Donald Rod: Budget Debate 
Donald Rod: Budget Debate 
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ROD DONALD (Co-Leader—Green) 
: 
 That was a farewell speech from Rodney Hide if ever I have heard one. Why does ACT not just accept that no one in his or her right mind would vote for a party that has such a blind faith in unfettered free markets? Kiwis know all too well the pain that ACT’s dog-eat-dog policies would cause. Ask anyone who is on the average wage trying to save to buy his or her first home. That Kiwi dream has become a nightmare because successive Governments have allowed the market to rule our society rather than ensuring that society directs our economy. 
Finally after 6 years of Government Labour is facing up to the fact that good hard-working Kiwi families are not getting a fair go when it comes to homeownership. The Green Party has highlighted this issue for years because home is not just where the heart is. A secure family home also provides a better environment in which to bring up children and many other benefits to both individuals and societies flow from a high level of homeownership. 
Homeownership rates have declined from 74 percent in 1989 to 65 percent in 2004. Those figures tell only half the story. Obviously a much higher percentage of young adults and those on low incomes are forced to rent because they cannot bridge the deposit gap. That gap has widened enormously in the 25 years since I started saving to buy my first home. In 1981 the average house price in New Zealand was $41000 and the average wage was $12600. When Labour took office in 1999 the average house price had increased more than fourfold to $187000 while the average wage had risen to $33400. In the last 6 years of this Labour Government house prices have rocketed to over $260000 on average while wages have grown to only $39000. Even relatively well-paid people in Auckland cannot afford to buy their own home. It is estimated that only 14 percent of Auckland households in the $44000 to $55000 income bracket can afford to service a 95 percent mortgage on an entry-level home. 
As rent trends tend to follow house prices they have also risen making it even harder to save for a deposit. So how does today’s homeownership deposit subsidy measure up? It is definitely a big step in the right direction and we congratulate the Government on that. But it is a 20th century solution to a 21st century problem. In many respects the subsidy is no different from what my generation could access in the 1980s. Why National axed that scheme and Labour took so long to replace it is something they will have to explain. But for now the good news is that more people will be able to join the so-called “ownership society” although not enough people who are on low incomes and benefits. However we do applaud the additional $131 million provided for another 1300 State houses over the next 4 years but we also note that over $400 million is being spent on capital spending for defence. Perhaps those who cannot afford to buy a home should join the Army. 
But the really bad news is that for all its merit the homeownership scheme does not tackle the root causes of the increasing unaffordability of the family home. Only 25 years ago the average wage represented 31 percent of the price of the average house. Today the average wage accounts for only 15 percent of the price of that house. Doubling wages is not the solution. Instead Labour must face up to the impact that foreign investment is having on the residential housing market and the increasing speculation in that market because of New Zealand’s tax structure. Until the Government shuts the door on foreign investors pumping capital into the residential housing market inflating property prices as a result and investigates a capital gains tax on all but the family home to steer investment away from property and into productive activities the cost of buying that first home will slip even further out of reach for struggling Kiwi families. 
Speaking of homes I would like to offer my condolences on behalf of the Green Party to all those people who have lost their homes or have had to leave them because of the torrential rain in the Bay of Plenty and the Coromandel. We would all like to hope that this is a one-in-150-year event but such states of emergency are becoming increasingly common. Although the incidence of unusual floods storms droughts and heatwaves cannot be proven to be directly attributable to global warming they have all increased and the pattern is consistent with that predicted by climate change models. 
Even the Insurance Council of New Zealand has acknowledged the impact that global warming is having on extreme weather events. Unfortunately some other parties in this House either refuse to accept the incontrovertible evidence or are not prepared to take the necessary steps to reduce our greenhouse gas emissions or believe we should not act until everyone else does. I am talking about ACT National and New Zealand First. Along with United Future those parties all voted against the Climate Change Response Bill. The Government passed that bill and 15 others in this term of Parliament only with the Greens’ support. 
The Government’s policy on carbon credits has got wind power the best new source of clean renewable electricity off the ground. Several wind farms are up and running and many more are being built. Although there is much we disagree with in the Government’s energy policy we congratulate it strongly on its efforts to support renewable energy. But we do challenge the Government to go much further especially with solar water heating energy efficiency and conservation. We must all change our transport and energy habits of a lifetime if we are to survive this century. So the Greens want to see the carbon tax brought forward to 1 April 2006 and an excise tax on diesel as the start of a comprehensive programme of ecological tax reform and as a key part of the transition to a sustainable energy future. 
The Government is failing to apply its foresight on climate change to the closely related issue of peak oil. While on the one hand the Government realises that global warming is a problem on the other hand it remains wedded to a fossil fuel - dependent economy. That was demonstrated today with an extra $300 million for roading. What is more it is investing our taxes in drill-and-hope searches for oil and gas and praying that world oil prices will drop instead of developing a plan to enable us to reduce our dependence on oil. 
