Fitzsimons Jeanette: Debate on Budget Policy Statement 
Fitzsimons Jeanette: Debate on Budget Policy Statement 
[Volume:637;Page:7765] 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 The Budget Policy Statement was published on 19 December 2006 and that was just 7 weeks after the Prime Minister made a landmark statement to a party conference that New Zealand could be the first truly sustainable nation in the world—that was her goal—and that we could be carbon neutral. So of course 7 weeks later I opened the Budget Policy Statement with bated breath to see what financial provision the Government was planning to make to meet those excellent goals which the Green Party thoroughly applauds. But I could not find anything. 
I looked first at the objectives of the Budget Policy Statement which are “to continue New Zealand’s transformation into a more dynamic knowledge-based society underpinned by the values of fairness opportunity and security.” Policies will also “further enhance New Zealand’s economic transformation continue to improve wellbeing for families … and strengthen our sense of national identity.” Of course there is nothing anyone could object to in those objectives but they do not align with the Prime Minister’s statement of just 7 weeks before. They say nothing about carbon neutrality; they say nothing about sustainability. 
I thought that possibly even though those goals are not in the objectives they would be in the mechanisms that the Budget Policy Statement foreshadows for the 2007 Budget. So I asked Dr Cullen at the Finance and Expenditure Committee what impact there would be on fiscal policy in the Budget as a result of the Prime Minister’s statement and what he anticipated doing. He said he thought we now have to face up to competition from other spending priorities. It would seem then that when the Prime Minister made her very excellent statement on 28 October to a party conference she did not tell the Minister of Finance about her goals so that Minister has not in the Budget Policy Statement made any allowance in the Budget for 2007 to deliver on them. We find that really sad. 
The Budget Policy Statement prefigures a business tax package and we understand that we are talking about a billion dollars worth of tax cuts for business. The Greens are very much in favour of using the tax system to incentivise the sort of behaviour we want from business and to disincentivise the sort of behaviour that is not in the national interest. So we are not opposed to the concept of some targeted business tax cuts. But when we look at what they are to be used for we see that again sustainability is not one of the criteria and carbon neutrality is not one of the criteria. The criteria are productivity gains competitiveness with Australia and business investment—and research and development staff training and exporting have also been mentioned. Sustainability is simply not there. 
I asked the Minister of Finance again whether he anticipated that by the time the Budget came out sustainability would have been added to those criteria and along with those other goals we would also be trying to incentivise the behaviour that the Prime Minister had announced as the key issue for her Government in this term. But the Minister of Finance answered that it was far too late this year to do the kind of detailed work that could lead to sensible conclusions around that area. So the billion dollars is to be spent without any consideration at all of sustainability. He suggested that possibly in future years we could look at this matter but if the billion dollars has already been spent in the 2007 Budget on things that have nothing to do with sustainability where do we find the money from next time to go further? So that was a big disappointment. 
I looked in the Budget Policy Statement for the policies that would start New Zealand towards that very long-term and aspirational goal of being carbon neutral and I could not find those either. The only thing I can find in the statement that relates to incentives—or not—for carbon emissions is that the carbon tax has disappeared so we are down by $360-something million on the revenue we might otherwise have expected. Given that the operating surplus is only $1.9 billion and that that has mainly got to go Dr Cullen says towards funding increases in things like health and education—increases that do not increase the level of service but just deal with growth in demand—that $360-something million would have been really useful for trying to deliver on some of the other things the Government wants to do. But it has gone. 
What do we have instead? Actually nothing! 
Gordon Copeland 
: Good riddance! 
JEANETTE FITZSIMONS 
: Well the United Future member over there thinks that it is absolutely great that the taxpayer in 2012 will have to pick up the bill for all the energy inefficiency right through the economy that could have been turned around by an incentive. It is interesting is it not that across the economy every business I talk to is now saying that in order to deal with climate change it has to have a price put on carbon. But where is it? There is no sign of one in the Budget Policy Statement; there will be nothing in this year’s Budget. 
In fact the only thing really that affects carbon emissions in this Budget is the announcement that has been made since the Budget Policy Statement of the largest road-building programme this country has seen since the 19th century. I tabled in the House this afternoon two peer-reviewed papers from the international literature and they are just two out of a great many that show that the cities with the most roads have the highest carbon emissions the greatest traffic congestion and the highest cost of transport. The cities that have the lowest cost of transport the lowest emissions and the best air quality are those that have developed their rail system and their public transport system. So where is the money in this Budget Policy Statement to do that? Unfortunately it is totally absent. