Chickens Coming Home to Roost

Written By: - Date published: 1:18 pm, June 12th, 2015 - 101 comments
Categories: Economy - Tags: ,

“Rock-star economy” is a catch-phrase that has served very well to persuade us that we are doing well in economic terms. But “chickens coming home to roost” and “living in a fool’s paradise” may be nearer the truth about our economic performance.

First, those chickens.   The warnings that some of us have voiced for some time about our dangerous dependence on a single commodity are, sadly, proving all too accurate. The slump in world dairy prices has exposed the unwelcome truth that our apparent good fortune depends substantially on just one price for just one product – and we now know that the milk powder price will not remain consistently at its recent high levels.

The charge that must be laid at the door of successive governments is that we have wasted the chance, during the good times, to prepare for the day when they came to an end. Instead of broadening our economic base by developing significant new industries and products, our economy is more dependent than ever on just one industry that, despite its great success and strength historically, cannot be expected to carry the rest of us forever.

This failure to diversify is not just an error of omission. Ministers may have failed to do much about the problem, other than make the occasional speech, but their real failure is one of commission. Our reliance on dairy products is the inevitable result of the macro-economic policies that governments have consciously pursued over decades.

Over a very long period, they have quite knowingly engineered an over-valued exchange rate as the consequence of the high interest rate policy they have used as a counter-inflationary tool. They have equally knowingly turned a blind eye to the inevitable consequences of thereby making our goods more expensive than they should be in international markets, including our own.

Those consequences include a perennial trade deficit that can only be financed by borrowing and by selling assets to overseas interests. And that trade deficit arises because new producers find it difficult to sell over-priced goods into export markets, however good they may be, with the result that our potential growth points cannot get a secure foothold that will allow them to grow and prosper.

The over-valued dollar has, in other words, killed off or otherwise stifled many of the new industries and products that are needed if we are to diversify. In the end, if we charge too much, it is only our very best and long-established performers that can survive – and even they will do less well in terms of the margins they earn and will struggle if markets turn down.

None of this is surprising. The economic consequences of the current policy settings are, or should be, well understood. But our leaders either deliberately or ignorantly choose to ignore the damaging consequences of their policies – and then wonder why we have failed to develop a broader base for our dangerously narrow economy.

And what about that fool’s paradise? It is not just the fall in world dairy prices that has revealed it for what it is. The dairy industry on which we have relied for so long is now vulnerable to a number of threats that we have scarcely begun to recognise.

As the dairy price has fallen, Fonterra’s travails have shown up in greater relief. They are, of course, partly of its own making, but they are also the consequence of a gung-ho approach to the Chinese market for our products.

No one doubts that we are now very vulnerable to any diminution in Chinese demand for our products, but what may not be so clear – yet – is that the great benefits we have enjoyed for so long from the success of dairying are in the course of passing into foreign hands.

The availability to investors – many of them foreign – of Units in the Fonterra Shareholders Fund means that much of the income stream from our dairy industry is now on its way out of the country. Even more importantly, an increasing proportion of the industry itself is being acquired by foreign interests. The proportion of milk production now being handled by Fonterra is falling steadily as foreign – and largely Chinese – owners of New Zealand dairy farms choose to bypass Fonterra and market their product directly into the Chinese market.

This development, too, should come as no surprise, but it has clearly never occurred to our naïve government. Yet, it is clear that – as we see from Chinese acquisitions around the globe in industries of much greater importance than dairying – the Chinese aim across the board is not merely to buy the products they need but to acquire and control the productive capacity itself.

To make this point is not to criticise. The Chinese are perfectly entitled to pursue their own interests. But we should surely be equally ready to recognise what is happening and to take appropriate action. The dairy production which has sustained us for so long may soon not be ours to rely on. Sadly, fools do not enjoy paradise for long.

Bryan Gould

12 June 2015.

101 comments on “Chickens Coming Home to Roost ”

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  1. adam 1
    12 June 2015 at 1:33 pm

    Thank you Brian – right on the money, as usual.

    The question I’d like to ask – if we don’t own any assets, and our primary production is owned by someone else – are we now serfs or vassals?

