JOHN HAYES ONZM MP for Wairarapa

Video update

nospam@example.com (admin) — Thu, 10 May 2012 09:44:00 +1200

In his latest video update John talks about the opening of duck season, the recent passing of Sir Geoffrey Henry, developments in the reopening of the Manawatu Gorge road and the recent briefing to his select committee from the Governor of the Reserve Bank of New Zealand. He also talks about changes to New Zealand's commitment to the IMF. John finishes off by talking about how things are going around the electorate.

Video Update - 03 May

nospam@example.com (admin) — Mon, 07 May 2012 14:36:17 +1200

In his latest video update John talks about the state of agriculture in the Wairarapa, the trade missions that the government has planned for this parliamentary term, the recent visit by officials from Masterton's sister city and some of the opportunities this presents. He also touches on the Crafar farm decision and the future of two way trade between New Zealand and China.

From the House: 2 May 2012

nospam@example.com (admin) — Fri, 04 May 2012 11:09:59 +1200

Parliament resumes this week after a break for the school holidays. Most MPs have been spending time sitting on select committees held around the country listening to representations on a range of legislation including changes to Dairy legislation, social welfare changes and selling some shares in state-owned businesses. In between these meetings it’s been possible to travel through the electorate to address constituent concerns and to get a sense of the state of our local economy. I am generally encouraged that most people are in a good space with farmers and manufacturers being positive and optimistic. The biggest concern is the persistently high value of the New Zealand dollar that is impacting on earnings. Weaker prices in overseas markets for meat, wool and dairy products, is denting farmer optimism.

The picture in the electorate is reflected nationally with Department of Statistics figures showing that the value of exported goods decreased 6.0 percent in the March 2012 quarter. Falls in the value of exported dairy products, crude oil, and fruit led the decrease.

Values of imported goods have been steadily increasing with a 3.0 percent rise in the first three months primarily due to crude oil imports.
The seasonally adjusted trade balance for the March 2012 quarter was a deficit of $787 million, equivalent to 6.9 percent of exports. In other words we spent more money than we earned in this period. In March export values decreased $400 million (8.7 percent) compared with March 2011, while imports increased $48 million (1.2 percent). The trade balance for the March 2012 month was a surplus of $134 million (3.2 percent of exports). Exports were down 6.0 percent to $11.4 billion. The decrease was led by falls in the values of milk powder, butter, and cheese; crude oil; and fruit exports. One thing is certain; if our collective wealth is to improve then we must sell more than we buy.

Strengthening and growing trade links is a key part of building a stronger economy and creating more jobs with higher incomes. New Zealand has a history of reaching high-quality free trade agreements with our international partners. We need to build on that legacy which is why 28 high-level trade missions are planned for this term of Government.
Already this year trade missions have gone to China, South Korea, Indonesia, and Singapore. These missions help raise the profile of our exporters in rapidly expanding consumer markets. They have helped develop business networks and open doors in these markets and reinforce the importance of Asia to the future of New Zealand. The Prime Minister recently led a successful trade mission to Indonesia and Singapore. The Deputy Prime Minister and several Ministers have been in Australia furthering the single economic market. Economic Development Minister Steven Joyce has just returned from the Middle East where he led a delegation promoting New Zealand’s profile as a destination for international students.

During the Prime Minister’s visit to Indonesia an airline agreement was signed and Fonterra announced it will open its first processing plant in Indonesia. The 30th anniversary of CER next year will celebrate the strength of our trans-Tasman business environment. It’s vitally important to develop the single economic market agenda with Australia to remove regulatory barriers to trans-Tasman trade, and for businesses operating on each side of the Tasman. Our collective wealth and welfare depends on developing market access and stronger trade links.

Against this background it was pleasing to attend a meeting of the newly chartered Dannevirke Chamber of Commerce. It was great to see more than 60 local business people at the meeting to be briefed on the services which will be provided to members. Most important the whole business community in Dannevirke is working together. This is a good example for other parts of the electorate to emulate.

A major benefit of the Chamber is that it will assist local businesses to identify buyers and suppliers in other countries. New Zealand has always been a trading nation. Our productive sector and niche companies like Metalform in Dannevirke provide the world with high-quality unique products. As efficient producers with a small domestic market, our focus has to be on larger markets beyond our shores.

It was good to see a final decision on the sale of the Crafar farms; an issue that has resulted in comments from many people in and beyond the electorate. Whether or not you like the outcome, the successful bid by Shanghai Pengxin for 7,000 hectares of dairying land won't hurt us anything like as much as it will benefit us. China is rapidly becoming the most powerful economic force on the planet. Dairy farmers in the electorate and throughout New Zealand are big investors in China through Fonterra and are welcome in that country. Two way trade between both countries could reach $20 billion before the 2015 target formally set during the recent visit of fourth-ranked Communist Party official Jia Qinglin.

Meanwhile in Masterton six high-ranking municipal officials from sister city Changchun visited for four days to look at the Wairarapa as an officially sanctioned tourist destination for tourists from the Changchun area. There are also prospects for China to invest in wood processing and for sending students to Taratahi. The city is capital of the Jilin province in north-east China and has a population of 4 million. Its economy grew by 15.3% last year. Interestingly Chanchung has 18 sister city relationships including Quebec, St Petersburg and Birmingham. Mayor Garry Daniell and his team are doing well to compete for attention from the Changchun administrators against these other large cities. While our community has agonised over investment from Shanghai Pengxin I was interested to discover that Coca Cola invested US$20 million to set up a manufacturing plant in Chanchung. Like it or not the global economy is increasingly interconnected.

ANZAC day continues to gain prominence in our communities with some 3000 attending the dawn parade in Masterton and about 500 at Tinui which I attended. Particularly encouraging is the active involvement of our young people in the services themselves.

Take care handling you guns on Saturday morning when duck shooting begins and don’t forget to visit Martinborough for the postponed Rotary Fair where there will be an excellent turnout of 480 stall holders.

Let me know what you think with an email to johnhayes.mp@xtra.co.nz or phone 0800 2 HAYES for an appointment to meet.

Seventh Anniversary of the Election of His Holiness Pope Benedict XVI

nospam@example.com (admin) — Tue, 01 May 2012 09:36:40 +1200

Thursday 19 April 2012: The Embassy of the Holy See

Your Excellency, Members of the Diplomatic Corps, Distinguished Guests, Ladies and Gentlemen.

Tena koutou, tena koutou, tena koutou katoa.

Good evening.

On behalf of the New Zealand Government it is my honour to address you tonight as we celebrate the occasion of the 7th anniversary of the election of His Holiness Pope Benedict XVI (“the sixteenth”).

Your Excellency, it is a privilege to join you here to mark this anniversary. Thank you for your speech, and for recounting Pope Benedict’s important remarks about peace and respect, and New Zealand’s role in encouraging this in the world.

Pope Benedict XVI (“the sixteenth”) has established himself as a world leader who champions for cooperation between different cultures and communities.

His Holiness has a great presence in the international community, and in particular has shown a great awareness of the challenges facing our region and the important role New Zealand plays in Pacific affairs.

Following the devastating Christchurch earthquakes, Pope Benedict XVI offered his prayers and support to those who lost loved ones and all who were involved in the rescue operations.

Tonight’s event is an opportunity to celebrate the anniversary of his election as well as to reflect on the history of good relations between New Zealand and the Holy See. This close relationship continues to the present day. In fact, New Zealand’s Ambassador to the Holy See was recently at the Vatican to participate in the Easter observances with the Holy Father.

