Donald Rod: Budget Debate 
Donald Rod: Budget Debate 
[Volume:608;Page:5789] 
ROD DONALD (Co-Leader—Green) 
: 
 The Budget surplus is a fraud. It is built on the backs of Kiwi kids living in poverty hard-working low-income families who need a tax break and our young people who are shut out of affordable tertiary education. New Zealand is paying a high price for Dr Cullen’s $4 billion Budget surplus. Today’s Budget could have marked a turning point for the Government. If Labour had cooperated with the Greens this Budget would have contained significant measures to future-proof the economy strengthen our social fabric and protect our environment. It does not. 
Of course there are many good initiatives in the Budget including several Green projects that continue from the last term. But it is not a Budget that Labour can be proud of. In fact it is one that Don Brash or Bill English would dearly have loved to deliver despite all their rhetoric because it might be damp around the edges but it is tinder dry in the middle. That is why on behalf of the Green Party I move  
That the amendment to the amendment to the amendment be amended by omitting all the words after “has no confidence” and substituting the following words: “in the Labour-led minority Government because of its failure to invest in achieving a self-reliant economy its refusal to properly nurture a just society and its unwillingness to seriously protect the environment.”  
The Budget itself is a house of cards. It depends on the global casino economy recovering. It depends on the release of genetically engineered (GE) organisms in New Zealand not destroying our export markets. It depends on the high exchange rate not crippling domestic manufacturing and not blowing out the trade deficit even further. It depends on the Government Superannuation Fund’s overseas investments not losing any more millions and it depends on business people believing that Michael Cullen is doing a better job than Don Brash or Bill English would. The Government is safe on that last point. In our view National’s economic prescription is worse than Labour’s. That is why the Greens have moved their own no-confidence amendment and will not be supporting National’s amendment. 
However every year our sense of frustration grows. I do not want to look back in 30 years’ time and try to explain to my children that I was in Parliament when we failed to stop GE when we ran out of Maui gas when we watched the rail network run into the ground when we failed to meet the needs of poor families and when we did not invest in the young people whom every one of us will depend on in our retirement. 
What will convince the Government to adopt our policies? It has taken a second energy crisis in 2 years for energy efficiency and conservation and renewable wind and solar energy even to begin to be taken seriously. It took a string of biosecurity incursions for Green concerns about poor border control to be faced up to. The Government is only now getting serious about buying back the rail-track more than 2 years after we first called on it to do so. 
When will the Government accept that the Green Party has the only realistic strategy for future-proofing the economy strengthening society and protecting the environment? Clearly not today. But I will place on record what we believe the Government should be doing. The energy crisis is the most glaring example of the failure of successive Governments to do their job. The energy crisis is a crisis of leadership a crisis of vision a crisis of common sense and a crisis of determination. To quote a former colleague it does not take “rocket science” to know that Maui was going to run out. The 1973 gas contracts made the decision to use the gas fast to use it wastefully to pay for it whether or not we used it and to use it all up in 30 years. The Greens have been warning for those 30 years that using most of that gas for electricity generation rather than as a direct fuel was wasteful. Two-thirds of all the energy value of the gas burnt at Huntly goes up the stack or into the Waikato River. Now that it is running out a mere 2 years earlier than was always expected there is no plan to fill the gap. 
For 30 years we have been promoting the use of gas for heat. We have been promoting insulation of homes and water heaters solar heating for domestic hot water wind generation for electricity industrial motors properly sized to their load wood-waste fired boilers in the forestry industry and a whole host of other measures. The 1975 Values Party manifesto called for an expanded Ministry of Energy Resources to coordinate the use of all energy sources and bring down a comprehensive energy policy aimed at preventing further increase in energy consumption increasing the efficiency of energy use minimising the consumption of non-renewable resources and environmental disturbance and discouraging high energy intensive industries. Imagine where we would be today if we had had MMP then and the Greens had got into Government and been able to implement that policy. We would certainly not be facing an energy crisis and old people would not be worrying about freezing in the dark this winter. 
Thank goodness we did get into Parliament and Jeanette Fitzsimons was able to introduce the Energy Efficiency and Conservation Bill. When National was in power it certainly was not interested in the energy-efficiency standards in the national strategy. Max Bradford even described the bill as “a huge and massive step back to a Stalinist approach to central planning.” At least Labour had the good sense to pass the bill and agreed to the Green’s Budget bid for an extra $3 million in funding for the Energy Efficiency and Conservation Authority. 
But that is a fraction of the investment we need to make to achieve the permanent savings and renewable energy targets we are capable of. One would think that in the middle of an energy crisis the Government would be pouring resources into solving the problem. It thinks it is but it has its priorities wrong. Today’s Budget provides only $12 million to the Energy Efficiency and Conservation Authority for efficiency and renewables while State-owned Meridian Energy plans to spend a hundred times that—$1.2 billion for a power generation scheme that will destroy the Lower Waitaki River. In the time it would take to build this leviathan the Government could help develop the New Zealand – based solar wind and energy-efficiency industries to deliver the same energy as Project Aqua. The energy crisis not only highlights the failure of the market model and the refusal of successive Governments to plan regulate and invest properly it also highlights the culture of waste that has permeated society. Investment and waste are two sides of the same coin. Do one to avoid the other and we actually make a profit. 
