Creaming it?

129 comments on “Creaming it? ”

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1. mickysavage 1

   18 May 2011 at 10:12 am

   A few commentators have wondered how much debt the dairy sector has and it is a very valid question.
    
   It seems likely that farmers are paying interest to Aussie banks rather than tax to NZ Government.  This is a drag on Government finances and the country’s balance of payments.  At a basic level this is really stupid activity and this behaviour needs to be changed.
    
    
   • Colonial Viper 1.1

     18 May 2011 at 10:20 am

     +1
   • Draco T Bastard 1.2

     18 May 2011 at 5:31 pm

     It’s more proof that foreign ownership is bad for the economy.
     • Jim Nald 1.2.1

       18 May 2011 at 9:30 pm

       Poor dairy farmers. They must be in poverty. Just bought myself some liquid white gold tonight and handed some cash at the check-out and wondering where the money goes to next.
2. ak 2

   18 May 2011 at 10:16 am

   Wee correction: average payout for 2011 is actually over a million.

   Average annual tax paid by 17,244 dairy farms in 2009: $1508.
   Tax paid by couple on the state pension: $3136.
   Tax paid by a single person on the average wage: $8020.
   Fonterra equivalent tax rate: negative 1.5%.

   Poor bastards. Pass the hat around.
   • Colonial Viper 2.1

     18 May 2011 at 10:21 am

     Average annual tax paid by 17,244 dairy farms in 2009: $1508.

     And don’t worry about that $1508, their kid at uni collects that back from the Government in just 6 weeks of student allowances.

     Deal!
     • Draco T Bastard 2.1.1

       18 May 2011 at 5:35 pm

       And then there’s all the pollution and shit that they don’t pay to clean up and so that last line should read:

       Fonterra equivalent tax rate: negative ~35%.
3. The Ka Pai Life 3

   18 May 2011 at 10:21 am

   And don’t forget the dairy sector is a significant contributor to the fact that 90% of our lowland rivers are now polluted, not to mention half our lakes.

   and despite Key recently passing it off as ‘one man’s opinion’, the science on this stuff is pretty tangible. From NIWA.
   “There is no doubt that our declining river water quality over the last 20 years is associated with intensification of pastoral farming and the conversion of drystock farmland to dairy farming, particularly in Waikato, Southland, and Canterbury.”
4. Raymond A Francis 4

   18 May 2011 at 10:35 am

   How about comparing apples with apples or even the tax take from a designated year
   Which in this case was a drought year which drove up running expenses
   “I’ve never met a poor dairy farmer” really just how many do you know?
   If you do know a few you will know they do an unpleasant job with high risks not only to their health but financially
   And as you are obviously not an accountant but I remind you tax has to be paid on surpluses, you can put off the day but not for ever. The only tax free dodge is the one any property owner can grab in this country capital gain except for a farmer they lose their home and income when they sell or rather if they sell for more than they paid
   • Colonial Viper 4.1

     18 May 2011 at 10:52 am

     If you do know a few you will know they do an unpleasant job with high risks not only to their health but financially

     A reasonable sized dairy farm has anywhere from 8-15 farmhands, many of whom will effectively be on less than the minimum wage, to take care of quite a lot of that ‘unpleasant’, ‘high risk’ work for the farmer.

     Tell me, how much tax do these farmhands pay, compared to the farmer? More than $1500 p.a. do you think?

     Oh and look at this, a “bonanza” payout from Fonterra for 2010, of over $800,000 gross. Doesn’t seem to me like the drought hit too unmanageably eh?

     http://www.odt.co.nz/news/business/127791/fonterra-signals-bonanza-payout
     • Lanthanide 4.1.1

       18 May 2011 at 11:01 am

       “Tell me, how much tax do these farmhands pay, compared to the farmer? More than $1500 p.a. do you think?”
        
       And where do the farmhands get their money from? The farmer, of course. He’s forgoing profits to pay them a wage, which they then pay tax on. So in other words, the farmer is paying income tax via the farmhands he is paying to do the work.
        
       There ain’t no such thing as a free lunch.
       • Colonial Viper 4.1.1.1

         18 May 2011 at 11:06 am

         Get over it Lanth, you are making the argument for farmers that the normal costs of running a business is in itself a tax. Rubbish. Taxes are levied by the Government on income and if farmers are enjoying income then they should pay the taxes just as their own workers do.

         The same excuses outfits like Exxon Mobil use to argue that they should pay zero tax on their profits. You know, because their employees pay tax they should be let off themselves as a corporate entity. Well screw that, UK Uncut has a very firm view on that. Every entity should pay the taxes that it fairly owes to society.

         Farm wages are not a ‘tax’ paid by the farmer they are WAGES paid by the farmer. The tax is then paid by the WORKER not the farmer. Don’t try and conflate that with a chicken or the egg argument. Those taxes paid are owed by the worker and paid by the worker, out of the worker’s income.

         The farmer is responsible for paying tax on their own income, but when that is sheltered and hidden so that their income is effectively zero, the farmer ends up paying no taxes.
         • Lanthanide 4.1.1.1.1

           18 May 2011 at 12:07 pm

           I’m not arguing that farmers shouldn’t pay tax because they pay their employers and therefore any profits they make should be tax free.
            
           You were simply saying that farmhands probably pay more tax than farmers. But the point is they wouldn’t be paying *any* tax if it weren’t for the farmers employing them in the first place.
           • Peter 4.1.1.1.1.1

             18 May 2011 at 1:24 pm

             You could argue that the farmers have a hugely disproportionate share of the countries income earning assets therefore they should pay a corresponding amount of tax. In fact their net incomes make them a drain on the economy, put the land to more productive use. More efficiency and value added in the dairy sector please!

             If you are going to say “if it weren’t for the farmers” you might as well say “if it weren’t for Government trained teachers” we would not have a 2 billion dollar p.a. foreign currency earning education sector etc etc.

             In the end what are they farming for if it’s that bad? Maybe long term capital gains, and an all expenses paid lifestyle courtesy of the tax system.
       • KJT 4.1.1.2

         18 May 2011 at 11:36 am

         How much profit would the farmer have without farmhands to do the work?
       • Psycho Milt 4.1.1.3

         18 May 2011 at 1:25 pm

         And where do the farmhands get their money from? The farmer, of course.

         Er, what? Is this what they’re teaching for economics these days? This is true to the same extent that the farmer gets his money from the work the farmhands do. He’s not nobly giving his money to charity, he’s paying the value of their labour less what he keeps for himself as profit. This stuff isn’t rocket science.
         • ianmac 4.1.1.3.1

           18 May 2011 at 1:47 pm

           A farmer showed me her books. It seems that the cost of providing a house, milk, meat, power, telephone for the farm worker was a cost to the farmer included in their returns and therefore tax deductible. (Tax avoidance.) The farm worker was paid a small salary which he paid small tax on but because the actual costs had been deducted already the actual tax was minimal.
           The net income on the whole farm was minimal because all the costs were written off. My tax however came off my salary first and then my costs and the net money left was for my modest luxuries.
           • Peter 4.1.1.3.1.1

             18 May 2011 at 2:25 pm

             Exactly, wouldn’t it be great if we all paid tax on our net earnings.

