Andrew Little: There's a crisis in dairy

Labour leader Andrew Little says there is a crisis in dairy that requires input from the whole country.

“A combination of the farmers, the banks, the government need to get together to get the farmers through it, “ Mr Little said to Q+A’s Michael Parkin. “Who knows when there’s going to be material recovery in that price? I don’t see it happening in the next year or two, a significant recovery. So we do have some tough times ahead of us”.

Mr Little said that while there was cause to look at whether the expectations that were created when Fonterra was set up have actually been met, now was not the time. But the Government needed to act, before farmers were forced to sell their land.

“There’s pressure on them to sell, and the people with the money to purchase land are off shore. That’s the US and Chinese buyers, and we run the risk of even more productive land winding up in foreign ownership in a way that we lose control of our productive sector.”

RAW DATA: Q+A transcript: Andrew Little

Watch the interview here

MICHAEL The gloomy predictions of a Black Friday have come true for dairy farmers, Fonterra cutting its farm-gate milk price forecast to $3.85. It’s the lowest since 2002 – tough times for our farmers and possibly the rest of the economy too. Labour Leader Andrew Little joins me now in the studio. Andrew, if you were in government, what would you do to help out the farmers and that wider economy?

ANDREW Well, the first thing is not to have allowed a situation to arise where at the peak of the dairy prices we kind of just cheer it on and do nothing and prepare for the inevitable downturn in prices. We are an economy that is dependent on commodities, when they’re at their peak. That’s the time to be thinking about the next phase this government hasn’t done yet. So what to do right now? What to do right now is work on a regional development strategy and to work with the regions on those things, on significant investment projects and that’s going to attract the private investment that’s going to generate the wealth and the jobs that are needed there.

MICHAEL What sort of projects do you like?

ANDREW Well, you look at Opotiki, for example. They have been hanging out for this for a long time. They need their- They’ve got a huge future and potential in aquaculture. They need their port developed. It would be a significant project. If they get that done, then the amount of investment they attract in the development of aquaculture industry, generating jobs in an area that desperately needs them, that makes a huge difference. If you look at Taranaki, where I spent a lot of my time, the dairy downturn there is going to have a significant effect; the oil and gas downturn is having an effect. They are looking at alternatives. They need a significant upgrade in their transport infrastructure, particularly the roading in the north. Throwing in $25 million at it at some indefinite point in the future, which is what this government has promised, isn’t going to cut it.

MICHAEL So you would promise that money off the bat? You’re in there, here’s that, we’re spending that money?

ANDREW Our policy last year that we went into the election was a regional development fund, a significant fund where you’d work with the local regions, the local authorities and the regional councils, on what they need to spur the next generation of investment in those areas. That’s the sort of thing that’s needed.

MICHAEL What about slowing up dairy conversions at the moment? Obviously, you say the National government let that process run away. Would you stop conversions? Would you put restrictions in to stop them at the moment, given the way the market is heading?

ANDREW Well, I think- I mean, dairy prices are going to drive that now, and the banks will drive that. I cannot conceive of a bank that is now gong to continue to lend to the dairy sector for dairy conversions. And if anything, I think what you’re seeing now, is farmers looking across at their dry stock colleagues, and thinking, ‘Gee, there’s a better future in beef, ‘ but- I don’t think that’s going to be the issue.

MICHAEL What about a subsidy, then, to help these guys get through the tough times, given they are so pivotal to the way the economy tracks?

ANDREW Well, Fonterra has announced as part of their package of measures the interest-free loan that goes-

MICHAEL But that still doesn’t pull them above that break-even point, does it? They’d still need more to really get them across the line.

ANDREW No, it doesn’t.

MICHAEL So should the government step in there with a handout?

ANDREW Well, I think the point is going to come- the discussions I’ve had with banks is that they will get the most indebted farmers through one bad season. It’s if- when it turns into a second season that is going to be the problem, which is almost inevitable now with that pricing. So we’re going to have to see what happens there. I think the biggest threat we face, if we don’t take some measures now, is that the farmers who are desperate, they’ve got the debt and they’ve got the banks on their back, is that their land then comes up. There’s pressure on them to sell, and the people with the money to purchase land are off shore. That’s the US and Chinese buyers, and we run the risk of even more productive land winding up in foreign ownership in a way that we lose control of our productive sector.

MICHAEL What I’m interested in the legislation around Fonterra as well that, obviously, also Winston Peters has honed in on, is do you see the changes in the regulations around that company?

