Back the superhero: the primary sector for our economic recovery

08 Jun 2020 Back the superhero: the primary sector for our economic recovery image

This week, the first round of the wage subsidy scheme ends. Businesses are now realising that there is an end to Government support and are asking, ‘where to next?’ The wage subsidy, and the next instalment of it, only mark time. It’s like treading water and waiting to be rescued, but there is no financial rescue from the Government in sight.

Our severe lockdown has been a resounding result for the health of the nation. It has also held back unemployment. Allowing the primary sector to continue operating during lockdown has kept New Zealand fed. In horticulture’s case, fed with fresh locally grown vegetables and fruit, while keeping many of the orchards, vegetable gardens and associated industries operating and viable.

But the lockdown also closed farmers’ markets, independent fruit and vegetable retailers, restaurants, and butchers. The growers and farmers who supply these outlets did not fare well at all. Like many in New Zealand, they made no income and are now left to try and continue trading.

Comparisons are being made with Australia as to which country will recover the fastest. The conclusion appears to be Australia. That is because tourism accounts for 20% of New Zealand’s export earnings and 6% of Gross Domestic Product (GDP). For Australia, tourism is only 9.5% of total exports and less than 2% of GDP.

The New Zealand tourism industry is in crisis and will not be contributing to our economy as did this year or the next. Even if we get a Trans-Tasman bubble with Australia, it will not turn tourism around. The result is that noone is forecasting a good economic outcome for New Zealand. Unemployment predictions seem to be around the 10% mark, putting a lot of people out of work and looking for jobs.

So, what are New Zealand’s advantages? As an island nation, we have managed to almost keep COVID-19 out of the country, but in all likelihood that will not last. Everyone in the primary sector knows how difficult it is to keep pests and diseases out of New Zealand. Even with the best plans, it will happen, unless a vaccine is developed to save our country in time.

Another advantage is that New Zealand produces more food than it can eat. However, this cannot be taken for granted. To keep producing food, our growers and farmers will need more support than wage subsidies, which most of them cannot access.

Critically, we all need somewhere to sell what is grown. New Zealand and the world’s hospitality trade is a very important outlet for our food. We need ours and the world’s restaurants to be fully open to give some certainty to growers and farmers to keep on producing.

More is needed to give growers and farmers certainty. The primary sector understands that it has a vital role in New Zealand’s COVID recovery, feeding the country healthy food and earning valuable export dollars. As noted, opening restaurants is a first step, but New Zealand’s and the world’s economy is not going back to where it was pre-COVID.

This is where innovation and a transition to a new way of growing is needed. The transition will require Government funding, but not Government control. Innovation is best bred on the land and in the orchard. This approach also needs to incorporate food security and supply policies that ensure we can feed New Zealand. For example, that growing is spread around the country to ensure that during drought and other disasters, we can keep feeding ourselves.

Our Government once backed tourism. Now it needs to back the primary sector as the main driver for New Zealand’s economic recovery and for employing New Zealanders.

Backing the primary sector goes beyond wage subsidies into addressing how to support a renaissance in primary production. It also involves giving growers and farmers the certainty to continue producing food today, while at the same time, nurturing innovation for tomorrow.

Tax breaks and direct cash payments to get on and plant that next crop are needed right now. Give our growers and farmers certainty today because they are the New Zealand economy’s key sector to drive our COVID recovery.

The primary sector is New Zealand’s post-COVID economic superhero.

Mike Chapman, Chief Executive