Our hosts the Wilding Family, Minister Nathan Guy, Stuart Smith, invited guests, ladies and gentlemen – welcome to Hurunui.
My brief is to talk from the Local Community and District Council perspective about the issues facing our district and particularly our export producers as we contemplate Heartland Hurunui’s contribution toward the Governments goal of doubling export earnings by 2025.
The following are my personal comments and perspectives influenced by 40 years living, bringing up a family and dry land farming in Hurunui, serving my community in numerous capacities, including 12 years in Local Government and listening to my community, I will touch on the potential of our three main export industries to meet our share of the Government’s goal and then talk about some of the handbrakes to achieving it, and conclude by throwing out some challenges to those in a position to assist and enable us.
IDENTIFYING OUR ASSETS
I will start by identifying some of our assets, capacity, and capability which makes us potentially able to make a significant contribution to the Government’s goal.
This district has significant areas of fertile land producing sheep meat, wool, venison, beef, dairy, pork, forestry, wine, specialist seeds and potential for more horticulture.
Our meat and wool industry has highly regarded and successful stud stock breeders, supporting our commercial producers, many of our meat and wool producers are at the top of the game, winning international recognition for producing quality products on overseas supply contracts. These producers have the ability to increase productivity significantly, given the right incentives.
Our local dairy industry is characterised by having the largest average herd size in the country and it leads the New Zealand dairy industry in efficiency and productivity with consistently the highest per hectare and per cow, milk solid production, there is no doubt that this sector is capable of further productivity and efficiency gains.
Waipara Valley, is one of the country’s larger wine producers, a world recognised brand with many of its wineries winning top awards on the national and world stage. I understand there is more land suitable for high quality wine production.
Tourism, or more correctly the visitor industry plays a major part in our local economy and is of course partly an export industry, the overseas visitors’ sector has huge potential to grow in this district.
Complementary to our international award winning attraction, the Hamner Springs Thermal Pools and Spa, we have boundless opportunities for out-door passive, active and extreme recreational activities, set amongst amazing scenic features and landscapes, encompassing lakes, rivers, mountains, coast and sea.
Complementing all that is world class dining experiences featuring our food and beverages expertly presented by award winning restaurants.
Each of these industries has a high percentage of top operators, supported by equally high quality contractors and service businesses in our community.
I need not remind you that one of our biggest and as yet only partially tapped assets is our water.
We have high river flows identified as available water to be stored, and we have a number of suitable sites for major water storage, and with approximately 110,000 hectares of land suitable for irrigation, and only approximately 1/3 of that currently irrigated, we have some grossly under utilized assets.
We have a major asset in the quality of our natural environment and native biodiversity and an asset in the increasing number of landowners who are dedicated to its protection.
That is a brief snapshot of our major assets, all of which are capable of both growth in terms of volume of product and added value, both of which will be required to double export returns.
HANDBRAKES AND DISINCENTIVES TO GROWTH
Now we need to talk a little about some of the handbrakes, impediments and disincentives stopping this district from making significant contributions toward the governments growth targets, some of these handbrakes are also a risk to existing levels of production.
The wine industry is showing some wisdom as they seek to align increased production of wine to increased demand.
The industry tells me that the major impediments to meeting increased future demand will be lack of water for irrigation and frost protection, and labour issues similar to those of the agriculture and visitor industries some of our wine growers also feel that the current application of excise tax is a totally unfair and unjustifiable tax. This tax on production, rather than on consumption, is a major diversion of funds away from investment in production.
Our overseas visitor industry faces challenges in convincing tourism operators that we have enough visitor attraction products to attract their clients north, rather than south once arriving in Christchurch.
It would initially appear short sighted that Air New Zealand, majority owned by New Zealand, would concentrate on improving its own bottom line by rerouting flights to Auckland at the expense of the Canterbury economy.
However, I would suggest that the ball is in Canterbury tourism’s court to get its act together and present airlines with compelling destination propositions.
My observation is that Christchurch City at the political level needs to give more than lip service to recognising the value of the Heartland’s visitor assets to the city and the Canterbury region’s economy and invest and work with the region in developing those compelling visitor propositions across the region.
In fact that observation applies across all parts of the Canterbury economy and predates the distraction of the earthquake recovery.
Lack of local capital to invest in more attractions, activities and accommodation is another clear handbrake to growing Hurunui’s visitor economy.
This district has a high reliance on an immigrant workforce in the wine, visitor and dairy industries, and close to zero local unemployment. Any increased demand for labour would require either better mobilisation of the New Zealand workforce or more convenient policies for recruiting and retaining quality overseas staff.
Extending rural health funding support to our migrant workforce would be welcome, ensuring affordable health care was available to these families who are making massive contributions to our country’s economy and our social and cultural vibrancy.
Hurunui District Council has left no stone unturned to work with our community, Ngai Tahu, and the Regional Council to ensure that we get our policy settings right in our district plan to deliver the right outcomes for our district.
However we know that after all that effort, the final RMA process in its current form can frustrate our endeavours.
GOVERNMENT POLICY SETTINGS
A number of government policy settings are a challenge to local government and unhelpful to our community in maintaining current production and achieving the growth targets.
One example. The outcomes of the road funding review will have serious consequences for our rural road network, the very first roads that most exports travel on, these are the roads that our producers totally rely on for their business and their entire family life.
The majority of our roads fall into the lowest classification, (low volume access) and will ultimately attract lower levels of Government funding, leading to correspondingly low levels of maintenance and reliability. To maintain these roads in the future to acceptable standards for the ever increasing weight and number of heavy vehicles will require us to rate our producers more.
