Government books need to be brought under control

Federated Farmers has made it clear in its submission to the Government’s Budget Policy Statement (BPS) that its spending needs to be affordable, efficient and effective to boost New Zealand’s economic resilience.

“For years Federated Farmers has submitted to the Budget Policy Statement warning of an unbalanced economy and urging for more restraint in government spending,” says Phil York, Federated Farmers economics spokesperson.

“The Government’s fiscal policy has significant implications for the primary sector, as well as the economy as a whole. We need government policies across the spectrum to be working together to promote competitiveness and productivity.

“For several years our economy has been unbalanced, driven by rapid growth in government spending, debt funding and a housing boom which has made people feel richer than they actually are.

“To get this fixed we need to get government spending down as a proportion of the economy. Federated Farmers believes it should be 30 percent of GDP or lower. This will cut government debt, take pressure off the exchange rate and push for a more aggressive export-led recovery.

“We are happy however, to hear the Government announce this week that it is considering cutting public sector spending. This is progress in the right direction, but it is extremely frustrating that it has taken so long for the penny to drop.

“While these noises are a good start, we also don’t need any expensive election year lolly scrambles which would cancel out any spending cuts. All government spending should be continually reviewed to ensure that it is affordable, efficient and focused.

“Federated Farmers position is strongly supported by farmers, with our latest Farm Confidence Survey showing that farmers want the government’s highest priority to be reducing spending and debt.

“The other concern we have is compliance costs and regulation. The introduction of the Emissions Trading Scheme, messy Resource Management Act consents, ACC levies and the National Animal Identification and Tracing (NAIT) are examples where farmers’ increased input costs erase any gains they make at the gate.

“Federated Farmers has always called on all political parties to commit to keeping spending and red tape down and let the tradable sector take over as the nation’s growth engine.


“If the government really must spend any savings, it would be best used to enhance New Zealand’s economic standing and competitiveness, such as in transport, broadband infrastructure or to fund research and development,” Mr York concluded.