Fonterra’s dramatic cut to its forecast farmgate payout over this season and next will lead to a $13 billion black hole over two years, and shows the need for a plan to diversify the economy, says Labour’s Finance spokesperson Grant Robertson.
“The milk price payout was $8.40 last season. It is dropping to $4.40 this season and will only recover to $5.25 next season.
“That’s a $13 billion two-year economic black hole over the next two years.
“It makes a mockery of the Government’s overoptimistic budget forecasts for the global dairy price. Any surplus next year depends on a rebound in dairy prices so next year looks likely to be another deficit, just a week after Bill English’s budget claimed a wafer-thin surplus.
“It also shows Reserve Bank Governor Graeme Wheeler was exactly right when he said the falling global milk prices are a significant risk to the economy. It is even worse now.
“Not only will the economic black hole be a significant blow to the overall economy it will really hurt regions and communities dependent on dairy and that have been neglected by National.
“The big black hole in the Government’s budget was a plan to diversify the economy so New Zealand is not so reliant on commodity traders.
“Labour wants the dairy industry to thrive but it isn’t good for farmers to have to carry much of the burden of economic growth on their own.
“New Zealand needs a modern, diverse economy that creates well-paying jobs across all industries. This Government’s neglect is creating financial risks to New Zealand,” Grant Robertson says.