  2. AmaKiwi 2
    12 June 2015 at 1:33 pm

    1. When the world economy catches a cold, tourist destinations get pneumonia.

    2. There is no value added in shipping raw logs and wood chips out of the country.

    Add tourism and timber to the list of our highly vulnerable industries we have become dependent on.

    • Macro 2.1
      12 June 2015 at 2:12 pm

      It causes me to wonder just how any government can allow un-processed timber to be exported when NZ was once the leader in timber processing. If China wants our timber then there needs to be regulations in place that says you can only buy sawn lumber.
      Currently our ETS encourages owners to be logging as hard as they can go and selling theland off for dairying – There is no incentive to replant, and by and large they are not.

      • Nessalt 2.1.1
        12 June 2015 at 2:37 pm

        Have you got a shred of evidence that forestry plantations aren’t being farmed in a sustainable way? all my travels in the country side show me that the only rural land use that isn’t sustainable is dairying. harvested forestry blocks are showing new planting in the 12 – 16 month window post felling?

        • Naturesong 2.1.1.1
          12 June 2015 at 3:28 pm

          If the forestry is monoculture, and the harvest is clear felling, it’s not sustainable.

          All you’re doing is stripping the land of nutrients and then every 26 years washing away the topsoil.

          • Nessalt 2.1.1.1.1
            12 June 2015 at 3:38 pm

            If a tree gets felled, then the topsoil must wash away and the nutrients are stripped from the land entirely with no hope of replacement. What a desert we live in now.

            Oh wait, that’s why burn offs are completely counter productive. /sarc

            Gaia doesn’t mind if you touch it a little roughly as long you cuddle well afterwards and don’t slash and dash

            previously forestry planted land is left fallow for a period of 12 -16 months or with a fallow type crop like some sort of legumes to replace the nutrients before being replanted.

            • weka 2.1.1.1.1.1
              12 June 2015 at 7:32 pm

              What nitrogen crops are used in NZ on pine plantation?

              • Andrea …
                12 June 2015 at 7:57 pm

                “What nitrogen crops are used in NZ on pine plantation?”

                Gorse or broom. Maybe tree lucerne.

            • maui 2.1.1.1.1.2
              12 June 2015 at 7:58 pm

              All that topsoil is washed into creeks and streams and I would imagine does a good job at killing eels, native fish and invertebrates by filling the stony bed of a waterway with sludge effectively.

              The pine trees themselves acidify the soil killing off life in the soil. That’s why you see rather sparse native vegetation underneath a pine forest. It all depends on what your take on sustainable is I guess…

              • Stuart Munro …
                13 June 2015 at 10:40 am

                The post and line logging system they use around Nelson is pretty easy on the topsoil – comparatively little use of heavy machinery.

        • Macro 2.1.1.2
          12 June 2015 at 4:09 pm

          We are logging far more than we are replanting – you can google that info for yourself. The ETS currently encourages owners to log. Furthermore the current price of Carbon in our shame of an ETS makes it a disincentive to replant (this info provided by an owner of one of the largest private forests in NZ)

      • infused 2.1.2
        12 June 2015 at 3:38 pm

        China will just got elsewhere. Why would they pay for milled timber here when they can do it for peanuts?

        • Macro 2.1.2.1
          12 June 2015 at 3:53 pm

          Well good on them – at least we get to keep our forests (which we need right now)- and when others do the same – they will be back.

          • Colonial Rawshark 2.1.2.1.1
            12 June 2015 at 8:46 pm

            Exactly. China thinks long term, and respects long term thinking. Unlike these neoliberals.

          • Colville. 2.1.2.1.2
            13 June 2015 at 9:07 am

            What do you suggest we do with the standing trees instead of selling them to China?

            • Stuart Munro 2.1.2.1.2.1
              13 June 2015 at 10:43 am

              [r0b: a joke I know, but even so] neo-liberals from them.

              • Colville. …
                13 June 2015 at 11:08 am

                So you want to murder how many people exactly?

                • Macro …
                  13 June 2015 at 1:20 pm

                  as many as it takes!

                • Colonial Rawshark …
                  13 June 2015 at 1:48 pm

                  I observe that the neoliberals are quite happy to cause economically motivated deaths and suicides in Greece and Spain by the dozens.

                • halfcrown …
                  13 June 2015 at 4:47 pm

                  “So you want to murder how many people exactly?”

