Norman Russel William: Budget Statement — Budget Debate 
Norman Russel William: Budget Statement — Budget Debate 
[Volume:672;Page:18872] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 The Green Party is the only party that has the courage to say we need to increase Government revenue in order to reduce borrowing and avoid making damaging spending cuts. It is responsible to raise revenue and it is short-sighted just to cut borrow and sell. We are the only ones who are prepared to say it. 
The Green Party is the only party that has put forward a series of tax-broadening measures that would both raise revenue and begin the smart Green transformation of the New Zealand economy. Broadening our tax base will help guide our economy on to a more sustainable footing with lower greenhouse emissions and a cleaner more efficient use of water. Our vision is for clean green prosperity for all New Zealanders—a smart Green economy operating as part of a fair society. That is the future the Greens stand for. That is the future that this Budget fails to deliver. 
Faced with a Budget deficit partly of its own making this Government has chosen to cut services and increase debt. Faced with an economy staggering under high private debt the Government has chosen to take us backwards with its attempt to mine minerals and mine water. But there are alternatives. Avoiding making damaging spending cuts and minimising debt by broadening the tax base would have been the most fiscally responsible approach to the 2011 Budget. National’s Budget is fiscally irresponsible. Running the largest fiscal deficit in our history is fiscally irresponsible. Bleeding social support and cutting services to pay for previous tax cuts is irresponsible. 
Labour’s response so far is not responsible either. Putting the Government’s historical deficit on the nation’s credit card is the wrong thing to do and I say to our colleagues in Labour that if they do not like the spending cuts then they have to identify where the money will come from to keep those services. Broadening our tax base to save services cut the deficit and transform the economy is a genuine alternative to National’s “cut borrow and sell” Budget and Labour’s alternative. 
We need to address the so-called tax switch and the claim that National’s tax changes were broadly revenue-neutral. There is a massive gap between what the Government says about its tax policy and the reality. It is the old tax switcheroo. National’s tax switcheroo works like this. It introduced two rounds of tax cuts that went mostly to the top end of earners then it increased GST to pay for it except it did not cover it leaving a $3 billion hole in the Budget. So to cover the gap National has slashed KiwiSaver Working for Families and the student loan scheme. The old tax switcheroo means that the chief executive of Westpac is given a $5000-a-week tax cut and to pay for it 500 workers lose their $10-a-week Government contribution to KiwiSaver. The old tax switcheroo is old National up to its old tricks. How is it that KiwiSaver and Working for Families which support ordinary New Zealanders get cut because they are deemed to be “nice-to-haves” but massive tax cuts for banks’ chief executives are essential and must stay in place? 
Last year’s tax cuts for those who have the most and this year’s spending cuts for those who need the most will lead to increased inequality in Aotearoa New Zealand. New Zealand already has one of the largest gaps between the rich and poor in the OECD. This Budget will make the gap worse. 
Two rounds of personal tax cuts were unaffordable and have not stimulated the economy. The GST increase did not deliver the additional revenue projected to cover the cost. The old tax switcheroo led to an increase in the deficit. The Government’s tax policy is one of the drivers of the record deficit. The failure of the Government’s tax policy has led to death by a thousand cuts which the Government has chosen to deliver in this Budget. 
Let us be clear about who is paying for the Government’s economic mismanagement and poor fiscal choices. The average working family will bear the overwhelming brunt of the cuts. That is not fair. The Government has cut $2.5 billion from KiwiSaver and hard-working New Zealanders. The changes to KiwiSaver announced today will make the scheme less attractive and undermine our national savings efforts. The Government knows that its changes to KiwiSaver will undermine the scheme; that is why it is allocating $90 million less in this Budget towards start-up grants. We know that workers will end up paying the increase in contributions to KiwiSaver. 
Over $400 million will be cut from Working for Families. That is money that helps put food on the table for many Kiwi kids. Those kids will be worse off. Over $600 million will be cut from accident compensation so when Kiwi families get hurt it will be harder for them to get healthy. We know that the Accident Compensation Corporation is already refusing support for many injuries. Starving the accident compensation scheme of revenue through the non-earners account will make life worse for many New Zealanders. Kiwi families will have to retrain because jobs are hard to come by. That will be harder because of the discriminatory changes that the Government is making to the student loan scheme. Many people will need to retrain later in life. Cutting their access to loans is wrong. 
