Hughes Gareth: Ministerial Statements — AMI Insurance—Financial Support Package 
Text is incorporated into the Bound Volume 
Hughes Gareth: Ministerial Statements — AMI Insurance—Financial Support Package 
[Sitting date: 07 April 2011. Volume:671;Page:17827. Text is incorporated into the Bound Volume.] 
GARETH HUGHES (Green) 
: 
 The Green Party supports the Government’s move to underwrite AMI Insurance a move that will give certainty to policyholders especially those in Christchurch needing to rebuild their homes and their livelihoods. Giving ourselves the option of taking a preferential shareholding in AMI Insurance is the most prudent way to bail out the company and will ensure that the interests of taxpayers are best protected. However the Government has itself admitted that the $500 million may not be enough to cover the full liability AMI Insurance is exposed to. With the Government committed to borrowing to fund this bail-out amongst a growing list of others the argument for an earthquake levy is now more compelling than ever. We as a nation have to be prepared for more bad news from the Christchurch earthquake. The Government needs to design a fiscally and economically resilient response. Putting it all on the credit card does not constitute a plan. Putting it all on the credit card leaves us less able to deal with future shocks to the economy. 
The Green Party has proposed a temporary levy on income as the fairest way to pay for AMI Insurance - like scenarios. Our proposed levy is fair it would fall on those most able to afford it and it would raise over $1 billion of additional revenue for each year it remained in place. The levy is a targeted tax one that would go directly to pay for the rebuilding of Christchurch. It is also a proposal that is widely popular. We commissioned UMR Research to test the waters and its poll results show total support for the temporary levy at 57 percent. Our plan to raise a temporary levy is smart economics. Raising additional revenues would significantly lessen the risk of a credit downgrade. 
The Minister of Finance’s office confirmed through an answer to a written question yesterday that the credit agencies will be reviewing New Zealand’s sovereign credit rating after the Budget. Standard and Poor’s and Moody’s currently have us on a negative credit watch. The Government’s latest bail-out of AMI Insurance simply increased the chance of a credit rating downgrade unless the Government shows some commitment to raising revenue to lessen its debt blowout. A credit rating downgrade would add significant dead weight of costs right across the economy—the last thing our fragile economy needs right now. 
The other part of the Government’s approach to paying for the rebuild of Christchurch is to cut public sector spending at a time of weak economic activity. This carries the great risk of sending an already fragile economy back into recession and a recession will further worsen our ability to repay debt and slow our ability to ensure that Christchurch lands on its feet sooner after this great disaster. 
A temporary levy avoids the risk of a credit downgrade and the risk of sending the economy into recession as it spreads the cost of funding the rebuild right across and fairly through the economy. In light of this new economic reality the smart pragmatic way to pay for rapidly increasing costs from the earthquake is to reconsider the raising of a temporary levy. We encourage the Government to do this.