Saturday, September 14, 2019

Henry Armstrong: So Farmers and Businesses “Have Nothing To Fear” According to Ardern?

When the debate on a Capital Gains Tax was in full swing, Prime Minister Jacinda Ardern was widely quoted as assuring farmers and small business owners that if a CGT were to be introduced, they had nothing to fear.

The productive sector and indeed most New Zealanders, quickly saw through this disingenuous claim and made their views known. The Ardern-led government quickly dropped that proposal-at least for now.

It seems the Ardern-led government learned nothing in the process.

New Zealand must export goods and services to exist financially, yet it seems this government is hell-bent on dumping on those very businesses which produce our wealth- which is then, via taxation, redistributed to fund such basics as health, education, welfare and housing. They also seem to have it in for our commercial banking sector too.

The creation of wealth should not be confused with the creation of money and the amount of money in circulation at any given point. On the latter point, I, like many other non-economists, thought that the Reserve Bank oversaw and controlled the money supply, using interest rates and other regulatory mechanisms to control our internal economic activity. Not so, according to long-time prominent Labour party activist and retired academic Bryan Gould, in a recent article entitled “Where Money Comes From. He claims:

“It is the commercial banks that are responsible for creating virtually all the money in circulation in our economy. And the amazing aspect of this is that they create the money literally out of nothing”.

Silly me! And I thought Adrian Orr, RBNZ governor, was THE man with his proposals to print more money (quantitative easing he called it); biffing free money out of helicopters; and taxing retiree’s savings in the banks? Obviously, Labour activists along with Mr Orr, have it in for our banks.

So, where does Ardern and co believe New Zealand’s wealth (as opposed to money creation), is going to come from?

Offshore mineral and gas exploration? Nope-that has already been canned.

Increased tourism? Nope- this government has already declared its opposition to “freedom” campers and plans to introduce a tourism surcharge on all tourists who come here. 

Already, international travelers are being warned off coming here due to a disastrous measles epidemic, caused by the failure to ensure all children receive vaccinations as a matter of course. Who wants to come here, only to be contaminated with third world diseases almost non-existent elsewhere?

International student numbers coming here to study are noticeably in decline. Yet this sector used to be a major contributor to our off-shore earnings, let alone the goodwill generated in the process.

Though it will be strongly denied, many students of Asian origin experience overt racism in New Zealand as anecdotal and research evidence suggests.

The productive sector then?

Our exporters contribute a significant majority of NZ’s wealth. Farmers, wine companies; food ingredient exporters, and so on. Yet the Ardern-led government is introducing a whole raft of regulations and bans which will undoubtedly impact heavily on the agricultural sector, with additional resultant negative outcomes for our thriving agribusiness industries such as rural merchandising, finance, machinery, fertilizers and so on-with downstream impacts on employment. No more dairy conversions, no more irrigation schemes; more stringent emissions targets; conversion of good quality land into forestry(pine trees); the list is growing daily. Oh, and also no more hydroelectric power schemes. Must have missed that one! I thought the Greens favoured such energy solutions?

But overshadowing all of this negativism towards the farmer, is the question of water. The Ardern-led government will almost certainly introduce a raft of further restrictions on access to and ownership of fresh water. Under the guise of cleaning up our freshwater systems the Ardern-led government favours co-governance of our fresh water sources and I suspect, will cave in to Maori demands for total ownership. This could mean New Zealanders have to buy their fresh water from co-governed organizations including royalties being paid to a minority ethnic group. My advice is firstly, that all farmers invest in freshwater storage facilities renewable if feasible from rainwater. Secondly, all New Zealand households should invest in a large water tank fed from our roofs. Nobody surely could tax us from this source? Mind you, they already tax us on its disposal through our rates.

So, what can small and medium enterprises expect from all of this negativism? News reports claim that business confidence is at an alarmingly low point with fewer jobs and reduced investment. Who can blame them in such an environment as we are experiencing? We see no incentives to encourage small firms to grow and expand. On the contrary, new regulations around employment seem punitive.

As we head for election year, there will need to be a complete reversal of this negativism towards our productive sectors if business and farming confidence is to be improved. Unfortunately, an aggregation of minority political interest may again form a majority under our MMP system, with a consequent disastrous and negative impact on our economic well being.

If this reducing and negative future for New Zealand is what New Zealanders wish, so be it. But I can assure readers that many innovative firms are actively pursuing investment opportunities offshore; that our universities are experiencing a downturn in international student enrolments; that business confidence is plummeting; and that tourism is under threat from an array of issues including overt racism and third world health matters such as measles. Coupled with all of this are concerns that our main export strengths of dairying and food manufacturing are to face significant restrictions on the home front in the near future.

What a dreadful legacy this Ardern-led government will leave us as we head into an election year? And our productive sector has nothing to fear? Bollocks!

Henry Armstrong is retired, follows politics, and writes.

1 comment:

Allan said...

Chin-up Henry. All is not lost. When we are ALL forced to accept a government hand out to survive, Jacindas job will be done. Oh darn, I forgot about the amount we will have to pay the descendants of Maori for the water we all need to survive. Probably be cheaper to import it in plastic bottles from China. The stuff they, the Chinese, want to suck out of Canterbury. But that might be considered racism in to-days society. Seriously though, surely being forced to live in cities living on a benefit with all of our country-side covered in pine trees, [the benefits being paid by carbon credit trading] has got to be better than doing an honest days work, or having the stress & responsibility of running a business that provides employment in the traditional way.
No, I didn't forget about food. We signed the TPP with S.American countries, so food can come from there.