There are better and fairer alternatives to the Government’s mismanagement of the Budget and the economy. A comprehensive tax on capital gains excluding the family home is a fair way to broaden the tax base. It would send real signals to the property market to make houses more affordable for everyday New Zealanders. It also has the advantage of moving capital away from housing and into the more productive sector of our economy assisting the transformation of our economy. Over time a tax on capital gains would raise an additional $4.5 billion a year. To anyone who says the sky would fall if we tax capital gains I ask them whether the sky has fallen in Australia Canada the USA or China. All of those countries have a capital gains tax. 
The International Monetary Fund the OECD and the Government’s own Savings Working Group all support a capital gains tax. In fact the Savings Working Group said that half the increase in house prices from 2001 to 2007 was due to the preferential treatment of housing. The Prime Minister talked earlier about making housing affordable. Well a capital gains tax is one of the single best ways that housing could be made more affordable. A similar case can be made for speculation in rural land which is driving family farmers off the land. The Government’s inaction on capital gains has slammed the door on the Kiwi dream of owning one’s own home or farm. 
A capital gains tax makes sense and is fiscally responsible. It would fairly increase revenue in order to lower Government borrowing and it would move capital towards the more productive sector of the economy—towards business. It is the best thing we can do to make housing more affordable and to reignite the dream of young New Zealanders to buy their own home or their own family farm. There are alternatives to this Budget. We say that implementing a tax on capital gains is a smart and responsible alternative and one that makes family homes and family farms more affordable for the average Kiwi. 
The devastating earthquakes that struck Christchurch have ripped a hole in our country’s heart. The loss of life is unprecedented in our recent history and our nation’s resilience was tested. Although the ongoing human cost of the quakes is immeasurable it is our job to meet the quantifiable economic cost to ensure that Christchurch and Cantabrians can rebuild. One-off tragic events like the earthquakes should not be funded through permanent service cuts and permanent debt which is what the Government is doing. 
The Green Party has an alternative way to pay for the cost of rebuilding Christchurch that does not place a permanent mortgage on our children’s future through high debt and borrowing. A small temporary earthquake levy shared across those most able to pay is the fairest and most compassionate way to rebuild our fallen city. It is what our neighbours in Australia have done in response to the devastating floods in Queensland. Australians stepped up and said that a levy was the fair way to spread the costs. We should do the same. 
New Zealanders told us that they preferred a temporary levy to increased debt or spending cuts when we asked them in a UMR Insight poll. A temporary levy set at 1.5 percent on income between $48000 and $70000 3 percent on income above $70000 and 2 percent on the company tax rate would raise an additional $1 billion per year. Over 5 years that levy would raise the amount that the Government currently projects it will need to pay for the rebuild in Canterbury. 
The Government’s approach—spending cuts and additional debt—carries great risks to our economic recovery. Spending cuts could send the economy back into recession as we saw in 1991 after the “mother of all Budgets”. More debt also carries risks and costs. An additional $5 billion in Government borrowing as proposed will add $250 million per year in interest payments alone. A credit downgrade due to increased Government borrowing could see mortgage interest rates go up for Kiwi mums and dads making life harder for thousands and delivering no benefit to Christchurch. 
A temporary levy is a better and more fiscally responsible option that avoids the economic risks of the Government’s slash-and-borrow approach and more fairly apportions the costs of the rebuild to those most willing and able to pay. There are alternatives to this Budget. An earthquake levy is a more balanced way to fund Christchurch’s rebuild without going into debt. 
The biggest opportunity the Government is missing in this Budget is the opportunity to lead our economy in a more sustainable direction. We are doing nothing new to position our economy in a way that maximises our natural advantages and “clean green” brand. We could be a world-leading economy that grows green technology and green-collar jobs in a way that is sustainable prosperous and fair for all our people. The Green Party is proposing the use of smart solutions that utilise market mechanisms to shift the economy in a sustainable direction and help the Government balance its books at the same time. 
