Currently the Waikato Regional Council is awaiting the final outcome from the Environment Court hearing into the objections around PC1.
PC1 is the proposed change to be made to the operative Waikato Regional Plan that was put forward by the Waikato Regional Council back in 2016.
It is expected PC1 will be operative next year and, depending on the final results of the Environment Court hearing, that farmers might need to get resource consent and or develop a farm environment plan to allow for continued operation of their farms.
As a result of the proposals in PC1 there will be farmers that will have to leave the industry as they will not be able to make a living carrying on farming under the new requirements.
Local Government NZ released a report in approximately 2016 which stated that the Waikato region would lose 68% of dry stock farms and 13% of dairy farms as a result of the new rules in PC1.
PC1 is likely to significantly change how farmers can operate regardless of whether they are arable, dairy, drystock or horticulture.
There is huge concern that many of these standards or timeframes are currently not practical or implementable whilst still maintaining economic viability of the farming operation yet they will be legally enforceable.
Irrespective of whether farming operations are a permitted or consented activity, they will be subject to ongoing scrutiny as council monitors compliance with permitted activity rules and consents, and will need to budget for ongoing costs to implement mitigations as part of any requirements in their farm environment plan or resource consent.
We need to ensure that PC1 is practicable, workable and fit for purpose so we ensure the economic stability of our country and protect the security of our food supply.
PC1 has not adequately considered the social and economic effects on the region if the plan was implemented.
Given the known effects of Koi Carp, which cause a huge reduction in the water quality of the region, it is clear that even if farming was eliminated completely from the region there would still not be an improvement in the levels of water quality in the region due to the effects of the Koi Carp.
Yet in all of the time that PC1 has been around (since 2016), the Waikato Regional Council through PC1 has been totally singularly focused on the agricultural industries as being the cause of the reduced water quality in the region, without addressing the effects of Koi Carp.
When we tried to raise the issue of Koi Carp affecting water quality with officials from outside the Waikato Region, we were commonly told that this is just a regional problem that is Waikato’s problem to deal with.
But in fact this is demonstrably untrue. The effects will be felt severely across the nation as a whole given the impacts that PC1 will have on our agricultural production and consequently our export income from the Waikato region.
A description of how the economic impacts on both the Waikato region and our national export income will occur, are set out below:
Total Negative Impact in Waikato region will be billions of dollars with the PC1 documents quoting figures of $500 to $600 million dollars per year for the eighty year time frame of the proposed plan change implementation.
It must be remembered that these figures are from 2016 when PC1 was first proposed and they will be seriously increased given the level of inflation over the past nine years.
Overall it is expected to cost the dairy and drystock industries alone, losses of approximately $2.4 Billion dollars.
The impacts on both the security of our food supply and our export incomes from this are going to be huge.
Context on Waikato's dairy sector
For the 2024/2025 season, the total value of the dairy payout for the Waikato Region is estimated to be approximately $4.8 billion.
Other notable statistics about the dairy industry in the Waikato include:
Waikato has about 4200 dairy farms, the most in the country and a 13% reduction in dairy farms means a loss of approximately 546 farms.
The cost to the region in lost GDP from a reduction of 13% in dairying is approximately $3.18 billion with an approximate cost of 2,700 jobs in the industry.
Key points about Waikato's beef production:
For the 2024 calendar year, the total value of beef exports from the wider Waikato region was $1,176.6 million, as part of the total meat and meat product manufacturing exports and given the predicted 68% loss in drystock farms there is likely to be a reduction in this export value of approximately $799,680,000, coupled with a reduction in the number of farms by approximately 1,655 farms.
Summary:
Treasury’s latest fiscal projections show deficits stretching indefinitely into the future. The government is borrowing just to pay the bills.
The cause of our recession is largely inflation fuelled by $50 billion of money printing, and a reckless borrow-and-spend binge under the previous Labour government.
Treasury has warned that expenditure and debt must both be reduced to restore our financial sustainability.
Unless spending growth is restrained and debt begins to fall, we are headed for permanently higher interest costs and a reduced capacity to fund essential services.