             Who are the real heroes and backbone of this country? Those who pay PAYE – wage and salary earners, beneficiaries and pensioners!
           • Lanthanide 4.1.1.3.1.2

             18 May 2011 at 2:29 pm

             On the face of it, it seems like the farmhand should have to pay fringe benefit tax on those provisions? It’s like a company car, right, an alternative remuneration instead of salary?
              
             I believe there are a few rural/town schools that provide houses for the teachers to live in, how is that handled for tax purposes? What about military personnel living on-base?
             • ianmac …

               18 May 2011 at 3:11 pm

               Lant: Teachers tell me that teacher houses are rental paid by the teachers.
             • Peter …

               18 May 2011 at 3:26 pm

               Good idea, tax all fringe benefits including 4WDs’ used by farmers for personal use.
           • Ian 4.1.1.3.1.3

             18 May 2011 at 7:51 pm

             And the GST is claimed back too!
     • side show bob 4.1.2

       18 May 2011 at 2:37 pm

       God you full of GV, you wouldn’t have a bloody clue. 8 – 15 farmhands, what fucking tosh.So we have the baying dogs of the left screaming rich pricks. You pay tax on you profits noddys not on your gross income,. So the tax take is low, perhaps you should question why rather then yapping like trained poodles.This whole story is a huge beat up by a desperate opposition trying to engage in the politics of envy. The bloody cardboard is bare an farmers are a handy wiping boy and have no political power. Open your eyes, you people never learn, useful idiots spring to mind.

       [lprent: Your comment has zero percent content and the word troll comes to mind when I read it. Read the policy, contemplate my attitudes on trolls, and improve the standard of your comments before I get offended by their inability to do more than waste bandwidth and put you out of your evident misery. ]
       • vto 4.1.2.1

         18 May 2011 at 2:51 pm

         Did you actually say something in all that drivel side show bob?

         If you read carefully you will see that this has thrown up various perfectly legitimate issues, such as whether farmers are paying their share of the country’s costs, how profitable farms actually are and what that means for example for the welfare they are about to get for their irrigation schemes, whether the tax system may in fact be flawed if the largest sector in the entire nation pays so little, and on it goes.

         All perfectly legitimate.

         Got any decent answers?? Cause I am keen to be proved wrong. Have a crack bob. Go on, be a devil..
     • infused 4.1.3

       18 May 2011 at 3:59 pm

       8-12 farmhands lol. Have you ever been to a dairy farm? I don’t think so.
       • Webster Rearo 4.1.3.1

         18 May 2011 at 10:59 pm

         lol agreed, who has 8>12~whatever farmhands

         Sure a few bigger operations maybe have that sort of manpower available, but thats pretty rare, I recon 90% or so of cases its just a family and local friend operation.

         I agree with a lot of the points here about the farming community getting an easy ride and being bludgers as described, I just think it’s good to display accurate reporting.

         The flipside of the story is about those farmers that do pay due respect to the issues raised. They deserve credit.
   • Peter 4.2

     18 May 2011 at 12:31 pm

     Not sure if this is right, but I’m sure you’ll be able to correct me if not.

     Salary and wage earners also pay GST on top of PAYE. Every time we buy something as consumers the 15% GST goes to the Government. As final consumers wage and salary earners cannot avoid GST.

     We don’t charge GST on exports so dairy farmers do not collect GST, on behalf of us all, from their overseas customers. However, they can deduct the GST that they pay to their suppliers, such as Unison or a fertiliser supplier, when calculating their taxable profit. Consequently this reduces their final tax bill.
     • PeteG 4.2.1

       18 May 2011 at 12:48 pm

       As final consumers wage and salary earners cannot avoid GST.

       There’s less opportunity but we can still avoid GST:
       – hunt and fish for our own food
       – grow our own food
       – buy lower value items from overseas
       – don’t spend as much on unnecessary consumer crap
       (all of which are legal)
       – exchange and barter goods
       – sell things we have caught, shot or grown for cash
       – don’t declare income from cash trades and weekend jobs
       • Vicky32 4.2.1.1

         19 May 2011 at 3:26 pm

         There’s less opportunity but we can still avoid GST:
         – hunt and fish for our own food – yeah, right!
         – grow our own food – ditto – many tenants are simply not allowed to, and others are simply physically unable
         – buy lower value items from overseas – or do as I do, and not buy anything from overseas!
         – don’t spend as much on unnecessary consumer crap – see above
         (all of which are legal)
         – exchange and barter goods –
         – sell things we have caught, shot or grown for cash – see number 1
         – don’t declare income from cash trades and weekend jobs – illegal, please note
   • Peter 4.3

     18 May 2011 at 2:20 pm

     As the system stands there is no incentive to show a taxable surplus, do all you can to increase expenses where the expenditure directly benefits the owner. Taxing profit is not the way to raise tax revenue.
   • Ian 4.4

     18 May 2011 at 7:49 pm

     I know several; they mainly run several newish vehicles; one had a 25m outdoor swimming pool installed last year – apparently it is a fire safety system and was tax deductable.

     Most of theme ‘delegate’ the work to less well paid milkers; that’s fine, because they can then indulge in their hobbies. One sponsors his own motocross team – again a business expense.

     Oh, and then there is the other one with the English wife who heads to the UK every year with the four kids and comes back with lots of nice new clothes for them all; he must be finding it hard!
   • Peter 4.5

     19 May 2011 at 11:24 am

     You know as well as anyone they have no incentive to show a taxable profit. They will always make decisions that effectively increase taxable expenses.
5. Bill 5

   18 May 2011 at 10:58 am

   I could work for a company that is returning immense profits while dodging tax and be personally ‘doing it hard’.

   Share milkers used be considered as the bottom rung of the dairy ladder. They didn’t own the land. And they didn’t own the beasts. They worked their arses off and ‘paid the piper’ at every turn.

   Remember a couple of years ago when ‘buying into’ share milking was being touted via TV advertising as the cash cow smart move? T’was a con.

   Those people will still be doing it hard. If there are pay outs, how much goes to those doing the work…the farmers… and how much ( directly or indirectly ) to the owners of the land and stock? And if share milkers aren’t getting coin while looking at paying percentages and/or set sums to owners, then what choice, beyond intensification or bankruptcy do they have?

   I suspect there is a chasm between Fonterra returns/ profits and the financial realities of individual dairy farms with regards those doing the actual work.
6. Lanthanide 6

   18 May 2011 at 11:04 am

   You only need to watch the latest TV ad targetted at farmers, with the upcoming field days. 3 flash new vehicles you can buy, all > $40,000 brand new. There’s a ute, a van, and a sedan. Only the ute could reasonably be used by farmers, and even then it’s very flash and sexy and not something you’d put out in a paddock – in other words it’s for tooling around town on the weekends showing off.
    
   Then there’s the “thinking man’s ute” ad.
    
   If farmers weren’t creaming it, they wouldn’t have ads marketing $40k+ cars directly to them.
   • Peter 6.1

     18 May 2011 at 12:34 pm

     Yes, they’ll happily buy the new car which is available for private use and claim the depreciation expense to reduce their taxable income. Landlords lost their depreciation claim why not farmers?
     • ianmac 6.1.1

       18 May 2011 at 3:19 pm

       I don’t know about the tax involved but a farming family I know sold their marginal largely sheep farm for over $11 million to be converted into vineyards. (Reported in the local paper.) This money was put into a trust. The sudden huge increase in land value was not taxed for capital gain so good luck to the family but sad for NZ.
       • vto 6.1.1.1

         18 May 2011 at 3:25 pm

         Tax on capital gains in farming…

         The law around tax clearly states that if you purchase land with a view to selling it later at a higher price then income tax is payable on the difference.

         As happens often with rental housing, for example.

         It should happen with farming, because all farmers admit openly that they buy the land with a view to selling it later at a higher price. This is income for the purposes of the Income Tax Act. The actual farming is a separate matter.

         Simple.

         And again exposes virtually all farmers as significant tax cheats.

         As always, happy to be proved wrong. However this time I aint…
         • Lanthanide 6.1.1.1.1

           18 May 2011 at 5:49 pm

           Yes, good point vto. If the farmers get all uppity about how they pay so little income tax because they actually make so little profit, we should simply ask them: why exactly have you invested so much money in such an unproductive asset? If their answer is “capital gain” then you book ’em.
7. JaJ 7

   18 May 2011 at 11:28 am

   They probably do only make that much profit as the leveraging is so high and farm costs are too. However, all the hard work pays off when they sell the farm for a large capital gain. It is ultimately an artifcat of the taxation system that they make so little profit.
   • Colonial Viper 7.1

     18 May 2011 at 11:32 am

     Oh yeah, Australian banks bleeding our economy dry because farmers decided they would blow up a nice big speculative price asset bubble in the farming sector, property speculation as the core business instead of producing food, while locking out young farmers from ownership. Nice.
     • PeteG 7.1.1

       18 May 2011 at 12:02 pm

       Individuals and businesses choose freely if they want mortgages with Australian banks – which have proven to be more reliable than South Canterbury finance companies who lent to dairy developments.
     • JaJ 7.1.2

       18 May 2011 at 5:09 pm

       Its more the farmers and the taxation system which is to blame.
8. Graeme 8

   18 May 2011 at 12:06 pm

   Epic Fail. That report was based on one of the worse years the farming sector has ever had. lets see the same report done for 2010, 2008,2007, then we can see if there is a trend, or is it a blip.
   lazy work from the red team.
   • Lanthanide 8.1

     18 May 2011 at 12:10 pm

     Yes, it is misleading. But it also gets a conversation started instead of just sweeping it under the mat.
      
     Maybe the ultimate outcome is actually the system we have set up as it is is working perfectly fairly and fine for farmers and salary earners. Or maybe the ultimate outcome is that we need a capital gains tax or land tax.
      
     Unless we actually have the conversation, we won’t know how it ends up.
     • Peter 8.1.1

       18 May 2011 at 3:31 pm

       So if its misleading, how much do they pay in good years? Farmers tend not to mention the good years.
   • Pascal's bookie 8.2

     18 May 2011 at 12:18 pm

     Graeme.

     If the tale from the good years tells a different story, farmers should be trumpeting it themselves instead of calling people lazy.

     For some reason though, they are calling people lazy instead of trumpeting their awesome figures.
   • mickysavage 8.3

     18 May 2011 at 12:26 pm

     And I thought that Fonterra’s payout figures were very high and market conditions buoyant?  God help the tax payer if farmers have a bad year!
      
     The ludicrousness of the situation can be shown by considering the implications of the figures.  On average turnover of $500k the average profit must be in the vicinity of $5k.  Why would you do it?  Why even take the risk when expenses are so close to turnover.
      
     • joe boggs 8.3.1

       18 May 2011 at 1:08 pm

       God help the tax payer if farmers have a bad year!

       the 2008/09 year WAS a bad year for farmers
       – milk solids payouts dropped from $7.90 per kg to only $4.55 a kg
       – extreme droughts in 2009 following droughts the previous year throughout most of the western side of the North Island
       – farm labour costs up due to obligatory Kiwisaver contributions, increased ACC costs, &c.
       – high exchange rates resulting in lower margins
       – escalating debt to asset ratios as land values collapsed

       In fact Westpac economist Doug Steele calculated that droughts cost the dairy industry $1.4 billion in lost earnings – a key reason behind New Zealand’s recession in the first half of 2008

       With that loss of earnings it’s little bloody wonder tax imputations were so low.

       It’s easy to demonise farmers – they account for only 3% of the vote so no big threat of disenfranchising the electorate there….
       • Lanthanide 8.3.1.1

         18 May 2011 at 1:32 pm

         “farmers” might only count for 3% of the vote, but I think the rural services industry would probably put it up to 10-15%, all of which is driven by farmers and therefore they’ll vote in their interest.
         • joe bloggs 8.3.1.1.1

           18 May 2011 at 1:56 pm

           that’s a very good point Lanth.

           10-15% of the economy directly depend on farm spending. That 10-15% of the economy also pay taxes – taken from the revenue generated from farm expenditure before the farm income tax is imputed.

           That’s where the polemics from the left fall waay over – there’s a huge money-go-round and tax take that relies on farms continuing to operate.
           • Peter 8.3.1.1.1.1

             19 May 2011 at 12:35 pm

             So we are saying that the money-go-rund is more important that profitability, effective use of resources and a fair contribution to the greater good?
       • Pascal's bookie 8.3.1.2

         18 May 2011 at 1:43 pm

         It’s easy to demonise farmers – they account for only 3% of the vote so no big threat of disenfranchising the electorate there….

         Good grief. The poor widdle farmers are having their fee fees hurt.

         farmers are the least demonised group in NZ by far. Take a look at the images, adverts, tv shows and whatever the hell else you can find in our media landscape, and you’ll see the farmer is potrayed as the salt of the earth caretaker of all that is good and honest. Funny, a bit gruff, might not have all the fancy book learning but still smarter than any of the unco’ city slickers! The only thing they might love more than their well looked after land, is their adoring family.

         The only things you’ll see going against this image are actual news reports about what they get up to.
         • joe bloggs 8.3.1.2.1

           18 May 2011 at 4:17 pm

           so the advertising agencies are now more credible sources of economic insights than the economists? Puleeese!

           That’s about as credible as David Cunliffe’s poll asking “How did the National-Act Budget affect your family?” – polling 2-3 days BEFORE the budget has been released.

           Incidentally I notice that Cunliffe has pulled that selfsame poll from his website – the fact that 88% of the 500 or so respondents said they were better off was obviously too much for poor Davey to stomach!
           • Pascal's bookie 8.3.1.2.1.1

             18 May 2011 at 4:32 pm

             I realise that people talking about farmers gets your poor wee brain all heated up and stops you from thinking clearly, but seriously, WTF?

             I was merely pointing out that farmers are far from a demonised section of society. You can tell that’s what I was talking about, because of the bit I quoted.

             Now perhaps you might want to respond to the question of just how different these figures are to the figures from other years.

             The idea seems to be being put out there that this is all just a big old mean trick by Labour, and that of course farmers pay their way, it was just a bad year, that’s all, honest guv.

             It should be fairly easy then for someone to put together the same figures for other years, and compare them.

             But, for some reason, that’s not happening, and all we are seeing is tears.
   • Draco T Bastard 8.4

     18 May 2011 at 5:51 pm

     A nephew of mine is an accountant and he assures me that it’s not a blip. Farmers only pay tax if their accountants suck.
     • Jim Nald 8.4.1

       19 May 2011 at 1:04 pm

       farmer + lousy accountant = taxes
9. Armchair Critic 9

   18 May 2011 at 12:28 pm

   I think what you’ve identified is a much wider problem, Zet. Sure, dairy farmers are not paying their share of tax. And they are polluting the water and the air, and receiving subsidies for their pollution and to develop their farms, but these are separate issues.
   There are a whole lot of other groups out there who are also using the tax system to minimize their tax too – did you focus on dairy farmers instead of the system that allows them to pay almost no tax for a particular reason? Is it just because dairy farmers are easy to make into scapegoats, or because their spokespeople are vocal supporters of National?
   If the objective of Mr Nash’s announcement is to try to neutralise the rhetoric of the farming sector, then I suppose this will go some way to achieving it.
   I see this as a missed opportunity for Labour. There is some dissatisfaction amongst farmers with National, hence the talk of a farmers party. If Labour does not plan to shift significantly to the left (and there are no signs that it does plan to shift to the left) then farmers are potentially a demographic that could be persuaded to vote Labour. While they tend to be socially conservative (huge generalisation – some I know are quite liberal), they tend to be more closely aligned to Labour than National in their views on economics. Also, farmers and Labour (to a lesser degree) are quite pragmatic; they tend to ask “does it work in practice”, as opposed to National, who tend to ask either “does it work in theory” and/or “does it benefit me and my mates”.
   I’ve always wondered why farmers vote National.
   • mickysavage 9.1

     18 May 2011 at 9:20 pm

     I can recall a story about former Labour MP Colin Moyle many years ago.  He was Minister of Agriculture and very highly regarded.  A farmer in his electorate was that impressed that he made a significant donation to Colin’s election campaign.  He saw the Farmer after the election and asked him how he had voted.  The farmer sheepishly admitted that he got into the polling booth and voted National.

     Labour should never expect to win the Farmer vote, no matter how bad national stuffs up …
10. Graeme 10

    18 May 2011 at 12:42 pm

    pascal’s bookie. business is a cycle, to take one year’s results without balancing it against the years before and claiming farmers pay no tax is un fair.
    if farmers paid that tax for say five years then yep, there is a definite issue, but how do we know that?
    we dont because the red team took the worse results it could find. very lazy on their part.
    • Pascal's bookie 10.1

      18 May 2011 at 12:54 pm

      Then the farmers who are being so unfairly accused should put Labour in their place by doing some bloody work and presenting their figures showing that farmers really do pay their fair share of tax..

      But they aren’t doing that, for some reason.
      • side show bob 10.1.1

        18 May 2011 at 7:25 pm

        Why should the farmers do that Pascal, your side is making the accusations. Labour drew first blood, it’s their case to prove. But that won’t happen will it, easier to keep the dogs barking.
        • Pascal's bookie 10.1.1.1

          18 May 2011 at 7:36 pm

          So you won’t then. For some reason.

          If labour drew first blood on this, then the usual response would be to fight back. Otherwise the accusation just sits there, with your lot bleeding.

          Your lot could shut everyone right up by showing that farmers do indeed pay their way.

          But it’s starting to look like you can’t, for some reason.

          Good lord, for a bunch of ruggedly individualistic tough guys who are are awesome business people that we all just couldn’t do without, y’all have been acting like a big old bunch of cry babies today.

          lulz.

          Honestly hough, if this is so dishonest and outrageous, ya’ll should stick up for yourselves and put Labour in their place.

          tick tock.
        • Puddleglum 10.1.1.2

          18 May 2011 at 9:19 pm

          PB is right, side show bob.

          Nash made a claim and provided evidence in support of it in the public arena.

          If someone thinks it’s flawed then let them put forward their evidence for the counter-argument. This is how rational debate and discussion operates – or should operate – in just about every area of public life beyond the pub ‘shout-them-down’ environment (and that’s being unfair to lots of arguments in pubs). 

          As PB says, if you or anyone else have a problem with the claim then provide the evidence for a counter-claim (e.g., that farmers pay their fair share of tax in all years except ‘bad’ years – or whatever). It’s not that hard to do. Is it?
        • Peter 10.1.1.3

          19 May 2011 at 12:38 pm

          No one has said that the figures are incorrect, so what are you saying?
11. MrSmith 11

    18 May 2011 at 12:47 pm

    So basically , all these overseas funds, the funds the farmers keep telling us that are saving our economy, are either Paying for almost slave labour, being written of as a business expenses or going to the banks in interest payments, the very banks that take something like 2-3 billion dollars back “overseas” every year in profit.
12. The Economic Illiteracy Support Group 12

    18 May 2011 at 12:48 pm

    There’s a very enlightening article on Teh Internets from one of the farm syndication companies who are busy selling shares in dairy (and other) farms, entitled “Returns from NZ Farming”. Here are some interesting quotes:

    Dairy farming assets comprise land and buildings, plant, stock and co-operative processing shares (when supplying Fonterra). The investment of $9 million in a typical 200Ha South Island farm is represented by 73% in land & buildings, 10% in the dairy herd, 5% in dairy and other plant, and 12% Fonterra shares.

    And they quote some returns on investment, along with margins:

    Milksolid returns to farmers show income has increased on average by 3.5% (13 cents/kg Milk solids per annum since 1983). Taking the trend for this line, plus adding returns from the sale of surplus stock, gives sustainable forecast incomes of $5.25 to $5.75/kg Milk solids. Typical operating costs (South Island) range from $3.30 to $3.80/kg Milksolids. The operating margin therefore ranges from $1.50 – $2.50 per kilogram of Milksolids.

    […]

    Average New Zealand dairy farm returns have been in excess of 12% p.a. for the past 15 years, with increased profits capitalised into the value of farmland. Forecasts for the next 5 – 10 years are for average operators to achieve:
    – Operating margins; 5-7% p.a.
    – Capital value growth; 3-5% p.a.

    What’s interesting about these numbers is that they are coming from a company specialising in syndicated farm investments, so it seems pretty likely that they are based on audited results. The takeaway message seems to be that the dairy sector is doing very nicely, thank you, so any taxation avoidance that results in a tax bill of only $1500/pa is probably due to financial engineering, not a lack of profitability.

    Of course if the farm is highly leveraged then most of the profits will be flowing out to the Australian banks as interest, which would indicate that Fonterra is a profit engine for Australia, not New Zealand.
    • vto 12.1

      18 May 2011 at 1:07 pm

      Exactly. Well put.

      Which also brings me back to a point I keep harping on about (and will in fact turn my own vote) and that is the sale of land to foreigners.

      It is essential for the health of any community on the planet that the people who live in a particular spot own that particular spot. Otherwise the community becomes a tenant community, and they are generally weak and undesireable.

      Land sale to foreigners should be stopped. If they want to own land here they need to live here. However, this does not stop foreign investment. Foreign investors are still able to invest in business (which is what they claim they are here for anyway, not the land speculation. This would expose this lie), just not the land. So using the example above of Mr Illiteracy the foreign investors investment in a $9million 200ha South Island dairy farm could reduce by 73% to about $2.5million. Lease the land and buildings. Some extra annual lease cost.

