Rural belt tightening cutting off air
Released 14 Feb 2011
By Stew Wadey, Federated Farmers Waikato Provincial President
Now that petrol is over $2 dollars a litre has your family sat down and worked out exactly how far you travel and how many litres are consumed?
In recent months concern has been coming at me from all directions in the farming community. We are all noticing the bite of running our vehicles to service family needs.
Take a rural family near Te Kuiti with a kid at Te Kuiti College. Those weekend rugby and netball matches against Hamilton Boys and Sacred Heart are already two hour round trips. This means the family vehicle now burns around $60 - an expensive endeavour indeed.
Townies sometimes forget that outside of the main cities, there isn't much in the way of public transport. Even basic supply runs into town now require planning to avoid fuel use.
The hike in the Goods and Services Tax (GST) and Emissions Trading Scheme (ETS) loading hasn't helped. It's all too easy to point a finger at the petrol companies, but 44 percent of the $2 a litre total retail goes straight into the government's coffers. That's right, 88 cents per litre pumped.
Combine this with high vehicle insurance premiums, vehicle registration and Warrant of Fitness checks and owning a vehicle is incredibly expensive, regardless of the price of oil in the Middle East.
All these compliance costs amount to around $3-5 a day depending on the vehicle, which shows quite clearly the cost of being part of the agricultural sector coalface.
This makes you ask the question, are there some flaws in the fiscal management of our economy when it comes to the Government's internal revenue gathering?
I would like to see Hon Bill English considering some alternative consumptive tax scenarios. We need to have an open and free debate on possible alternatives to reduce the cash take as a percentage of retail fuel prices, to support struggling New Zealand rural families.
These families are already struggling to add value in this economy. In my opinion, Waikato pastoral agriculture is still in recessionary mode. Land equity values are in a downward trend, most of this is because Reserve Bank policy on lending doesn't allow banks to loan much to the heavily indebted primary production sector.
Unfortunately, New Zealand is now reliant on the agricultural sector to produce. We are not that diversified in products or services for export income, so our agricultural exports will be the major money earner for our economy over the next decade.
While it's great that wool, grain and meat prices are trending up, it also means we need to look at the problems with our dairy industry, especially Fonterra. The constraints of the Dairy Industry Restructuring Act (DIRA) force it to supply up to 600 million litres of cheap raw milk to its competitors.
Now I don't for one minute decry competition, but the Government needs to get real with DIRA and realign it with its original industry intent from 2000. That is, to maintain competition, not subsidise competitors unfairly through loop holes.
DIRA has since been hijacked by competitive processors, many of them funded by overseas investors and competing in the same international markets, to unfairly grow stronger off its back every day. These competitors have no incentive to build their businesses and improve, while Fonterra's shareholders are losing value. We need these loop holes closed.
Let's hope we will see some bold initiatives in this election year to resolve both these consumer and industry issues, because they are all tied together in the end.