Diplomatic relations were first established between New Zealand and the Holy See in 1973. This was the official beginning of a solid relationship which has seen New Zealand and the Holy See work together in the international arena on a range of common goals.

Examples include our mutual support for development programmes such as UNESCO and the Food and Agriculture Organisation. We have also worked to similar goals on disarmament and arms control issues.

The Holy See actively works to promote racial and religious tolerance through international security initiatives such as the Interfaith Dialogue. It is also heavily involved in activities which aim to foster human welfare, particularly through the United Nations.

New Zealand followed with interest Pope Benedict’s recent visit to Latin America and the personal example and inspirational message of hope that he carried to the region.

Our shared vision of a safe, peaceful world in which human rights and freedoms are respected and celebrated, is one which brings our people together. New Zealand looks forward to continued cooperation with the Holy See, both here and abroad, to realise this vision for the betterment of the global community.

While we are here this evening to celebrate the 7th anniversary of the election of Pope Benedict XVI (“the sixteenth”), there is a second call for celebration.

On Monday His Holiness celebrated his 85th birthday.

I understand he celebrated with guests who treated him to Bavarian “oompah” music and folk dancing in the Apostolic Palace. In his thanks His Holiness noted how the different cities, people and ages represented there were “a reflection of all the stages in his life”.

Your Excellency, Ladies and Gentlemen, these are both great milestones and tonight I invite you to join me in a toast to His Holiness Pope Benedict XVI (“the sixteenth”).

Rural Schools to get faster broadband

nospam@example.com (admin) — Thu, 19 Apr 2012 11:12:49 +1200

17 April 2012

John Hayes MP for Wairarapa welcomed the news that work is to commence to connect five schools in the Wairarapa Electorate to faster broadband. The schools concerned are Mangaorapa School, Porangahau School, Oueroa School, Akitio School and Makuri School.

“This is great news for these schools, most of which are located in remote rural areas. It’s another step along the way to the Network for Learning, which will provide the schools with affordable, safe, ultra-fast internet access.

“Many of these schools have relied on using satellite broadband and have had to manage with small data caps and slow speeds, but this project will make a massive difference for students and teachers at these schools,” Hayes said.

“In addition, many of the communities surrounding the schools will also benefit, as the providers have agreed to make available wireless and fixed-line broadband services to many of the communities.

“This is part of National’s commitment that no school would miss out on faster broadband and I am delighted that we are delivering on that promise,” Hayes said.

Ends

Inquiries: John Hayes 021 546 072

Paddling in one canoe: trade and understanding in the Pacific

nospam@example.com (admin) — Thu, 19 Apr 2012 10:47:57 +1200

Speech to the Pacific Cooperation Foundation
17 April 2012

Fakaalofa lahi atu, talofa lava, maloe lelei, ni sa bula vinaka, namaste, kia orana, la orana, evening olgeta, taloha ni, talofa, kia ora tatou and warm Pacific greetings to you all.

Thank you for the opportunity to be involved in the opening of these wonderful new Pacific Cooperation Foundation offices today. I appreciate the invitation and want to acknowledge the PCF Board and staff members here this evening. Thank you for your dedication and commitment. Its also good to see so many familiar faces from business councils, businesses and trade commissions involved in the region. Its great to see you being supportive and cooperating together rather than competing in silo’s. Having spent last evening with the Vietnamese Deputy Prime Minister, a country of 90 million people, its clear to me we must work cooperatively rather than competitively.

Since 2002, the Foundation has worked to connect and coordinate the public and private sectors in the region to promote wealth creation in Pacific communities. This is a goal fully supported by the National-led Government.

New Zealand can, in my opinion, make the biggest difference in the Pacific by helping develop local enterprise and entrepreneurship. Fundamentally, improving trade and helping strengthen the private sector in the island states is a key contribution New Zealand can - and should to help job creation in the economies of our Pacific neighbours.

I salute the Foundation’s main supporters are Brother and the Ministry of Foreign Affairs and Trade. When we look at the PCF, we see Government, business and Non-Governmental Organisations working together – exactly the behaviour the Foundation is facilitating around the Pacific.

Today I’m going to discuss each of the Foundation’s two main work streams – trade and fostering understanding. Increasing trade is absolutely essential, but it is also crucial to appreciate that true cooperation is about much more than trade alone.

Trade

There is no doubt that trade has an important role to play in the development of the Pacific region because it provides employment, revenue and a solid economic base.

I belong to a party and a Government which believes strongly in enterprise and entrepreneurship. We firmly support improving trade between the Pacific Island countries and New Zealand in order to benefit individual countries and the region as a whole.

Economic growth through trade contributes to a nation’s real independence and to the wealth of communities. Growing national prosperity allows governments to improve education and health services. Community wealth enables environmentally sustainable policies.

However, I have to mention New Zealand’s massive, systemic and enduring trade surplus across the Pacific region.

Exports to the Pacific total $1.5 billion a year while imports to New Zealand from the Pacific come to just over $100 million. Taking out minerals and phosphate, New Zealand is importing around the same amount from the Pacific than it did in 1991.

Worse, the volume of New Zealand purchases from Pacific countries has actually declined over recent years. This is despite the fact that we offer duty-free and unrestricted access to almost all Pacific products under South Pacific Regional Trade and Co-operation Agreement (SPARTECA).

There is a pressing need to address this trade imbalance. We have a collective interest in encouraging more balanced trade flows between nations. It is a challenge for all parties involved in our region. Let me start by offering two suggestions.

In the past, I acknowledge that we have often made it difficult for Pacific imports to get into New Zealand. As an agricultural nation, we naturally have to take biosecurity and border control very seriously. However, there is potential to reduce the amount of compliance and red tape while keeping robust biosecurity protections in place.

For example, there are initiatives from Ministry of Agriculture and Forestry which look to educate businesses in the Pacific about our regulations and quarantine rules to help speed up importing. That is a step in the right direction.

It is also clear that we have a problem with ships traveling to the islands relatively full of goods, but coming back only a quarter full. This low level of back-filling causes unusually high freight rates to the Islands. Addressing this is going to require changes from both the New Zealand Government and New Zealand businesses.

That will take time but I hope it will happen.

Simply put, the Pacific economies have not grown fast enough to satisfy the aspirations of their people. Only through trade and increased economic growth will communities have access to the resources they need.

I chair the Foreign Affairs, Defence and Trade select committee which conducted a major inquiry into the Pacific. One of the key themes in our report was the importance of helping Pacific nations develop the harvesting, processing, marketing and exporting of island resources - including fish, tropical timber, fruit and vegetables, minerals and tourism.

These are the sectors where many Pacific countries have strong prospects for economic development which in turn will lift communities firmly above poverty, malnutrition and dependence.

That will not happen automatically. Amartya Sen, the Indian-born Nobel Prize winning economist and also a Professor at Harvard, warned “while economic growth is important for enhancing living conditions, its reach and impact depend greatly on what we do with the increased income.”

He used the example of India and China. While India was catching up with China in terms of raw economic growth, this was not being reflected in key statistics such as life expectancy, infant mortality, years of schooling, literacy and immunisation rates. Countries still have to choose to use their additional resources wisely.

Fostering Understanding

When it comes to fostering understanding, it is important to recognise the strength of the relationship between New Zealand and the Pacific region.

It goes back in history and deep into our societies. We share a combination of history, constitutional links, family and community ties, and geographical proximity which binds us together as Pacific people. I strongly believe that New Zealand has a capacity, and indeed a responsibility to play a greater role in the Pacific.

