State Of It: Politics, Yes. Leadership, Yes. But Does NZ First Have the Infrastructure to Become the Rural Bloc Option?

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Part one of a two part series – By Selwyn Manning.New Zealand First positions to export its rural New Zealand representation brand.AFTER THE NORTHLAND POLLING BOOTHS HAD CLOSED a well positioned National Party insider text messaged me from inside one of the Party’s election night functions.He said: “The mood from some is explosive tonight. The campaign was a disaster with the Sabin bomb still ticking. All the National list MPs will be watching, and Nats in provincial seats, with reasonable majorities, will be a tad shaken too. A 13,000 vote turnaround in six months…”

He added National would likely “concede Northland in 2017. Shocking”.

He feared: “We should lose East Coast, Tukituki, Wairarapa, Whanganui, Otaki and Invercargill in 2017. But it will be tough for Labour to win unless Little allows Nash to find candidates to run there.”

That’s the reality-check Northland delivered to National’s true-blue loyalists. The only uncertainty is whether New Zealand First has the infrastructure to become our version of rural Australia’s the Nationals – the conservative, monarchist, rural-based counterbalance to urban-political-dominance across the ditch. And, whether Labour leader Andrew Little has the courage to let Stuart Nash loose to develop the take-back-the-provinces plan.

New Zealand First leader Winston Peters.
New Zealand First leader Winston Peters.

AS SOON AS NEW ZEALAND FIRST leader Winston Peters scented the mood in Northland he knew a political vacuum was in evidence – that rural New Zealand, beyond the borders of the Far North, was angry and suffering from a lack of political representation.

But can New Zealand First export the win from its Northland base to become the rural New Zealand voter’s option? To achieve this, the party will need an infrastructure robust enough at ground-zero to attract quality representatives who are already recognised for driving solutions to challenges specific to their region.

The pressures on New Zealand First – the Party as opposed to its Parliamentary extension – will be considerable. If the Party is to succeed in realising its potential, it must sustain a recruitment drive on a grand scale, all-the-while delivering, from Wellington, solutions for those it seeks to represent.

Cause and Effect:

Politically, the Northland result shows rural New Zealand has been promised much only to see its fortunes dwindle.

Prime Minister John Key.
Prime Minister John Key.

During the 2014 General Election the National Party’s message to farmers was to expect to receive their bounty from the ‘white gold’ they produced and exported from their gates. Those working within the farming support and service sector picked up the message too.

The promise was: a decent slice of the domestic economy pie-graph was coming, that farmers were going to reap huge rewards, that rural communities and New Zealand as a whole, was about to bask in trickle-down wealth of unprecedented proportions.

But as farmers arose in early Autumn, the Governing party’s promises ran hollow and nothing emitting from Wellington could arrest the reality – the bank balances were turning red.

As Winston Peters said on March 26 prior to the by-election “… Fonterra’s latest downwards revision in the 2014/15 forecast… for a fully-shared up farmer, can be blamed on an urban focused government that is not putting farmers first. This will hurt Northland’s 801 farm owner/operators and 291 share-milkers given nine percent of New Zealand’s herds are in the region”. (ref. ForeignAffairs.co.nz)

For Northland a reality had broken the day before.

When Fonterra returns are in free-fall, whole communities are starved of income. And when the costs of milk production are higher than Fonterra’s Farm-gate Milk Price of $4.70 per kgMS (as announced on March 25), then, the farmers, the rural dependent sectors, workers, families, and communities… hurt.

During the September 2014 campaign, the National Party leader John Key told all of New Zealand we were on the cusp of something very big, something special – the implication was rural New Zealand, and especially farmers, should expect to be rewarded for their farming expertise, investment, and high quality, high levels of production.

But after the election, commodity milk and powder prices could not sustain global downward pressures. The trade-weighted GlobalDairyTrade price index hit a five-year low in December, and by degrees, Fonterra, the co-operative dairy exporting giant, began reducing the value of returns to farmers.

At first, the newly elected National Government insisted returns to farmers remained sound, that the overall trend was positive. But farmers are not fools. Nor are the communities that work with them. Northland voters, like their rural counterparts all over New Zealand, knew their farmers were in trouble – despite producing more milk per head of cow, more milk per hectare of land, they were getting less back for it.

Fonterra annual results - Farm-gate milk price dropped from $5.55 on September 24 2014, to,  $4.70 by end of March 2015.
Fonterra annual results – Farm-gate milk price dropped from $5.55 on September 24 2014, to, $4.70 by end of March 2015.

By March 27 2015 Fonterra delivered a forecasts no one wanted to hear. Its interim report detailed:

      Forecast Cash Payout for the 2014/15 Season of $4.90 – $5.00

 

      – Forecast Farm-gate Milk Price $4.70 per kgMS

 

      – Estimated full year dividend of 20-30 cents per share

 

      – Revenue $9.7 billion, down 14 per cent

 

      – Reported EBIT $483 million, up 16 per cent

 

      – Normalised EBIT $376 million, down 7 per cent

 

      – Net profit after tax (NPAT) $183 million, down 16 per cent

 

      – Interim dividend of 10 cents per share.