ANDREW Well, there’s a review of the Dairy Industry Restructuring Act-

MICHAEL And there is, but do you-?

ANDREW A scheduled review, and I think-

MICHAEL But do you see the need for change in there?

ANDREW I think it’s right to ask the question whether the expectations that were created when Fonterra was set up have actually been met. But perhaps now is not the time to do that. There is a crisis in dairy, and a combination of the farmers, the banks, the government need to get together to get the farmers through it. Who knows when there’s going to be a material recovery in that price? I don’t see it happening in the next year or two, a significant recovery. So we do have some tough times ahead of us. And remember, it’s not just the farmers. It’s the communities they’re in, too.

MICHAEL Absolutely. But what about the Russian idea of letting Fonterra be more aggressive in Russia, really fly in the face of the restrictions that the government as put in place? Because we need them to be making some money.

ANDREW But we also don’t need them to be burning off future market opportunities in Europe and other parts of the world, for whom the Russian-Ukraine issue is a very sensitive issue. So they’ve got to be thinking long term, and as I understand from what Fonterra are saying, they are being sensitive about that issue and they’re right to do so.

MICHAEL And they should keep that sensitivity in place?

ANDREW Absolutely.

MICHAEL If we could move on to some, I guess, other issues that are facing the country at the moment, and I just want to get a quick answer from you on where you stand on these things. First of all, TPP – does Labour support or oppose that deal right now?

ANDREW Well, we don’t know what the deal is. We support free trade. We are very concerned about things that expose or potentially compromise our sovereignty. We are very concerned about something that might undermine PHARMAC and its purchasing model-

MICHAEL But knowing what you do know, do you support or oppose it?

ANDREW But we don’t know. That’s the whole thing. We don’t know what’s in it, and we keep on being told that they’re about to do the deal, they’re about to do the deal. They’re not going to do the deal. They won’t do the deal before the end of this year. The Canadian elections are going to put paid to that. If they wanted to have a deal ready for signing at APEC, they needed to have it- for the US, they needed to have the deal done by 18^th of August, and that is not going to happen. And the problem with TPP is that the level of secrecy that the government has managed it with has made it impossible to make an informed judgement whether it’s in the best interest of New Zealand.

MICHAEL Okay, so let’s put that in the ‘maybe’ column. The Kiwisaver $1000 kick-start the government scraped – would Labour reinstate that?

ANDREW Well, we would like to, but the truth is two years out from the next general election, we don’t know what state the government’s books are going to be in.

MICHAEL Okay, so that’s another ‘maybe’.

ANDREW I don’t know why you keep saying ‘maybe’.

MICHAEL Well, because you don’t give us an answer. I mean, you need a position on these things. Isn’t that part of the problem that Labour is facing? It’s that you’ve got these policies, you’ve got these issues out there, but you guys don’t draw your line in the sand.

ANDREW We had drawn our line in the sand on TPP. We’ve set out our bottom lines. They’re pretty clear. But on the $1000 kick-start, yeah it would be great to put that back in place, but we don’t know what state the government’s books are going to be in. This government is a government that in seven years that hasn’t run a surplus; it’s racked up $62 billion more net debt since it’s been in government; it has failed to deal with the issues, looming issues, like the future cost of superannuation. And so now with the crisis of dairy and a reduction in our national income, who knows what state the books are going to be in, in 2017? And we’re not in the business of making rash promises now.

MICHAEL All right. Let’s look at means testing for over-65s who are getting the pension. Is that something you want to look at?

ANDREW No, we’re not going to look at that. We just want to keep age of eligibility for superannuation at 65. What we want to do is a government being responsible and reigniting the payments back into the Cullen fund-

MICHAEL But you don’t want to means-test over-65s?

ANDREW No, it’s not our policy.

MICHAEL And you said that- you hinted in that post-Budget speech for what reason?

ANDREW No, no, no. What I pointed at is that there is a crisis looming about the future cost of superannuation. This government has done nothing to meet the future cost in the way that the last Labour government did. We’ve got to be honest about these things. This government just- it faces big issues, whether it’s decline of dairy, whether it’s superannuation. It kicks it off and dismisses it all. These are big issues-

MICHAEL But you backed away from your own plan to raise it, Labour’s plan to raise it.

ANDREW The age of eligibility? That’s right, yes.

MICHAEL So then what is your answer to this problem?

ANDREW Well, we’ve got to resume payments to the New Zealand Super Fund as quickly as possible.

MICHAEL The anthem. Do you want to change the anthem?

ANDREW No, I don’t want to change the anthem.

MICHAEL So why did you say that?

