New Zealand Executive Government Speech Archive

Getting to know something about the deer farming industry has been one of the highlights of my first three months as Minister of Agriculture. I see your industry as one of the classic New Zealand success stories. Illegal only 30 years ago, we're now the biggest exporter of venison in the world, the biggest supplier of velvet to South Korea, and yesterday's announcement of a record $223 million in exports caps it off. People as diverse as the New Zealand Olympic team and actor Jack Nicholson are eating Cervena.

I'm going to talk today mostly about the economy, and its prospects as we go into our first MMP election. I don't think there's much I can tell this particular audience about international marketing. With the Zeal and Cervena strategies, you have followed the three fundamentals of marketing which I've been promoting - sometimes in vain - to the rest of the red-meat industry.

You've invested in the marketplace to determine what consumers want - a lean premium product, that's perceived to be healthy. You control the quality of your distribution, to guarantee that it's a high quality product that ends up on the plate. Farmers are paid for producing what the market wants. You don't have a centralised grading system that's used to pay farmers more for producing meat with lots of fat. Those three fundamentals are underpinned by long-term relationships between buyers and exporters, and exporters and farmers.

That strategy works. Your pasture to plate approach has proven it works. In the rest of the red-meat industry, I want to see, not necessarily the duplication of your strategy, but the adoption of the principles that underpin it. You have led the industry in marketing. I now would like to see you lead the industry in introducing comprehensive traceability systems for venison.

I'm told too often by the more conservative elements in the meat industry that it isn't possible to trace final cuts of meat back to the animal they came from. These are the same people who tell me that red-meat is just a commodity, that we've got to accept that, and take whatever price we can get from traders. In reply, I say that this is 1996. I'd like you to prove the rest of the industry wrong on traceability just as you've proven them wrong on marketing.

I envisage the day when consumers will want to know where the meat they are proposing to eat came from. What's more, and perhaps more importantly, to get production fully in tune with the consumer demands, we need systems in place to pay farmers not for the carcass they produce, but for the cuts of meat that they produce. If we get that, farmers and the breeding industry will respond. To the benefit of all, that will mean we will improve the quality of our national herds - as defined by consumers. So I put that to your industry as a challenge, for you to once again lead the rest.

The current value of the kiwi dollar is a topic of hot conversation around rural New Zealand. It's a debate fuelled along by my political opponents as they cynically try to offer some immediate solution to the problems of sheep and cattle farmers, many of whom are genuinely struggling. You don't hear quite so much about the value of the kiwi dollar from dairy farmers or deer farmers. Those two industries have shown that the value of the dollar is not the issue. Marketing is the issue.

This country had a falling dollar from 1979 to 1992. If a falling dollar is the answer, then you'd think we'd be sitting pretty right now because even the recent rise in the dollar has not taken us back to anywhere near the 1979 level. I'd argue that through most of the time our dollar was falling, the agriculture sector was in trouble. The fact is that rich countries have increasing-value currencies. If we are going to be a rich country, and that's the Government's goal, our dollar will continue to trend upwards.

If your vision for agriculture is of a peasantry trading commodities, then as New Zealand becomes wealthier - and our dollar rises as a result - we have no future. We won't be able to compete with other commodity producers. But if your vision is of an agricultural sector producing premium products like Cervena or velvet - or high-quality table cuts of beef or lamb - then we have a great future. That second vision is my vision.

It's argued by the second most popular political party in New Zealand that the value of the dollar is being kept artificially high by the Government's inflation target of 0-2%. That political party has said it would abandon the 0-2% target and instead introduce a new target to keep our inflation rate below that of our trading partners. The problem for Mr Peters is that Japan has an inflation rate of -0.5%. He'd have a hard job keeping our inflation below that. If you trade-weight the inflation rates of our major trading partners, then already they have inflation at around the same level as we do.

New Zealand First contradicts itself. On the one hand it says that 0-2% is too tight. On the other, it says it wants to keep inflation at that level, or below. What's frightening for farmers about New Zealand First, is that it also promises to spend up large on social policy. Farmers know what happens when a Government tries to keep inflation low while meeting every spending demand of Wellington lobby groups. We pay higher interest rates. I find it difficult to attack some of what the previous Labour Government did in opening up our economy. But I have no difficulty attacking them for their over-reliance on monetary policy to control inflation.

If a Government spends up large it will create inflationary pressures. And the only way to control those pressures is to tighten monetary policy and drive up interest rates. Under the previous Labour Government, over night interest rates passed 100%. 90-Day Bank Bills went well over 25%. Under this Government, those 90-Day Bank Bills remain under 10%, despite the political uncertainties we face right now.

If this election results in a Government other than one led by National, farmers will once again pay the interest rates that they paid in the mid-1980s. Many farmers, in fact, won't pay those interest rates because they will be driven off their land. I think it is important that farmers know that, because amongst the 25% or so of New Zealanders who support New Zealand First, there will be one or two farmers. And, with things so tough for many farmers, it's understandable some will be looking for alternatives. But, increasingly, I think they will see the leader of New Zealand First as a loose cannon - a risk it's just not worth taking.

And I don't meet too many farmers who want to pay higher interest rates. Nor do I meet many farmers who believe New Zealand should expand tariffs, with the impact on costs, and the risk of reprisals and the disaster that means for our exporting sectors. Nor do I meet farmers who want to abolish the Employment Contracts Act, bring unions back to the fore, and watch their meat rotting in ports as strike follows strike.

I'm happy to debate these issues with NZ First's agriculture spokesman, former teacher Jack Elder, any place, any time. I believe most people do want the stability of a National-led Government. The only possible alternative to that result is the three-headed monster of Labour/Alliance/New Zealand First. Such a result is possible, but it depends on New Zealand First continuing to attract its current level of support and some of the main-players in Labour and the Alliance agreeing to bury the hatchet.

Current polling suggests that National will have the most seats in parliament come Sunday 13 October. And I'm confident that there will be sufficient MPs in parliament who have the common sense not to risk returning New Zealand to a nation of high interest rates, high inflation, militant unions and protectionism.

As Education Minister, I fought publicly with Labour's Margaret Austin. But privately, we were able to work together quite well. The same is true with Jim Sutton. I worked for him on his farm when I was a student. On occasion, he speaks a great deal of sense. We're at one on the idea that the beef and sheepmeat grading system should be taken out of legislation.

This election will be touch-and-go. People outside the parliamentary system must find it difficult to imagine any Government being able to emerge from the no doubt confusing situation which will emerge after October 12. But I think common-sense will play a major role, at least within National, the sensible wing of Labour, and any United, ACT or Christian Coalition MPs who are elected. If all this reasoning is true - and, right now, who knows whether it is? - then I believe New Zealand, and the deer industry, can expect stability after the election.

I can't believe New Zealanders and sensible parliamentarians will choose to put at risk the current stable economic environment and send New Zealand into another decade of turmoil, leading to economic collapse. I believe you will find that the Reserve Bank Act, the Employment Contracts Act, the Fiscal Responsibility Act, the low-rate, broad-base tax system and the open economy will survive the election, along with a National-led Government.

The stability that will provide will allow the deer industry - and the other successful industries in New Zealand - to plan with confidence, and continue building on your success. I wish you all the very best as the deer industry moves to the next phase of its development. I'm tremendously impressed with what you are doing in quality assurance and marketing. I intend to be a friend of the deer industry, not just for the next hundred-odd days, but for the foreseeable future as Minister of Agriculture.