Budget a masterclass of smoke and mirrors

Damien O'Connor's Budget 2022 press release announced a $1 billion spend on primary industries, but this really needs close scrutiny. It is full of vague waffle like $118 million for 'advisory services' to 'support farmers', $40 milion for Stuart Nash's 'transformation' of the forestry and wood processing sectors, and $32 million for Meka Whaitiri's fund to crack down on farmers - with increased compliance, enforcement and on-farm inspections.

Close inspection of Treasury's Appropriations document shows this announcement conflates a number of initiatives to reach that impressive-sounding $1 billion.

For example, the Government has included the likes of a $68 million collective agreement for some MPI staff in this figure, and $95 million for 'integrated advisory services' - whatever they are.

What worries me the most is the large sums of money being poured into compliance, policing and inspections. Right at a time when most farmers are fed up with regulatory change and time-consuming auditing, it looks likely there'll be a whole new wave coming at them.

This Labour Government has unleashed unprecedented levels of spending in the 2022 Budget, with more than $9.5 billion in new spending forecast this year alone. To put it in context, it is now spending 68% more – or an extra $51 billion per year – since coming into office.

While we’d all agree that spending to boost the likes of biosecurity measures is essential, Grant Robertson’s refusal to rein in spending and take meaningful action to dampen inflation is piling pressure on our primary sector.

This is putting huge pressure on the economy and is driving inflation to a record 30-year high, with the cost of farm inputs rising by 9.8% since the March quarter last year.

Last month, we saw another 50 basis point jumps in the OCR, the first back-to-back 50 point increase since the OCR was introduced. It will effectively double interest rates on this time last year. A farm carrying $4 million in borrowings that sees a 100 basis point increase in their interest rates will need to pay an additional $40,000 a year in interest costs.

New Zealand’s agriculture exports are rapidly climbing towards $50 billion, but the cost of doing business on-farm is skyrocketing.

For the sector to continue to carry the New Zealand economy during these turbulent times, it is my view the Government needs to rein in spending on compliance and ‘advice’ and cut costs in order to increase productivity.

Nicola Grigg, National Party associate agriculture spokesperson