Ross Meurant: Economic Formulas for Failure

Eight Hundred jobs to go – in Timaru – meat works.(1)

Two hundred jobs to go – Ruapehu – timber mills.(2)

Shop closures and job losses in Auckland CBD.(3)(4)

Hundreds of jobs to be axed in New Zealand media restructure.(5)

The collateral impacts of these job losses, runs deep affecting thousands of New Zealanders.

Fear not.  The Official Cash Rate tinkering has Interest rates dropping.

Yeah, right mate. 

With Australian banks being the owners of New Zealand banks, holding firm on their higher OCR, AND New Zealand being as it always has been and always will be, a “follower” and never a “leader”, when it comes to setting economic trends, the questions emerging from this mist must be:

For How Long Mate – before OCR rises again?

Is this the medicine to fix the massive decline in New Zealand’s economy?

As one glances at the job losses and the hidden debt being uncovered by the current coalition government, the probability of a further deterioration, must be a high probability.  An economic PhD with whom I recently conversed, suggested: ‘Two more years decline at least.’

A quick glance back in time to try and find some explanations for how we got to where we are:

1987 crash precipitated by Rogernomics aka privatisation (which I support).
1994 things begin to get better but then crashes again in -
1998 as Jenny Shipley takes the helm. Later things got a little better but                 
2008 international crash put an end to that.
2008 also introduced John Key.  If John Key’s support for Chinese immigration, was a cunning plan to introduce “development capital” to New Zealand, it failed.  Overnight, house and land prices elevated as the “wealthy immigrants” speculated buying land/houses and selling at an inflated rate – within a week. 
2017 Jacinda Ardern – Yeah Right – well – this takes us through to -              
2023 and her legacy currently exposed as a massive debt blowout and              
2024 an environment of increasing job losses and crippling cost of living.

Each of these events has seen the loss of trade skilled and educated young Kiwis off shore mainly to Australia never to return.

Australia and China are the key players in New Zealand’s survival.

Re Aussie:

According to Australian freelance CEO Matt Barrie, ‘Australia should be the richest country in the world’ but instead is facing the ‘mother of all cost-of-living crises. (6) 

Barrie says the outlook for Aussie is not good – as a result of self-imposed damage rather than blaming China.  He claims the country has an energy crisis ‘because we stupidly are going down the path to renewables.’

‘We can’t burn coal, but every single thing we’re digging out of the ground is being burned by China, or is being burned by Japan,’ he claims and that it’s delusional for Australia to think that by not burning coal or gases in Australia, they are saving the planet.

Meanwhile, Australia is one of the world’s top three exporters of liquefied natural gas (LNG) alongside the US and Qatar, but now faces the ‘bizarre’ prospect of being forced to import gas from overseas in the face of skyrocketing energy bills.

Barrie says the Sydney median house price of $1.8 million, is mathematically impossible for the average person to buy the average house, and that, ‘the root cause of is the cost of land, and the root cause of that is mass immigration’ (more than one million migrants entered Australia since 2022, with India recently overtaking China as the top source).

Re China:

If New Zealand goes too far supporting America trying to stop China asserting itself across the South China Sea and retaking Formosa aka Taiwan, New Zealand risks being shut out by its biggest export/import trading partner (in tourism Aussies still prevail).

Universities in NZ have already felt the impact of an alleged stalled China economy – a penalty it seems emerging from a past policy of the one child family, failure to provide a worker base to support the overwhelming geriatric population – now about to be remedied by paying families to produce more children. (7)

Forcing these students to engage in compulsory Māori study is another disincentive to study here.  Like, what use is a language spoken by 250K people at most in this antipodean outpost viz learning e.g. Spanish – spoken by multi millions across the globe?

Re New Zealand:

Primary Industries have been the cornerstone of New Zealand’s economy – since Queen Victoria allowed Māori to sign a treaty which put a stop to their internecine warfare. 

As former MP for a farming electorate & Primary Industries Select Committee Chair and Under-Secretary Agriculture & Forestry and Cabinet Committee Commerce, Industry & Environment, (and later Primary Industries including Fisheries adviser to Rt Hon Winston Peters) I retain a reasonable understanding of this sector of the economy.

Dairy industry exports currently appear to have recovered from a period of management which most now prefer to forget. NB Ignore history at one’s peril.

Meat exports however, as signalled by the Timaru works closure, is on a slide to extinction.  Conundrum One: Throughput at meat works is critical i.e. number of sheep/cattle slaughtered per day.  Price paid for product at the farmers gate, impacts on supply. Costs faced by farmers affects their selling price.  Conundrum Two:  Conversion of hill country (and increasingly rolling country) to tree planting to save the planet, contributes to reduced numbers of stock.

Wool?   Collaterally damaged.

Fish industry?  Retention or removal of surveillance cameras on commercial vessels and retaining or lifting maritime reserves (8) - clouded as are these historical issues with concerns about political donations (9), has a massive impact on catch.

These outcomes in turn, greatly impact on the Sustainable Fisheries Policy, which New Zealand parades as its right to be, Champion of the Seas.

Forestry.

This is the big one i.e. indicator of how smart were policies of Prime Minister Rob Muldoon and East Coast MP Duncan McIntrye, subsiding forestry?

Having had close association with the biggest Forest owners – Ernslaw & Hikurangi – both Malaysian owned, I am cognisant of issues which appear to me to have contributed to: (a) withdrawal from milling timbers in New Zealand, and (b) resorting to volume of log exports to survive.

The Ruapehu result (closure) is not the first and won’t be the last – for the very same reasons which have progressively altered the face of the forestry industry in New Zealand.

Putting on hold, pine trees due for harvest now – 30 years old is prime yield time - its ok to delay harvest for up to another 20 years – but by that stage, the trees are turning on each other – suffocating their mates and losing their own yield value.

My conclusions?

Forestry is a dead man walking.

Meat trade is vulnerable.

Dairy farming is a thing of the past – farmers kids abandoning the hard-earned family properties, leaving old dad to manage with immigrant workers who don’t treat the farm as an owner did.

Fishing.  Now that’s a fishy business, in my view.

Ross Meurant BA MPP Former Police Inspector. Former Member of Parliament. Former Diplomatic Representative. Current partner www.gena.co.nz

(1) https://www.1news.co.nz/2024/09/27/hundreds-of-jobs-to-go-under-proposal-to-close-timaru-meatworks/
(2) https://www.stuff.co.nz/politics/350410128/workers-heartbroken-closure-ruapehu-mills-puts-over-200-people-out-job
(3) https://www.stuff.co.nz/business/350343088/closing-time-ten-retail-and-hospitality-places-auckland-has-lost-year
(4) https://www.rnz.co.nz/news/business/512628/peter-gordon-s-auckland-restaurant-homeland-to-close
(5) https://www.wsws.org/en/articles/2024/03/14/myhs-m14.html
(6) https://www.news.com.au/finance/economy/australian-economy/tech-ceo-says-australia-should-be-the-richest-country-in-the-world-in-scathing-assessment-of-policy-failures/news-story/49d48d69c4eae9b4a44fc3af91a61326
(7) https://www.globaltimes.cn/page/202405/1312184.shtml#:~:text=Several%20regions%20across%20China%20have,associated%20with%20raising%20a%20family.
(8) https://www.waikatotimes.co.nz/environment/350447573/campaigners-slam-unconscionable-last-minute-permit-commercial-fishing-hauraki
(9) https://www.stuff.co.nz/national/politics/119832405/fishing-influence-trawls-deep-into-nz-firsts-past