                  I thought Stuart Munro said neo-liberals. He never mentioned people.

            • Macro 2.1.2.1.2.2
              13 June 2015 at 1:27 pm

              If we had a proper ETS (or better an effective Carbon Tax) there would be more incentive to leave them standing accumulating Carbon rather than to log them – such is not the case today with our scam of a scheme, whereby we buy in cheap dodgy credits from off-shore for the cost of a cup of coffee to make ourselves look good.

              • Colville. …
                13 June 2015 at 4:28 pm

                You do realize pines have a very limited lifespan? and a tree is always going to go back to the atmosphere sooner or later. Even a sequoia is going to be C02 again in a 1000 years, a pine in less than a tenth of that time.

                • Macro …
                  13 June 2015 at 4:46 pm

                  On my last property I had a number of pines that were approaching 100 years old and still good. And yes I do know that they are a relatively short lived species – but not as short lived as you suggest. Furthermore milling them for timber and paper in NZ is what I am saying. I know that is what they were initially planted for. Logging and sending them off overseas unsawn is stupid. We have people crying out for work here – lets do something about it. We need to build houses here in NZ (or haven’t you noticed). Maybe the cost of materials might become a little more realistic – if all of our production is not sent offshore.

                  • Colville. …
                    13 June 2015 at 5:33 pm

                    Holy shit.
                    The amount of errors and falsehoods in that couple of hundred words is simply astounding.
                    You think the trees of 100 years ago and open grown resemble high genetic plantation radiata in any way?
                    A plantation pine has an economic lifespan of max 35 years. The trees start to die standing up after that and it is unsafe to go into the forest.
                    Do you think people actually work in timber mills now days?
                    How much (as a percentage of total) is the timber cost of a house?
                    Do you think NZ lacks for timber to build houses? of that the price of timber in NZ is a result of constrained supply?

                    • Macro …
                      13 June 2015 at 7:27 pm

                      Actually people don’t work in timber mills these days because we have closed them down. Here in Thames we lost 100 jobs at the end of last year in one of our timber mills. The food bank however was working overtime.

                    • Macro …
                      13 June 2015 at 7:38 pm

                      Having built a couple of houses recently I can say that the cost of timber is extortionate. At around $5.00-$6.00 per metre for 100×50 framing plus transport it adds up considerably. Yes one can buy cheaper than that, but you have to look around for it. and even though it may be cheaper down the road – the hidden cost of transport can make it even more expensive. I found on one building that it was cheaper to transport my supplies from Greytown in the Wairarapa to Coatesville than it was to buy locally at the Pinepack merchant in Huapai.

        • Draco T Bastard 2.1.2.2
          12 June 2015 at 8:37 pm

          And that’s a negative how exactly?

      • Draco T Bastard 2.1.3
        12 June 2015 at 8:26 pm

        If China wants our timber then there needs to be regulations in place that says you can only buy sawn lumber.

        I want a simple law that simply states that no raw product can be exported or imported.

        • Colonial Rawshark 2.1.3.1
          13 June 2015 at 1:50 pm

          Need a more flexible system than that…a law which establishes the NZ Export Authorisation Commission and gives it powers to regulate how much can be exported and in what state.

          Notice that skim milk powder is not a “raw product” but it is still a low value commodity per kg.

          • Draco T Bastard 2.1.3.1.1
            13 June 2015 at 3:19 pm

            I was considering skim milk and was wondering how we could effectively class it as a raw product. I think it may have to come down to not allowing product to be exported if its not ready for retail.

            How much can be exported is a good idea as well so as to enforce sustainability.

            • Colonial Rawshark 2.1.3.1.1.1
              13 June 2015 at 3:33 pm

              basically we go back system of export certification for anything vaguely resembling a bulk commodity

              • Macro …
                13 June 2015 at 4:58 pm

                I like Michael Savage’s import quotas of 1936. They served NZ well for nearly 50 years. We are now a very small and “open” economy and are subject too much to the pressures from overseas economic forces to the extent that we have almost no control over our economy at all. In terms of managing our economy English has done virtually nothing over the past 6 years. One wonders why we pay him.

                • Colonial Rawshark …
                  13 June 2015 at 5:01 pm

                  In the same vein, I want to know if Labour will walk away from the TPP if the NATs sign it. I am thinking they won’t.