ANDREW I didn’t say that. I might have expressed a view about its-

MICHAEL Why did you even raise-? Why did you even raise the anthem when it was going to be able to be portrayed as you wanting to change the anthem?

ANDREW Because we have a government- In the face of, I think, some of the most serious economic challenges that we’ve faced in a generation-

MICHAEL The economic challenges are a long way from a flag debate and an anthem.

ANDREW But this is the whole point – the government dismisses the state of our dairy prices, that dismisses the challenges they’ve got in terms of meeting future costs of the government, and what is it talking about most? What does it want to spend $72 million on? A referendum on changing the flag.

MICHAEL And your brought up the anthem into the debate. When you stood there and made that speech, did you run the idea of bringing up the anthem past any of your staffers, and of your press secs, any of your fellow MPs? Or did that just come out of the back of your mind, straight out of your mouth?

ANDREW I reflected a debate that had already emerged, and that point I was making was-

MICHAEL So you didn’t run it by anybody?

ANDREW I no sooner would change the national anthem, the musical qualities of which I have some views, than I would to spend $70 million on a referendum to change a flag that nobody wants. The house-

MICHAEL But you- But you didn’t- You didn’t test the waters of saying that with anybody? Can I be clear about that? Did you run that idea of mentioning the anthem by anybody in your party?

ANDREW I reflected a debate that’s being held in public.

MICHAEL No? Okay. In that vein, then-?

ANDREW I’m the leader of the party, and-

MICHAEL I’m not saying you have to. I’m just asking if you did.

ANDREW I participate in debates, and you add colour and your try to make a point.

MICHAEL And given the way that debate went, was it right to mention it?

ANDREW I’m very satisfied with the contributions I’ve made to the debate, whether in Parliament or outside.

MICHAEL Okay. Chinese buyers, then – in that same vein, how well was the decision to single out Chinese foreign buyers when you put out those numbers? How well was that scrutinised by other people in your party and your colleagues?

ANDREW That was a very considered decision. We got the information. It wasn’t our information. We were given information-

MICHAEL But you took it out there-

ANDREW We had to think very carefully about how we managed it.

MICHAEL And you made it about Chinese buyers, and do you regret taking it to that level, making it about specifically Chinese people in this country?

ANDREW Not at all, because there is a huge issue, especially in Auckland. You ask any Aucklander about their experience in the housing market, and they will tell you. We have a housing market in Auckland that is shutting more and more Aucklanders out of.

MICHAEL But does it make Labour an inclusive party that people want to be a part of when you’re singling out minorities like that?

ANDREW Yes, we do, but as political leaders and as leader of the Opposition, as a leader of a political party, my moral duty is to the people who live and work here, whether they’ve been here for one month-

MICHAEL And given you’ve now shown them that duty, why haven’t we seen a bounce in the polls for Labour? Because it is an issue they care about. The polls reflect that, but they don’t show they’re flocking to you as a result of that. Why is that the case?

ANDREW Well, it presupposes that we do everything for the polls.

MICHAEL We’re presuming you do, because that’s for votes, isn’t it?

ANDREW Well, yes. The support we’ve had expressed to us through the correspondence coming in to my office and to other MPs’ offices and people stopping me in the street, people stopping me in Rarotonga when was I was up there this week, New Zealanders are saying-

MICHAEL They are concerned-

ANDREW They are saying at last somebody is talking about an issue that is a big issue in Auckland that this government is doing nothing about.

MICHAEL And yet they’re still not prepared to vote for you, even though you’re the one raising it.

ANDREW Yes, well, when it comes to that sort of stuff, here’s the thing – we’re coming off a pretty low base from last year. The overwhelming feedback that I get from people and from the correspondence is that people are saying, ‘Yes, we hear you. We know you’re there. You’re saying stuff that we like-‘

MICHAEL ‘But we don’t want to vote for you.’

ANDREW No, not at all – ‘We want to know you guys are serious about it, that you can hold it together, that you can show us you’ve got a plan for New Zealand.’ And so I’m not particularly concerned about that at this point. What I want- What I am concerned about is that people are hearing us and are listening to us, and they are, and I’m pleased about that. Most importantly, I’m pleased about the feedback that I’m getting, which is that at last there is a party that is talking about stuff that matters to New Zealand.

MICHAEL And just, quickly, to end, how would you rate your performance as leader today?

ANDREW Perfectly good.

MICHAEL Perfectly good. All right, perfectly good. There we will leave it. Andrew Little, Labour Leader. Thank you very much.