“Another massive drop in milk prices overnight shows New Zealand needs an Economic Upgrade to limit its overreliance on the dairy industry, Labour Leader David Cunliffe says.
“Since February, milk prices have collapsed by 41 per cent, which suggests the short-lived economic recovery may have already ended.
“Last night’s milk price fall of 8.4 per cent follows Fonterra’s slashing of its forecast milk payout last week which is estimated to suck more than $4 billion out of the New Zealand economy.
“Given Goldman Sachs recently warned of a five-year ‘global milk glut’, the payout price could drop even further in coming months.
“If this trend continues we could see increasingly indebted farms being sold overseas under National’s lax overseas purchase rules.
“New Zealand is too reliant on one industry – riding the wave of commodity prices is not a long-term solution to grow jobs and incomes.
“New Zealand needs to protect and support its existing export base while diversifying our economy and growing dynamic industries such as ICT, wood processing and manufacturing.
“Labour’s Economic Upgrade will focus on investment, innovation and industry to grow and diversify our economy and create better jobs that pay higher wages.
“We will boost our investment pool through universal KiwiSaver, direct that money to productive businesses and industries through our capital gains tax, increase innovation through research and development tax credits and tax deferrals, and provide targeted support to industries,” David Cunliffe says.