Agricultural Sector Leaders support Government Economic Policy Direction

17 January 1997

A majority of agriculture sector leaders believe the sale of state assets by Government should continue, according to the Ministry of Agriculture’s Post Election brief.

Sector leaders also expressed broad support for the economic policy direction of the country and the need for business to be assured it was operating in a consistent and stable economic environment.

The Post Election Brief outlines policy issues and matters likely to need the attention of the Minister of Agriculture in the near future. In preparing the brief MAF staff consulted sector leaders representing farmers, farm organisations, bankers, processors, marketers, companies, farm input suppliers, producers boards and local and regional Government to gauge the impact of the general economic policies.

Participants were asked to present views they wished placed before the incoming Minister of Agriculture regardless of the Government’s new make-up. The information obtained from interviewees is valued because collectively it highlight views, expectations and concerns that are held across the agriculture sector.

A small number consulted saw the need to fine-tune economic policy to ensure the export sector was not shouldering an inequitable burden through high interest and exchange rates, in achieving the objective of price stability.

It was suggested that the Consumer Price Index (CPI) methodology needed reviewing. Specifically, some of those interviewed believed house price movements should be excluded from the index with imputed rental used as a substitute, and interest costs should also be excluded, in line with overseas countries.

The issue of exchange rates provoked the greatest variation in views. Some parties believed a strengthening $NZ was a sign of an improving economy and would lead to a drive for international competitiveness. Others were concerned at the speed which the $NZ had appreciated - tending to focus on what they saw as “revenue lost’ as a result of the high $NZ, relative to where it was previously.

The option most favoured by parties seeking a change in policy would be to widen the inflation target set in the Reserve Bank Act to three or even four percent. Another suggestion was that it may be appropriate to move from a single objective of stable prices and include an economic growth objective, or have the primary objective being sustainable economic growth.

Sector leaders indicated they would like to see the programme of tariff reductions continue.

For further information or a copy of the brief contact:
Jocelyn Brown, MAF Policy,
Phone: (04) 4744100 ext:8454.

  

 

Last Updated: 08 September 2010

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