Norman Russel: Debate on Prime Minister’s Statement 
Text is incorporated into the Bound Volume 
Norman Russel: Debate on Prime Minister’s Statement 
[Sitting date: 30 January 2013. Volume:687;Page:7639. Text is incorporated into the Bound Volume.] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I applaud the previous speaker Chris Tremain on what was an overwhelmingly positive speech focused on the Government and what it is achieving. That has been very unusual in this debate from the Government side where most of the speeches have simply been attacking the Opposition. It was good to hear actually. It was good to hear someone from the Government who obviously believed in what it is doing and it is pleasing to hear that there is a Government Minister who is focused on what it is doing. 
From the Green Party’s point of view we hope to contribute in a positive way to the political debate in New Zealand this year. We will be focused on making sure that the discourse around the economy is focused on having a smart but green economy. The Government’s agenda has been to simply focus on more resource extraction which is a kind of simplification of the economy if you like making it simpler and simpler. We think we need to be a more diverse economy and actually encourage green economic opportunities and also the manufacturing sector which we think is critical to that. 
We will also be focused on making sure that we protect our environment. It is not only for economic reasons which is critical; it is also in and of itself. The Green Party believes that the environment matters in and of itself and in fact to have rich lives to have lives that have meaning and that are full of the things that we love we need to protect our natural environment. Of course we also need to protect our natural environment to protect our economy—the New Zealand economy in particular but of course all economies are entirely dependent on the natural world and we degrade the natural world at our peril. It is with some sadness that in recent years under this Government New Zealand’s position in terms of environmental management has gone so far backwards. 
Finally our third priority area of course is about making sure that everyone gets a fair go. We have seen New Zealand now has the highest levels of inequality that have ever been measured. As a result to some degree of the global financial crisis and to some degree of the specific policies of this Government inequality has grown quite radically in New Zealand. That is I think a very sad development and something the Government should not be pleased with. 
I wanted to touch a little bit on a few of the contemporary debates. The first one is the so-called hands-on hands-off economic policy debate. The reason is that what I found around the Government’s approach to this is a little bit incoherent. On the one hand we have had Bill English—and John Key to some extent—telling us repeatedly that it is a hands-off Government. What we hear from the Government all the time is that Governments do not create jobs and so forth but that the private sector does. On the other hand we hear from Steven Joyce about being hands-on. Steven Joyce comes to us every day and tells us about specific businesses that he is supporting or whatever so he talks about being hands-on. So the problem I think for the Government in this debate is that there is incoherence. Is it a hands-on or a hands-off Government? The Government cannot seem to decide which one it is. That matters because if the Government is going around having a hands-on approach which is obviously what Steven Joyce is doing with massive intervention it is doing it without a theory without a consistent approach. In fact on the other hand most of the rest of the Government members are saying that they do not do this thing that clearly they are doing. So there is incoherence in the Government’s approach to intervention in the economy and I suspect that is part of the reason why things are going so badly. 
The second debate that I wanted to touch on was around monetary policy. We have got the official cash rate announcement tomorrow. No doubt—I think it is highly likely—it will stay the same which is relatively high by international standards. New Zealand’s interest rates and official cash rate are relatively high. This is a problem for New Zealand. It is a problem because the official cash rate drives up the level of the exchange rate. The high exchange rate makes it very difficult for our exporters and those who compete with imports. That means we run these big imbalances over time big current account deficits. To service those current account deficits we have to sell off more assets or we have to borrow more money and New Zealand has been doing this for a long time. When the current Government criticises the previous Government for running current account deficits it is a fair criticism. The previous Government ran enormous current account deficits. It is a problem. But it is not enough just to constantly blame the Labour Party. The current Government is the current Government and as much as it wants to blame the Opposition for its own failures at the end of the day it has a majority. The fact that we are still running large current account deficits and they are getting worse really does lie at the door of the current Government. 
