Cost cutting an expensive mistake | The Jackal

27 Aug 2013

Cost cutting an expensive mistake

Today, the NZ Herald reported:

New Zealand may boost the number of trade specialists in Asia in the wake of Fonterra's botulism and DCD scares, Prime Minister John Key says.

But Opposition foreign affairs spokesman Phil Goff says Mr Key's comment is "deeply ironic" given it was Foreign Minister Murray McCully's restructuring at the Ministry of Foreign Affairs and Trade (MFAT) last year that led to the loss of key trade staff.

Cost cutting that led to the mislabeling of suspect meat exported from New Zealand that sat on China's wharves for months on end. In fact hardly a week goes by without us learning of another export market stuff up likely attributable to MFAT cutbacks.

Mr Key yesterday faced questions about protests over contaminated milk which have forced Fonterra to pause operations in Sri Lanka. Those questions came as the Herald reported a range of New Zealand dairy products remain stranded on Chinese wharves more than three weeks since the botulism crisis erupted.

New Zealand officials have been trying to reassure the Chinese that everything is fine. However, the Chinese are doing more testing on various products because they no longer trust the safety of New Zealand's exports. With so many incidents of contamination, who can blame them?

Mr Key said the botulism scare and the previous DCD scare which has prompted the Sri Lankan protests had sparked debate amongst ministers "about whether we need to have bigger footprint offshore in some of those critical markets".

"If you think about China, we've gone from about $2 billion worth of exports in recent times to about $7 billion and maybe our footprint needs to be a bit bigger there."

In 2008, New Zealand was exporting around $500 million worth of dairy products to China. By 2012, that had increased to $2.5 billion mainly because China was looking for sources that it believed could supply safe product.

If Key is talking about total exports to China, then his figure is also wrong! Total exports to China to December 2012 were $8.1 billion. If he is talking about merchandise exports he is once again wrong, but only by $114 million this time.

Even though our multimillionaire Prime Minister is inaccurate by hundreds of millions of dollars, who cares? Certainly not those right wing propagandists who claim that he's good with numbers.

The prospect of more money for MFAT comes little more than a year after cost-cutting proposals at the ministry prompted criticism from top diplomats, a number of whom left.

You've got to wonder why National gutted MFAT at a time exports were increasing so dramatically?

With export volumes to China increasing by 190% between 2008 and 2012, surely it's complete mismanagement to decrease administrative oversight. This is especially the case if you consider that MFAT didn't have the capacity to deal with their workload when the restructuring occurred.

It's almost as if the Natz wanted to stuff things up.

Former Foreign Minister Phil Goff said MFAT lost some of its best trade personnel as a result of Mr McCully's restructuring, "because they were utterly disillusioned with the direction the minister was taking the department".

"It's deeply ironic now that the Prime Minister should be saying we're going to revamp our trade specialists when the actions of his own minister are responsible for gutting that ministry of its best people."

Phil Goff was one of the people warning the government that cutting MFAT would lead to problems. He's rightfully justified in his criticism both then and now.

National's ideological drive for a smaller government and cost cutting has once again led to disaster! The cost of their mismanagement on our economy that relies heavily on a strong export sector will be significant.

Even though National knew China's demand for dairy products was going to keep on increasing, they still went ahead with gutting MFAT anyway, which has clearly caused a lack of proper oversight.

The same thing occurred when National instructed Solid Energy to increase debt at a time coal prices had fallen dramatically. In effect National couldn't organise themselves out of a paper bag. They are entirely incompetent and not fit to govern.