Norman Russel: Annual Review Debate — In CommitteeText is incorporated into the Bound VolumeNorman Russel: Annual Review Debate — In Committee[Sitting date: 28 April 2015. Volume:704;Page:2923. Text is incorporated into the Bound Volume.]Dr RUSSEL NORMAN (Co-Leader—Green):I rise to speak on behalf of the Green Party on the debate on the Government’s financial statements. National told us to judge its economic performance on whether it achieved a surplus or deficit—repeatedly over and over. Over the last 6 years this is something we have been told. As it approaches a record equalling seven deficits in a row—of course its previous record was set by the Holyoake Government of seven Budget deficits in a row—we can only say to the Government that on its own terms it failed to meet what it said was its objective which was to actually produce a Budget surplus. Surely what that says to the Government is that it is time to reconsider the big tax cuts that it gave to the wealthiest people in the country which drove the Budget further into deficit.It is worth remembering that prior to this Government we had Michael Cullen and nine Budget surpluses in a row. Each time one of those surpluses came around the National Party said to us that we should not pay down debt; we should give the surpluses away in the form of tax cuts to the wealthy. At the time the Labour-led Government with the support of the Greens and others said: “No we should use the surpluses to pay down debt.” Fortunately that is exactly what Cullen did. He paid down debt. So when this Government came in and faced a series of genuine challenges—the global financial crisis the earthquakes—there was a lot of leeway in order to borrow which this Government has done over and over and over. But unfortunately part of the borrowing is to pay for tax cuts for the wealthy and I would say to the finance Minister: surely even you looking back at that must recognise that was a mistake.The thing is that Budget deficits are not really the best measure for whether a Government is performing well. The National Government has told us we should judge it by its Budget deficits but the truth is that actually that is one measure. It is an important measure but actually there are a lot of other indicators we should look at. For example we should look at the current account deficit. The current account deficit is currently rising. It is $7.8 billion in the year to December 2014. Perhaps we should look at the growing net international investment liability which has now gone up to $154 billion. It is certainly true that there were some reductions in both of those numbers around the global financial crisis but what we are seeing again is that the New Zealand economy is running big deficits. The truth is that New Zealand cannot borrow its way to prosperity. That is something that the finance Minister himself acknowledged when he first took the role. But as he has been unable to crack that problem and it is coming back once again—it is only going to get worse according to the Reserve Bank projections—it is a problem that is going to be passed on to the next Government to try to deal with. We simply cannot borrow our way to prosperity.Linked to that is the research and development deficit. New Zealand has one of the lowest levels of investment in research and development in the OECD and this Government is unfortunately cutting investment in research and development—the funding to businesses that want to invest in research and development. Even the most recent announcement that the Government made—which was a small nominal increase—when you look at it in real terms is a decrease in research and development investment once you take into account inflation over the years ahead looking at the Government’s draft investment plan for science. There are in fact great businesses in New Zealand that want to invest in research and development and want to embrace the opportunities of smart Green economics. But it is very difficult when you have a Government that subsidises the primary sector commodities subsidises milk production and subsidises oil exploration but strangles high-tech industries and strangles smart Green innovation. In every other country those industries get a lot of support from their Government on research and development because that is an essential part of the package. Under this Government we have very low levels of investment in research and development.What about the housing deficit? It is simply a fact now that for many Aucklanders their houses earn more in a year than they do. The median house price has gone up by over $250000 in Auckland since this Government came into office. That is terrible economics and it is terrible social policy at the same time. The Reserve Bank is really worried about the Auckland housing bubble and has called for a capital gains tax on investment properties as have the Greens to dampen the housing bubble. National unfortunately opposes that measure to close that loophole and Labour—well I am not quite sure what Labour’s current position is on capital gains tax.We also know that offshore demand for housing is virtually unlimited and so we need some constraints on offshore demand for housing in Auckland as many other countries have. So far we do not have that. We also know that in terms of the