Minus 12.2%

18 Sep 2020 Minus 12.2% image

Our GDP has hit rock bottom at minus 12.2% in the June quarter, and on top of that, the Government has already spent the $50 billion recovery package.  The financial cupboard is literally bare.  Everyone is talking about the rebound and they seem very confident about it.  If there is one thing that Covid has taught us, it is that predicting what is going to happen is not easy.  In fact, I would say it is near to impossible.  The result is we have all had to be very flexible- what we planned to happen has more often than not had to be changed.  I can’t see any reason why the current uncertainty and the ever-present unpredictable future will suddenly become certain and predictable.

The problem with spending the $50 billion is that it has not by in large been spent on enabling New Zealand’s economic recovery.  It has been spent propping up the status quo with wage subsidies and the like.  With that money spent, how are these workers going to get paid?  Where are they going to work?  Accommodation and food services took a 47.4% hit in the June quarter with hits also in mining, clothing and footwear, furniture manufacturing and transport.  Just walk down any main street and see empty shops.  Agriculture went down 2.2%, but that drop was saved from going further down with fruit exports up 10% and wine up 15%.

New Zealand is in recession.  Tourism, international education and hospitality will not be the drivers for economic recovery in the immediate future.  The main driver for economic recovery will be the primary sector and within the primary sector horticulture and wine.  So, the Government’s focus and support programmes need to be focused on the sector that will actually lead New Zealand’s economic recovery.  This requires a close partnership with Government where what Government does enables the primary sector to perform, feed New Zealand and trade our way out of the recession.  None of that is going to be easy.  The important point is how things worked pre-Covid cannot be the way they will work as we recover from the pandemic.

The collective horticulture groups have developed a Covid recovery strategy in conjunction with Government, and through that strategy, we aim to make a significant contribution to New Zealand’s economic recovery.  But we can only do that if Government gets the policy settings right and those need to be set now for our seasonal workforce: harvest is underway.  We have explained what we need, and we have asked for it. 

To enable horticulture to contribute to the recovery, there are six areas that need resourcing:

First, developing programmes with industry to redeploy those New Zealanders who will work in horticulture but, with the skills required, this will take more than a year;

Second, enabling unemployed New Zealanders to join the harvest trail starting with cherries and moving onto apples, kiwifruit, other fruit and vegetables by providing financial travel, accommodation and training incentives and pastoral support;

Third, expanding our bubble so that workers can travel to and from the Pacific Covid free countries;

Fourth, removing the cap on how many Pacifica workers can come into New Zealand to make up labour shortfalls;

Fifth, giving those stranded backpackers visa extensions to work in hort and wine and feed and accommodate themselves; and

Sixth, recognise that we in a troubling crisis and reduce the compliance burden to let our growers and farmers focus on growing our way out of recession. 

To let horticulture and wine make the contribution to our economic recovery, the Government has a series of decisions to make, and these decisions are now overdue.

It is time for the primary sector, hort and wine, to be fully backed by the Government to lead New Zealand’s recovery.  We can make a significant contribution, but we can’t make it without the right policy decisions being made now.

Footnote 

We acknowledge the work that Immigration NZ, the Ministry of Social Development and Ministry for Primary Industries and their Ministers are doing to address present and urgent labour and immigration issues, working with horticulture industry groups. 

Planning is well advanced for the coming harvest, which has just commenced with strawberries and asparagus.  For strawberries, picker shortages are predicted in the next few weeks and the vegetable industry is experiencing difficulties in finding workers today.  Then, we have spring pruning for apples and kiwifruit followed by the build-up to the cherry harvest in December, with a requirement for 7,000 pickers. 

Finding solutions are our collective priorities and we must find them soon.

Mike Chapman, Chief Executive