The mighty Pacific Ocean touches the shores of all the countries in our region. That deep blue water is the central symbol of our Pacific identity.

We have a special relationship with the Pacific and all New Zealanders have an interest in working in partnership with our neighbours to build prosperous, safe and just societies.

I would suggest three areas which require more work.

One - We collectively need to do more to highlight the depth of talent in the Pacific communities in New Zealand. Although it often goes against our innate modesty, we need to celebrate success, promote role models and encourage successful Pacific Islanders to become more active as mentors, both here and back in the region.

Two – there is a pressing need to obtain more financial support and commitment from New Zealand businesses to boost Pacific enterprises. Development cannot rely just on Government support. We must move beyond aid.

Initially, Pacific businesses may require assistance developing their expertise and banking reform will be required to allow people to raise capital. Improving access to finance remains a prevalent concern and we should look at simplifying application processes and attracting foreign investment to small- and medium- enterprises as many enterprises in the region remain undercapitalised.

The New Zealand Partnerships for International Development fund aims to support New Zealand-based organisations to deliver development activities with partners in developing countries, particularly the Pacific. It will be available for businesses, recognising that they play a critical role in development.

For those interested, Amanda Ellis, Deputy Secretary of Foreign Affairs and Trade, will be speaking here in two-day’s time as part of the consultation on this new fund which will becomes active later in the year. If you wish to attend, please give your details to any member of the PCF staff here today.

Three, we need to engage more with Pacific leaders to build a stronger culture of responsible governance. To be blunt, the biggest threat to regional stability and development is poor governance, corruption and the mis-allocation of resources.

Looking at the Pacific in a post-colonial environment, the key to security and peace for Pacific States is to develop strong economic and political foundations.

However, the preconditions for economic empowerment include the existence of a trusted system of rules for business and, frankly, open, honest and transparent governments.

Crucially, it’s only in this environment that foreign investment in infrastructure will be secured. Pacific nations really do need ports and power, water and roads if they are to progress. There needs to be order for business to exist.

Business people, skilled workers and tourists also need to be safe and they need to feel safe. This means proper policing and security. In an inter-connected world, people will quickly take their money and skills elsewhere if they feel threatened.

Conclusion

New Zealand’s on-going relationship with the Pacific region should be based on the mutual desire to talk, trade and engage in business. It must be founded on respect and understanding – not any desire to control, exploit or bully.

Our role as Government is really quite similar to the Pacific Cooperation Foundation – it is to build business and public sector partnerships to develop capacity for Pacific Island countries.

The potential of the private sector in the Pacific is immense, and how that sector performs over the coming years will largely determine how much progress is made and how sustainable any gains will be.

By fostering greater understanding, we have more chance of everyone being in one canoe, paddling in union and heading in the same direction.

I wish the Foundation well in your new premises and for your on-going work.

From the House: 18 April 2012

nospam@example.com (admin) — Thu, 19 Apr 2012 10:44:11 +1200

A third of the year has slipped by. Easter has been and gone, the school holidays will soon be over and still the grass grows! Part of our family has visited and returned to Kuwait where they work. The parting strengthens my resolve to work hard for a stronger economy so that it is more attractive for our children to work and live in New Zealand rather than overseas.

Parliament is not sitting this week but select committees are. I’ve been ploughing through more than 600 submissions commenting on the partial sale of shares in several utility companies. Later in the week I’ll be on the Social Services Select Committee considering submissions on draft legislation introduced by Paula Bennett. The Bill is intended, amongst other things, to tighten up on cash payments paid to young teenage mums. Currently the welfare system simply pays benefits to young people and teen parents and leaves them to it; that’s about to change. The draft legislation means that young people will in future have accommodation, electricity and food provided rather than cash in the hand.

The job of a parliamentarian is to see that the taxes taken from your pocket are well spent. Government spends a huge chunk of your taxes, $7 billion a year, on welfare benefits – that’s more than $20 million a day. The numbers are so big that careful scrutiny is required. Some 351,000 working age people or 13% of the working age population – that’s 1 in 8 – are receiving a benefit. More than 220,000 children (that’s equivalent to ten towns the size of Masterton) live in benefit-dependent homes. Across the electorate I see long-term welfare dependency trapping too many people in a life of limited choices, poverty, and poor health. If adopted, the new legislation will place greater work obligations on beneficiaries. It’s worth repeating that the money for benefit payments does not grow on trees. It comes from the pockets of people in work. I feel that the system has been letting people down, causing too many people to become trapped in a cycle of dependence from which it is difficult to break away.

Currently there are 3,000 16-17 year old parents on a benefit, and around 14,000 young people aged 16 and 17 years who are considered ‘NEET’ – not in education, employment or training. I think it is reasonable to provide more support for these young people but I also feel it is reasonable to insist they be in education or training if they are paid a benefit.

The Bill will introduce a part time work requirement for mothers when the youngest child reaches five years of age and it introduces a full time work expectation when the youngest is fourteen. The legislation will authorise information sharing between the Ministry of Education and the Ministry of Social Development to allow the provision of services to young people; and between provider organisations. The intention is that the youth support changes will take effect from the end of July 2012 and the work obligations initiatives will come into effect in October 2012.

Rural communities like ours are a big part of the economy and important because they generate two thirds of New Zealand’s export income and provide one in every nine jobs. It would not be reasonable to focus on welfare beneficaries without making sure that the economy was being strengthened to provide new jobs. We must ensure that New Zealand farmers and rural businesses stay at the top of the global game and to achieve that we must all work to build a more competitive and productive economy.

Much has been done to cut red tape. The Resource Management Act has been reformed to reduce costs, uncertainties, and delays, and work is underway on a second stage of reforms to achieve the right balance between environmental responsibilities and economic opportunities.

The need to reform local government to get council debt and spending under control is obvious and I thought reinforced in an article in the Dominion a couple of weeks ago. The Mayor of Wellington is paid $161,600 while the three southern Mayors covering Masterton, Carterton and South Wairarapa are collectively paid $201,900, but the cost is met by far fewer people than in Wellington. Many other costs are triplicated. I believe we need to plan for a one-stop-shop or Unitary Council arrangement like Gisborne or in Nelson, and have it in place by next year’s local body elections. The efficiency of our local economy depends on this type of change.

Company tax and income tax have both been reduced across the board and a couple of weeks ago, on 1 April, ACC levies for farmers and rural businesses were reduced.
Other support from central government for the rural sector includes $35 million provided through the Irrigation Acceleration Fund to support the development of irrigation proposals that should boost exports by $1.4 billion a year by 2018, and by $4 billion a year by 2026. Government will also invest up to $400 million to support the development of new water harvesting, storage, and distribution infrastructure. $75 million has been provided to a Joint Border Management System between MAF and Customs to improve biosecurity.
Access to key growth markets, such as India and China is vitally important if we increase exports. John Key is in Indonesia this week advancing our export interests in that large market. A particular focus for him will be to try to increase our beef exports to Indonesia. They are currently constrained by an Indonesian imposed quota. We are also working towards free trade agreements with South Korea, Russia, and India, and with the United States through the Trans Pacific Partnership.

Through sensible policy development, sound financial management, and industry consultation there is plenty of scope to deliver a smarter and more efficient internationally competitive primary sector which I would expect to deliver more jobs in our community.

Let me know what you think with an email to johnhayes.mp@xtra.co.nz or phone 0800 2 HAYES for an appointment to meet.

