Norman Russel: Budget Statement — Budget Debate 
Text is incorporated into the Bound Volume 
Norman Russel: Budget Statement — Budget Debate 
[Sitting date: 24 May 2012. Volume:680;Page:2407. Text is incorporated into the Bound Volume.] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 New Zealanders are looking to their Government for hope but this Budget I am afraid is a “zero hope Budget”. The National Government is slowly grinding middle and lower income earners into the ground while giving generous tax cuts to the wealthiest. National is slowly entrenching inequality and undermining a fair go in a land that should be a beacon of fairness opportunity and sustainability. If there is a burden to be shared then it should be shared fairly.  
Today I will be discussing a Green vision of hope for New Zealand but first I wish to acknowledge the land the waters and the natural environment of Aotearoa New Zealand—the foundation of our prosperity and wealth. I acknowledge the mana whenua of our country and Te Tiriti o Waitangi the founding document of our nation. I acknowledge the generations of New Zealanders who have come before us whose hard work laid the foundation for us today. I acknowledge those who are yet to come and I hope we keep their interests at the centre of our thoughts. Finally I acknowledge the work done by the Minister of Finance and the many public servants who worked on this Budget. We have our differences with the National Government but the Green Party believes in a society where we can still respect those with whom we strongly disagree.  
When this Government took office at the end of 2008 the New Zealand economy was in trouble. It had skyrocketing overseas-funded private sector debt—most of which fuelled the housing boom—and a current account deficit of dangerous proportions. Government debt was low but it was about to rise. When the new Minister of Finance took over he told us that it was important to rebalance the New Zealand economy away from a debt-fuelled consumption boom to an economy with more savings and a better external balance with the rest of the world. We were pleased to hear those words and we agreed with him.  
Now the Government needs to be held accountable; 3½ years later it is timely to ask whether the Government has achieved its rebalancing goal. Unfortunately for all of us the answer is clearly no. The current account deficit the key marker of whether we are living within our means is currently running at 4 percent of GDP and Treasury is projecting it to increase to nearly 7 percent by 2016 in the figures that were released this morning. This one simple fact is an unmistakable sign of an imbalanced economy that is becoming only more imbalanced. It is matched by worsening international debt projections. A worsening current account deficit as the Government has projected just today means more debt and more of our land and productive assets being sold into overseas ownership. Budget 2012 fails to deliver any fundamental changes to the structural problems facing the New Zealand economy. National has failed in 3½ years to rebalance our economy and under this Budget there is zero hope of it improving.  
Moving from how the Government has managed the economy to how it is managing its own Budget it is clear that it has made a number of poor-quality decisions that are now costing ordinary New Zealanders dearly. National has made much of the difficult fiscal position and has used it to justify services cuts and new user-charges for ordinary New Zealanders. National has blamed the global financial crisis and the earthquakes for the deficit. It is true that these events have had a significant impact on the Government books but a large part of the deficit is due to poor decisions of this Government around revenue and spending.  
Another feature of the revenue and spending decisions of Budget 2012 is that they appear to be driven by political imperatives rather than economic imperatives. For example the Government’s decision to defer automatic enrolment into KiwiSaver is bad for the economy but it will help get it into surplus by a whisker which is a political imperative.  
In the 2010 Budget National introduced income tax cuts targeted at high-income earners and said it would cover the reduced revenue caused by the tax cuts by increasing GST—increasing the cost of living for middle and lower income earners. National’s 2010 tax cuts gave the chief executive officer of Westpac a $5000-a-week bonus—an extra $5000 a week—which was funded primarily by the extra GST on middle and lower income earners when they were paying for their weekly groceries. Aside from the grotesque injustice of this the tax switch was not fiscally neutral as promised. After 18 months of operation the 2010 tax switch has cost about $2 billion. At a time of high debt to borrow $2 billion to fund tax cuts targeted at the most wealthy is both obscene and fiscally irresponsible.  