Treasury’s long-term fiscal statements show that an ageing population and rising health and superannuation costs will drive debt above 50 per cent of GDP within a generation unless policy changes.
Given the current situation with our heavy debt loading and the need to either cut spending or increase our income, any serious reduction in our ability to export agricultural products has huge potential to cause us to slide further into recession.
The Ministry for Primary Industries reports that for the year ending June 2023, agriculture generated $48.9 billion in export revenue, representing 70% of New Zealand's goods exports, which were $74 billion.
The Government has stated that they want to double our primary exports to allow the income to bolster our financial position yet with the resulting effects of implementation of PC1 we will be looking at a reduction not an increase.
As the headline of this article states: Waikato Regional Council an Economic Disaster; the basic fact of this is that if the Waikato Regional Council had done an adequate economic analysis of the proposed plan change, it is highly likely that it would never have been put forward in its present form.
A Section 32 analysis is a mandatory evaluation under New Zealand's Resource Management Act (RMA) that assesses the justification, effectiveness, and efficiency of proposed changes to ensure they meet RMA goals.
Key Aspects of a Section 32 Analysis
The reason I claim that the WRC is an economic disaster relates to the fact that the WRC’s section 32 analysis almost completely avoided any examination of the economic effects of the proposed plan change and as can be seen from even just a brief study, the plan change is going to have hugely significant effects on both the local and national economies.
The impact on the horticulture sector is such that under the rule changes that came into effect in October 2016 when the PC1 was advertised for public submissions, the horticulture sector will over time disappear from the Waikato region.
The total negative economic impact on the Waikato region comes about even though only 15 of the sub-catchments in the Waikato and Waipa catchments were exceeding the standards proposed to be introduced through the enactment of PC1 at the time it was proposed.
In other words there is going to be significant costs across the Waikato region with flow on effects across the country as a whole, for very little gain.
It can easily be seen from the above information that the impacts on both the security of our food supply and our export incomes from this plan change are going to be huge, yet the section 32 analysis that was carried out was so far removed from any type of economic study that it did more to hide the effects than to identify any possible detrimental effects.
In the original proposal the Waikato Regional Council stated that PC1 was the bold first step in an 80-year journey to improve the water quality of the Waikato and Waipa Rivers so they are safe for food gathering along their entire length and meet the requirements of Te Ture Whaimana o Te Awa o Waikato, the Vision and Strategy for the Waikato River.
Based on the information that was currently available, the Combined Stakeholders Group concluded full achievement of the Vision and Strategy by 2096 was likely to be costly and difficult. The 80-year timeframe recognised the ‘innovation gap’ that means full achievement of water quality requires technologies or practices that are not yet available or economically feasible.
The V&S clearly states that any plan to improve water quality in the Waikato and Waipa Rivers, must include the social, economic and cultural impacts that plan will have on the region if that plan is implemented.
The V&S has an aspiration to get water quality in those two rivers to historical standards yet at the same time the V&S realizes there must be a compromise and that’s where the social and economic clause fits in.
PC1 has not, particularly in regard to the section 32 analysis, adequately considered the social and economic effects on the region if the plan was implemented.
Given that the Waikato region is home to 1.2 million dairy cattle, making it the largest dairy-producing region in New Zealand and only about 4% of the dairy products produced in the Waikato Region are consumed locally (with the rest primarily for export) the effects will be severely felt across the whole nation not just the Waikato Region.
Waikato has about 4200 dairy farms, the most in the country and a 13% reduction in dairy farms means a loss of approximately 546 farms.
The cost to the region in lost GDP from a reduction of 13% in dairying is approximately $3.18 billion with an approximate cost of 2,700 jobs in the industry.
The Ministry for Primary Industries reports that for the year ending June 2023, agriculture generated $48.9 billion in export revenue, representing 70% of New Zealand's goods exports, which were $74 billion.
The Government has stated that they want to double our primary exports to allow the income to bolster our financial position yet with the resulting effects of implementation of PC1 we will most likely be looking at a reduction not an increase.
An Economic Disaster in the making!
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By Andy Loader, Poke the Bear