Launch of the Hong Kong Friendship Group

nospam@example.com (admin) — Thu, 05 Apr 2012 11:19:34 +1200

New Zealand’s relationship with Hong Kong is comprehensive and in good shape. It is maintained by regular high level engagement. Hong Kong has for a long time been an important trade and economic partner of New Zealand. Like us, Hong Kong is a strong proponent for open markets and supporter of the multilateral trading system. It is a valuable and like-minded partner in both the WTO and APEC contexts, and an important gateway for some firms to mainland China for goods, services and investment.

New Zealand-Hong Kong trade is facilitated by the Closer Economic Partnership (CEP) which entered into force on 1 January 2011. The CEP raises the profile of what was already an open and sophisticated trading relationship. It secures duty-free access for New Zealand goods into Hong Kong and will enhance access to Hong Kong’s service market. Importantly, it highlights Hong Kong as a strategic platform for New Zealand business seeking access into the mainland China and regional markets.

On the political side, New Zealand and Hong Kong share a common commitment to the rule of law, the preservation of individual rights and the independence of the courts. That shared commitment is based on common law legal traditions, and is reflected in the presence of a number of New Zealanders in Hong Kong practicing law at high levels and through the number of senior New Zealand judges that have served on Hong Kong’s highest court, the Court of Final Appeal.
The Hong Kong Chief Executive Donald Tsang will visit New Zealand 10 – 12 April 2012.   The visit will be an opportunity to reinforce the good political relationship and close connections between the political leadership of both systems.

We welcome your delegation led by Madame Maria Kwan Sik-ning, Director-General, Trade and Industry Department, Hong Kong.   Madame Kwan is a senior trade and economic official who has held a number of positions across a range of portfolios including currently as the Hong Kong Senior APEC official. She is currently visiting New Zealand to lead the Hong Kong delegation for the inaugural CEP Joint Commission meeting.

Hong Kong is our 21st largest trading partner. It is also New Zealand’s 8th largest source of foreign direct investment.   Trade with Hong Kong has risen by around 30% in the past five years (exports by over 40%).
Exports to Hong Kong last year totalled $798 million. New Zealand’s main exports to Hong Kong are fish and seafood; dairy, eggs, honey; meat; edible fruits and nuts; and, hides and skins.
Imports from Hong Kong last year totalled $156 million. Key imports were machinery, electrical machinery, woven apparel, optical and medical instruments and precious stones and metals.

In terms of investment, as of March 2011, Hong Kong had over $3.6 billion of investment stock in New Zealand. This includes direct investments portfolio investment, and other forms of investments. The stock of Foreign Direct Investment (FDI) in New Zealand from Hong Kong was valued at $895 million as of March 2011, mainly focused in infrastructures and resources.

I hope this new friendship group will play an important role in promoting New Zealand’s engagement with Hong Kong for many years into the future.

Can I ask you to charge your glasses and make a toast to a close relationship between Hong Kong and New Zealand.

Middle East and Counter Currents: the Arab Spring

nospam@example.com (admin) — Thu, 05 Apr 2012 11:10:15 +1200

Speech to U3A Christchurch - Monday 2 April

Salam Alaykum!

‘Upon you be peace’

Thanks for the invitation to address your class today as part of a series of talks on “International Political Hotspots”. As Chair of the Foreign Affairs and Trade select committee and a former diplomat, that is certainly a topic which fascinates me, not least because I have lived and worked in some of those hotspots.

Today I will discuss the Middle East, specifically the likely short- and long-term consequences of the Arab Spring uprisings. To set the scene, I am going to begin by outlining my time in the region and showcasing how New Zealand presence there has changed. Those changes reflect the Middle East’s growing importance for our security and economy.

After a brief overview of the Arab Spring, I’d like to examine several competing assessments of its impact and give you my thoughts. Finally, I will reflect on the nature of the Middle East and some of the broader challenges it will have to confront going forward.

Personal experience

I spent nine years working on Middle East issues, lived in Bahrain, Jeddah, Riyadh and Tehran and have visited most countries in the region a number of times. In 1982 I arrived in Bahrain after closing our High Commission in Delhi.

This was an unexpected outcome as I had early that year been posted to India for three yeas as Deputy High Commissioner. It was not a fortunate role. All three of my predecessors had died of were about to die with brain tumours.

My stay in New Delhi was short: five days after I arrived Sir Robert Muldoon – in his wisdom – decided to close the High Commission which at that point had been in place for 22 years. The High Commissioner was in Bangladesh presenting his credentials when the fateful message arrived on the secure teleprinter. On his return, he decided to fight Muldoon and, like most people at that time, lost.

Having literally just arrived I was given three months to close the High Commission and put fifty people out of work. It was an unpleasant task, all the more so because I knew it would just be a matter of time before New Zealand would reopen its presence in the largest democracy in the commonwealth.

New Zealand’s presence in Bahrain at that time was another oddity instigated by Muldoon. From the capital Manama I covered from Kuwait in the north to Oman in the south and Qatar in the east to Jeddah in the west. It was a bit like covering countries of the Pacific from Niue.

By the time our office opened Bahrain’s oil, discovered by a New Zealander in 1935 had been extracted. The country was supported by Saudi and during my time connected to it by a causeway. Bahrain was ruled by an Amir or tribal leader, Sheik Issa, father of the present ruler. A charming, benign, shrewd leader surrounded by eunuchs at his palace and a bevvy of beauties at his beach house. I very much doubt he would have responded to the recent uprising in the way his son did.

It was an odd environment, but I quickly came to understand that Arabs say one thing but mean another. The influence of the Arabic language leads to cant, hypocrisy, bombast and self deceit. Fine language allows Arabs to avoid their fears and the imperatives of logic.

Close by however was the reality of the Iran-Iraq war, the longest conventional war in the 20th century, just a five minute ride in a Jet Fighter from the Bahrain coast. Tension between the sunni rulers and the majority Shia was palpable then it is now, and Iran was doing its best to promote discord and instability as it still does.

The cultural divide and lack of understanding between Arabs and westerners (recruited to work for Arabs) creates misunderstanding, rumour and a certain nervousness. The reality during the “Tanker Wars” - when Iranian planes and ships sank Iraqi oil tankers in the Gulf – was lumps of oil washing up on the beaches of Bahrain. The fear of war is nothing new in the Middle East.

From Bahrain, we also covered Saudi Arabia, the UAE, Oman and Qatar. Our main job was to keep the important Middle East market open for New Zealand food products, principally meat and dairy products. Our main opponent in this fight was Australia. At that time the Australians were promoting limited shelf life for food to the GCC countries. The shipping time from New Zealand back then was about six weeks and limited production and expiry dates could have shut New Zealand from the market.

The Australian farmers were shipping from Darwin – which is much closer to the Middle East - would have had a huge competitive advantage even though our lamb was a better product and perfectly safe.

It was certainly an on-going battle.

Our office was situated in Bahrain because Muldoon believed Bahrain would become the Singapore of the Middle East, an economic miracle. It did not, of course, but Muldoon was not alone in making that error. Much of my time in Bahrain was spent arguing the case for closing that office and reopening in Saudi, which we did in 1984.

Importance to New Zealand

Times have moved on since we tried to promote New Zealand’s regional interests from a small post in Bahrain. New Zealand diplomatic personnel are now in the key places – Saudi Arabia, Dubai and Abu Dhabi, Egypt and Turkey – and the hot spots – Afghanistan and Iran. The large embassy in Saudi now covers Bahrain, Kuwait, Oman and Qatar. I think we have got it the right way round now but I expe ct its just a matter of time before a permanent representation is established in Qatar.

