His call came amid calculations by the Reserve Bank that in a worst case scenario up to 15 per cent of the $40 billion in dairy farm debt – equivalent to more than $5 billion – could be lost to the banks.
What does Little mean by stiff armed? Send troops into their offices to take them over? To threaten government retaliation if they don’t write off debt?
I can’t think of a single act that would destroy investor confidence in New Zealand that a Government strong-arming banks. Also recall one of the factors of the Global Financial Crisis was banks being over-extended with loans that they could not get repaid. Little seems to want a repeat.
“We expose more New Zealand farm land to the risk of overseas ownership and I think that is a matter in which there is a national interest the Government should be alert to, and take action on.”
So what is it Comrade? Nationalise the banks? Or just force them to do what the Government demands by secret blackmail?
Little said the Government’s approach was “cavalier”. A summit should be called and dairy cooperative Fonterra should be at the table. Farmers needed to agree on a long term plan for the cooperative to move its products up the value chain, even if that meant taking less cash out once the immediate crisis was over, to allow Fonterra to invest to generate better long term returns.
Beware politicians who talk about moving the products up the value chain. This is code for “I know better than the entire industry, what is good for you”. You get this in forestry where politicians demand we sell finished products such as tables, rather than logs. But this is supreme arrogance by politicians who think they know where the global demand is better than the hundreds or thousands of businesses actually selling and exporting. If more money can be made from selling tables to China rather than logs to China, then there would be businesses doing exactly that. So in dairy, Little is saying forget about milk and milk powder, but instead sell chocolate!
Government assistance should be provided to get farmers over the crisis, in a similar way to the help offered during drought, but it did not need to be any more than that.
This is rich coming from Labour. Labour have spent the last decade demanding dairy farmers be taxed more and penalised more. They have demanded dairy farmers pay for the methane emissions of their cows, that they pay more for water, that they be fined for pollution etc. Their rhetoric over the last decade has been that we need less dairy in NZ, not more.
And to top it all off, they are opposing the TPP which would see the NZ dairy sector gain hundreds of millions of dollars in increased exports.
So instead of helping dairy farmers export, their policy is to bully boy banks into not collecting money owed by farmers – a policy which would guarantee no bank in NZ would ever lend again to a farmer!
Their level of economic incompetence is at an all time high.