Don Nicolson

Wellingtlon, June 25 NZPA - Federated Farmers has given the Government a clear warning that it had better start paying attention to the rural sector.

The federation's president, Don Nicolson, used the ousting of former Australian prime minister Kevin Rudd to make his point today.

"Rudd's demise is a timely warning to those who assume the rural vote is theirs as of right," he told Federated Farmers annual conference in Invercargill.

"I need to make this abundantly clear -- agriculture is to New Zealand what minerals are to Australia. When you play with fire you will get burnt, and so will every New Zealander.

"Agriculture is New Zealand's unique competitive advantage, and it's time for the Government to get that."

Mr Nicolson said that last year farmers collectively retained just 6.2 cents out of every dollar they earned, and then he moved on to the most contentious aspect of the sector's relationship with the Government.

The emissions trading scheme (ETS), which starts on July 1, was nothing more than a tax on production and productivity, he said.

"We have not done a 180 degree policy turn but National has," he told the conference.

"It stood shoulder to shoulder with us in 2003, again in 2005 and in 2008 against Labour's old ETS. Come 2009, suddenly the ETS is the solution. Where are you, National?"

Mr Nicolson said the Government's embrace of the ETS was dangerous.

"With ACC levies, increasing interest rates, excise taxes and these ETS imposed cost increases, come October and the tax cuts the public may actually find themselves worse off than the year previously," he said.

"The risk National now faces is a winter of discontent."

Mr Nicolson said the world was moving on while New Zealand was going to be stuck in a policy cul-de-sac with its ETS.

He suggested a flat carbon charge was more simple, cleaner and "less fiscally convoluted" than the ETS.

Federated Farmers' policy had been consistent since 1985 -- voluntary market mechanisms worked better than state-led intervention.