      Better deal for the foreign investors and also allows further funds to be invested in business. And better deal for the NZ communities as the land on which they live, work and play is owned by them. And better deal for the entire NZ as all property values reduce thereby meaning less of our daily toil goes into land ownership costs such as interest on loans from foreign banks.

      Who’s in?
      • Hugh 12.1.1

        18 May 2011 at 1:39 pm

        In the interests of evidence based policy could you explain what you mean by a “weak” community, and how having people own property who don’t live there “weakens” it?

        For bonus points, aren’t you basically against rental home ownership, not just foreign land ownership in general?
        • vto 12.1.1.1

          18 May 2011 at 2:09 pm

          I mean weak in that the people living there are more transient so the strong long roots of a community do not go down as well as an owned community. Weak in that they have less of an interest in the property (land and buildings) and so do not put as much effort into it, compared to an owned property in which the owner improves the living situation (compare gardens for example between the average owned home and rented home). Weak in that the bonds between people do not develop as strongly (similar to first point). On it goes.

          This applies on a small scale and imo on a nationwide scale.

          And no I am not arguing against rental housing (not sure what you mean by rental home ownership). There is always a need for rental property (housing, land, industry). My point is in some ways about absentee landlordism on an international scale. It benefits nobody. Domestic landlordism – different beast.
          • Hugh 12.1.1.1.1

            18 May 2011 at 2:48 pm

            I don’t know if I want to live in a world where people moving between communities is as rare as you seem to want it to be.

            You said “It is essential for the health of any community on the planet that the people who live in a particular spot own that particular spot”. It doesn’t seem a very large leap to go from that to the idea that it’s bad for the health of a community for people to live in houses they don’t own, or own houses they don’t live in.
            • The Economic Illiteracy Support Group 12.1.1.1.1.1

              18 May 2011 at 4:13 pm

              As Brian Gaynor has pointed out:

              The Bank of New Zealand was sold to National Australia Bank (NAB) for $1.5 billion in 1992. Since then BNZ has distributed $5.2 billion in dividends to its Australian parent and is now worth an estimated $7.2 billion based on its 2010 net earnings of $602 million and a price/earnings ratio of 12.

              Thus NAB paid $1.5 billion for BNZ and the latter has delivered total shareholder value of $12.4 billion to its Australian owners since late 1992.

              Can you please explain how this is in the best interests of New Zealanders?

              [lprent: Hugh is correct – I can’t see what in the hell that has to do with his comment. Was this random or do I have cause to feel moderator levels of concern? ]
              • Hugh …

                18 May 2011 at 5:11 pm

                Er… are you asking me this? Because it seems utterly irrelevant to what I said. I mean, I don’t actually mind replying, I just don’t want to jump the gun.
            • vto 12.1.1.1.1.2

              18 May 2011 at 5:18 pm

              No, that is not what I was saying, or implying. Of course not everyone wants to own a house, or property etc etc. And sure, movement between communities is important. But I don’t think those points of detail at the edges really apply to the general proposition I put forward.
              • Hugh …

                18 May 2011 at 5:36 pm

                Well, I think they do. You are basically saying that rootedness is an unambiguous good. I’m saying that for a lot of people rootedness is emotionally, intellectually and financially unsatisfying. The idea that people treat communities of nodes in which they invest and withdraw various amounts of interest, be it in terms of time, labour, emotional commitment or financial investment sounds far healthier for me than the idea that the more we sink into any given community the better for everybody. Your ‘transience’ is my flexibility.
                • Draco T Bastard …

                  18 May 2011 at 6:19 pm

                  You are basically saying that rootedness is an unambiguous good.

                  It is. That’s been known for decades and more and more research is coming out proving it.

                  I’m saying that for a lot of people rootedness is emotionally, intellectually and financially unsatisfying.

                  I suspect you’ll find that you lot of people makes up single digit percentage figures of the population as a whole.

                  The idea that people treat communities of nodes in which they invest and withdraw various amounts of interest, be it in terms of time, labour, emotional commitment or financial investment sounds far healthier for me…

                  Sounds psychopathic to me. You’d only be in the “community” for what it can do to enrich yourself with absolutely no thought of what it costs or brings to others.
                  • Hugh …

                    18 May 2011 at 6:28 pm

                    I don’t suppose you could link to some of that research?

                    I’m presuming you feel that the only reason people change hobbies, leave families, change towns or countries is because they are somehow pressured to do so?

                    People change throughout their lives. A community that might be the right community to raise a child in might not be the right community to retire in. A community that might be a good place to have an active social life in might not be a good community to focus on your career in. Some people may want to live in one place for business purposes and another for relaxation, so will divide their time. Some people might move to an area to pursue a hobby, but get bored with that hobby and then leave. Some people might want to study in somewhere where they didn’t grow up. OK, maybe not everybody will want to do these things, or find the location where they live provides an obstacle to doing them, but do any of these really strike you as “psychopathic”?
                    • Draco T Bastard …

                      18 May 2011 at 7:17 pm

                      I don’t suppose you could link to some of that research?

                      Apparently not ATM, all my googlefu brings up ATM is ways to make money from buying and selling houses.

                      I’m presuming you feel that the only reason people change hobbies, leave families, change towns or countries is because they are somehow pressured to do so?

                      Nope. If you were in a healthy community you’d be more inclined to stay as all you needs would be met. If you felt like moving it would be because those needs are not met. Nothing wrong with that per se but moving all the time? Yeah, there’s something wrong there.
                    • vto …

                      18 May 2011 at 9:14 pm

                      Hugh, I think you are misconstruing what I said. My proposition has no effect on the ability of people to be able to move around. If you read and think carefully about it.

                      What I am talking about that is not good is basically various forms of absentee landlordism on a large scale, which undermines a community’s wellbeing. You are welcome to go move around all you like. It is the foreign ownership / absentee landlordism aspect that is damaging not the few who ramble around.

                      I think your tangentialism has seen you come unstuck.

                      edit: and I may be presumptious in this but I suspect a young age and lack of experience may be the cause of your ideas…
                    • Puddleglum …

                      18 May 2011 at 9:35 pm

                      Hi Hugh, this one is just for you.

                      The literature on well-being is very clear. ‘Transience’ – or what you call flexibility – results in more but weaker friendship bonds than lower residential mobility. These ‘lower quality’ friendships have an adverse effect on well-being. This is a general finding in the literature – one of the best predictors of high subjective well-being is deep, high quality connections with others.

                      Interestingly, in high residential mobility societies, the reason for valuing having more friends seems to be that, for ‘minor crises’ (e.g., looking for a job), having lots of ‘contacts’ helps find solutions. Those contacts can ‘help’ because the cost to them is very low.

                      However, for more significant crises (e.g., loss of someone, long-term illness), that large network of contacts doesn’t help. What is needed is a few high-quality friendships. That is why in low residential mobility societies people tend to be very cautious about calling someone a friend because that would mean having a considerable network of potentially serious obligations – i.e., the cost of giving aid would be very high.

                      In one study, college students who had high rates of residential mobility when young had significantly more facebook friends than those college students who had lower rates of residential mobility when young.
    • Peter 12.2

      18 May 2011 at 1:27 pm

      ….. and the more assets we sell off the more we are likely to become a profit engine for overseas interests
    • Peter 12.3

      18 May 2011 at 4:48 pm

      There is also a huge money go round when people are employed, yes including Civil Servants. A huge portion of the economy depends upon Government spending ………..Well done, this puts something like the truth out there. Capital gains, plough the money back in and minimise tax.
13. south paw 13

    18 May 2011 at 1:04 pm

    I think its probably the huge agricultural sector debt.