In last year’s Budget Treasury took the trouble of providing a full page of advice on oil prices. It said that Brent crude spot prices would remain at about US$32 a barrel over the middle of 2004 before easing back towards their assumed equilibrium level of US$19 a barrel. When we questioned officials on where they got their price predictions from they conceded that neither Treasury nor the ministry of energy had any capacity to predict future prices. Instead they admitted that they rely on consensus forecasts which in turn are significantly influenced by the futures market. We asked whether they had ever heard of peak oil and they revealed that they had not. Treasury devoted another page to oil prices in the December Economic and Fiscal Update. By then its tune had changed. Its prediction was for a gradual decline in prices to US$43 a barrel by March just past. Today Brent crude is selling for US$48 a barrel and today’s Budget Economic and Fiscal Update states that spot prices of US$50 are expected to decline over the next 5 years to US$47. That is a long way from US$19.50. 
Dr Cullen has claimed that the overriding theme of this year’s Budget is the need to play the long game to ensure that our economic fundamentals remain strong. It is a great theme but when it comes to transport and all the other economic activities that depend on oil where is the plan to achieve it? Where is the announcement that the extra $100 million allocated to land transport each year for the next 3 years will all be spent on public transport rail and other sustainable options? It is going on roads instead. We will not motorway our way out of our transport problems. The Government knows that to some extent. It has bought back the rail-track but much of this still needs to be fixed. Beyond that Wellington’s commuter rail network should be expanded—for example by double-tracking where it is needed and electrifying the route north of Paraparaumu. Auckland needs rail services to the airport linking to the south and the west as well as to the city. Christchurch needs a passenger rail service to Rolleston and Rangiora. 
The Government should also be investigating the electrification of the gaps in the North Island main trunk as another step to reducing our dependence on fossil fuels and meeting our emission reduction targets. The benefits go beyond being kind to the environment. If we can get more freight off juggernaut trucks and back on the rail where it belongs then our roads will become safer. If we can provide fast affordable public transport within and between our cities and towns we will reduce congestion on our roads reduce frustration and road deaths and increase productivity. 
Thanks to the Greens we have a land transport strategy and a new Act that makes it possible to build a much more balanced transport system with funding across rail road public transport travel demand management cycling and coastal shipping. But that is not reflected in this Budget which allocates even more hundreds of millions of dollars to accelerate road building and nothing to the low-energy alternatives. It just shows the effect of Don Brash’s billboards in Auckland. It is disappointing that Dr Cullen does not have the spine to stand up to this sort of blatant populism. 
Whether or not peak oil is upon us the end of the cheap oil era certainly is. The challenge of the next 3 years is to ensure that real change actually happens on the ground. So far the signs are mixed. The framework exists to take us into a future in which mobility is not the preserve of the rich as Don Brash and even Michael Cullen would seem to have it. The difference between the two doctors and the Greens is that they are looking back to a past that never existed while we are looking to a future that is only possible if we take big strides to achieve it. The “it” I am talking about is environmental sustainability. None of the environmental initiatives in this Budget tackles the problem of industry being both poacher and gamekeeper which has meant that non-binding measures such as the New Zealand waste strategy have failed to meet even their own very modest targets. The Government must lead in this area. 
New Zealand’s economy is built on our environment. Our clean green image is vital to the success of our primary producers while our largest export industry tourism brands us “100% pure”. Yet despite depending on the environment for economic success as well as human survival the Government constantly puts short-term economic growth ahead of long-term environmental sustainability. So does the Budget measure up on sustainability? Does it ensure that our environmental fundamentals are strong? Does it have a plan to ensure that we are living within resource limits and that demand does not outstrip supply whether in fossil fuels or in water? Does it ensure that we are reversing the decline in quality of our air our drinking water and our rivers? Will Dr Cullen’s economy reduce our ecological footprint or will it increase it? Quite simply the Budget does not measure up on any of these counts. It falls well short on sustainability and self-reliance. In fact it will have a negative environmental impact and make New Zealand even more dependent on what Dr Cullen admits is a weak global economy. 
Perhaps Dr Cullen is finally waking up to the need for our economy to be more self-reliant. His admission today that we have a chronic current account deficit and high overseas debt sounded as if the king has finally looked out the window of his counting house to see that the peasants are struggling. While his self-proclaimed prudent fiscal management has led to record surpluses—that is Government surpluses—our national economy has been going down the gurgler. When Dr Cullen took over as Treasurer New Zealand had an annual trade deficit of just over $2500 million and rising. For the 12 months to March this year it has worsened to an all-time record of $4365 million. 