Moving these roading costs along with a raft of other costs, off the government balance sheets onto local government and ratepayer balance sheets, shields other beneficiaries from their responsibilities for the critical infrastructure that serves the national good, and simply sucks up more local funds, leaving less to invest in production.
Where is the respect for, or the incentive for our producers, totally reliant on these roads to answer the call?
A raft of environmental issues appears to be all consuming at the moment.
While we certainly recognize a healthy environment is an essential and valuable asset, how this is achieved and maintained is under debate.
Our Visitor Industry clearly benefits from a pristine environment and our wine industry is very focused on environmental sustainability.
However, affordable environmentally sustainable disposal of urban sewage, which of course includes visitors, is a major concern, as is the affordable provision of water that meets the New Zealand DWS.
With the unavailability of quality deep water and reliance on poorer quality surface water means that meeting the standard is extremely difficult and expensive. Much of our water and sewer infrastructure, built with government subsidies, is aging and in need of major renewal.
We are proposing some pragmatic and we believe responsible rating and financing changes to deal with these issues, but the cost of renewing and upgrading this infrastructure to meet environment standards, is financially challenging and is drawing local funds away from production.
A review of the way local government activities are funded is being initiated by Local Government New Zealand and is well overdue.
The regulatory protection of native biodiversity, outstanding landscapes, and coastal environments has long been and still is a contentious issue in Hurunui.
It is unequivocal that the current regulatory rules base approach, forcefully demanded by some parties, to protect and enhance biodiversity and natural features, is counter productive.
It is clear that areas protected with the goodwill and pride of landowners ensures more sustainable and higher quality protection. For a nation that claims to value the protection of these areas but is not prepared to invest anything into them is appalling.
To demand, by punitive regulation, that landowners should bear the cost of protection, the loss of use and production, thereby turning these areas into a liability for them rather than an asset, is short sighted.
In spite of all that, we have many outstanding examples of large areas of biodiversity on private land voluntarily protected, we have prominent families and individuals in this district leading by example, restoring and planting and encouraging others to value and protect what they have.
Why insult this initiative by slapping them with punitive rules and regulation, and we call ourselves an intelligent and civilized nation, where is the respect.
There has to be a better way and we are working on it.
This is the big one for our district.
The Nation would not be missing out on approximately $1/2billion from this district, at the farm gate per annum, plus the multiplier throughout the national economy and the multiplier of added value for export, if we were able to irrigate the remaining irrigitable area.
Why hasn’t this happened, forget about resource consents appeals, nutrient loads, etc. I believe these can all be worked through. The major problem for landowners and shareholders that I talk to is the commercially unviable capital cost of the proposed schemes, marginally viable two years ago at $8 per kilo.
The irrigation proposals on the table for up to 60,000 hectares are aligned with the ZIP and the H/W L&W Plan, in that they are designed to meet the National Policy Statement for fresh water, and the Canterbury Water Management Strategy targets to protect environmental, cultural and recreational values, however the added cost of protecting those values leaves new irrigation schemes struggling for commercial viability.
As a result of that, the irrigation companies have been forced to design less than optimal size schemes, others are promoting smaller self serving schemes in order to achieve any progress at all, this is unacceptable and irresponsible because the ZIP was predicated on total integration of all water, all irrigatable land and all irrigators working collaboratively toward major water storage in the interests of maxim utilisation and efficiency, maximum productivity and the national economy.
If all the beneficiaries, that is the whole nation, are not prepared to make a significant financial investment in these schemes, to release the potential productivity for the nation’s benefit, enabling at the same time the safeguarding of environmental, cultural and recreational values demanded by the New Zealand public, then I find it hard to see a way forward.
The Irrigation Acceleration and the Crown irrigation investment funds in their current form doesn’t do it. This is intergenerational infrastructure and requires intergenerational funding.
The irony is that 15 years ago while Canterbury experienced a dry period similar to what we are experiencing today, the Mayors of Canterbury, in their wisdom decided that we needed to drought proof the Canterbury economy. This was the genesis of the Canterbury Water Management Strategy. Their first project was to identify half a dozen major storage options, these were seen as the most critical requirement to achieve their goal. 15 years on, with the exception of a variation to the Rakaia Water Conservation order allowing the use of Lake Coleridge, no new major storage is in sight.
You may think I am a strong advocate for irrigation, not necessarily so, I am a strong advocate for what is best for my community first. I want prosperity for my community, but in the widest sense, not just a narrow monetary sense.
While irrigation will clearly deliver high gross revenue for the nation it does not follow that it will guarantee high net returns and quality of life for the farming family.
In the face of 15 years of obstacles, handbrakes and frustration, have we reached the point where we need to advise our dry land livestock farmers to think of their own interests first, and concentrate on high net incomes from low capital cost farming?
Farming one of the driest farms in the district, I have proven for myself over the last 35 years that with reliance on lucerne and several other deep rooting cultivars, coupled with suitable livestock genetics and appropriate management, that high net profits, low family stress, and low environmental pressure is easily achievable.
I have clearly run out of time to do justice to all the issues, but my last thought is this: – given the challenges and handbrakes, and environmental uncertainties is it reasonable and sensible for the government to continue promoting their goal.
It is difficult to see that adding value alone without significant extra production from the land will do it, and clearly, increased irrigation is seen by many as the key to this.
Ladies and Gentlemen.
Let me remind you, we are a huge geographic district; we have a small population and a relatively tiny rating base and are constrained for capital.
We have the Export Industries, we have the potential, we have the assets, we have the expertise, we have pride in our district, and we have pride in our country.
With the right respect, the right incentives, the right policy settings, and the appropriate investment…
Hurunui, the true Heartland, can deliver.
The “Future of the Heartland Forum” was held at Te Mania Angus Stud, Conway Flat, Canterbury, Friday April 17 2015.