    Bernard Hickey’s interest.co.nz site has some good articles on the sector.

    http://www.interest.co.nz/rural-news/52183/47-billion-rural-hangover

    “in inflation-adjusted terms the payout has mostly fallen since the 1970s, with only a very recent rise. And in the meantime, like their city cousins, many farmers have committed themselves to huge amounts of debt. Between 1990 and 2000, the price of rural land doubled. It doubled again between 2000 and 2005. And again between 2005 and 2008.

    Prices were largely fuelled by a flood of cash from the banks. According to data collated by the Reserve Bank, over the past seven years alone the amount banks have dished out to the agricultural sector has more than doubled from $19 billion to $47 billion. Two-thirds has gone to dairy farmers, or to people wanting to convert land to dairying. The dam burst in early 2008, and since then land prices have plummeted. In some parts of the country, values have halved and many farmers now owe more to their banks than their farms are worth – a situation known as negative equity.”
14. mickysavage 14

    18 May 2011 at 1:06 pm

    David Cunliffe talked about tax issues in his well received speech given on Monday.
     
    In particular he said:
     

    That includes, frankly, paying a fair share of the tax burden rather than – for some – structuring businesses that do not show income, sheltering income in trusts, or pretending not to trade property after buying and selling a dozen rentals.  Those folks have fair warning that we are all in this together and that they too will pay their fair share.
     

    Amen to that!
     
    • side show bob 14.1

      18 May 2011 at 7:34 pm

      Mickey your lot had nine years to sort this, perhaps you should ask some Labour MP’s to do the right thing and dump their trusts. Left or right Mickey, they all do. I’m afraid Davey doesn’t have the moral high ground on this. Please let me know when he does I might be interested.
      • mickysavage 14.1.1

        18 May 2011 at 9:44 pm

        Don’t hold back Side Show.

        Maybe it was the first Labour Government who is at fault, surely they could have persuaded current and future generations to not minimise the amount of tax they pay?

        Trusts are not the problem.  The rich not paying any tax is the problem.

        So a couple of Labour MPs have trusts.  These are the same MPs who are advocating for tax changes so that they pay more in tax.

        Good attempted diversion.
15. Samuel Hill 15

    18 May 2011 at 1:06 pm

    Land Reform.
16. Samuel Hill 16

    18 May 2011 at 1:14 pm

    The English and Goodfellow families have nothing to do with farming at all do they?
17. Policy Parrot 17

    18 May 2011 at 1:34 pm

    The farm vehicle is typically structured so that cashflow is king. This is a habit that pre-dates the dairy boom, back when many more farmers were into sheep/beef cattle and receipts were much lower.

    This practice assists in the repayment of farm mortgages, and tax benefits more a bonus for those heavily indebted. However, undoubtedly, there are some farmers, just like any other people, who certainly play their cards close to their chest on their income.

    But many don’t realise that they may risk forfeiture if audited by Inland Revenue, and have been shown to consistently understate their income/overstate their expenses.

    Stuart Nash has raised an interesting point – but what should/can be done about it, other than perhaps asking farmers to pay a land tax?
    • Peter 17.1

      18 May 2011 at 3:33 pm

      Even if nothing is done about it start giving credit to those who pay tax including the Civi lServants who are the NACT scapegoat for all ills.
18. Bored 18

    18 May 2011 at 2:29 pm

    Farmers are not the only people to fleece the taxman (and by dint of that their fellow citizens). I know of two instances of very rich individuals who dont pay tax at all, whose children have recieved full university fees and hardship assistance etc. This is because they can structure their tax affairs in a way PAYE payers cant.

    I do believe that in reality the IRD has the ability to ‘deam” income should they wish to i.e the IRD might say that somebody who has a company / trust that they structure their tax affairs through, and which they work for “gratis” thereby not paying PAYE have done X amount of taxable work. It should not be too difficult for the IRD to really make an example of a few of these rustic bludgers.
    • Lanthanide 18.1

      18 May 2011 at 2:34 pm

      The IRD are on the path to doing just that right now. They won a court case against two Christchurch doctors that paid themselves salaries of ~$60k to avoid the top tax rate while funnelling the rest of their income through their businesses and family trusts. The doctors have appealed, but it seems likely that ultimately the IRD is going to come out on top. And when that happens, they’re going to start coming after everyone else.
    • Draco T Bastard 18.2

      18 May 2011 at 6:31 pm

      Well, it wouldn’t be if the government didn’t go round cutting staff while need for those staff increased.
    • KJT 18.3

      18 May 2011 at 9:40 pm

      Apparently, at least half of our wealthiest individuals do not pay tax.
      While we should expose the hypocrisy of farmers, they are not the only ones.
19. MrSmith 19

    18 May 2011 at 2:52 pm

    “they’re going to start coming after everyone else.”

    No there won’t, they may nail a few trophy cases sure, but if they are coming after anyone it will be middle and lower income earners, have you forgotten who is running the show at the moment.
20. Pascal's bookie 20

    18 May 2011 at 3:58 pm

    In other news:

    http://www.radionz.co.nz/news/rural/75429/sudden-rise-in-effluent-breaches-on-southland-farms

    More elitist leftist media picking on the farmers.
    • pepeketua 20.1

      18 May 2011 at 4:50 pm

      yeah, that horrible leftist media monopoly… like the NZ Herald for example, and don’t get me started on Garner and Espiner.

      it’s ABOUT TIME the agribusiness industry were taken to task on their bad behaviour (not saying everyone does it, but the ones that do should be held responsible – and that appears to be HALF of Southland’s dairy farmers). I’m from a farming family, but the corporate agribusiness (see how many of these ‘farmers’ actually live in cities and wear suits) sector has traded on NZ’s good keen farm man image for too long.

      We have a strong cultural affinity to our farming heritage, too right, but that does not give people the right to destroy our rivers and lakes, rort the system and claim ‘stop picking on me’.

      i’ve had a gutsful of it – and it appears i’m not the only one.
21. joe bloggs 21

    18 May 2011 at 4:31 pm

    MAF data shows that in 2008/09 the average farm had:

    -$750,000 income,
    -$529,000 expenses,
    -$235,000 interest and depreciation
    resulting in a loss of $6,300

    Average tax bill was $18,600

    Profit after tax was -$25k

    What a load of bullocks and shame on the repeaters in the media for printing Nash’s duplicitous words without checking the facts.

