Sabin Mike: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Sabin Mike: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 12 March 2013. Volume:688;Page:8378. Text is incorporated into the Bound Volume.] 
2. 
MIKE SABIN (National—Northland) 
 to the  
Minister of Finance 
: What impact is the current drought likely to have on the economy? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Well clearly the longer the drought goes on and the more widespread it becomes the greater the impact will be. We are beginning to see a decline in milk production—in fact a sharp decline in some areas—and farmers are considering slaughtering capital stock which will result in lower future production and reduced revenue for farmers. This may flow through to a negative effect on GDP compared with our most recent forecasts. However there are some factors that may offset that such as the increase in prices particularly for dairy products and the fact that up until the drought began we had a strong production season for milk production. Thirdly the production in the South Island will continue to partially offset decreases in the north. So we know the drought will peg back growth in the economy but it is not yet clear by how much. 
Mike Sabin 
: What help is the Government offering farmers who are affected by the drought? 
Hon BILL ENGLISH 
: In this context the Government is mindful that many parts of the economy and many households and businesses have had to adapt their circumstances because we have had harder times and the same will apply to farmers. There is some Government assistance however. Once drought has been declared extra funding is made available to coordinate the local rural support trust which provide primarily moral rather than financial support; the Inland Revenue Department has the capacity to extend flexibility to farmers on a case by case basis to assist them with smoothing their tax payments; and in extreme cases rural assistance payments are available at the equivalent rate to the unemployment benefit. This is a package of measures actually put together by the previous Government for dealing with floods and droughts and we believe that it is appropriate in the circumstances. 
Hon David Parker 
: Does the Government still intend to be back in surplus in the 2014-15 year? 
Hon BILL ENGLISH 
: Yes. 
Mike Sabin 
: How can the Government support farmers if there are long-term changes in weather patterns? 
Hon BILL ENGLISH 
: It certainly cannot do it through financial means that are aimed to support those in extreme hardship for a short period of time. In the long run farmers would have to adapt to changes in weather patterns as they have before. New Zealand has been through cycles of wet summers and dry summers over the last three or four decades. Where the most direct Government assistance comes in is through its funding of research and development and through the Primary Growth Partnership which looks into improved production and into better drought management. 
Mike Sabin 
: How does the drought affect the Government’s plan to return to surplus in 2014-15? 
Hon BILL ENGLISH 
: It remains the Government’s target to return to surplus in 2014-15. There is no doubt though that a drought is likely to have some negative impact and make that task a bit harder. Treasury will be incorporating its view of the future impact of the drought into forecasts as we go into the Budget and the Government will take that into account in making its spending decisions.