxes or more borrowing, both of which would put New Zealand's economic recovery at risk'.
In contrast, the saved money will be used to stimulate the business that will, at least in theory, enable productivity gains and increased income for everybody in New Zealand.
Dr Jacqueline Rowarth says there's not a lot in the budget for agriculture this year.
Of note is that the primary sector, which is responsible for the bulk of the new money coming into the country from exports, was not given its own Budget package.
Like other businesses, claims can be made on depreciation, which is important for capital items such as tractors.
But the $4.95 billion over the next four years announced by Agriculture Minister Hon Todd McClay is continued baseline funding for the Ministry for Primary Industries (MPI).
It is not new money.
Its continuation is important in supporting the sector to lift on-farm productivity and profitability, strengthen rural communities, and drive higher returns at the farm and forest gate.
The intention of past investment is being achieved.
Stats NZ data published mid-May show that, yet again, agriculture, forestry, and fishing led the gains.
Value-added output rose 7.4% and labour productivity rose 9.8%.
Multi-factor productivity, which includes labour and capital productivity (ie hours worked per unit of output, and capital inputs such as land, machinery and equipment), increased by 8.3%.
Stats NZ defines productivity as a 'measure of how efficiently capital and labour are used within the economy to produce outputs of goods and services.
A higher productivity rate means a nation can either produce a higher level of goods and services with the same level of inputs or produce the same level of goods and services with a lower level of inputs'.
Over the last economic cycle (2008-2024), agriculture has achieved 2.4% multifactor productivity gains a year (forestry, fishing and 'services to agriculture' achieved 0.2%).
In considerable contrast, accommodation and food services achieved 0.9%.
In the last year, output in the accommodation and food services sector fell 3.8%, and labour productivity fell 9.1%.
More work for fewer gains.
Tourism, holidays and eating out will not get New Zealand out of debt.
But agriculture has continued to support the economy.
According to Stats NZ, last month, the value of exports from New Zealand was greater than that of imports.
Exports were driven by the value of meat and milk products – the sustainable pasture-based protein that New Zealand farmers produce so well.
The agricultural powerhouse needs protection and investment for the future to ensure that it can continue to do what New Zealand needs.
Doubling the value of the export economy is the Government's goal because it will benefit all New Zealanders through increased investment in health, education and infrastructure.
With guidance and policy adjustments, it will also stimulate wage and salary growth equitably.
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