                  • Macro …
                    13 June 2015 at 7:23 pm

                    That is my fear too. In the round of protest action last year I went to the Hamilton event. Almost every speaker including the Maori Party – were more emphatic as to the dangers of this than the Labour spokesperson who was decidedly ambivalent.

          • Macro 2.1.3.1.2
            13 June 2015 at 4:54 pm

            Yes I was wondering about that too. Take for instance the manufacturing of tyres (NZ used to manufacture all of its car tyres and some of the most efficient factories in the world – now we manufacture not a single one!) – yes I know you can produce synthetic rubber. But it may be that some raw materials need to be imported.

        • Clemgeopin 2.1.3.2
          14 June 2015 at 12:13 am

          What about live sheep and live cows? and oh, live Nacts?

    • Colin Williams 2.2
      12 June 2015 at 5:12 pm

      We have been saying this since I moved to NZ over 34 years ago. First it was kiwi fruit and deer capture then it was ostrich and emu farming and of late our wine industry. All but the wine have gone into decline. Diversification means more capital input. Tourism is unreliable and yes we are a very small but good country. Is it not a question of “where do we go from hear?”

      • Draco T Bastard 2.2.1
        12 June 2015 at 8:36 pm

        Is it not a question of “where do we go from hear?”

        And efficient and economic economy wouldn’t be concerned with imports or exports. Trade would not be critical as the nations economy would be economic.

        As productivity increased the freed up capacity would be put to different use and the economy would develop. The capacity is freed up because as the nation only needs to produce from it’s own resources enough for the local population then any increase in productivity results in people being able to shift from what they were doing to doing something else. Farmers shift from being farmers to being teachers or research assistants or go to university to get a doctoral degree.

        These changes develop the economy in an economic way that produces real results for the entire population and not just the few at the top. To put it another way, our present system is uneconomic.

        • Colonial Rawshark 2.2.1.1
          13 June 2015 at 6:03 pm

          Trade with other nations in ‘nice to haves’ and ‘luxury’ products is pretty important for a high standard of living. Of course, I believe NZ should be at least 90% self sufficient in goods and services related to the “must have” category.

  3. SMILIN 3
    12 June 2015 at 1:52 pm

    Listening to BE giving us the new spin on the new OCR amazing sales pitch Basically he was side stepping that our economy has been devalued by our creditors and the Ak land grab for housing is the last ditch stand before the predicted global crash next year and the TPP FASCIST TAKE OVER OF OUR ECONOMY i can see the invasion of Poland already being prepared. F Y Key and your WW1 psycho manipulation of the truth Key you are a fraud. Germany is about to foreclose on Greece Spain and Italy . The TPPA is debt collecting by stealth because of what we owe

  4. Richard Christie 4
    12 June 2015 at 1:56 pm

    That I’ve personally been hearing people say this about diversification for 45 years, and also knowing that it was said well before then, before I became politically aware, is depressing beyond belief.

    • Draco T Bastard 4.1
      12 June 2015 at 2:10 pm

      NZ seems to have a history of doing the cheap, easy stuff rather than putting the hard work into producing the high value stuff.

      • Chooky 4.1.1
        13 June 2015 at 2:11 pm

        +100…short term thinking …easy money…lack of NZ government accountability …poor business long term strategy …self serving politicians …betrayal of New Zealanders and New Zealand

  5. Gosman 5
    12 June 2015 at 2:20 pm

    Mr Gould, it is mentioned in the leaked report on Labour’s failure at the last election that neo-liberalism is on the wane around the world and that there are moves (which the Labour party should possibly follow) to adopt a different set of policies. I was wondering if you agree with this sentiment and if so which countries are evidence of this move away from economic orthodoxy? Would these include Greece where the Syriza government is advocating wide scale privatisation of state owned assets and following fiscally prudent budgetary policies (i.e. no deficits) for example?