The hugely increased New Zealand diplomatic presence in the Middle East reflects its growing importance to our security and trade interests.

As a small nation, New Zealand has a vested interest in a stable geo-political environment. The Middle East has long been a cauldron of conflict, some of which have occasionally, threatened to spread. Consequently, we are naturally interested in a peaceful and stable Middle East which respects international law and human rights. We do not play a dominant role there obviously, but as a small independent nation we have some complementary elements and can play a non threatening role.

Despite all the talk of the new economy, New Zealand remains a trading nation and the Middle East has become a very important market. The region has transformed and grown since I was skirmishing with the Australians over frozen lamb regulations in the eighties.

In 1988, New Zealand trade to the Middle East was worth $461.5 million, or 3.5% of our total exports. That figure has grown steadily and in 2011 our exports to the Middle East were $3.045 billion. That represented 6.6% of all our exports. The largest markets for us by some margin are Saudi Arabia and the United Arab Emirates. There can be no doubt the region is important to our economic future.

On the issue of trade, I believe we need to rethink our opposition to exporting live sheep and cattle for slaughter. In the early nineties, it was a billion dollar a year industry. However, we never exported cattle for slaughter and the last export of sheep for slaughter was in 2003.

That did not stop the last Government pushing the Customs Exports Prohibition (Livestock for Slaughter) Order in 2007. Although it is not a blanket ban, it blocks live animal exports for slaughter “unless the risks to New Zealand's trade reputation can be adequately managed.”

Australia seems to manage that risk successfully. In 2011, just over a billion dollars worth of Aussie cattle and sheep were exported for slaughter, much of it to the Middle East. We still send a lot of live sheep out of the country but only if they are for breeding purposes. I believe the time is right for another look.

It may turn out that our objections to live export for slaughter are still valid. However, technology has advanced in the last ten years and we need to check our assumptions before deciding to forgo what could easily be a billion dollar industry again. After all, our livestock is still better than Australia’s. That is one thing that has not changed since my time living oin Bahrain and Saudi Arabia.

Arab Spring - Summary

The Arab Spring was a wave of protests and demonstrations which began In Tunisia and swept across the Arab world throughout 2011. For those that doubt the significance of the revolts, rulers were forced from power in Tunisia, Egypt, Libya and Yemen. Many of those routed from office had held power for decades, often with an iron fist. Gaddafi ruled Libya for 41 terrible years. He ruled through the presidencies of Ford, Carter, Reagan – who famously called Gaddafi the Mad Dog of the Middle East – Bush Snr, Clinton, Bush Jnr and Obama. In the end, the revolution which ended his reign and his life took nine months.

There have been major civil uprisings in Bahrain – including the massive Day of Rage protests which prompted martial law - and the struggle continues in Syria where the regime of Bashar al-Assad remains under huge international pressure to go.

At this point I want to note my personal disappointment that China and Russia refused to support the reform measures proposed by the Arab League which had inspected the deteriorating situation in Syria. It was cynical geo-politics from the superpowers after the leaders of the Arab League had put the interests of the region first.

Differing interpretations

Much has already been written and said about Arab Spring – by politicians, academics, journalists and ordinary people on social media – and predictions made about how it will play out. Most agree it was a historic event and the full implications will take years to become clear.

The Intelligence Unit at the Economist concluded there are three main scenarios: a 20% chance of the status quo continuing, a 20% chance of a democratic breakthrough and a 60% of limited democratic reform in some – but not all – Arab nations.

Shashank Joshi - doctoral student at Harvard and columnist for the Guardian - described the Arab Spring as a “torrent of uprisings, coups, standoffs, civil wars, and an orgy of state-sponsored bloodletting” which finally thawed a “regional order frozen in place since the death of Egypt’s Colonel Nasser 40 years ago.” However, he notes that “revolution is not, and has never been, an event. It is more like a project, and one whose gestation spans not months, or even years, but decades.”

In the immediate future he is not overly optimistic. Joshi predicts continued Army bullying Egypt and an economic crisis which will see the protesters, parliament, president and generals staring each other down, if the country has not collapsed into Civil War.

He describes Syria as a “multi-cultural powder keg” where the al-Assad regime will continue under the shield of China and Russia’s protection. He predicts a flood of smuggled weapons and escalating violence, including a swathe of political assassinations.

Its worth recalling that Syria has been ruled for five decades by the Ba’th party which is an unattractive arrangement. In effect a dozen men have ruled Syria in this time. Like all parties that rule alone it has no faith in democracy. It permits patronage, corruption and nepotism. It denies freedom of speech.

The 2011–2012 Syrian uprising is an ongoing internal violent conflict in Syria. Protesters demanded the resignation of President Bashar al-Assad, the overthrow of his government, and an end to Ba’ath Party rule. The uprising has sectarian undertones, though neither faction in the conflict has described sectarianism as playing a major role. The opposition is dominated by Sunni Muslims, whereas the leading government figures are Alawite Muslims.

According to various sources, including the United Nations, up to 9,100–11,000 people have been killed, primarily protesters but also including 2,470–3,500 armed combatants; the United Nations reported that over 400 children have been killed. Anti-government rebels have been accused of human rights abuses as well, including torture, kidnapping, unlawful detention and execution of civilians.]
The Arab League, the United States of America, the EU states, the GCC states, and other countries have condemned the use of violence against the protesters.

China and Russia have avoided condemning the regime or applying sanctions, saying that such methods could escalate into foreign intervention. However, military intervention has been ruled out by most countries.The Arab League suspended Syria's membership over the government's response to the crisis,[86] but sent an observer mission as part of its proposal for peaceful resolution of the crisis. To escape the violence, over 130,000 Syrian nationals have fled the country.

Despite desperate efforts from President Obama, Joshi believes we will see “more mysterious explosions at nuclear facilities” in Iran – his code for pre-emptive Israeli attacks on Iran’s nuclear capability. How the unpredictable and increasingly radicalised Iran responds will have a huge impact on the region and the world.

I would like to carefully reflect on the strategic position of Iran and its possible drive to develop nuclear weapons. It is instructive to take an Iranian perspective.

They are surrounded by India and Pakistan who both have nuclear weapons. Israel, Saudi Arabia and Turkey might have nuclear weapons, and Afghanistan remains unstable. Their oil is high in sulphur which makes it considerably less valuable than their competitors. It is a dangerous strategic environment – the virtual opposite of what we face in New Zealand.

Commentator Saeb El Kasm, who has taught at the University of California, is more upbeat than Joshi. For him, the Arab Spring has the “potential to change the existing landscape in the Middle East by replacing coercive authoritarian regimes with sovereign states rooted in the democratic spirit. Given the proper impetus and direction, the shackles of the old exploitative order can be replaced with a political space respectful of popular participation, comfortable with the pluralism of civic engagement, and mindful of the importance of governmental accountability.”

He acknowledges there will be economic dislocation, increasing political upheaval, and a structural redefinition of Arab governance. However, moving ahead, he believes there can be acceptance of policies based on political freedom, rule of law and inclusive economic growth.

Stefan Wolff, Professor of International Security at the University of Birmingham argues it is a two-level revolution.

In the countries where there has been regime change he characterises progress as incremental at best. Most are engaged in “an up-hill battle in the transition to a more democratic political system” often because the protestors were only united by their opposition to the previous government. Once that government was gone, their disparate interests re-assert themselves. One of the key lessons Wolff draws is that “the departure of the old regime does not automatically lead to peace, stability and democracy.”

