Graham Kennedy: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
Text is incorporated into the Bound Volume 
Graham Kennedy: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
[Sitting date: 24 May 2012. Volume:680;Page:2448. Text is incorporated into the Bound Volume.] 
Dr KENNEDY GRAHAM (Green) 
: 
 This Taxation (Budget Measures) Bill unsurprisingly reflects the general priorities of the Government’s 2012-13 Budget. Let me in my short time do two things: first to judge what is in the bill and more broadly the Budget as presented this afternoon and secondly to discern what is missing from it. In judging what is in this bill and the Budget let me compare the National and the Green positions on the stated priorities that provide the overall framework. National’s starting point is the three demons that provide the setting for a zero Budget—one global one national and one local. There is the global financial crisis there is the 2008 national recession and there is the Christchurch earthquake crisis. These together create a dire situation that justifies a zero Budget and on top of that was the irresponsible fiscal management of the previous Government. From that the Government justifies fiscal austerity so that New Zealand avoids the fate of Greece.  
The bill proposes to abolish three outdated tax credits the transitional circumstances credit the housekeeper credit and the children’s active income credit and there are plans to restrict the livestock valuation method for farmers and repeal the 10 percent voluntary repayment bonus in the student loan scheme. Why does the Government have to engage in this kind of tax sleight of hand? Because it judges such legislative changes to be essential to its 2012-13 Budget. There can be no other way it can afford it.  
So what are the main components of such a strange Budget? There are four main components to this year’s Budget. First is the goal of sound financial management. With that as a precondition the Government identifies three priorities: economic competitiveness public sector efficiency and Christchurch recovery. New Zealand’s outlook says the finance Minister “is more positive than most. We are a food-producing economy [in] a rapidly growing middle class … region.” Unlike other developed countries New Zealand is going through a “moderate adjustment”. So long as the Government sticks to its balanced economic programme we shall pull through. “New Zealanders have shown … resilience in challenging times [and this Budget] supports their aspirations for a brighter future.”  
So let us compare National and Green policy on these components. First sound fiscal management. Rather than slash spending or dramatically increase taxes National chooses to run larger deficits and curtail growth in public spending. The result is the proclaimed ability to stay on target for a Budget surplus by 2015. But giving tax cuts to the richer income earners is not sound financial management. Selling off State-owned assets and borrowing more from overseas is not sound fiscal management. It is a form of fiscal theft.  
The alternative Green Budget has sound fiscal management. It recognises what the Government does not: that our national economy is afflicted with a structural imbalance. That imbalance is an overseas-funded private sector debt driven by excessive consumerism exacerbated by a distorted taxation regime resulting in a rising current account deficit and an increasing negative net investment position. The Green Budget would rest on alternative forms of both revenue and expenditure that reflect three values: sustainability resilience and equity. The revenue would rest on a capital gains tax a resource rental on water increased mining royalties a temporary levy for Christchurch a phase-out of emissions trading scheme subsidisation with a real price on carbon savings off the absurd roads projects and increased revenue from a higher minimum wage. Green fiscal expenditure would include reprioritised items ending child poverty reinstating training incentives initiatives for river clean-up new social housing extended home insulation and reforestation initiatives.  
Consider National’s first priority: economic competitiveness. The Green Party agrees that economic competence rather than a ruthless competitive efficiency is a sound national goal but how much and how is it to be paid? With National having sold off the country’s State assets to the tune of some $6 billion it will put $385 million of new investment in research science and innovation. The alternative Green Budget would apply from the savings within its fiscally neutral Budget—some $1 billion over the next 3 years—which is roughly comparable in amount to National’s plans but the way of funding it is different. Green taxation reform would be specifically dedicated to green technology.  
Consider National’s second priority: public sector efficiency. Of course this is a national goal shared probably by all parties in this House but the difference is over what it means. National is amending the State Sector Act the Public Finance Act and the Crown Entities Act. It will reduce long-term welfare dependency support vulnerable children boost skills and employment reduce crime and improve interaction with government according to its Budget speech this afternoon. The Green Budget already has plans for bringing 100000 children out of poverty and identifies $100 million over 3 years for a start-up fund for cleantech small to medium sized enterprises.  
Consider National’s third priority: Canterbury earthquake recovery. National has committed $5.5 billion over 6 years which is about $1 billion a year. The funding has helped in the rebuilding of 75 percent of the 1000 buildings that require demolition some 13000 repair jobs have been generated and 5000 of the 7000 homeowners have accepted the purchase offer. So that is some modest progress though it has not been without pain and not without continuing controversy. But the main problem is how to fund it because National is funding this through overseas borrowing. Green funding would be a national levy that would generate $5 billion over the next 5 years—also about $1 billion a year. This would avoid the need for further overseas borrowing and greater national debt and the Government prides itself on fiscal prudence. That fiscal prudence is a sick joke. It is a recipe for social inequality and political instability.  
Finally let us recognise what is not in this Budget which requires the Taxation (Budget Measures) Bill. What are the omissions? What is missing in the broader recognition of the true global situation? There is no recognition of a global ecological overshoot—a 50 percent overshoot—with the current human population of 7 billion and the associated resource depletion and biosecurity loss. There is no recognition of the projected growth in human population from 7 billion to 9 billion over the next four decades a 28 percent increase that will also increase the ecological overshoot beyond the 50 percent obtaining at present. It ignores the critical part of that overshoot: the increase in carbon emissions which will also increase the ecological overshoot beyond the 50 percent obtaining. And it will cause serious and possibly catastrophic climate change which in turn will cause social instability.  
This bill as part of the Budget is seeking an illusory national redemption in a dysfunctional global framework. As the global economy deteriorates the New Zealand Government believes its destiny lies in being more competitive on neoliberal terms. As we head towards the cliff the Government presses down on the accelerator. The global framework is dysfunctional because we focus on the global economy only and regard the ecology as external collateral damage to be remedied. We fail to realise that the economy is part of the ecology and that the global situation will be rectified only if ecological economics replaces the neoclassical economic framework as the guideline for macro policy by New Zealand. For these reasons the Green Party will be opposing this Taxation (Budget Measures) Bill.