Donald Rod: Financial Review Debate — In Committee 
Donald Rod: Financial Review Debate — In Committee 
[Volume:624;Page:19388] 
ROD DONALD (Co-Leader—Green) 
: 
 I am sure that the Government would like to be congratulated on its healthy financial statements but I have to point out that while it is sitting on record surpluses hard-working Kiwi families farmers and business owners are paying a high price for Labour’s mismanagement of this country’s economy. That is because every family with a mortgage every business owner with a bank overdraft and every farmer with a loan is paying 1 to 2 percent more in interest because Dr Cullen refuses to take action on New Zealand’s record current account deficit and overvalued dollar. The Minister is shaking his head but the Governor of the Reserve Bank confirmed when he appeared before the Finance and Expenditure Committee that because of our high and growing international debt New Zealanders pay— 
Hon Dr Michael Cullen 
: And private debt. 
ROD DONALD 
: Private debt; it does not matter—the fact is that Kiwis are paying a risk premium because of that debt. 
I would like to know what the Labour Government is doing about that. I would maintain that it is doing less than nothing because despite net foreign debt now exceeding $120 billion the Government wants it to be even easier for foreign investors to buy up our land our farms our forests our buildings and our businesses. Despite the trade deficit being at record levels—$4.1 billion for the year to February it was announced today—and imports climbing by 9.7 percent in the last year Labour wants to fuel even more imports by removing New Zealand’s last remaining tariffs. Despite Dr Cullen claiming during the 2002-03 financial review that he had tools available to get the dollar down to realistic levels he refuses to relieve the pressure on our exporters and domestic manufacturers. I believe that that is because the Minister of Finance has a conflict of interest. He would rather sacrifice some businesses than face public outrage as the result of the inevitable rising cost of imports if the exchange rate of the New Zealand dollar was restored to realistic levels. 
In particular I believe that the Minister is rightly concerned about the impact that the rapidly rising price of oil will have on the New Zealand economy when the dollar rediscovers gravity. Despite the high exchange rate of the New Zealand dollar insulating New Zealand from the full force of escalating oil prices the cost of oil imports rose by 29.9 percent in the year to February according to today’s statistics report. The impact of oil prices will only get worse if the Government does not take action to reduce our dependence on imported fuel. The Finance and Expenditure Committee report on the financial review highlights that the Government has been caught napping on the oil issue. It was and still is totally unprepared for one of the greatest threats to the New Zealand economy and to our way of life. 
We have only to look at page 4 of the report to see that it states: “Treasury conceded that previous projections”—that is oil price projections—“were based largely on historical prices. This has proved a reasonable basis for predictions in the past as the real price of petrol has stayed relatively constant for the past 30 years.” However Treasury concedes “historical prices may no longer offer an accurate reflection of future prices”. Well tell us about it! But Treasury went on to state that it believed that: “current high prices will be temporary”—this was in October last year—“and in about 7 years oil prices will fall to around US$35 per barrel.” Well clearly the futures trader who put in a bid for oil costing $100 a barrel this June had not read what the New Zealand Treasury had to say about oil prices and the New Zealand Treasury claims that it now relies on futures traders to tell it what the price should be. I think it is time that Treasury revised its $35 per barrel figure upwards because oil at the moment is trading at more than $50 a barrel even though the price has settled slightly and that is almost three times what Dr Cullen stated it would cost in last year’s Budget. He said that oil would reduce to an equilibrium of $19 a barrel. 
Hon Dr Michael Cullen 
: I didn’t; Treasury did. 
ROD DONALD 
: I am sorry to slight Dr Cullen. Dr Cullen’s advisers in Treasury said that. 
We have a small window of opportunity to tackle that problem. At the very least and to begin with the Government needs to recognise that the problem is real and urgent and that change is inevitable. It needs to bring in vehicle fuel-efficiency standards right now. It needs to invest more in public transport in rail for freight and passengers and on walking and cycling. It needs to encourage more local production and to become less dependent on long-term trade. I acknowledge that the Government has taken some small steps towards that in cooperation with the Greens but those steps simply are not enough. We need to rapidly transform our economy; otherwise we will not cope.