In other countries, he believes the old regimes are determined to hold on to power at all cost and are likely to be successful in doing so. Wolff argues change “will be a long and at times frustrating endeavour, and while we must remain realistic about the speed and comprehensiveness of its success, we should remain equally committed and determined in our support of the genuine democratic aspirations of the people who have started these revolutions.”

I would agree that we must offer support but I remain sceptical about whether democracy – our Western concept of democracy – will ever work in the Middle East. Many commentators believe that democracy as we know it is a product of western culture and social norms. As such, it cannot be applied to the Middle East which has a different cultural, religious, sociological and historical background.

With some regret, I find myself agreeing with that assessment but we must look to develop new systems which promote - perhaps in different ways - many of the democratic ideals we hold dear.

Reflections

I would like to finish with some reflection on the Middle East – both the immediate aftermath of Arab Spring and the longer-term strategic challenges the region has to face.

Part of diplomacy is understanding a nation’s character – what characteristics really define it. For New Zealand, it would probably be a sense of fairness and a desire for equality. In the Arab world, the fundamental law is tribal loyalty - if you are not a member of the tribe, you an enemy of the tribe. Strength and power are crucial.

To me, this goes someone towards explaining why the region is inherently unstable. Any truces or alliances are short-lived as self-interest and tribal identity constantly assert themselves. I have seen the exact same behaviour from the many tribes of Papua New Guinea. They have the same tribal mindset and the result is constant skirmishing and squabbling.

As a result, I see a continuing need for a strong Western presence in the region, be it the United States, Europe or a multi-lateral approach. The last option is currently hamstrung by the attitudes of China and Russia though the revolution in Libya showed a dramatic change in French attitudes. They were keener on an aerial bombardment than the British!

You may be aware that Time Magazine gave its Person of the Year Award for 2011 to “the protestor.” It is not the first time a group has received the award – previous recipients have included American soldiers (twice), Hungarian freedom fighters, American scientists, American women and the Whistleblowers. The award has also been won by the computer (1982) and the endangered planet (1988).

While the cover photo and much of the article focused on the Arab Spring protests, as they should, other protests such as the Occupy movement were included. I don’t believe the two groups share much in common. The Arab Spring protestors, often poor, were putting their lives on the line against oppressive regimes. Hundreds were killed, thousands were imprisoned and many have simply disappeared.

The Occupy protestors, often rich, share only a loose hatred of ‘the rich’ and ‘the powerful’. They have a strong sense of their entitlements (camping sites, water supply, public toilets) but little understanding of their responsibilities. For those raging against corporations, they are quick to call in lawyers and throw around injunctions.

There is a difference between facing down the secret police and trashing a Starbucks. Putting the two together devalues the sacrifices made during the Arab Spring.

However, the Middle East faces a far greater challenge. The region is energy rich, water poor. That is to say it has a lot of oil, but very little water. New Zealand is the opposite – we are energy poor, water rich. At first glance, it would seem better to be energy rich with all the wealth that appears to entail. That is a short sighted view.

Many Middle East states have encouraged high population growth based on their rising oil revenues. However, with the greater population comes a greater need to desalinate water and to import food. Virtually no Middle East country has even basic self-sufficiency in food and water.

They try to cope by raising the price of oil but that simply pushes up the price they pay for water and food. It does not work. It is the same reason a country cannot tax its way to prosperity, though that does not stop many trying.

In the 21st Century and beyond, if a country runs out of energy, food or water there will be upheaval. When the oil supply runs out – or is superseded by new technology – the Middle East will face disaster unless they have diversified their economies and improved their food and water production.

If they do not or can do this, then archaeologists of the future might be uncovering magnificent ruins of cities like Abu Dhabi and Riyadh under desert sands.

Conclusion

For much of its long history, the Middle East has been a maelstrom of commerce and violence. It is clear that the Arab Spring was a momentous event which will take its place in history, but the full impact will take years or decades to become clear.

I believe we will see limited democratic change in a number of countries and this is to be applauded. If Egypt can successfully transition to a more democratic system then that will be a significant achievement.

However, many of the countries will remain unchanged or may even become more violent and repressive. There is the danger of counter-revolution and civil war, often supported by neighboring powerhouses. New Zealand will continue to have a small but important role to play in the region.

There is no danger of the Middle East dropping off the list of “International Political Hotspots.”

From the House: 4 April 2012

nospam@example.com (admin) — Thu, 05 Apr 2012 11:06:33 +1200

Last week I was delighted to meet a smart young lawyer in parliament. She had graduated from Victoria University after schooling at Saint Matthews. She has just joined a major Wellington law firm and was attending a Parliamentary Business Association lunch. I think the greatest gift a parent can give to their child is an excellent education. Educating our children well also helps the country lift its economic performance and create jobs, boost incomes, improve living standards, and provide the world-class public services Wairarapa families want. High-quality education is vitally important. It provides the opportunity for any child from any background to get ahead and make the most of their lives. A good education is also an essential requirement for a skilled, creative, and productive workforce, which is a key to growing a stronger economy. The whole community contributes by paying taxes which allow interest-free loans to be made available to students so they can complete their course of study. The scheme is one of the most generous in the world and we want to keep it that way. Parliament took steps recently to make the student loan scheme sustainable into the future, reducing the need for more Government borrowing, and preparing students for the jobs of the future. Legislation was passed to make sure borrowers understand that when they choose to take up a student loan, they are choosing to take on all the responsibilities that come with it – such as paying it back. After all the money came from taxpayers in the community.

The Student Loan Scheme Amendment Bill contains reforms announced in Budget 2011 and follows on from the Student Loan Scheme Act passed by Parliament in August 2011 which allows for defaulters’ loans to be recalled in full. The bill makes it mandatory to provide a New Zealand-based contact person when applying for repayment holidays, which will also be cut from three years to one year for those travelling overseas. The student loans Budget package included a change requiring every new loan application received by StudyLink to include a contact person as a condition of getting a student loan. This bill will allow for that contact information to be provided to Inland Revenue by StudyLink. Essentially, Parliament was cleaning up the area around defaulting on student loans and addressing the overall size of student loan debt.

You might be interested to know that $1.6 billion was lent by the Government for student loans in 2010/11. The total amount of repayments for this year was $690 million. The current value of new lending is 54.75 cents in the dollar (ie the Government writes down 45.25). 12,000 more core fulltime tertiary places were funded in 2012 than in 2008 without increasing the tertiary budget. This was achieved by delivering better value-for-money from the community’s investment in tertiary education and the student loan scheme.
As at 30 June 2011, borrowers who moved overseas represented 15% of all borrowers, but half of them were in default and 70% of the borrowed amount was overdue. IRD managed to recover $6.6 million in overdue debt through a successful pilot programme aimed at 1000 Australian-based loan holders. This debt recovery programme is being expanded to debtors in Australia and Britain. The median repayment time for overseas-based borrowers is 14.1 years, compared with 5.2 years for borrowers resident in New Zealand. Those constituents with children living and working overseas and a student loan could help us all by suggesting the time has come for them to do the right thing and pay the communities’ money back.

Travelling around the electorate I constantly meet people who have a strong emotional attachment to the country or place where they were born. It’s especially visible in people who have come to settle in New Zealand. Such sentiment is similar to our sense of parochalism. Similar emotion drives our desire to work in silos where we feel comfortable in a small rather than a large space. It constrains the ability to reach out to embrace the wider community where we have common interests though we are not always inclined to want to work together. Our many District Councils are an example. In Dannevirke last week I was briefed on an extraordinary number of agencies providing community services, in particular around the issue of family violence, which reported over 800 incidents last year. Yes, just in Dannevirke and its environs. An issue I’m now looking at is how to provide an interfaced service using these agencies which is effective but less confusing. I hope we can shed some light and establish which agency where manages what in the community.