A Green-led Government would also be re-evaluating the quality of this Government’s spending. Looking at National’s spending decisions it is hard to go past the reckless decision to spend $12 billion on new motorways some of which did not even have a business case when National made the decision to build them. As the Minister of Finance admitted in the House yesterday these projects have never been assessed against Treasury’s own guidelines for major capital spending; they were chosen for political reasons. Building new motorways not only is a reckless waste of precious taxes but is impeding the rebalancing of the New Zealand economy because it locks us into oil dependence right when the IMF has predicted that the price of oil will double within the next decade. We already spend $8 billion importing oil per year. National is locking us into spending even more—money that simply flows straight out of our economy worsening our current account deficit.  
Another example of poor-quality spending is National’s decision to subsidise greenhouse emissions of intensive agriculture to the tune in the current Budget of about $1.1 billion over 3 years. National has put its hand in the pocket of ordinary mum and dad New Zealanders and is taking a couple of billion dollars to give to dairy corporations. By subsidising agricultural emissions we are locking our agricultural sector into old greenhouse-intensive farm technology instead of using the price mechanism to incentivise the move to low carbon pollution. This pollution subsidy is compounded by the $400 million that was set aside—which now appears to be delayed—for irrigation subsidies to intensify agriculture more heavily. Although dairy corporations are receiving billions in Government subsidies pensioners are being asked to pay more for their prescriptions.  
One of the most fiscally reckless parts of this Budget is National’s signature policy of asset sales. After driving the Government books deeper into deficit with irresponsible top-end tax cuts and poor-quality spending John Key now tells us that we have to sell our assets to cover the fiscal hole that he created. In fact asset sales make the Government deficit worse and the national accounts worse. As Treasury has set out in this Budget selling assets would make the Budget deficit worse by about $100 million per year as the lost profits far outweigh the cost of servicing Government debt. The research we commissioned from Business and Economic Research Ltd came to similar conclusions. Asset sales would also make the country’s books worse because the dividend streams flow over to the offshore buyers of the companies. As Business and Economic Research Ltd concluded the flow of profits to foreign buyers would result in a permanent deterioration in the external deficit and the level of external debt. Privatising assets risks New Zealand’s opportunity to secure a share of the global clean-energy market because it opens the door to those companies falling into foreign ownership. As we have seen with banking foreign ownership turns key sectors of our economy into large capital drains rather than smart Green export platforms. The Green Party has joined with Grey Power the Council of Trade Unions Greenpeace and other political parties to get over 300000 signatures to force a citizens initiated referendum on asset sales. We will get the signatures and we will establish clearly that the National Government has no mandate for selling the people’s assets. Most New Zealanders do not want their assets sold. It shows only how out of touch National is that it thinks mum and dad New Zealanders have loads of cash sitting around waiting to buy shares in the privatised assets. Most mum and dad New Zealanders are struggling to pay for the groceries for the kids after John Key put up the GST to pay for tax cuts for Paratai Drive.  
This Government has dug itself into a fiscal hole through poor-quality revenue and spending decisions and now it is looking for someone else to pay the bill—that is ordinary New Zealanders and most important their kids. Successive National Budgets have cumulatively resulted in a slow creep of wealth away from low and middle income New Zealanders to the well-off. First the tax cuts targeted at the rich were part-funded by GST increases for everybody else. Now National is going back to low and middle income New Zealanders to take some more. It is going to make them pay a bit more on their student loan. It is going to cut their student allowance. It is getting rid of beneficiary mothers’ training incentive allowance. It has cut the funding for early childhood education again. People are going to be forced to pay a bit more for prescription charges. And the Government is increasing class sizes. The list goes on.  
It is ordinary New Zealand families who are paying the price. Research released yesterday by the Green Party shows that an ordinary working family will be more than $11000 a year worse off due to the cumulative Budget changes made by National while high-income earners are better off by tens of thousands. Class sizes will not be increasing at King’s College when Hekia Parata slashes teacher numbers in public schools; it will be ordinary New Zealand families who suffer. An extra $2 for medicine might not matter to those on Paratai Drive but for the average person on “Main Street” it can make the difference between getting the medicine they need or going without. The Government is passing the costs of its fiscal choices on to those who can afford it the least. It is not doing it in one big hit but everyday New Zealanders are feeling the pinch and seeing whom this Government really works for.  
