New Zealand as a country is no different to us as individuals when it comes to expenses and paying the bills!
We borrow money sometimes to allow us to, have or do things, which we may not be able to fund out of our immediately available personal funds. We need to provide some type of collateral to support our level of borrowing if we are to find a lender to give us access to the money we want. We then have to put in place methods to repay that borrowing or we will lose our collateral which we put up as a surety for the loan.
New Zealand is in the same position with slightly different circumstances. If the country wishes to borrow money to fund government expenditure, we need to find an international money lender who will be prepared to lend us that money. Where the circumstances differ is that instead of putting forward some type of collateral in the form of an actual asset, to be surety for the lender, we need to have a recognised international credit rating which in effect takes the place of that surety or bond for the loan.
Just like any one of us, the country must have a viable income to first of all get a loan and then to be able to service that loan or in other words pay it back.
How does a country get an international credit rating? Pretty much; the same way we would get one from a finance house. The international financiers look at the country’s financial history to see what level of income they have, measured against the level of borrowing or indebtedness and then issue a credit rating which is used by financiers to decide how much they are prepared to lend and on what interest terms.
Just like us as individuals, a country can cease to be attractive to lenders when it reaches a position where its income is not sufficient to fund its borrowings. Countries get their income from two main streams; export incomes and taxes.
Export incomes are effectively the new money that comes into New Zealand and provides income to the individual exporters and through them, to their staff and suppliers, which then allows the government of New Zealand to levy and collect taxes which is where they get their income from. If New Zealand’s export earnings drop significantly then they have a reduced ability to receive taxes which effectively means a cut in their income and also their ability to fund borrowing.
As a result of the effects of the Covid pandemic and also the government’s decisions around management of those effects, New Zealand has suffered a very significant drop in export earnings which has resulted in a hugely increased level of indebtedness.
Government spending has raised public indebtedness to unprecedented levels. In 2019 our indebtedness was 18.6% of GDP and in 2021 it was at 51.97% of GDP and 2022 is predicted to rise to 56.95% of GDP.
New Zealand had a record Trade Imbalance in the second half of 2021 of approximately $8 billion, house prices had gone up 30% and we had an almost total loss of tourism valued at approximately $38 billion per year. All of these things contribute to a change in our ability to borrow money on international markets and consequently our ability to fund government spending across the board as well as our ability to pay our existing bills.
Over the past few years the New Zealand public have been brainwashed to think that our food production needs radical change. This has been focused on Green House Gas emissions, water quality, and biodiversity. It’s time to put the record straight.
Over half of this country is in trees, mountains, natural cover. ALL types of farming combined, only cover 39% of our total land area.
Current Land Use in New Zealand
|
Land Use |
Land Area |
|
Urban & Lifestyle blocks |
6% |
|
Horticulture |
2% |
|
Dairying |
7% |
|
Sheep & Beef farms |
30% |
|
Forestry Plantations |
7% |
|
Doc Estate National Parks |
48% |
“The Environment” has become a religion for some people. Lobby groups get their funding from the public and to get attention (and therefore attract funding) they often use statistics which, whilst not being untrue, their selective use creates anxiety amongst the general population. This level of anxiety usually has more detrimental effect on the lower socio-economic sector of the population as they have very little opportunity or means to combat the perceived effects on the environment.
New Zealand has clean freshwater and in fact is listed as one of seven nations with the cleanest water in the world.
There has been much talk about the GHG emissions from farming and the detrimental effects of methane emissions on the environment but in most discussions the fact that methane is a short lived gas which has less effect on the environment than CO2 (a long lived gas) is ignored.
This discussion fails to recognise the natural carbon cycle. The method of assessing the levels of methane from ruminants is flawed with assumptions based on figures that are officially + or – 50%. The Paris Agreement said to exclude food production.
It is economic madness for us to limit the sector leading the recovery, based on flawed assumptions.
It is only fair that if the discussions are to be held around the detrimental effects of farming on the environment, then the beneficial effects should also be part of the discussion to reflect the reality of the situation and bring some much needed balance to the discussions.
The world needs agriculture in all its different forms to ensure that people can be fed and yet agriculture is being unfairly portrayed as a destroyer of the natural environment, when in actual fact it is no worse or better than other parts of society as we see it today.
39.75% of New Zealand’s land mass is used for agricultural production and approximately 1% is urban area.
According to UN Habitat, cities consume 78 per cent of the world’s energy and produce more than 60 per cent of greenhouse gas emissions. Yet, they account for less than 2 per cent of the Earth’s surface.
Farming is currently being asked to lower its carbon footprint to comply with New Zealand’s Paris agreement requirements, yet the idea that farming is the main cause of our GHG emissions and also that it will be the cure-all for those emissions is totally wrong. The current requirements on farming in relation to GHG emissions will only have the effect of endangering our country’s economy, our farmer’s economic survival and security of our food supply.
Yet as The Hon Damien O’Connor; Minister of Agriculture, stated in a letter to Groundswell in February 2022:
“Our primary sector is a crucial part of the New Zealand economy and plays an important role in maintaining New Zealand’s global reputation for producing safe and quality exports.
The primary sector has taken steps towards improving the sustainability of our food and fibre, and the Government is committed to helping the primary sector go even further to meet shifting global consumer demand and to meet New Zealand’s international obligations.
You’re correct that New Zealand is among the lowest emitting dairy producers globally.
There is strong demand globally for naturally and ethically produced food and fibre products, and New Zealand is well placed to meet the demand. We need to continue our lead in producing low emitting food and fibre products and improve environmental outcomes.”
New Zealand is one of most environmentally sound producers of food on the planet but we are now being asked to reduce levels of production to lower our GHG emissions which will in effect have the end result of our emissions going down marginally but other nation’s emissions rising significantly to take up the deficit in production so created.
So on a global scale we are actually very likely to make the GHG situation worse as a result of trying to achieve arbitrary targets that have been set with a strictly NZ emissions viewpoint.
Yes we support the protection and enhancement of our environment, but not at the expense of security of food supply to the nation.
Given that in the current situation agriculture is our largest export income earner by far, any reduction in agricultural exports is highly likely to have a severe effect on our ability to pay our bills!!!