When Jeanette Fitzsimons’ bill was introduced in 1998 the Parliamentary Commissioner for the Environment said: “There is significant risk to the New Zealand economy and our way of life if energy efficiency is not improved. Addressing energy efficiency across all sectors has the potential to bring substantial cost savings to the Government businesses and the public and reduce impact on the environment.” We still have not learnt that lesson. And we still have not learnt the lesson about biosecurity. Despite the painted apple moth and a host of other biosecurity incursions in recent years the Ministry of Agriculture and Forestry inspects only 24 percent of the sea containers arriving at our wharves. By the ministry’s own statistics 39 percent of containers are contaminated in some way which means approximately 60000 contaminated containers are opened without any sort of inspection and their contents let loose on our environment. The Government said it would cost $60 million a year for a 100 percent inspection of containers. So far it has spent $90 million on painted apple moth eradication alone. 
Threats to our biosecurity are one of the hidden costs of free trade. The more goods we import the greater the threat to our economy and exports. A Reserve Bank and Treasury report earlier this year on the macroeconomic impacts of a foot-and-mouth disease outbreak should be a wake-up call for the Government and all New Zealanders. As Federated Farmers President Tom Lambie said: “The reality of 20000 job losses and a $10 billion drop in GDP reinforces the need for Government to ensure that biosecurity is resourced to the same level as other security agencies. It isn’t.” 
There is the very real possibility that if a Government fails to extend the GE moratorium due to be lifted in October the very thing Tom Lambie is concerned about will happen because of a deliberate move by Government rather than by accident. Unfortunately Labour is determined to force GE on New Zealanders despite research given to the Government showing that under realistic conditions there are more likely to be negative effects for the economy rather than positive effects from GE release. 
Yesterday we learnt that the Government’s determination knows no bounds. It is actually backing a United States case to the World Trade Organization to force the European Union to lift its moratorium on GE products. If ever there was a case of shooting oneself in the foot this is it. Not only has Helen Clark undermined her relationships with European leaders but the Government—perhaps unconsciously—is destroying our marketing advantage in Europe by on the one hand helping the US increase access to our second-largest market and on the other hand degrading our clean green image which is exactly why European consumers like our products. 
Wisdom appears to be in short supply. If the Government were a wise investor it would invest in the children of New Zealand. Unfortunately it is not wise. After 4 years of a Labour Government 30 percent of our children still live in poverty. Despite the Government’s claim that its key priorities include supporting a productive and cohesive society reducing crime and the impacts of crime and investing for the future Dr Cullen says children will have to wait until next year. 
A Budget surplus is not real if it means that children have to do without the basics of life. If those children grow up in impoverished conditions the State will pay in the next 10 15 20 years and beyond. Poverty costs. If families cannot afford food for a basic healthy diet health-care services and healthy accommodation the country will pay in lower educational attainment higher health costs from hospitalisations and additional health-care later higher unemployment and higher crime. Children from most deprived areas are more than twice as likely to be admitted to hospitals than those from less deprived areas. So we applaud the Government’s moves to improve access to primary health-care but the Government is still treating the symptoms and not the underlying structural problems. 
Families do not have enough income. The Government should have targeted family support packages this year and not wait a further year. The cost of $28 million for a Families Commission will not send one child to school with warm clothing and a decent breakfast inside him or her. Research from the Child Poverty Action Group shows that since 1986 the poorest one-child family in New Zealand has had a rise of only $5 a week in family support. Adjusting for inflation that family should now be receiving $74 a week; instead it receives $47. 
This Budget is woefully inadequate in redressing this appalling situation. Yes it includes $34 million over 4 years but this increases the income thresholds for family support by less than $500. Adjusting family support to reflect cost of living changes since its implementation would have cost $250 million—just 6 percent of the surplus. The Government should not stop there. It could even afford to implement Green Party policy to restore the family benefit as a universal child allowance at a cost of about $600 million a year. 
The irony will not be lost on people of all political persuasions that while the Government is putting off providing proper funding to ensure that children are brought up decently to become the healthy well-educated and productive adults we need to secure our future the Government is determined to gamble that future on the casino economy. Dr Cullen’s “super fund” will have $1.9 billion sitting in it by the end of June and this Budget will add another $1.9 billion to that sum. 
Instead of investing that money wisely in New Zealand and New Zealanders the Government has instructed the guardians of the “super fund” to play the overseas sharemarket. We already know from bitter experience of the Government Superannuation Fund that that is an extremely risky gamble. Since Dr Cullen required that fund to be invested off shore in October 2001 it has accumulated net losses of $233 million and the shares it bought are worth 35 percent less than their purchase price. The pro-market zealots tell me that the share price will recover but I am not convinced that dead cats bounce. In any case it was not prudent to stake $1.5 billion at a time when the sharemarket was going through its period of significant volatility. 