We do need to change the monetary policy settings. One of the issues has consistently been that what the Reserve Bank has been trying to do is control inflation coming out of the housing sector. The way it has done that is increasing interest rates or the official cash rate in order to try to squash the housing sector. This is in spite of the fact that we know that there are alternative tools available. The Reserve Bank board got some work done looking specifically at this. Loan devaluation ratios which are able to control housing inflation are a way to target the inflation coming out of the housing sector without increasing the official cash rate. This is a tool that is well known and widely used within the developed world. But for some reason New Zealand has been locked into a new-right ideological position. We are completely out of sync with the rest of the OECD. We have a Reserve Bank that is solely focused on targeting inflation. Most OECD countries do not do this. They look at things like exchange rate output and employment and of course that is a very sensible approach. 
Of course we are also in the middle of this currency war. Most major economies that we relate to or compete with are putting downward pressure on their currencies through quantitative easing and printing money on a large scale. It is a very strange world where very large economies—the US Federal Reserve of course the Bank of Japan the European Central Bank is looking at getting engaged in it in a big way the Swiss National Bank—are all involved in quantitative easing of one sort or another to put downward pressure on their currencies. New Zealand of course takes the position that we could not possibly get engaged in anything like that. The effect is that our currency is overvalued and our export sector is getting squashed. 
The Opposition parties set up the manufacturing inquiry because we wanted to look at the problem in manufacturing. One of the key problems that the manufacturers and exporters are telling us is the level of the dollar. They are saying it over and over and over again. Other countries’ Governments and central banks are responding to the cries from the productive sector by intervening on the currency. That is now normal practice within the OECD. Anyone who reads what is going on from the Bank for International Settlements or from any of the international institutions knows that it is normal practice now for Governments and central banks to put downward pressure on their currencies by putting their official interest rates down towards the bottom of the band and by using quantitative easing to intervene on their currencies. It is just normal practice now. The fact that New Zealand refuses to do it is part of the reason why our currency is much higher than other currencies. 
Hon Chris Tremain 
: The only way that intervention would work is if you were the only one. 
Dr RUSSEL NORMAN 
: So Chris Tremain who is now shouting out whose speech I politely listened to is now I think showing great impoliteness by shouting out. In fact Mr Tremain this is normal practice now within the OECD and if you read OECD documents as I do on a regular basis you would see that this is standard debate. The tragedy is that we cannot have a rational monetary policy debate because we get this kind of shouting out that we get from the National Party which makes it very difficult to have a rational monetary policy debate as they are having in other countries. 
In other countries they are saying how do we protect the export sector the manufacturing sector and the productive sector of our economy which generates jobs? How do we intervene on our currency to do that? It is not a simple thing to do. It is not an easy thing to do. Nobody has the silver bullet around this issue but it is the debate that we need to have and unfortunately we are not having it properly in New Zealand largely because of the Government which is intervening against the debate. At the same time we now have record high unemployment so in terms of jobs which the Government should be judged against it has been a failure. We had the highest level of unemployment since the National Party was last in Government so that tells you about its success. 
In the manufacturing sector we have lost 40000 jobs in 4 years. So this is a major problem yet the Government tells us repeatedly that it is not a problem and it refuses to act on it so we are seeing a decline in manufacturing exports. Just in nominal numbers we have had a 9 percent decline in the value of manufacturing exports over the course of this Government. It has been a failure. We have got record unemployment and a decline in manufacturing exports. 
Then of course when it comes to the environment the Government’s policy is extraordinary. Since the election we have seen an extraordinary attack on the New Zealand environment. It is a broadside led of course by Steven Joyce. Policy after policy is just about attacking the environment. We have seen it particularly with regard to mining. The thing about mining is that you know obviously we need some mining but mining as an industry does not employ a lot of people. It never has and it is likely that it never will. Compared with 200000 people employed in manufacturing it is relatively small. So while the Government sits on its hands when we lose 40000 jobs in manufacturing its whole economic approach to generate jobs is premised on building up the mining sector. Even if you doubled the employment in the mining sector it would make a marginal difference to the number of jobs that are being lost in manufacturing. That is how out of touch this Government is in its economic policy. It simply does not get it. Look at climate change: it is the same problem. This Government has no priority around climate change and dealing with climate change issues. 
The Government has done some positive things—the home insulation scheme was a positive development—but in this term the Government really does not appear to have any ideas.