Wednesday, May 22, 2024

Firm hand needed to settle economy, English says 

Neal Wallace
Urgent need to ‘get things in shape’ in an unpredictable world, says former PM.
The panel that discussed the post-covid economy at the recent Silver Fern Farms Plate to Pasture conference are, from left, journalist Madison Reidy, former prime minister Sir Bill English, economist Cameron Bagrie, Rabobank NZ chief executive Todd Charteris and Silver Fern Farms chief financial officer Vicki McColl.
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Many countries, including New Zealand, have lost their economic discipline since covid, former prime minister and finance minister Sir Bill English says.

He told 700 farmers at the Silver Fern Farms Plate to Pasture Conference in Christchurch that since covid, governments have been less disciplined and allowed economic conditions to deteriorate.

Speaking during an economic forum that discussed post-covid economic challenges and opportunities, English said NZ’s economic performance has also suffered from what he called “chaotic and unproductive” policy making.

He gave the example of changes to the Emissions Trading Scheme, which has created distrust and uncertainty with carbon pricing; regulations imposed on farmers; and the tax on utility vehicles to subsidise buyers of electric vehicles.

“We need to get these things in shape and quickly, because the world is pretty unpredictable.”

English said Ireland is considering culling 200,000 cattle to meet climate change goals, which raises strategic choices for NZ’s primary production sector.

He said the quality of regulation and policy in NZ is a major threat and believes we need to confidently make the case that our primary production systems are already sustainable and demonstrate that fact.

“I hope in the next few years we can clean up this dumb policy and the primary production sector can move onto the front foot and make their case domestically but also on the world’s stage.” 

English said the next few years could be volatile as the world weans itself off cheap money and adjusts to what is a very different global economy.

Economist Cameron Bagrie said the country is not in a recession but is resetting from the effects of inflation, which he said were fuelled by the government’s approach to monetary policy.

“We have strayed out of our economic lane, we have traversed 10km to the left and we are on a goat track.”

He was also concerned at the implications of the country living beyond its means, its poor education performance, local body debt and a tax take that is $6 billion below budget.

“Economic laws are coming back into play. For a long time we have followed ideology.”

English, Bagrie, Silver Fern Farms chief financial officer Vicki McColl and Rabobank NZ chief executive Todd Charteris were all part of the panel.

Charteris said he believes interest rates have peaked but it could be April next year before the Reserve Bank cuts the official cash rate.

He thinks on-farm costs have peaked, too, but fighting inflation will come with pain and a rapid cut in interest rates could be in response to international weakness among NZ’s trading partners.

For the past 20 years or so, global trade was driven by economic growth, the common good and comparative advantage, but Bagrie said those drivers have now changed.

Food and energy security are priorities and trade and market access are increasingly being used by countries as a weapon.

Charteris agreed, saying the notion of free trade is under pressure but other factors are emerging, such as a decline in natural resources and an ageing global population.

A recent United Nations report says the number of new births has peaked, which means that in the coming decades there will be fewer people to produce products, including food, relative to consumers.

Charteris expects demand for nutritious food to increase, saying this will be underpinned for NZ by the strength and ability of its farmers.

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