The bottom line here is that people tell me they care deeply about the quality of the public services they receive and what those services achieve. I have begun getting stiff messages about rates rises especially those governed by the Masterton District Council. People care whether or not the health system treats patients promptly and effectively. They want to know that children are getting the chance to achieve at school. They want to see the Government tackling crime and looking after the vulnerable in our community. Those same people are also tax and ratepayers. They pay the bills. They want to know that the public sector is spending money with sort of care they would themselves.

The stretch of Highway 2 between Woodville and Dannevirke is host to significant construction effort and slow-going just now. The road looks as if it will be vastly improved when construction is completed. Good progress is being made on clearing the slip in the Manawatu Gorge, but this week’s report has a photo of damage to the bridged road under the slip. A couple of weeks ago I received a petition with 463 signatures pointing out that the Whakaruakapa Bridge was dangerous and needed to be replaced. I have written to the Minister of Transport and look forward along with the Tararua District Council to promoting this project . Unfortunately I was unable to table the petition in Parliament because it did not follow the prescribed form. If you are contemplating a petition can I suggest that you share the text with me before signatures are collected so that we can be sure it meets Parliament’s rules.

I was delighted that the Whips gave me leave from Parliament last night to attend a celebratory evening at Makoura College. Readers will recall the Labour Government wanted the school closed. Over the last two years the stable College environment has enabled 100% of 2011 Year 11 and Year 12 students who were entered in a full 80 credit NCEA course to gain NCEA at that level. This is a fantastic outcome and has I am sure exceeded many parents expectations. I want to put on the record my congratulations to the school leadership team for shepherding the school through difficult times and into this excellent space. Great work Tom!

Let me know what you think with an email to johnhayes.mp@xtra.co.nz or phone 0800 2 HAYES for an appointment to meet.

Video update

nospam@example.com (admin) — Wed, 04 Apr 2012 09:35:00 +1200

In his latest video update John talks about his recent trip to Tonga for the funeral of the late King. He then goes on to talk about his recent travels around the electorate and the state of farms in the area. He then goes on to talk about the reforms of student loads that are currently being undertaken. John also talks about the 75th Anniversary celebrations for the Air Force at parliament, as well as his upcoming visit to Makoura College.

From the House: 21 March 2012

nospam@example.com (admin) — Wed, 21 Mar 2012 10:31:38 +1300

It seems like winter has arrived in Wellington this week. A southerly has been gusting to 50 knots since Monday; rain and depressingly grey. I feel sorry for the visitors who slid into the harbour on a large white block of flats embarked on a world cruise. I expect few would have escaped their luxury suites for the cold windswept streets. A disappointing outcome for local retailers. But it was great to see columns of cars streaming across to the Wairarapa at the weekend. Travel is really helped by the upgrade work on the Rimutaka Hill with sealing of the reshaped road virtually completed. Progress clearing the Manawatu Gorge slip is being made with dirt now being cleared from the both the Palmerston and Woodville sides of the slip. For those with internet, it’s worth a visit to view progress at http://www.nzta.govt.nz/traffic/current-conditions/highway-info/manawatu-gorge.html

Speaking of the internet it’s pleasing to see ultra-fast broadband being rolled out in the electorate. I’m really excited about the benefits it will bring to our community, our young people, and our local businesses. Much faster broadband will help schools work together and help our students learn. They’ll be able to get the very latest in learning resources online. They’ll get new opportunities to build their talents and grow their skills. The impact of much faster broadband will go well beyond schools. By the end of 2019, three in every four Kiwis will be able to get ultra-fast broadband.

Broadband will revolutionise the way our firms do business. It will continue to transform the way our GPs and hospitals deliver care and treatment to patients as is readily evident at Masterton Hospital. It will connect our farmers and vineyards with markets, encourage greater innovation, and create more jobs with higher incomes. Broadband initiatives are an important part of our plan to build a more competitive and productive economy – one of the four key priorities for our second term in Government.
Over the past couple of weeks I’ve had a wet towel around my head while concentrating on changes proposed for the Foreign Ministry by the organisation’s senior management. I have been focussed on this issue because delivering better public services within tight financial constraints is one of the Government’s four key priorities for this term. We are firmly focused on re-organising the public service to be more innovative and efficient. Our objective is to improve services, reduce costs, and deliver better results. We want better traction on difficult issues like reducing crime and long-term welfare dependency and lifting achievement in schools. We also want the public sector to have a sharp focus on its costs.

It’s worth keeping in mind that the public sector makes up about a quarter of our economy so it has a big influence on our economic performance. I’m regularly surprised at the disconnect in people’s thinking between Government money and their pockets. Any money the Government has spent has come from taxpayer pockets. The job of a politican is to ensure that taxpayer’s money is spent wisely and within tight budgets.
Constituents clearly care deeply about the quality of the public services they receive and what those services achieve. I soon get a message if for example the health system is not treating a patient promptly and effectively. Parents and grand parents want to know that children are making progress at school. They want to see the Government tackling crime and looking after the vulnerable in our community.
Those same people are also taxpayers. They pay the bills. They want to know that the public sector is spending money with the sort of care they would themselves. Serving on Parliament’s Finance and Expenditure Committee forces me to pay close attention to these issues.

This week the Prime Minister announced three changes to sharpen the public sector’s focus on providing better frontline services.

1. Requiring an outcome driven focus for the public sector.
2. Reducing the number of employees engaged in administration.
3. Creating a new business-facing government department.
Government will set for the public sector ten outcomes to achieve over the next three to five years. For example reducing long-term welfare dependency, supporting vulnerable children, boosting skills and employment, cutting crime, and improving people's dealings with government. Results will be publicly available so you can see progress being achieved.

There will be a cap on the number of employees in core government administration of 36,475. We are already below that number and will stay under it. The cap does not include frontline staff such as teachers, hospital staff, and police officers.

The new Ministry of Business, Innovation, and Employment will help drive the building of a more productive and competitive economy. It will pull together four departments – the Ministry of Economic Development, the Ministry of Science and Innovation, the Department of Labour, and the Department of Building and Housing.
It will strengthen the ability of the public service to work on business policy, regulation, and engagement. I expect businesses to soon notice a much more focused approach from government.

Having worked to restructure and downsize central government it remains to develop local government reforms to contribute to a competitive economy. There are 78 councils which make up 4 per cent of New Zealand’s GDP, spend $7.5 billion dollars of public money each year, and manage $100 billion dollars’ worth of assets.
Since 2002, council debt has increased from $2 billion to $8 billion and the Wellington Regional Council has raised the cost of renewing a water right from $35 to more than $850, and who has used irrigation water this summer? There is a need to rebalance the changes made in 2002 that have seen an average rate increase of 7 per cent per annum and seen council debt quadruple to $8 billion.

Local government, like central government, must deliver better services to New Zealanders within tight financial constraints. Reform is needed to provide clarity around the role of councils, stronger governance, improved efficiency and more responsible financial management. Ratepayers from Waipawa to Ngawi deserve the assurance that the five District and three Regional Councils serving the electorate are spending their money wisely, on services that matter to them. Reforms which will be in place by September will refocus the purpose of local government, introduce fiscal responsibility, strengthen council governance provisions and streamline council reorganisation procedures. Councils need to keep debt down and rates and charges sensible and affordable. Legislation to be introduced to Parliament in May and passed in September will:
• streamline the purpose of local government. Its role will be to provide good-quality local infrastructure, public services and regulation at the best possible value to households and businesses.
• introduce fiscal responsibility requirements or benchmarks for councils’ performance regarding income, expenditure and debt levels.
• Strengthening council governance provisions.
• Legislate to make it easier to change a council’s structure.
Let me know what you think with an email to johnhayes.mp@xtra.co.nz or phone 0800 2 HAYES for an appointment to meet.