Even if the sharemarket recovers the Government Superannuation Fund will need to earn 9.6 percent after tax for the next 8½ years to achieve its investment target of 6.5 percent over the decade. Even if the sharemarket were booming instead of busting we would challenge the wisdom of the Government strategy. Our opposition to the “Cullen fund” is backed up by an OECD study which concludes that private capital appears to be more productive than public capital in the short term but that the converse is generally true when a long-run perspective is taken. 
While the Green Party is pleased that the Government has increased funding for tertiary subsidies by 3 percent this will not address the significant funding shortage in the area nor give any comfort to students wanting lower fees and an affordable education. Student debt has grown by $2.5 billion since Labour has been in office. At the end of March this year the debt was $5.4 billion. Women graduating today with a bachelor’s degree can expect to spend the next 28 years paying off their debt. What does that do for family life? 
The Green Party wants to see fees reduced to $1500. We want to see the reintroduction of universal student allowances. We want to see tertiary institutions funded at an appropriate level to attract and retain quality staff. We know that this is an expensive item but we fully believe that it will be paid back in full from higher levels of productivity and increased tax revenues from graduates who want to stay and work in New Zealand. The Green Party supported the introduction of the fee maxima but at the same time it warned the Government that it could not use it as a mechanism to squeeze tertiary institutions financially so that they would have to lower quality. We believed—perhaps foolishly—that the Government would deliver on its promise to students to make education affordable and we are very disappointed. 
It is time for the Government to face up to its commitment to our young people and invest more in tertiary education reduce fees fund tertiary institutions at a reasonable rate and provide all students with a living allowance. Almost 50 percent of children from the lower socio-economic group leave school without a qualification. These children will not be equipped to provide the level of skills and expertise that an innovative economy needs. The Government is providing more funding for industry and innovation but for the sake of our future families need more support now so that they can contribute to this vision the Government has. We applaud the Government’s additional funding for teaching in New Zealand. This helps but again it does not help families that are still paying for their children’s education through so-called voluntary donations and fees. It costs $30 million a year for a free State education. But we need to do more than invest in our young people. We need to make sure New Zealand is a place that they will want to live in. 
The Government says all the right things about sustainable development on the international stage but back home there is an enormous gulf between rhetoric and reality. There is no doubt that we are living beyond our natural income and consuming our environmental capital. There is no doubt that the economy is a subset of society and that both depend on the environment but persuading the Government—both elected and bureaucratic—to acknowledge and act on that reality seems well nigh impossible. 
A Green Budget would begin the vital task of aligning economic and fiscal incentives with ecological imperatives. Ecological tax reform is a simple idea. It shifts taxes off work and enterprise and on to waste pollution and scarce resources. Those who waste and those who pollute pay more while clean business pays less and everyone pays less income tax. It is common sense if we want a sustainable economy and it is happening now in many European countries. In New Zealand we have yet to begin any serious attempt at ecological tax reform and this Budget does nothing to change that. The Government’s only commitment in that area is a carbon tax which is set so far in the future that many in business still hope they can lobby their way out of facing up to climate change for a few more years. 
Our tax policy is to remove all income tax on the first $5000 of income for everyone. Low-income people will feel the benefit most but everyone will get something. We will gradually replace the lost income tax through eco-taxes starting with taxing climate change and carbon monoxide emissions and ensuring that diesel users pay their fair share for the health costs of their emissions. This is part of our broader approach to a shift to measuring our success as a nation rather than as a business. Gross domestic product tells us nothing about whether what we are growing is adding to or subtracting from our well-being. As part of the Green’s Budget packages agreed with Labour last term work was begun on broadening our national accounts. We are a long way from measuring sustainable national income yet but we have to do that if we are to have any meaningful concept of growth and development that is real. 
The Greens are working with the Government to bring New Zealand into the mainstream of international transport thinking. Years of obsessions with cars and trucks alone have brought our largest city to a standstill and our national rail system to the brink of collapse and it has created serious health problems among adults and children. Make no mistake: until Labour was elected New Zealand had some of the most extreme road-focused transport policies in the developed world. The transport objectives agreed by the Greens and the Government focus on economic development safety and ability and on public health and the environment. They are extraordinarily well balanced and sane. Although the allocation of funds is still focused on roading it has begun to reflect broader thinking. Cooperation with the Government on transport highlights that we can work together where we have a common cause even though we have fundamental differences in other areas. 
We are pleased to note that the Government recognises the merits of Green Budget initiatives from the previous term by continuing to fund several ongoing projects in this Budget. However no Budget speech would be complete without me mentioning at least one of those fundamental differences—trade policy. The Government’s fixation on free trade is the root cause of the $1.87 billion trade deficit for the year to March. Instead of investing over $30 million in Team New Zealand the Government should be promoting import substitution for a Buy New Zealand Made campaign. It is time we showed some loyalty to our own country.