  6. Macro 6
    12 June 2015 at 2:21 pm

    Fiona Farrell I believe coined the phrase “Milk Powder Republic” – and it so apt – I use it all the time. 🙂

    I’ve just been reading Fiona Farrell’s The Broken Book in which she is also highly critical of the Key Gov’t and their inability to deal with the issues that matter to most ordinary NZers (especially following the Chch earthquakes). I loved her use of “Milk Powder Republic” – such an apt phrase to describe our country. The book has been adapted for radio here:
    http://www.radionz.co.nz/national/programmes/thereading/collections/readings/the-broken-book
    and Kim Hill has interviewed her as well.
    It’s so good to have these prominent women in our society speaking the truth, and not the propaganda issued by “The Ministry of Truth”.

    http://thestandard.org.nz/eleanor-catton-responds/ 16.3

  7. Atiawa 7
    12 June 2015 at 2:32 pm

    So, the question is. What should we be doing to maintain & improve our living standards?
    Any answer(s) require meat rather than bones.

  8. RedLogix 8
    12 June 2015 at 2:33 pm

    “The bonfire of right wing politics” … HC 2008

    Ordinary New Zealanders worked bloody hard for decades to build these industries and assets. Yet because these monied arses know nothing of real work, they value them slightly – and blithely fritter them away for trinkets and toys.

    • linda 8.1
      13 June 2015 at 6:56 am

      new Zealand is in desperate need of [r0b: deleted] so a reset can begin the let the eat cake crew need a cure.

  9. philj 9
    12 June 2015 at 3:18 pm

    IRD are contracting out the IT upgrade to a US Company. The first contract is for $190 M, the total cost is approximately $2B! It makes the railway carriages from Dunedin look insignificant. This IT contract should have gone to our own people. Oh! we can’t compete with the cheaper US contractors. But the US offshore its own work to India and China. Weird.

    • infused 9.1
      12 June 2015 at 3:41 pm

      I don’t actually think NZ has the experience for this one.

      • RedLogix 9.1.1
        12 June 2015 at 4:02 pm

        Yeah I think that’s what they said about the INCIS project as well:

        http://en.wikipedia.org/wiki/INCIS

      • Tracey 9.1.2
        12 June 2015 at 4:07 pm

        you might just be half right there infused

        • RedLogix 9.1.2.1
          12 June 2015 at 6:23 pm

          Oh well … so much for ‘ambitious for NZ’ then. 🙂

          In the short time I’ve been over in Aus I’ve had the professional privilege of being heavily involved with three significant green-field engineering projects. Opportunities I would NEVER have gotten anywhere near back home.

          And it’s not a huge company I’m working for. There is nothing they are doing here that could not just as easily be done in NZ.

          It’s just that under John Key the nearest we’ve gotten to any actual ideas from this govt have been some kind of hokey financial money trading centre that never got off the ground – and a half-arsed bunch of disconnected cycle-ways. Excuse me but whoppee.

          I guess I’ve gotten so old that I can remember a time when we used to able to DO things in this country.

          • Colonial Rawshark 9.1.2.1.1
            12 June 2015 at 8:56 pm

            What we forget is that there are very many Kiwis all over the world who have exactly the experience we need to run this technology project. Bring them back and have them take over all government IT development.

          • gnomic 9.1.2.1.2
            12 June 2015 at 9:58 pm

            From the first time I saw the present regime figurehead it was obvious he had no new ideas. That was under the Brash fuhrerdom.

            Or no agendas that he was willing to disclose at that stage. Already adept at eating dead rats since he said Kiwisaver had to stay to an audience of fanatic Nats from the Eastern suburbs of Dorkland. Presumably the polls must have told him what to say.

            If there is a hell he will be a resident. Not a believer in deadly sins presumably. At the very least in this case greed, lust, and pride.

            This government has ideas but they are from a neoliberal internationalist ticklist. Objective privatise profits, socialise costs. That is all.

            Anyway who is this we? Alas there is no us, just an array of interest groups, or as they are called stakeholders — perhaps obsolete jargon nowadays.

          • Clemgeopin 9.1.2.1.3
            14 June 2015 at 12:38 am

            “nearest we’ve gotten to any actual ideas from this govt have been are”

            Two auwktully!

            [1] Sell off all our government assets to rich private pricks.
            [2] Have a stupid and expensive flag referendum as a convenient distraction.

      • RJL 9.1.3
        12 June 2015 at 4:09 pm

        @infused…

        And there’s absolutely no way that a NZ company could develop/hire the expertise required if $2B was invested in it.

        • RedLogix 9.1.3.1
          12 June 2015 at 4:15 pm

          Probably the US contractor will just offshore it to India anyhow.

