Fitzsimons Jeanette: Debate on Budget Policy Statement 
Fitzsimons Jeanette: Debate on Budget Policy Statement 
[Volume:645;Page:14847] 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 I am going to do something a bit radical—and I hope it is within the Standing Orders—in that I will actually speak about the Budget Policy Statement. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: It is in the Standing Orders. 
JEANETTE FITZSIMONS 
: Thank you Mr Assistant Speaker. Just last December the Budget Policy Statement forecast an increase in tax revenue this year. Now we know just 3 months later that tax revenue is actually $4 billion less than predicted. That figure of $4 billion is from the end of January before the drought had even properly kicked in. The Budget Policy Statement forecast once again falling oil prices and this week we note that oil prices are nudging $110 a barrel. 
We are facing a year of significantly reduced Government revenue with the likelihood of a US recession affecting our markets with worse numbers still to come in when the effects of the drought work their way through and with steeply rising oil prices and the No. 1 priority for both of the old parties is tax cuts. Are we debating today the impacts of the Budget Policy Statement and the policy responses to it? Not really; no. I have listened to name-calling and personal denigrations from both sides of the House and to some robust debate about who did what when and what they said they would do instead but there has been nothing in the debate that takes us forward into how the country will respond to these very considerable risks. 
Is this a good time to reduce Government revenue through further tax cuts on top of the $4 billion reduction already noted another $1.5 billion from tax cuts and probably worse to come? Is this a good time for such a policy? Nobody is really addressing that question either. Labour tells us that we will have tax cuts only if certain criteria are satisfied: the tax cuts will not be funded from borrowing there will be no service cuts to fund them and they will not be inflationary. We would sign up to that; we think those are good criteria. We say “Good on you!” to Michael Cullen. But it does not look as if the criteria will be met. 
The Reserve Bank in its Monetary Policy Statement from just last week has already made allowances for an extra 0.3 percent inflation because of the likelihood of the generosity of the tax cuts putting more money into the economy. It says that the likelihood of tax cuts is delaying the time at which it can reduce the official cash rate and therefore interest rates and therefore—what will follow from that—the exchange rate. 
I want the Government to tell us where that reduced $4 billion revenue and the $1.5 billion of tax cuts will come from. Just how will it be funded? Will anybody tell the House that? We desperately need capital investment in our rail system; we desperately need more investment in public transport. The Child Poverty Action Group came to the Finance and Expenditure Committee when we were looking at the Budget Policy Statement and said there are still 185000 children living in poverty in this country because they are children from beneficiary families who do not get the in-work tax credit. Those families are facing higher food prices higher energy prices and higher transport costs and the Government cannot think of anything better to spend this money on than tax cuts. 
The Budget which is due in a couple of months will be interesting. Will the Government borrow or will the sustainability deficit and the social deficit remain unfunded? National on the other hand has no criteria at all. It will just give tax cuts regardless. For National tax cuts are a higher priority than public services and it will borrow if necessary. Well that is a clear position; at least we know where National stands. That is what National has said for a long time. 
Let us look at the other forecasts made in the Budget Policy Statement. One thing is becoming a really regular pattern. Every time the Budget Policy Statement comes I just flip through until I find the appropriate graph and sure enough the graph does exactly the same as it did last time: it notes that oil prices have increased. They have increased throughout the whole year in fact. 
R Doug Woolerton 
: You’re absolutely right on that. 
JEANETTE FITZSIMONS 
: Once again the Budget Policy Statement predicts that oil prices will fall sharply and it is absolutely wrong on that I say to Mr Woolerton. It notes that oil prices are around $90 and predicts they will fall to below $75. Today oil prices are nudging $110. This has been going on for at least 4 years and during the whole of that time oil prices have been rising and Treasury has not noticed. 
Four years ago the Budget Policy Statement forecast that by now oil would have fallen to $19 a barrel. Whoopee! Three years ago Treasury reckoned that by this time oil would be $40 a barrel 2 years ago it reckoned that right now oil would be $50 a barrel and 1 year ago it reckoned that right now oil would be $67 a barrel. Members can see that the Government is gradually adjusting to reality but it is a long long way behind. How long will it take it to catch up? When will it get a grip and put some resources into planning an economy that has to not only withstand climate change but become much less dependent upon oil and when will it involve business and the public at large in that planning? Surely that is the most important economic issue facing this country. It is completely ignored by both sides of the House. Neither of the old parties shows an interest in dealing with this issue. It will be left to the Green Party—and I have to say to the Maori Party which has also shown interest in this issue—to lead the country when we return from the next election in much larger numbers.