Source: New Zealand Labour Party – Cracks showing in economy of milk and houses

Fonterra’s latest cut to its forecast farmgate payout confirms that an economic black hole of $7 billion is opening up that will seriously affect the regions, says Labour’s Finance spokesperson Grant Robertson.

“The cut confirms the long term trend of a fall in global milk prices due to an upcoming international supply glut set to last five years. With global milk prices slashed in half since the February 2014 peak, there is little doubt the forecast cash payout will fall too.

“If the international milk price keeps falling or even stays where it is, Fonterra’s payout will be significantly lower than forecast and the economic black hole that currently stands at $7 billion will be even bigger.

“This will have a serious effect on farmers and the many provincial communities that are almost solely reliant on them for their economic wellbeing.

“The Government has repeatedly refused calls to help diversify our industries and export markets so that the country and local communities are not hit hard when a commodity price falls.

“It has even ignored the Reserve Bank Governor’s warnings of the risks to the economy from Auckland’s housing bubble and the damage the associated high dollar is causing to exporters.

“National has created an economy of milk and speculating on houses and pretended that it will continue to flourish. But the cracks are showing.

“New Zealand needs a modern, diverse economy that creates well-paying jobs across all industries,” Grant Robertson says.


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.