          • Macro 9.1.3.1.1
            12 June 2015 at 6:57 pm

            More than likely! Cheaper labour.
            When will we ever learn?
            Globalisation it’s called – Isn’t it great! Everyones salary heads to the lowest common denominator, and the rich get richer.

      • Draco T Bastard 9.1.4
        12 June 2015 at 8:38 pm

        And we certainly won’t get that experience if we don’t try.

      • DH 9.1.5
        13 June 2015 at 9:46 am

        “I don’t actually think NZ has the experience for this one.”

        That’s complete bullshit. They’re not writing a new operating system here, they’re merely creating a new database. I’d wager Xero will be more complex than the IRD system. IT people are writing databases all the time, any specific skills in short supply here can easily be sourced from overseas if need be.

        This project is only expensive because the bureaucrats have ‘you won’t get fired for buying IBM’ syndrome. They always go for the extravagant and expensive because in their minds more expensive means ‘better’. When it turns tits up, as it will, they defend their poor decision making by claiming they bought the best and could do no more.

        This is a classic example of why we need our govt to intervene to protect our interests. Instead they’re either complicit in this rort or conspicuous by their absence.

        They should have invested in a pilot project for local development years ago, they’ve known the need for the upgrade long enough. When they’re expecting to spend $2billion an extra $20-30 million is petty change and they could be well on the way by now.

        • Colonial Rawshark 9.1.5.1
          13 June 2015 at 10:00 am

          The government needs its own crack tech project management and development unit. A core of fifty senior, experienced hands on types who do all the scoping and project management work, and only take on contractors and consultants as entry and mid level labour, ad hoc.

          • DH 9.1.5.1.1
            13 June 2015 at 10:16 am

            Yeah, that. The IRD project would be about 95% labour (including licensing), the hardware costs are negligible. For $2billion you could hire over 2500 developers fulltime on $100k for eight years…. and you certainly wouldn’t need that.

            From the development perspective a project like IRDs is rather easy. Most of the project design is already done, they’re not building from scratch they’re merely replicating what already exists and adding improvements.

            Quite frankly it’s worth a gamble. They could make a fortune selling it if it worked out and if it didn’t… well they’d still gain a lot from it.

            • Colonial Rawshark 9.1.5.1.1.1
              13 June 2015 at 1:53 pm

              There are tonnes of skilled Kiwis from around the world who would come back home and do this work for NZ. Give them permanent contracts, good redundancy clauses, pay scales up to $150,000 pa and they will flock back.

              • DH …
                13 June 2015 at 9:03 pm

                I reckon so. Our politicians constantly show a disgusting lack of faith in their own country people and it’s irritating. I’ve been in the IT industry a long time & I can say with complete confidence we have the people who can build a world-class IRD system for well under $2billion.

    • Poission 9.2
      13 June 2015 at 6:06 pm

      IRD are contracting out the IT upgrade to a US Company.

      two points that stand out.

      Firstly the policy settings objectives should be for a reduction in tax compliance complexity (an ideal tax code would be run on a pc)

      The more complex a system,the greater the bias to the larger organisations and individuals (read wealth) .

      Secondly the US with its incoherent tax code,baffling legal system,and decaying state institutions and corporate tax dodgers is the last place to go .

      Exhibit 1

      http://3.bp.blogspot.com/-y9G9A_zuf7I/U0aWIFjeGFI/AAAAAAAAKNU/V5qWpeT8Qy4/s1600/wolters-kluwer-cch-tax-law-pileup-2013.PNG

      Exhibit 2

      http://www.niallferguson.com/journalism/journalism/how-america-lost-its-way

  10. Puckish Rogue 10
    12 June 2015 at 3:43 pm

    Yeah if only this was true

  11. saveNZ 11
    12 June 2015 at 5:20 pm

    +100

    It was always obvious that is what would happen. Not only that, Theo Springs is not even a Kiwi and his speciality is mergers. His mantra, intensify intensify and cost cutting is leading to a loss of quality and loss of moral.

    Fonterra our ‘cash cow’ is in a precarious state. Farms sold by the government bypassing Fonterra (so they don’t get the benefit of the trade) and at the same time being crapped on with ideology from their own CEO.

