Clendon David: Budget Debate 
Clendon David: Budget Debate 
[Volume:673;Page:19122] 
DAVID CLENDON (Green) 
: 
 Kia ora e te Whare. I am pleased to take an opportunity to speak in this debate on the Appropriation (2011/12 Estimates) Bill. In his Budget speech the Minister of Finance informed us that the main task of this Government was to “return New Zealand to sustained prosperity.” The primary theme of this Budget as it has rolled out has been that this longed-for prosperity that we are promised will somehow be achieved by a mix of public sector cost-cutting an assault on the most vulnerable and least well-off in our society and an enthusiasm for a return to the extraction industries that fuelled the growth of our economy in the 19th and early 20th centuries but at an enormous and largely irreversible environmental cost. 
In amongst this propensity—this obsession almost—with cut cut cut it seems the Government has lost its way. One possibility seems to have eluded the Government—that is rather than cutting into the provision of very necessary and important social services we should instead seek to improve the income streams and revenue so that there is more to go around and we can improve quality of life and create a better economy. An unfortunate albeit important characteristic of the New Zealand economy is that it is a low productivity economy and that is generally accepted I think by all shades and all political hues. We do not manage to generate a high return on our investment in capital labour energy or other resources. 
Although we do not share—in fact we are as far as anyone could be from sharing—this Government’s obsession with the chimera of catching up with Australia which is apparently the solution to all ills it is worth noting that productivity growth in the Australian economy has surpassed that of the New Zealand economy now for a number of decades but historically New Zealand did better than Australia in productivity growth. The turning point was the massive assault on the economy and on society that followed 1984 from which our economy has never recovered. It is to everyone’s advantage that we improve the productivity of our economy that we get more return from every unit of energy and that we get more labour productivity so that New Zealanders can perhaps reduce their internationally and historically high average number of hours worked. We can get more value from our use of our natural capital which ultimately underpins and will always underpin our financial capital. 
Improving productivity is a necessary and certainly a worthwhile objective but sadly nothing in this Budget will contribute to that end and help to generate the outcome of a more productive and therefore more sustainable economy. Rather than slicing budgets and cutting New Zealanders’ access to those critical and important social services we should be looking for and investing in a comprehensive strategy to increase productivity which will deliver not only economic but also social and significant environmental benefits. It is interesting that this Government’s sole contribution—or attempt at a contribution—to productivity improvement given that the Government is pro-business and talks so much about cutting the public sector was to establish a bureaucracy in the form of the Productivity Commission. The irony is lost on no one that the Government looked to a bureaucracy to deal with what is essentially a social and business sector opportunity. We have no need for a relatively expensive and ultimately fruitless Productivity Commission to discover what the issues on low productivity are. Anyone who engages with the business sector reads trade and professional journals listens to economic commentators or indeed engages with the unions academics and researchers or small and medium enterprise owners and operators absolutely knows what most of the problems are around productivity and we have a whole suite of solutions available to us none of which focus initially on the affordability of houses or the movement of freight across our wharves. It is interesting to look as I have done for references to productivity improvements in this Budget. In the Budget speech the word appeared four times once in the context of acknowledging that “Exports growth and productivity have all stagnated.” So it is acknowledged that productivity is an issue but sadly no solutions are offered. 
Growth in itself according to the way this Government understands growth is problematic. We know that if growth is understood simply as increasing GDP year by year it is a fruitless and ultimately self-defeating exercise. In a different context we have a much broader and much more sustainable macroeconomic picture of genuine sustainable growth a steady State economy that is able to deliver goods and services to us to our society and to protect our environmental quality over time. As for the reference to exports I say that yes exports can and will be at least in the short term part of our recovery and part of the answer but the whole picture is much more complex than simply desperately trying to export more and more low-cost commodities which seems to be this Government’s only solution to building economic activity. 
Again I quote from the Budget speech: “The public sector has a wider role to play in lifting productivity and national saving.” and I could not agree more. The public sector can demonstrate leadership. The Government spend in our economy can be targeted in such a way that it will contribute to increasing productivity and reward those companies and services that provide the mechanisms and means for improving our productivity but sadly rather than letting that leadership emerge from the public sector again we saw this slash and burn this destruction of the capacity of the public sector even to achieve its basic tasks let alone leadership in the economy. 
It must be said that the broadband initiative is one mechanism that can deliver productivity improvements and one hopes it will albeit it is a very expensive solution. It is the only content within this Budget that offers anything much in the way of allowing New Zealanders to do more with less and improve their quality of life along the way. 
We are told that the much-touted mixed-ownership model will raise productivity of the businesses involved through sharper commercial disciplines as if the Public Service is not in itself capable of delivering decent and efficient management of those resources. 
The energy sector in itself rather than being milked as a cash cow if directed and modelled correctly could ultimately produce income export through the development of new technologies. 
We had a very good definition of how we can improve productivity and I quote once more: “By investing in new capital increasing skill levels introducing new innovations encouraging entrepreneurial activity and promoting natural resource management New Zealand can achieve productivity growth higher incomes and a better standard of living.” That came about 3 years ago from then Treasury secretary John Whitehead when speaking to The Icehouse the entrepreneurship centre at the University of Auckland. 
Increasing skill levels is a critical part of productivity. Instead we see our tertiary sector and indeed our secondary sector struggling to maintain the capacity to educate and to train. We are losing capacity in just about all of the trades all of the skills all of the professions because this sector has not been sufficiently resourced. It has not been respected. Morale in the tertiary sector is as low as I have ever seen it in 15 years of a quite close relationship with it. 
In respect of new innovations I would like any Government member to point me to where in this Budget they are encouraging and supporting innovation in industry in business in design and in development. Where are the incentives for people to take the risk? Where is the support for the companies that have a very good idea? We have many of those companies. Where is the support to turn that idea into a saleable exportable commodity particularly in the area of weightless commodities like intellectual property rather than product that goes out in containers? We have an extraordinary opportunity in this country to improve our performance by investing in skills by supporting and valuing innovation and this Budget is simply a lost opportunity to advance that. Kia ora.