In contrast the Green Party is committed to reducing inequality in New Zealand and ending child poverty. We know that investment in the early years of a child’s life is absolutely crucial to reducing inequality yet since 2008 the cost to parents of early childhood education has risen 20 percent under National. We know that many of our kids are living in temporary unhealthy and totally unsatisfactory homes. The Government’s own report found a shortage of 70000 homes with up to 20000 households in extreme need yet National chose to wind down its investment in social housing leaving thousands of poor kids cold and waiting. They will be waiting a long time after this “zero hope Budget”.  
This Budget like the others that came before it is a threat to the environment. Our sparkling rivers and lakes are a key part of what makes New Zealand such a beautiful place to live in. Healthy rivers are essential for a healthy economy. Our “clean green” brand underpins our agricultural and tourism exports but our rivers and lakes are under threat mainly from dairy intensification. Over half of our monitored rivers are unsafe for swimming one-third of our lakes are unhealthy and two-thirds of our native freshwater fish are at risk or threatened with extinction. National plans to make it worse by subsidising more intensification with no clean-water rules. It is not a smart way to farm for the long-term prosperity of the country. National is effectively mining our soils instead of farming them and that is not all it is mining. The Government is doing everything it can to promote unsafe drilling and mining. From its pro - fossil fuel energy strategy to the bill on drilling in our exclusive economic zone and subsidies for oil corporations it is clear that the Government’s priority is “Drill baby drill.” Unsafe mining is not the way to build prosperity in New Zealand. These projects will benefit very few people. Deep-sea oil will bring hardly any jobs for locals and hardly any royalties or taxes and the profits will flow offshore as the mining companies are mostly foreign-owned. The risks are high and they are real; the rewards will not even belong to us.  
New Zealand’s future prosperity depends on investment in clean green technology and sustainable jobs. The Green Party has a smart Green economic plan for the New Zealand economy—a plan that takes our national debt seriously while moving our economy on to a more sustainable footing. It is great to see the announcement today that the home insulation programme that the Greens initiated will now reach over 230000 homes. We are in Parliament because we want to look after New Zealand and all its people and this scheme is an example of how we can work with parties across the political spectrum to achieve that. We congratulate National on doing that. It is a shame that it has chosen not to extend the scheme to another 200000 homes over the next 3 years. Such an investment would employ 4000 people directly and 10000 people if you include indirect and upstream employment effects.  
There is a synergy between smart Green economic objectives and the objectives of increasing the fiscal resilience of the Government in rebalancing the economy. When you look at our capital gains tax for example it enhances the fiscal resilience of the Government but it also helps the economy rebalance by shifting capital away from the unproductive property sector. It also has the advantage of putting productive resource into the clean-technology sector if we were to support that. A capital gains tax is also fair because it results in a decrease in inequality.  
This is just one policy for a richer greener New Zealand. There are many others: reprioritising transport spending putting a price on the commercial use of water boosting research and development higher standards for fresh water higher mining royalties and creating a reserves royalty fund with the proceeds a real price on carbon supporting a living wage lowering fees on KiwiSaver accounts by offering a public option and retaining our State-owned energy companies and refocusing them towards exporting their renewable energy expertise. I am not offering a single silver bullet but a number of practical costed alternatives that will address our dangerously high current account deficit and get our economy on to a more resilient sustainable and fairer footing.  
The National Government inherited a New Zealand economy seriously out of balance living beyond its means and then rocked by a series of earthquakes. It was a remarkable opportunity to remake our economy and put it on a more sustainable footing. It has failed to do that. When you inherit an economy that is broken you have a unique opportunity to fix it. It is a moment when powerful vested interests are open to acting differently for the greater good of the nation. Unfortunately John Key’s Government has done the opposite. Our economy is becoming more unbalanced the Government is more indebted and public assets are threatened with privatisation. The casino owners the miners the property speculators the oil companies those who pollute waterways or our atmosphere—they are all doing really well under John Key’s watch but National has turned its back on the belief that we are all in this together. But it does not have to be that way. I believe we can have a country with a smart Green economy that protects our natural capital enhances our quality of life and shares our prosperity fairly. Such a country is a place where hope returns.