Graham Kennedy: Budget Debate 
Text is incorporated into the Bound Volume 
Graham Kennedy: Budget Debate 
[Sitting date: 29 May 2012. Volume:680;Page:2623. Text is incorporated into the Bound Volume.] 
Dr KENNEDY GRAHAM (Green) 
: 
 This 2012 Budget is the miser’s Budget. It picks up the kids hangs them upside down then empties the coins out of their pockets with a view to pretending we are on-target for a wafer-thin surplus in the year promised. Not only is this small-minded it is a distraction. It is a distraction because it deceives us into focusing on the near irrelevant forgetting the essentials and ignoring what is critical. What has not been recognised amidst all the rhetoric and hyperbole in this debate is what this Budget will not be known for—what it has omitted. What the Minister should be doing with his Budget Policy Statement in these difficult times is this: first explain the global ecological economic context to the New Zealand public; second analyse what the international community is doing about the global problems that beset us all all 200 national economies; and third offer a prescriptive macroeconomic policy in the Budget Policy Statement supported by the estimates which reflects the mix of national prudence with which the Minister is instinctively well endowed with some creativity on what policy prescription New Zealand can offer to help ameliorate the global problem something of which the entire Cabinet seems to be devoid.  
The first requirement is to recognise the ecological overshoot of the current global population. With a footprint of 2.7 hectares per person and an earth share of 1.8 hectares we record an overshoot of just on 50 percent. That means we need one and a half planets to sustain our current global population on the basis of contemporary technology. That is the first sobering global fact the Budget needs to address but this Budget is silent on that.  
The second sobering global fact is that the human population is increasing barring tipping points by an additional 29 percent from 7 billion to 9 billion by 2050. The global population will have grown from 2 billion at my birth to 9 billion at the death of my children from 2 billion to 9 billion within two human lifetimes. That unprecedented event has enormous implications for New Zealand’s economy yet this currency trader Budget completely disregards it—not a word.  
The third global fact—not so much sobering as alarming—is the onset of serious climate change. Let us put things in context. The international community has now had 20 years since adopting the framework convention to ensure that global emissions peak and commence the downward emissions path to a low-carbon economy. In 1992 global carbon equivalent emissions were 44 gigatonnes; today they are 56 an increase of 28 percent. During those 20 years the only instrument to reduce emissions was the Kyoto Protocol with a commitment period of 16 to 20 years later. That protocol covered only 17 percent of global emissions and aspired to shave only 5 percent off them. Even if it had succeeded it would have shaved perhaps 0.2 degrees Celsius off the average global temperature increase. It was intended as a precursor to a comprehensive binding global agreement. That is now to be negotiated by 2015 to come into force in 2020 so the global agreement designed to commence the task identified in 1992 of containing the global emissions increase will come into force 28 years later. It is likely in the best of all worlds to take a decade before emissions would peak after that. That would be 13 years after emissions need to peak to avoid serious climate change.  
In 2010 the international community agreed on a threshold of 2 degrees Celsius rise on average global temperature. One year later the scientific community revised the expected temperature increase to between 3 to 4 degrees Celsius. So no sooner did the Governments identify a global warming target than that target was rendered unlikely if not impossible. This is humanity at work addressing for the first time ever an issue pertaining to its survival. Scientific concern is now being expressed over the indeterminable risk of non-linear climate change occurring from ice melt thermal ocean expansion and methane release from the tundra and subterranean vents. These are the tipping points that could cause catastrophic disturbance to the biospherical balance of the planet on which we dwell for our survival. These three global facts depict a planet in decline. They forecast severe strain perhaps intolerable strain for the global economy. The New Zealand economy accounts for a tiny portion of the global economy—only 0.2 percent—but it is not negligible.  
The fate of New Zealanders rests on the fate of the global economy yet the Budget says nothing of this. The Budget Policy Statement advanced last week by the currency trader Government contains not one word on population not one word on ecological overshoot not one word on biodiversity lost and not one word even on climate change. Rather its highlights are tax credit reductions for paper deliveries and adjustments to livestock valuations. It plans to cut policy advice on climate change by 30 percent compared with 2 years ago. Because of this the 2012 Budget has an air of unrealism to it reminiscent of the  
Titanic 
. 
 What does the Budget do about climate change even though it does not mention the words? The Budget seeks to hide the line items pertaining to climate change splitting the emissions trading scheme into various line items that would challenge any corporate investigator. The New Zealand emissions trading scheme is a complex creature. It was born of proud parentage but slipped into a wayward life early on. Its original objective under the Labour Government was to meet the Kyoto Protocol obligation of the same emissions level in 2008-12 as that in 1990. It was to achieve that by setting a carbon price and then let the market work. It was based on the assumption that other countries would do the same around the same time so there would be little carbon leakage and an integrated international carbon trading market would emerge. But this was beset with flaws. First no emission reduction obligations were required under the framework convention or the protocol for developing countries. Second the United States stayed away. So some 83 percent of global emissions have faced no such constraints so the risk of carbon leakage is ever-present—something the corporate world exploits to the full for self-interested commercial reasons.  
Third the emissions trading scheme itself was designed to be soft on the New Zealand economy setting no cap for the emissions permit trade. It sets a ridiculously low carbon price and it gives free allocations to carbon-intensive trade-exposed companies like medieval indulgences comprising 76 percent of the environment ministry’s budget. So there has been zero incentive for any New Zealand firm to actually cut emissions. So rather than staying level our emissions have soared from 60 million to 72 million tonnes by 2010.  
The independent review panel recommends further deferrals in the name of doing our fair share. The Government’s proposals reflect the panel’s recommendations. The submissions and hearings will run their course and the Government will enact those deferrals. The 2012 Budget contains the multiple concealed line items in anticipation of that. Meanwhile New Zealand fights its corner at the international conferences determined to gain some short-term maximum advantage in the game of global carbon negotiations wilfully heedless of the repercussions in the medium term that will harm itself. Each time the climate Minister returns from yet another Olympian mission overseas we are assured that New Zealand has once again punched above its weight. By definition that is a recipe for disaster. If 194 States’ parties punch above their weight the global carbon emissions and ecological footprint will shoot higher yet this is what we are all doing. We need to avoid such hubristic pursuit of competitive national interest on climate change. We need to engage in a collaborative national interest in pursuit of the global interest. One day a New Zealand annual Budget will reflect that underlying truth. The question is: will it be too late?