    The ole politics of envy, greed, and selective use of data that the left excell in. Pah!
    • Pascal's bookie 21.1

      18 May 2011 at 4:38 pm

      Is that the average dairy farm?

      can’t tell, coz you didn’t link.
    • Herodotus 21.2

      18 May 2011 at 4:48 pm

      Farmers onlycare about profit in relation to tax commitments. What is far more important is cash flow, so then a diary business after having record returns is a breakeven. Does not sound like a great business venture. Perhaps if farms were being sold for a fair economic value then interest cost would diminish and there woul dbe a fair profit, tax and a sound cash flow. But diary like many business is based on an economic model where all the real value add is in the property and realised when the business is sold. What would happen to many diary farms if milk fat prices returned to their traditional levels. Yet another industry requiring special bailing out measures and still the environmential damage that will also require govt intervention to clean.
    • logie97 21.3

      18 May 2011 at 7:43 pm

      joe bloggs
      Care to itemise some of those expenses? Annual subscription for the New Zealand Herald? Farm vehicles used for private and off farm leisure… (running on pink diesel)…
    • KJT 21.4

      18 May 2011 at 9:42 pm

      And how much of those expenses were actually personal costs, which PAYE tax payers have to pay out of after tax income?
      • infused 21.4.1

        18 May 2011 at 10:57 pm

        You can’t claim personal costs, newb. If you ever get audited, you will get raped by IRD.
        • terryg 21.4.1.1

          19 May 2011 at 1:11 am

          You can claim personal costs, infused. If you ever get audited, you’ll get stomped by the IRD.
          FIFY infused, and did so without explicitly exacerbating the kyriarchy whilst simultaneously offending more than half the human race.
           
          • KJT 21.4.1.1.1

            19 May 2011 at 3:49 am

            Infused is confused. Of course they claim personal costs. Accountants know all sorts of things to call them to get past the IRD.

            If a farmer pays tax his accountant is no good.

            Just had a look on the Federated Farmers website.

            No acknowledgement that without the shifting of farming incomes into capital gains and the dodgy accounting the rest of us would have to pay less tax.

            Not to mention the frequent bailouts of farmers after wholly predictable natural events, the subsidy charged to us with excessive food prices and the effect on national income of excessive borrowing to prop up farmers eventual capital gains and the dairy bubble.

            Though to be fair, there are other businesses and individuals who manage to avoid paying their way also.

            It was very frustrating, when I owned my business, to compete with other people in the same business who did cashies.
            I remember one complaining bitterly, after one year he declared his real income to get a mortgage, that he was having to pay for his kids living expenses at Polytech.

            Many clients accepted my quote for a cash price, not realising I still charged the same because I was declaring my income. But, it gave them the illusion they were getting a cheaper rate.

            Of course, I also lost a lot of work because I was undercut by the cash cowboys.
            • Herodotus 21.4.1.1.1.1

              19 May 2011 at 12:40 pm

              Very few people understand the real cost to the country regarding cashies. Most think that they are diverting the GST savings from the govt to savings to themselves. But little do they realise that the country also suffers from the 30% tax that the cash deal would result in. As if any materials are consumed, these costs are written off within the business. Resulting in the entire income 86.96% going straight to the proprietor which if declared should also contribute an additional 26% tax being paid on the cashie deal.
              So if anyone wants to negioate a cashie they should expect somewhere between 14-40% discount and NOT just the GST component, with the discount (in conscience allows) to be more in the line of 1/3 off. The person being paid gets literally off with murder !!!
            • terryg 21.4.1.1.1.2

              19 May 2011 at 2:11 pm

              KJT, you are dead right – there are tricks aplenty, and anyone who can afford to drop a couple of grand a year on an accountant gets to exploit (some or all of) them.

              Disclosure: I am self-employed, work from home and pay an accountant, therefore get these benefits. The accountant thinks I’m daft for not pulling any sneaky tricks like LAQCs (Loss Attributing Qualifying Companies) etc. – not from moral reservations (they are there), but because life is complicated enough already (and I dont understand any of it either).

              http://www.laqc.co.nz/ for a foray into how the other half lives. strong stomach required
              “In plain English this means they allow you to receive more money by paying less tax”

              So I get to write off a big chunk of the electricity bill (work consumes inordinate amounts of electricity, operating all manner of test gear and things like 30 x 100W incandescent lamps running continuously for weeks at a time), telecommunications, rates/mortgage, depreciation etc.

              All absolutely legitimate and auditably so – the IRD and the Justice Dept. are two organisations not to mess with, they can literally kick your door in, take your stuff and put you in prison. Besides, I am able do this job in large part because the state poured tons of money into my environment, upbringing and education, so not paying my share goes well beyond churlishness…

              However over the years I have been “advised” several times to start up businesses running from home specifically to allow for these sorts of deductions, rather than to make a profit (or, say, do something useful and gainfully employ people) – its actually desirable to make a loss, for as long as possible. And I’ve met plenty of people who do precisely that. Weasels.

              And thats nothing compared to what big business gets away with – when spending hundreds of thousands on accountants and lawyers, the possibilities for tax avoidance are limitless.

              Straight wage/salary workers? cough up, shut up and obey. The system is so stacked against ordinary workers its outrageous. And many salaried jobs are little more than theft of labour by employers – contracts that require minimum amounts of unpaid overtime are commonplace, as are clauses that require attendance whenever the employer sees fit (again sans remuneration).

              Yet these are the people who pay the bulk of taxes. Hmm.

              ..frequent bailouts of farmers.. After the last massive Manawatu River flood, one “agricultural beneficiary” was whining on TV about the need for emergency subsidies from the government to cover the cost of damage to his farm. When asked by the astute reporter why he farmed in a flood plain, he then went on about how the rich soil (enriched by flood deposits) was much more productive, thereby earning a greater return. Hello cognitive dissonance.

              if anyone is deserving of bene-bashing its these greedy polluters. But no, all they ever get is subsidies by the billions.
22. seeker 22

    18 May 2011 at 4:43 pm

    Does not a conflict of interest exist where Conor English is CEO of Federated Farmers and Bill English is the National Government’s Finance Minister ? Have been meaning to ask about this for sometime; now seems appropriate.

    N.B. Am still chuckling over a comment by gary j.on Red Alert a few days ago:

    “National: Once Were Farmers….”

    Hope you don’t mind me quoting you Gary 🙂
23. Carol 23

    18 May 2011 at 5:17 pm

    I heard Key say on RNZ news, that Labour is living in the past and doesn’t have policies for the situation today…? And NActs tired old 1990s policies & philosophy os soooo today? It seems to me, Key just takes all the criticisms of him & his party and say the same about the opposition: eg Labour just makes shit up, Labour is living in the past, Labour just focuses on trivialities etc, etc…. Key doesn’t even have critical responses of his own. Maybe he’s a parrot?
    • Pascal's bookie 23.1

      18 May 2011 at 5:26 pm

      @Carol,

      Yeah. He’s a bell-end.

      Bit rich saying labour doesn’t have any ideas when his bloody budget looks to be a big old pile of things they want to do if they win the leckshun because we can’t actually do anything this year because the only things we can think of are things we promised not to do and by the way Don Brash is an extremist for saying he wants to do those things and I’m not like him but I won’t rule him out and fuck I’m bored might move to the US soon and sit on a beach are there any egotistical maniacs waiting in the wings that might want my job?

      (looks like you were replying to a comment I made, and then deleted and put in OM, sorry about that should have refreshed first)
    • Jim Nald 23.2

      18 May 2011 at 9:57 pm

      If so, he is the 50-million dollar parrot.
24. ianmac 24

    18 May 2011 at 5:20 pm

    How big is the dairy debt given that the private debt is blamed for NZ debt? On the panel I am sure that it was said that their debt is $80 billion. If I heard that right then isn’t that significant?
25. Samuel Hill 25

    18 May 2011 at 5:36 pm

    http://www.dairynz.co.nz/dairynz_news.aspx?articleId=2145870964

    ‎”Our figures show about 10% of farmers are significantly at risk in terms of cash flow, but the majority are managing despite significant debt levels. Farmers would be struggling if it wasn’t for the increase in international demand of New Zealand dairy products.”