(ref. ForeignAffairs.co.nz)

In the forecast statement, Fonterra’s Chairman John Wilson said that given the results achieved in the first half of the year, and the continued volatility in international prices “the Co-operative was holding its forecast Farm-gate Milk Price at $4.70 per kgMS.”

Wilson added: “Our half-year results are a snapshot of tough conditions in dairy with variable production, demand and pricing.  There was also the challenge of generating profit from inventory made in the previous financial year when the cost of milk was higher, but sold in the first quarter of the financial year when global dairy prices were falling.”

Put simply, supply outweighed demand and buyers undervalued milk, which was reflected in prices that declined to unsustainable levels.

Wilson: “Oversupply from dairy producing regions around the world in the early months of the financial year saw the trade-weighted GlobalDairyTrade price index hit a five-year low in December.” (ref. ForeignAffairs.co.nz)

That’s another reality which Winston Peters (the morning after his landslide Northland win) spoke to the nation about. He highlighted how some farmers were having to borrow hard to sustain themselves through this downward cycle.

Add to this the uncertainty factor: no one knows how long the commodity price downturn will last. That affects the cost of borrowing from banks, pushes interest rates upward to reflect the significance of uncertainty. Peters pushed for Government support stating it would provide some clarity at a time when confidence in the sector’s performance was being exhausted.

Winston Peters  on TVNZ's Q+A from Russell after winning the Northland by-election.
Winston Peters on TVNZ’s Q+A from Russell after winning the Northland by-election.

On TVNZ’s Q+A programme (ref. Q+A) Peters questioned why this was a negative. He claimed an honourability to his willingness to help out rural New Zealand and compared this to the dishonourable practice of corporate welfare dished out by the Key Government to SkyCity casino and the $1.7b+ bailout of South Canterbury Finance (ref. Stuff.co.nz). It was classic Peters politics – compare one sector to another to drive home the divide between commonsense and ridiculousness.

But politically, it drove home a message to rural voters beyond Northland, who will be well aware their National Party MPs will not advocate their interests like this. They will not go into bat for farmers over their party – at least, not in public. For rural New Zealand, it must have been music to their ears. For others it exposed the broad-tent National Party’s biggest weakness: party loyalties are supreme.

The regions, as opposed to the provincial cities, are New Zealand First’s for the taking. While Winston Peters has the leadership, the zest, and the tenacity to achieve it, the New Zealand First party has yet to show it has the infrastructure to reach deep into rural New Zealand and turn out candidates that are leaders of their regions.

But, as the National Party insider said to me on Northland by-election night: “The Northland example does show that Joyce’s economic development record is a weak spot.”

If New Zealand First can’t foot it, then Labour will continue to galvanise its connection with Peters, present a good governance rural/provincial/regional development brand, and seek stronger candidates to take East Coast, Tukituki, Wairarapa, Whanganui, Otaki, West Coast, and Invercargill in 2017. Under this scenario, New Zealand First would anchor in with Northland and urge true-blue party voters to swing its way.

However to achieve this Labour’s leader Andrew Little would be wise to scent the air and promote Napier’s MP Stuart Nash to the front-bench. It would send the right signals to provincial New Zealand, acknowledge Nash as a regional specialist, provide him with a mandate to develop policy, a much needed campaign plan, and a key role in attracting quality candidates for 2017.

Add to this the angle where Labour positions to really represent share-milkers. That would drive a wedge between this under-represented group and their farm land owners who remain loyal to National, and potentially foot it with New Zealand First for swing votes in heartland National seats.

Recently, there have been some signals on this from Labour. Take Labour’s West Coast specialist Damien O’Connor this week stating on April 2: “Dairy farmers throughout New Zealand are currently frustrated by the low pay-out from their co-operative company. Many are concerned that Fonterra has been too busy focusing on satisfying the demands of its investors rather than meeting the needs of farmer supplier shareholders.” (ref. ForeignAffairs.co.nz)

At this stage, National’s arrogance appears to be blinding it to the ‘up you’ message the Northland voters delivered via Peters. These people want solutions, not politics and National’s performance in the House since votes were counted suggests its arrogance-factor has not waned.

If New Zealand First cannot construct the party infrastructure needed to broaden its rural base, then a co-ordinated approach with Labour’s more conservative/centrist MPs may occupy the vacuum created by National.Much common-ground and high regard is exchanged between Winston Peters and former Labour ‘backboners’ Shane Jones and Dover Samuels. you can also include Kelvin Davis and Stuart Nash in this group.But lets examine such important relationships in the second instalment of this series: New Zealand First’s Challenge: The Conservative Balancing Act.Whatever way this plays, 2017 looks a more interesting election than the bizarre shenanigans of 2014.

See Also:

State Of It: Factional Fractures In Evidence As National Loss In Northland Looms

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Selwyn Manning, BCS (Hons.) MCS (Hons.) is an investigative political journalist with 23 years media experience. He specializes in reportage and analysis of socioeconomics, politics, foreign affairs, and security/intelligence issues. Selwyn has extensive experience as a commentator and has provided live political analysis to a wide range of television and radio organizations broadcasting in New Zealand, Australia and globally including the BBC (Five Live, London) and BBC (World Service). He is currently a correspondent to Australia's FiveAA radio, and is a regular live-on-air panelist on Radio New Zealand's The Panel with broadcaster Jim Mora.