Donald Rod: Financial Review Debate — Procedure In Committee Speaker Recalled In Committee 
Donald Rod: Financial Review Debate — Procedure In Committee Speaker Recalled In Committee 
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ROD DONALD (Co-Leader—Green) 
: 
 Unlike the previous speaker I intend to address the financial review— 
Rt Hon Winston Peters 
: I hope not. 
ROD DONALD 
: I am sorry but I tell Mr Peters he will dead bored; he may as well go now. The period covered by this review marks the “end of the golden weather” for this Government— 
Rt Hon Winston Peters 
: I raise a point of order Madam Chairperson. It is totally inappropriate for the Green associate leader or whatever he is to talk about someone being a dead boy particularly when the polls say that that member is finished. 
The CHAIRPERSON (Ann Hartley) 
: That is a debatable point. 
ROD DONALD 
: Thanks for nothing. In Dr Cullen’s opening remarks to the Finance and Expenditure Committee he made much of the Budget surplus being well ahead of the forecast—never mind that the surplus is built on the back of 30 percent of our children growing up in poverty. Yes it is good to see that the Government intends to take steps to address that indictment through its foreshadowed Future Directions package in this year’s Budget but $500 million will be nowhere near enough to lift those children out of poverty place them in safe healthy homes and ensure that their parents have sufficient income to give them the material well-being and quality of life they deserve. 
The golden weather is over because one of the main issues we debated during the financial review—I am talking about New Zealand’s overvalued dollar—is still far too high in the currency markets. During a hearing last November Dr Cullen said the value of the dollar was likely to correct itself in the near future. What is more he said that he had tools available to reduce the dollar to more normal levels. What has happened since? The dollar has continued to climb and it was only when the Reserve Bank took its initiative and said it wanted to take an active role in the foreign exchange market that the dollar ended its climb. Good on the bank for doing that good on the Government for supporting its initiative and good on Dr Cullen I suspect for giving it some gentle encouragement. 
But the Reserve Bank’s intervention will not be nearly enough. It will only ever knock a couple of cents off the top of the dollar. It does not address the fundamental structural problems of the New Zealand economy; that is the Minister of Finance’s responsibility. Other than trying to talk the dollar down he is not taking the problem seriously. 
I agree with Dr Cullen’s statement at the hearing that the quickest way to get the dollar down to realistic levels would be if the Green vote went up to 20 percent. 
John Key 
: That’s a long way from Sunday night. 
ROD DONALD 
: Unfortunately particularly given Sunday night’s poll I cannot see that happening in the short term but I tell the member that I do see it happening. What Dr Cullen should be doing is taking up my suggestion to investigate a capital gains tax on all but the family home. He conceded that it might help but he did not take it seriously then; I suggest he does now. If the Government wants to avoid having its revenue fall because profitable companies start recording losses instead of paying taxes due to the crippling effect of the dollar if the Government wants to avoid companies laying off staff and its having to pay more unemployment benefits because of the high dollar if the Government wants to encourage investment in the productive sector instead of in property speculation and if the Government wants to recover some of the company tax revenue it will lose then it needs to look into a capital gains tax. 
During the financial review I also raised the issue of the poor performance of the Government Superannuation Fund and asked some questions around the New Zealand Superannuation Fund. The Minister conceded that the last 2 or 3 years have been extremely bad years. In fact he went on to say that if the next 20 years were that bad for equities we would all be in “deep pooh” whatever we do. 
John Key 
: That’s correct actually. 
ROD DONALD 
: Well in the Green Party’s view unless the Government stops gambling on the casino economy and investing New Zealand capital in overseas companies thus strengthening their economies against ours then we will be “in the pooh” big time. The Minister shakes his head but I draw his attention to the Government Actuary’s report which came out only today on the Government Superannuation Fund. In the year before Dr Cullen took it out of Government bonds and started gambling it overseas it made an after-tax return of 5 percent. In the first year on the overseas sharemarket it made an after-tax return of 0.02 percent. In the 2003 year the one we are reviewing it made an after-tax return of 1.03 percent—nowhere near the 2.5 percent above Government bonds that the Minister predicted the fund would make. 
Hon Dr Michael Cullen 
: Unfair market. 
ROD DONALD 
: Well the market is exactly the point. Why gamble on the market when there is a safe return in Government bonds? That is what the Government did not do—it did not keep it in Government bonds. What is the Government doing with the New Zealand Superannuation Fund? It is splashing that money around overseas as well.