    NZ are known for Milk leadership, not the Dutch. We don’t need the dodgy European diseases coming our way from Intensification or the corporate structure instead of the co operative. Fonterra was doing much better before he arrived and also these ‘free trade’ agreements. Foreign ownership is submerging our biggest business as well as the residential market.

    Two things that are important now, quality OR price. Fonterra is reducing the quality and trying to compete on price. Hello, NZ will not be able to compete on price, so the most important thing for our milk is to make sure the ‘quality’ is suburb. Unfortunately under the new regime of ‘marketing’ Fonterra believe saying it is good is the same as making sure it is good.

    Fonterra is a poster child for taking a NZ cash cow asset and using ideology and neoliberism to screw it up but getting some foreign CEO to screw up what Kiwis were better at before he arrived.

    • Chooky 11.1
      13 June 2015 at 2:16 pm

      +100 saveNZ…our brand should be free range, environmentally sound, animal welfare …HIGHEST QUALITY product …highest price…New Zealand ownership and control

      …New Zealand’s biggest asset/branding is our environment …lets not let overseas opportunist interlopers trash it for intensification and short term cheap dirty easy money for a few! ( namely their own pockets)

  12. Halcyon 12
    12 June 2015 at 5:24 pm

    I fail to see our dependence on a single commodity when that commodity only accounts for 22% of our exports. Do not the other 78% of our export products count?

    While NZ, for many reasons, can not compete with the big manufacturers overseas, we excel in providing goods and services to niche markets.

    • RedLogix 12.1
      12 June 2015 at 6:10 pm

      Not much of a business head on you there Halcyon.

      Ask anyone running a decent sized business what happens when your single biggest (and usually most profitable) customer suddenly goes tits up. Especially the one you’ve borrowed and invested hugely in order to service.

      Result = Cash Flow Crisis

  13. Zappod 13
    12 June 2015 at 6:08 pm

    Its not just milk in the very far north Avocado orchards are being sold to overseas companys from China, can’t blame them its our government’s that have let them buy the primary industry’s.

  14. stever 14
    12 June 2015 at 6:12 pm

    I was recently in a meeting of people who manage some of our biggest engineering and engineering-using industries (this includes Fonterra).

    I made the point that a big worry should be that overseas companies are buying our IP and doing ALL of the work (from primary production onwards) overseas (so, not just production here and marketing directly overseas, as discussed din Bryan’s article).

    The Unanimous response from those around the table? “Well, as long as we get to clip the ticket on the way out, we’ll be OK”….

    So, yes: little leadership , no real understanding about what’s at stake (or perhaps too lazy or unskilled to actually do anything about it).

    • Macro 14.1
      12 June 2015 at 6:17 pm

      We are paying our so called business leaders obscene megabucks to clip tickets! Maybe they would be better employed on the platform of a rail station somewhere. 🙂

    • saveNZ 14.2
      12 June 2015 at 8:05 pm

      @ Stever

      If TPP comes in, all the service industry might be gone offshore as well. Social services, justice, Health, etc etc At present privacy is one obstacle preventing off shore privatisation of social services, that is being eradicated by the present government.

      The end of our country as we know it. It is already beginning with the primary sell offs.

  15. sabine 15
    12 June 2015 at 6:52 pm

    anecdote from westie land

    a nice little cafe was opened last year, and did really well. the food was good, the decor pleasing and the staff worked hard.

    the cafe sold two weeks ago, to five chinese business man that have started replacing staff with chinese on studend / work visa. The place is now not primarily a cafe anymore but a food production place for a cafe that caters to the chinese down town crowd.
    I will give it another 4 weeks and the remaining kiwis will also have been replaced by chinese studends.

    the only one who made money is the person who started the cafe a year ago. The staff will now be unemployed.

    Oh but you say this can not happen ,cause laws…well in the temp working world that is the hospo industry the hours that the staff used to work are not there anymore, they have been cut and given to the cheaper staff from oversees. You see no one got fired, they all just kind of gave up, hoping to find more hours elsewhere.

    NZ is fucked and the mentality of kiwis is fucked aswell. This make a fast buck get rich quick scheme will only ever work for one generation, everyone after that is a beggar.
    NZ is a beautiful country, but i have come to the conclusion that the average kiwi cares not about their neighbourg or their brother or their country. they care about their own bottomline and the rest can go to hell. and this is why we have the current government and everything that comes withit.

    the greediest people on the planet are kiwis. and many of them are very very stupid in their greed.