    Those farmers didn’t really believe all us kiwis would purchase that milk did they?

    He is basically saying that for NZ to get out of debt we will have top increase exports. Correct. Now if only there was investment in other sectors to increase these exports! Having land is always going to be the Dairy Farmers advantage. We need to diversify. We are still living in the 1960s. The Dairy sector has woken up to this, but our government refuses to invest in other sectors.

    Nobody is investing in NZ. Farmers have taken the debts of upgrading into their own hands by using their land as collateral. How can other Kiwis do this? We need the government to create a plan that will attract foreign investment. Public-private partnerships may be the way forward.
    • Draco T Bastard 25.1

      18 May 2011 at 6:50 pm

      We need the government to create a plan that will attract foreign investment.

      No we don’t. Being owned by foreigners is bad for the country.

      Public-private partnerships may be the way forward.

      No they aren’t as the failures of PPPs around the world has shown.
      • MrSmith 25.1.1

        18 May 2011 at 7:12 pm

        Got me by 6 minutes Draco, if I had my Ultra fast broadband that I was promised last election I might just about have got you there. Every time I borrow a dollar from my bank I am supporting an overseas investment .
    • MrSmith 25.2

      18 May 2011 at 6:56 pm

      “We need the government to create a plan that will attract foreign investment. Public-private partnerships may be the way forward.”

      Samuel.

      Foreign investment has us as tenants in our own country already, are these foreign investors just going to arrive and start giving away money?

      No, they are going to want a return on there investments and if they don’t get that they will be taking your house or farm or whatever else that they will require as collateral for there investments.
      • Samuel Hill 25.2.1

        19 May 2011 at 12:14 am

        IMF here we come then.
        • Colonial Viper 25.2.1.1

          19 May 2011 at 12:20 am

          The IMF doesnt bail countries out of private debt, doh.

          That’s why puppet western governments had to bail out hundreds of billions of banker’s private debts first and take it onboard as public debt.

          THEN the IMF can step in, just as planned 🙂
26. Robert Atack 26

    18 May 2011 at 8:31 pm

    I think the dairy industry is set up like the Nigerian oil industry, or most ‘undeveloped’ countries with resources, they strip mine the place leaving tailing ponds and highly polluted land and rivers, taking all profits away, leaving the population in dyer financial and health condition. Milk and cheese is like oil in a water restricted world, New Zealand is being sucked dry – both water* and minerals, the country is going to look like the Niger Delta, what with proposed mining in Golden Bay and deep sea drilling off our coast and anything Brownlee can find to sell.
    But that is the new deal we have to destroy the environment if we are to support 7 billion people.
    Just think how a transaction tax would work so well for keeping a farmer in line, every time he made a payment on his Beamer he would pay some tax. No exceptions every time a $ went through his account it would be pinged, it is meant to give the govt 80 billion per year ?
    *ie the Manawatu River
27. vto 27

    18 May 2011 at 9:29 pm

    Well I say well done on this effort by Nash. It has clearly exposed a sector that contributes very little to the costs of the country. And it has clearly stirred things up with both English coming out on it, and Fed Farmers coming out with two things today (one on southland dairy farmers appalling and worsening pollution and another to try to counter Nash’s piece).

    Take a bow. And keep at it. It is clearly hurting them – as it should.

    And one further item just found – all of industry in NZ paid $9.7 billion in tax, while all PAYE paid $23 billion.

    The rort is exposed. The wage and salary earner gets shafted.

    Hasta manana..
    • Peter 27.1

      19 May 2011 at 12:59 pm

      If you can find the GST total that would be good because it to is a consumer tax not a business tax. PAYE earners make up the vast majority of consumers.
28. Peter 28

    19 May 2011 at 7:55 am

    We are told that farmers are the back bone of the country (TV3 this morning) because they bring in overseas funds from exports. Absolutely correct, however we are also told the make little profit or losses because of their large debt (TV3 this morning) which mean large interest payments to banks. So the export money received is largely offset by interest payments made to foreign lenders, leaving very little for to contribute to the future prosperity of the country.

    Effectively their value added to the economy must be minimal. Lost of money go-round, pollution, pathetic returns on investment, a pathetically small contribution to the finances of the country.

    You can guarantee that they will always make sure their taxable profit is next to nothing regardless of their cash profit. Nice lifestyle, no worries, nice gains. Sorry but I need someone to explain exactly how these guys are the backbone of the country?

    All of this points to the recommended capital gains tax and the lauding by NACT of the mugs like me paying PAYE.
29. vto 29

    19 May 2011 at 8:32 am

    Correct me if I’m wrong…

    Total private debt in NZ approx. $80 billion.

    Of that $46 billion (58%) sits with dairy farmers.

    Pretty irresponsible, as they say..
    • Peter 29.1

      19 May 2011 at 11:20 am

      So 58% of foreign debt has been incurred by 3% or so of the population. If that’s correct NACT now know who to target to reduce debt. These unprofitable dairy farmers must be of real concern to them. It is laughable that the taxes collected from PAYE employees are used to clean up the environmental mess they continue to create.

      The backbone of the country, they should get over themselves!
      • Colonial Viper 29.1.1

        19 May 2011 at 11:25 am

        Are those numbers serious?

        That’s around $2M-$3M in debt per dairy farmer.

        That cannot be right. Can it?
        • Armchair Critic 29.1.1.1

          19 May 2011 at 11:36 am

          Sure it can. I’d have guessed about $4-5m each, so 2-3m is better than I expected.
          There’s a real problem with the whole set-up of the system that allows this to happen, huh?
        • vto 29.1.1.2

          19 May 2011 at 11:59 am

          It is right. Been following the sector for a while. They are just shit lucky that commodity prices rebounded so soon after the GFC. I know some dairy farmers who said to me that they were given twelve months by their bank or the plug was to be pulled. Few months later and along came the rebound. Bloody lucky.

          It is like the dairy sector has steadily been exposed on several fronts (environmental, profitability, tax) and its been found that the emperor has no clothes.

          Tell you one more thing… commodity prices are going to collapse back to their historic averages again. And soon.
          • Peter 29.1.1.2.1

            19 May 2011 at 12:25 pm

            What is NACTS plan to improve the decision making ability of our self-proclaimed private sector. Can we trust these people and their financiers with the assets they control? Is it time to return the land to the original settlers?
30. Dave Hansford 30

    19 May 2011 at 11:23 am

    It’s worse than that; the taxpayer-funded subsidy of $400m towards irrigation projects will be bankrolled from the sale of our SOEs. That represents (yet another) massive appropriation of public wealth by private interests, brokered by the National Government.

    What’s more, you and I will foot the bill for the extra greenhouse gases this proposal will generate until 2015, while the agribusinesses reap the profits, thanks to the get out of jail free card given them by this Government.

    Let nobody convince you that New Zealand farmers are no longer subsidised…
    • Peter 30.1

      19 May 2011 at 11:28 am

      Please no more, I am far too shaken this morning trying to comes to terms with this rout, dependent on state support of the so called private sector.

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