Robertson Grant: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeRobertson Grant: Oral Questions — Questions to Ministers[Sitting date: 02 July 2015. Volume:706;Page:5061. Text is incorporated into the Bound Volume.]2.GRANT ROBERTSON (Labour—Wellington Central)to the Minister of Finance: Does he agree with the Prime Minister’s advice to farmers in November of last year that they should not get too worried about the milk price?Hon STEVEN JOYCE (Associate Minister of Finance)on behalf of theMinister of Finance: Yes. Every farmer’s situation is unique but the point the Prime Minister was making is that we have a world-class dairy industry that has a very solid track record of resilience and adaptation to changing international market conditions. The member should also be aware of course that the trade-weighted New Zealand dollar has fallen 19 percent in recent months and this along with lower interest rates will help off-set the full impact on farmers’ incomes from the drop in global dairy prices. Declaring a crisis is the member’s preferred approach to every market development but I cannot see how that actually is particularly constructive.Grant Robertson: Was the Prime Minister correct then when he also told farmers in November 7 months ago that the dairy price slide would bottom out soon and start climbing again and what is his definition of “soon”?Hon STEVEN JOYCE: The dairy price will undoubtedly rise again in the next stage of the cycle and the member I think would be trying to guess exactly when that occurs. There are a number of intersecting international conditions including as I pointed out in response to an earlier question the Greek situation and some of the challenges in the Chinese economy currently. The thing for New Zealand is you cannot control the world economy but you can control your response and our response is to operate a conservative sensible fiscal and monetary policy and continue to encourage the diversification of the New Zealand economy.Grant Robertson: When did he first become aware that there was going to be a global milk glut and what action did he take in response to that?Hon STEVEN JOYCE: I am tempted to say that it is not the job of the Minister of Finance to soak up a glut in any particular commodity. The member of course may think that in his command economy - type approach to the world that would be possible. The response of a sensible Government is to run a sensible fiscal policy to ensure that the stabilisers are in place to counter any downturn in commodity prices and continue to invest in opportunities to grow and develop the other parts of the New Zealand economy. That is exactly what this Government is doing and that is exactly what the Opposition now appears to be criticising.Grant Robertson: I seek leave of the House to table a report from Goldman Sachs Group dated June 2014 that indicated that there would be a 5-year global milk glut. It is not—Mr SPEAKER: Order! Is it available on the net for members to get?Grant Robertson: It is available on the net but it is difficult to find. I doubt many members—Mr SPEAKER: Order! I will accept the honourable member’s word. Leave is sought to table that particular document. Is there any objection? There is objection.Grant Robertson: Is he aware that ANZ is now forecasting a dairy payout of $4.50 for next season on top of the $4.40 for this season and that this would see $13 billion stripped from regional economies over 2 years representing a real risk to the viability of many farms?Hon STEVEN JOYCE: I am tempted to leap to Mr Robertson and say: “Well why don’t you just call it a crisis then because you’ve been dying to all week?”. [Interruption] Go on; call it a crisis because it generally helps when the Opposition calls something a crisis. Obviously for the dairy industry dairy prices are a concern. I do however remind the member that there are a lot of other industries that are doing very well. He speaks of the regions and the tourism industry is going absolutely gangbusters at the moment. Then there is the high-tech manufacturing industry. Then there is the wine industry. Then there is the kiwifruit industry. Then there is the information and communications technology exports industry and then the red meat industry which is also doing better. I appreciate that in Mr Robertson’s cartoon world—Mr SPEAKER: Order! The answer is now going on for far too long.Grant Robertson: Is it not time for him to drop the complacency stop blaming everybody else get real about an economy that has moved from a stumble to a stagger and is built on the volatility of the Auckland housing bubble and a peaking Christchurch rebuild and actually come up with some action to diversify the economy?Hon STEVEN JOYCE: That is the most pathetic list of platitudes I have heard in many a day in this House from a member whose answers to life are absolutely as shallow as a puddle. His depth of analysis is so shallow that the only thing that could possibly drown in it is a grasshopper. This Government is in fact doing much more of the things that Mr Robertson would suggest. Again I have given an example of the information and communications technology industry which is growing at the rate of 9.5 percent per year and in fact exports are growing at 14 percent a year. Mr Robertson—Mr SPEAKER: Order! The member must resume his seat. That is enough of an answer.James Shaw: When does the Minister of Finance project that dairy prices will recover?Hon STEVEN JOYCE: I do not think it is wise for the Minister of Finance to be picking the turn in any commodity cycle actually. I think the job of the Minister of Finance is to carefully run the country’s finances to ensure that the automatic stabilisers have an opportunity to operate as they are in this case in terms of a lower exchange rate and lower interest rates through the Reserve Bank; to continue to invest through other Ministers in things that help diversity and develop other parts of the New Zealand economy; and to continue to do such things through other Ministers that help New Zealand trade—for example free-trade deals like the Korean free-trade agreement and hopefully soon for New Zealand the Trans-Pacific Partnership. These sorts of things actually improve the opportunities for New Zealand exporters.James Shaw: Given that the Minister of Finance does not seem to have any information projecting when dairy prices will recover why did he tell Radio New Zealand in March that the concentration of capital in dairying was not a bad thing; and does this over-allocation of resources into one sector not risk destabilising the whole economy as the dairy boom turns to bust?Hon STEVEN JOYCE: I think the member is in danger of catching Mr Robertson’s cartoon disease because the dairy industry represents depending on how you measure it between 4 and 5 percent of the New Zealand economy. So the member may think that is the whole New Zealand economy but it actually is not. Again there is a large number of other industries that are having significant and sustained levels of investment including kiwifruit including wine including information and communications technology—Hon Nathan Guy: Apples.Hon STEVEN JOYCE: —including high-tech manufacturing including apples—a whole range of those sorts of export industries. So again if he wants to subscribe to Mr Robertson’s bust scenario that is fine but most New Zealanders know we have a very resilient and broad-ranging economy.James Shaw: What specifically is he going to do to support overleveraged dairy farmers through this bust?Hon STEVEN JOYCE: We will be doing the sorts of things that actually help minimise the risk which include keeping Government expenditure under control to keep interest rates down through the cycle which is very very important. We will also be running a responsible fiscal policy that does not create risk externally in a time of a fragile and not without risk world economy. What the member may be suggesting is something in terms of direct bailouts. I think that would be inappropriate. The New Zealand dairy industry is very resilient. It is one of the most efficient dairy industries in the world. I am sure it will be positioning itself right now to recover from this lower dairy price and prosper in the next cycle.