    • RedLogix 15.1
      12 June 2015 at 7:50 pm

      Sadly you are mostly right Sabine.

      I don’t think it’s because we are any more greedy, stupid or selfish than we were a generation ago. Nor were we necessarily any better as a people back then.

      But the social contract that once obliged us to moderate our behaviour has been torn up and shredded. You are right – that ideals of duty and responsibility to others has been replaced with a sense of entitlement and ‘I’m all right Jack’ mentality.

      And in a sense who can blame us – when our political and social leaders no longer command respect, when personal ethics are reduced to ‘whatever I can get away with’ – then only mugs play by the old rules.

    • maui 15.2
      12 June 2015 at 8:09 pm

      I wonder if this was one of the Hip group of cafes..

    • saveNZ 15.3
      12 June 2015 at 8:19 pm

      I think you will find that although Kiwis are getting greedier, the rest of the world are even greedier and more corrupt than we can only imagine.

      Naivety is a bigger problem in NZ, in particular in parliament.

      Kiwis have a problem with being both Greedy and Naive while at the same time being over confident in their abilities and anti intellectual to boot. They don’t even know when to call in the experts or even understand they should listen to them.

      Personally I think the average Kiwi is smarter than the average politician in Parliament. We are let down by the lack of quality in our government across all aspects.

      With Russell Norman going there is an even bigger gap.

  16. Binders full of women 16
    12 June 2015 at 9:07 pm

    OECD … New zealand 7 th best growth in the world …. But let’s keep putting down the economy & country.

    • Colonial Rawshark 16.1
      12 June 2015 at 9:13 pm

      Firstly, this goes to show how shite the western neoliberal world and its financialised economies is doing.

      Secondly, uneconomic growth which benefits only the few is not the kind of growth NZ needs.

      Thirdly, you need to look beyond the statistics because they do not address the strategic opportunities and threats that our nation faces.

      • Macro 16.1.1
        12 June 2015 at 9:31 pm

        Thirdly, you need to look beyond the statistics because they do not address the strategic opportunities and threats that our nation faces.

        But don’t expect Binders to be able to do that because that requires thought and that is tricksy stuff!

    • dv 16.2
      12 June 2015 at 9:44 pm

      But let’s keep putting down the economy & country.

      BUT BUT BUT
      New Zealand debt
      NZ$ 94,206,944,787

      • Colonial Rawshark 16.2.1
        12 June 2015 at 9:50 pm

        That’s more a result of NZ using a debt sourced money creation system, instead of simply issuing the currency debt free.

  17. John B 17
    12 June 2015 at 9:11 pm

    A couple of days too late to complain about high exchange rates (20% down on last year), a couple of decades late to advise Labour on election policy.

    • Colonial Rawshark 17.1
      12 June 2015 at 9:16 pm

      Please explain John B – last year Key said that a strong dollar represented a strong economy; with our dollar much weaker now, does it mean that our economy is also now 20% weaker?

  18. Saarbo 18
    12 June 2015 at 10:11 pm

    “Over a very long period, they have quite knowingly engineered an over-valued exchange rate as the consequence of the high interest rate policy they have used as a counter-inflationary tool. They have equally knowingly turned a blind eye to the inevitable consequences of thereby making our goods more expensive than they should be in international markets, including our own.”

    Not that long ago I worked for a paper manufacturer in Kawerau and was responsible for selling paper to China, Taiwan, Hong Kong etc…we could do this because our NZD/USD cross rate was 0.50 cents. Since then the Kawerau mill has had to compete against cheap imports from China due to the reasons that Bryan has stated.

    Agee 100%.

  19. Robert Glennie 19
    13 June 2015 at 11:27 am

    Yeah. A rock star economy drugged like rock stars often were in its hey day, except that it is on disaster recovery and dairy exports instead of marijuana and what not.

  20. hoom 20
    14 June 2015 at 3:29 pm

    The NZ economic Rockstar is true…

    …If its an ageing drug addled one-hit wonder who got screwed out of all the Royalties by the Publishers & hasn’t come up with anything new in 25 years.