Take greenhouse emissions for example. The Government’s emissions trading scheme is so poorly designed that taxpayers are footing a bill of nearly $2 billion over 2 years to subsidise polluters’ carbon emissions. That is an extra $2 billion added to the worst deficit in New Zealand’s history just to subsidise pollution. Setting a proper price on carbon will drive the transition to a low-carbon clean economy. It will also make those doing the polluting pay their way and it will free up over $1 billion from this deficit and render unnecessary the social service cuts that we heard about today. It is more than fiscal; it is about protecting our kids from out-of-control climate change. This Government is literally subsidising climate change in our country and climate change around the world and it is an absurd way to spend $2 billion. 
A charge on the commercial use of water is another market signal we should be sending. This eco-tax would help us restore some of the water to our rivers and ensure a sustainable economy at the same time. The latest OECD country report on New Zealand calls for a price on water for irrigators. A small charge of 10c per cubic metre of water for commercial irrigators would raise the best part of $1 billion per year. There are alternatives to this Budget. Introducing a price on all commercial water use and a price on greenhouse emissions is a responsible way to sustain our natural capital. 
We also urgently need to reprioritise the infrastructure investment and expenditure to reflect the clean green low-carbon future we all want. Spending $16 billion over 12 years on new motorways as the Government proposes at the same time as petrol hits its highest price ever is not a smart way to run an economy. One might argue it is kind of insane to spend $16 billion on new motorways over 12 years. Spending $16 billion on new motorways when commuters are desperate to go to work in modern and affordable trains and buses is not a smart way to run an economy. Spending $16 billion on new motorways which is not as job rich as spending on public transport is not a smart way to run an economy. Let me be clear. The Greens are not anti roads. The question is: what is the best way to spend the next transport dollar? Sinking such large amounts of money into new motorways that commuters do not want and buses do not drive on is money badly spent. 
These changes are just the tip of the transformation that is possible. A capital gains tax a price on commercial water use a real price on carbon pollution and a smarter transport spend can set us on a path to clean green prosperity but this is only the beginning. I see a future for New Zealand in which Government industry workers and experts collaborate to ensure that we are at the forefront of clean green technology infrastructure and business. The policy options for transforming into a sustainable economy are too numerous to detail here but include measures such as tax breaks for research and development into clean green technology. It is about keeping our power companies publicly owned and using their size and scale to create a revolution in green power generation—a revolution that we can apply at home and export to the rest of the world. That cannot happen if our assets are sold as the Government proposed today. This Budget does not deliver any of that. There are alternatives to this Budget. 
Despite not being part of the Government the Greens are part of creating a more sustainable economy. Our memorandum with National has delivered the successful Warm Up New Zealand home insulation scheme. It is an example of smart Green economics at work and we congratulate the Government on recognising the wisdom of this policy. New Zealand will reap economic benefits in health and energy savings worth over $500 million from the 100000 homes insulated to date. An additional 2000 jobs will be created over 4 years. Most important 300000 New Zealanders half of them on low incomes will be warmer and healthier this winter thanks to this scheme. This is an example of the sorts of Green alternatives that deliver for the economy for people and for the environment. Sadly the Green homes scheme is a shining light in a Budget that is otherwise lacking in imagination. 
The Green Party recognises the challenging fiscal circumstances that surround this Budget and we acknowledge the hard work and sincerity of the Minister of Finance but we do not believe that this is the right Budget for today or for tomorrow. We cannot endorse a Budget that fails to implement smart Green revenue measures that would reduce Government debt avoid making damaging spending cuts and set us on a path to developing a 21st century smart Green economy. We cannot endorse a Budget that increases the gap between those who have the most and those who need the most. We cannot endorse a Budget that undermines our “100% Pure New Zealand” brand and places us firmly on a path of ongoing environmental degradation. 
There will be other Budgets and other opportunities to put our country on a path towards clean green prosperity for all New Zealanders. The tragedy is that this Budget has missed that opportunity.