"All government policies should promote increased productivity, efficiency, innovation, and international competitiveness"
Although necessary it is not sufficient to run a surplus. Large surpluses were achieved in the 2000s but came at the same time as double digit increases in government spending. This turbocharged the domestic economy and forced the Reserve Bank to raise interest rates, which in turn drove up the exchange rate and plunged the tradable sector into recession.
After several years of fiscal discipline, we have a hard-earned return to surplus but we cannot afford a repeat of the 2000s. Government spending should be continually assessed to ensure it delivers strong value for money and appropriately targeted outcomes. This would allow choices like tax cuts, debt reduction, and spending increases.
The ideal tax system raises enough revenue to pay for spending while imposing as small a cost as possible. Federated Farmers generally supports our current broad-based, low-rate tax system but we strongly oppose new taxes like a capital gains tax or a land tax, as well as an ETS on agricultural biological emissions and resource rentals as being harmful for agriculture and farming.
Federated Farmers supports the Reserve Bank Act and considers the current framework for monetary policy to be sound and consistent with world’s best practice.
The Reserve Bank should be able to make use of existing tools to supplement the official cash rate, and should be open to considering new tools that would address inflation in the domestic, non-tradable sector and take pressure off the exchange rate. However, the operational independence of the Reserve Bank must be maintained and it should keep its focus on price stability. It should not be distracted by other goals that it cannot easily influence and are the preserve of the Government.
The Government should do all it can to make the Reserve Bank’s job easier by keeping spending under control and ensuring policies are consistent with improving productivity and competitiveness.
The quantity and quality of regulation are both very important but moves to impose more rather than less regulation threaten to work against productivity and competitiveness. Federated Farmers acknowledges that a level of regulation is necessary and desirable but regulation which is overly risk averse or is not properly informed by evidence will create poor outcomes.
Overseas investment provides capital for investment, generates jobs, increases incomes, improves competition and consumer choice, improves productivity, and assists the spread of technology and innovation. However, Federated Farmers is concerned by the ambition of some overseas investors looking to purchase multiple farms to create vertically integrated production, processing and marketing businesses with a loss of New Zealand control.
New Zealand’s rules for overseas investment are among the most stringent in the OECD yet there is a perception that it is still too easy for foreigners to buy land and that large swathes have been purchased. More information is needed and so we would support a register of foreign ownership of farmland.
With agricultural debt exceeding $60 billion, banks’ decisions can have a huge impact on farm businesses and farming families’ economic and social well-being. Our banking surveys show that most farmers are satisfied with their banks but some are not. Federated Farmers supports farm debt mediation and the banking industry should do more to promote it. We believe farmers should also have better access to the Banking Ombudsman Scheme to resolve disputes.
More than 60 percent of merchandise exports are from agriculture. Trade barriers and market distortions make our exports less competitive in overseas markets and reduce incomes for farmers.
Since the 1980s good progress has been made to reduce trade barriers and market distortions but we are still a long way from achieving free trade Federated Farmers therefore strongly encourages efforts to reduce tariffs and non-tariff barriers and the elimination of agricultural subsidies and other policies that distort markets. We also support trade promotion and better in-market presence.