The story is the same for the current account deficit. It was $4.8 billion and rising when Dr Cullen became Treasurer. For the 2004 calendar year it was a massive $9.385 billion and it is predicted to rise even higher. That is why the Green Party opposes the Government’s free-trade and foreign investment policies and supports import controls and a strong Buy New Zealand Made campaign. That is also why we support the Government’s work-based savings scheme announced today. In fact ever since we have been in Parliament we have called on the Government to provide working people with an incentive to save some extra for their own retirement on top of their New Zealand superannuation entitlement. Our view is that while the Government should provide the bread and butter it is up to people to make their own jam with the help of a little sweetener from the Treasury coffers. Our reason for supporting a work-based savings scheme is not just that it is good for the individual saver; it is also clearly good for the whole economy. We are pleased to see that Dr Cullen has finally grasped the benefits of increasing savings as a way of reducing our growing dependence on foreign capital. An additional benefit from the scheme is that by encouraging saving it will automatically reduce consumption of and therefore pressure on scarce resources. 
We cannot say the same about the Government’s flawed plan to get parents to start saving for their kids’ tertiary education. That is a blatant quadruple whammy. The current generation of young working people is not only paying for its parents’ superannuation but through the Cullen fund also paying for part of its own superannuation and added to that it has been paying for its own tertiary education. That alone is intergenerational theft on a grand scale but now the Government wants to cap it off by making working people pay for their kids’ tertiary education too. It is a no-brainer which is why it is not in the Budget but has instead been announced as a discussion document. As even the  
Dominion Post  
suggested last week why does the Government simply not reduce tertiary fees and cut the size of student debt? The Green Party would go even further. We believe that full-time tertiary students should be paid a living allowance equivalent to the unemployment benefit. We also support the write-off of existing student debt where graduates stay in New Zealand and contribute to our economy and society. If the Government is serious about having a world-class education system and making New Zealand a place where skilled people want to live then it needs to send those people a very strong signal that they are valued. Right now they are receiving exactly the opposite message. 
We live in hope that Dr Cullen will make his goals consistent with his policies. After all he is finally doing something about work-based savings. But perhaps one reason why he refuses to tackle the student debt burden is that the net debt targets in the Crown accounts are being achieved on the backs of young New Zealanders. Student loans appear on the Government’s books as an asset. In reality the burden of student debt is a massive liability for our society but in the Crown accounts the current debt of $7 billion helps the Government achieve its net debt target. Dr Cullen’s Budget surplus is also built on the backs of children growing up in poverty. Yes Working for Families is helping and will help to reduce child poverty in New Zealand but as we have said time and time again it does not go far enough fast enough. The fact that a coalition of Barnardos Unicef Save the Children and Plunket have launched the Every Child Counts initiative to make children the centre of attention during the election campaign confirms that the Government is not doing enough to ensure every child gets the decent start in life that he or she deserves. 
Children should be at the heart of the election policy debate because they are literally our future. It is morally indefensible that children are growing up in poverty in our wealthy country. It is also short-sighted economically. When children have a bad start in life they are more likely to get into trouble and will not contribute as much to society as they should. We cannot afford that because we depend on the current generation of children to produce the goods and services we want when we retire and to create the wealth to pay the superannuation and health costs of our generation. In other words we have a vested interest in ensuring that all children grow up to become healthy productive citizens because they are the best security that we could have in our old age. That is another reason why the Greens continue to oppose Dr Cullen’s superannuation fund. We believe that the money would be better invested in the health housing and education of our young people and in the public infrastructure that I talked about at the beginning of my speech. It is time to future-proof our economy strengthen our society and protect our environment rather than invest our taxes in the economies of our competitors. 
We also have a responsibility to be good international citizens. It pains me to see that New Zealand is in the bottom half of the OECD when it comes to our contribution to overseas development assistance. My passion for politics developed when Norman Kirk was Prime Minister. He made me proud to be a Kiwi not just because he sent a frigate to Mururoa but also because he lifted our contribution for aid and development to over 0.5 percent of GDP. Today it is half that level despite successive Governments signing binding commitments internationally. As my colleague Keith Locke has pointed out if the recently announced defence package had instead been invested in development assistance New Zealand would have regained its international reputation by almost reaching the 0.7 percent target. While there is of course a place for a defence force especially in peacekeeping fisheries protection and disaster relief roles real peace comes from development not out of the barrel of the gun. 
Three years ago the Green Party voted for the Budget despite Labour passing legislation to lift the moratorium on genetic engineering earlier in that same week. Because we had a confidence and supply agreement with that Government we supported that Budget. In this term the Government does not have our confidence because it has refused to countenance the protection that we believe New Zealanders deserve from genetically engineered crops and animals. Fortunately our strong public stance against GE means that we can still claim victory in that New Zealand is still GE free. Bearing in mind that fact and the fact that there are many measures in the Budget that we do support I will not be moving a no-confidence motion in the Government this year. We will also vote against the no-confidence motions moved by the other parties—as we have always done—and for the first time since the last election we will abstain on voting on the Budget itself. That signals both that we are willing to work with Labour and our belief that the Budget still does not measure up where it counts. We look forward to ensuring that next year’s Budget does measure up and does give Kiwis—both the feathered species and the human species—the future that they deserve.