supply side increasing high-quality housing density around improved public transport routes is actually the only solution on the supply side that works. Auckland needs to go up not out. That is just a basic reality. This Government unfortunately has been backing sprawl and it has been backing motorways rather than compact urban form and rail. It is going in exactly the wrong direction in terms of dealing with the housing affordability and livability crisis that Aucklanders are facing. Instead of supporting compact urban form and rail which we know is the way to actually reduce house prices in Auckland in terms of the supply side the Government is backing sprawl which makes Auckland more and more unlivable.What about the climate deficit? When the Government first came in it gutted the emissions trading scheme it subsidised road transport and hence fossil fuel use on roads it subsidised dairy expansion and it subsidised oil exploration. Unsurprisingly New Zealand’s net greenhouse gas emissions are surging. The Minister for Climate Change Issues—I use the term advisedly—has tried to hide the massive net deforestation that is under way right now in New Zealand. He put out a press release saying that afforestation is ahead of deforestation in New Zealand except it is not. So Mr Groser had to issue a new press release a correction to his press release where he had to acknowledge that in fact deforestation in New Zealand is currently happening at about twice the rate—so twice the number of hectares—of afforestation according to the Government’s own figures that it released a couple of weeks ago. Of course the impact of that is that New Zealand’s net greenhouse gas emissions are increasing and our intensity—the amount of net greenhouse gas emissions per unit of GDP—continues to increase. So we are going in exactly the wrong direction in terms of climate change.The cost to the taxpayer is enormous. Treasury is trying to estimate what the cost to the taxpayer of this big surge in New Zealand’s net greenhouse gas emissions will be. It estimates it will probably be up to $52 billion in order to buy carbon credits to meet our climate change targets. So the taxpayer—the Crown—will have to buy an enormous quantity of carbon credits on the international market to try to meet our international commitments to marginally reduce our net greenhouse gas emissions. That of course is not free; the taxpayer has to pay for that. Depending on the price for carbon credits internationally that will mean that the taxpayer has to pay up to $52 billion in order to buy those carbon credits internationally according to the New Zealand Treasury. I think this really demonstrates the way that this Government is passing these deficits on to future generations and future Governments. It introduced a whole series of policies that resulted in a big increase in net greenhouse gas emissions—the climate deficit if you like. The impact of that on future Governments is they are going to have to buy carbon credits internationally to try to meet our targets. There will be a huge fiscal burden on the taxpayer as a result of that.We still of course have no official emission reduction targets to present to the World Gas Conference in Paris coming up at the end of the year. I think the tragedy in all of this really from the point of view of “New Zealand Inc.” is that it is really an enormous missed opportunity. New Zealand already has a great reputation—“100% Pure New Zealand” and so forth—and it is a great opportunity for New Zealand to grab the opportunity of smart Green innovation which is just taking off internationally. Unfortunately New Zealand is locked into a 1950s mentality—or the current Government is unfortunately. There are a lot of New Zealand businesses that are trying to break out of that. The Government is locked into the mentality that says: “This climate change stuff doesn’t really matter and all that innovation stuff. We’re going to do milk powder and we’re going to do oil.” But that really is locking us into a very unproductive future and is missing one of the great economic opportunities of the 21st century which is sustainability. Purpose-driven capitalism if you like—capitalism of abundance and sustainability—is going to be the marker of this century and New Zealand is completely missing out on this opportunity because we have a Government that cannot see it and that looks backward as it travels into the future.Finally there is the biodiversity deficit. New Zealand is in the middle of a great biodiversity crisis. We are really losing magical things that are hard to put a number on. This debate is about the financial statements of the Government but as we lose the amazing biodiversity that we inherited from those who came before us it is hard to put a number on the enormous loss of our children not being able to see the amazing plants and animals that once lived in this amazing country—these islands and this kingdom of the birds. As we lose biodiversity because we really—as a Government and as a country—have not put the effort and the financing of the need into the Department of Conservation and elsewhere to protect that biodiversity we are losing something that cannot really have numbers put on it. I think that is perhaps one of the irreparable damages that Governments can leave.