Video update

nospam@example.com (admin) — Tue, 20 Mar 2012 10:07:00 +1300

In this update John talks about this year's crops in the Wairarapa, and the challenges that the weather presents for horticulture in the region. He then goes on to talk about the roading issues the region has been facing and the progress being made on solving those issues. As well, John talks about the proposed changes to local government.

From the House: 9 March

nospam@example.com (admin) — Fri, 09 Mar 2012 13:15:23 +1300

Saturday’s storm caused a certain amount of damage in the southern third of the electorate and hit the South Wairarapa Rotary Club very hard with the cancellation of the Martinborough Fair. The clubs fundraiser generates significant funds for distribution to all manner of worthy causes. Typically stall holders travel from as far afield as Taranaki and Auckland with items for sale. More than 30,000 buyers come from the Wellington region to spend at the Fair. All manner of sporting and community organisations raise significant funds through stalls. The cancellation, albeit sensible, will impact hugely on our local economy and on the Rotary Club’s ability to support the range of projects as has been done in each of the 38 years since the Fairs inception. That’s a real pity because the Club makes such a huge and positive contribution to the district it serves.

Mavis Mullins and the 200 volunteers deserve our thanks and congratulations for organising an outstanding Golden Shears and World shearing and wool handling event. The finals on Saturday night were attended by the Governor General, Prime Minister and a capacity crowd. I heard many comments of appreciation that both men had taken the trouble to engage with Heartland New Zealand at the event. Particular thanks must also go to the many people who kept the sheep dry and in good condition during the storm. This event is really important to our area. It will have contributed several million dollars income for businesses in Masterton. I am pleased to have worked with the Shears Organisation to secure a contribution of $160,000 from the Ministry of Economic Development to help fund the event.

Sunday saw a poignant commemoration service in Carterton for the eleven who lost their lives in the January balloon accident. The service was attended by about 400 people including the Governor General, Prime Minister, affected families, the Wellington Regions Mayors and the many Police, Firefighters and volunteers who dealt with the accident and its difficult and stressful aftermath. As the Prime Minister said the service would help provide closure and the possibility to move on. I hope and pray that the Balloon Festival later this week will take place in fair weather and be incident free.

Much of my work representing constituents does not make its way into the public domain. In that context that I thought readers might be interested in a submission I recently sent to the Ministry of Agriculture setting out my views on a consultation they are conducting on proposed changes to our Dairy Regulations. The issue is of vital importance to each of us because of the size and importance of the dairy industry to the economy. Whether we live in town or country policy changes in this area will affect the future well being of us all.

The comments come from my background and experience as:
1. an agricultural economist engaged in the formulation of government policy;
2. a diplomat charged with protecting and advancing New Zealand’s trade and economic interests especially in Saudi Arabia and the Gulf States, Iran, and Asia;
3. an apple and pear grower who experienced the demise of ENZA which suffered the same thinking underpinning proposed DIRA changes;
4. as a Member of Parliament listening to constituents in the Wairarapa Electorate.

The purpose of the consultation is said to be “to ensure the long term growth and dynamic efficiency of New Zealand’s dairy industry”.

The proposals are underpinned by thinking based on the mistaken premise that it is better for New Zealand farmers to compete amongst themselves rather than extracting maximum value from international markets.

Fonterra has a very successful track record. It has returned significant dividends to producers and the whole economy. Its size and critical mass has facilitated the entry of milk products into difficult markets, where smaller entities would have failed. In contrast the meat, wool, kiwifruit, venison, and other producers who have tried to market by splitting their export effort, have all failed to match, or even come close to Fonterra’s success.

Why would anyone not learn the lessons from that?

The proposed changes intended to diminish Fonterra’s strength by making it compulsory for Fonterra supply 5% of its production to outside buyers will damage New Zealand’s strongest international marketing entity. That is not in New Zealand’s collective interest and is quite inconsistent with the policy prescription drawn up last year for the Kiwifruit industry.

The New Zealand meat industry is fragmented and has a high degree of internal competitive pressure. When I lived and worked on trade issues, in the Middle East, a procession of New Zealand meat traders undercut the price of meat quoted by the trader who visited the previous week. Their actions created nervousness amongst buyers none of whom wanted meat which cost more than that supplied to a competitor. In contrast the Australian Meat and Livestock Corporation managed the prices of competing Australian product and secured higher returns for Australian meat.

In Manila recently I visited a substantial manufacturer processing cheddar cheese imported from both Fonterra and Open Country Cheese. I asked the plant manager whether there was any difference between the two brands. The answer he gave me was that the product was identical. My interlocutor then added “but Open Country is always cheaper”.

On my return, I asked a senior person in Open Country why the company was undercutting Fonterra in a low price market, and at the bottom of that market. The response was defensive. Open Country was, he said, more efficient because it employed relatively few staff.

The reality is that milk taken from Fonterra was being sold offshore against Fonterra and was driving the price down for both companies thus generating lower returns for New Zealand producers.

Changes to the dairy legislation are likely to be of no value if they cause more competition amongst New Zealand exporters. Increased competition simply results in lower prices globally but reduced returns to New Zealand producers and the New Zealand economy.

New Zealand has suffered inefficient single desk sellers, for example ENZA. But unlike Fonterra ENZA had no competition. Fonterra supplies milk to about 25 independent processors. Some companies like Tatua Dairy in Morrinsville and Westland Dairy serve specialized markets with specialized products are not paying their milk suppliers significantly more than Fonterra. This suggests Fonterra is performing quite well.

Fragmentation of Wool sellers in New Zealand has resulted in poor returns to wool producers. Low returns mean inadequate money being spent on Research and Development, lower returns for producers and hampered industry development, innovation and job creation.

Presumably considerations like these underpinned the Ministry’s resistance to Turner and Growers efforts over the past eighteen months to break into ENZA / ZESPRI marketing arrangements. It is difficult to understand the Ministry’s remarkably inconsistent attitude when comparing its response to Turners and Growers and separately to Fonterra. In the former case officials said change would only be supported, if proposals had majority producer support.

It will be quite clear to the Ministry from submissions being sent by my constituents, that many of the proposals are not supported by dairy farmers in the Wairarapa Electorate. Not only do I expect the Ministry to listen carefully to their views but I know that dairy farmers around the country are making similar submissions.

The experience of living and working in difficult countries, with potentially huge markets for dairy products, like India and Iran leaves me in no doubt that New Zealand needs a large entity like Fonterra with its critical mass and resources to break into those markets. These are strong grounds for the Ministry to take no action which could damage Fonterra’s strength.

Let me know what you think with an email to johnhayes.mp@xtra.co.nz or phone 0800 2 HAYES for an appointment to meet.

Video Update - 06 March

nospam@example.com (admin) — Tue, 06 Mar 2012 19:57:19 +1300

John talks about the state of farms in the Wairarapa, as well as the
impact of the recent storm on parts of the electorate, including the
effect on the Martinborough Fair. He goes on to talk about the Golden
Shears event held in the electorate, as well as reflecting on the recent
ballooning tragedy.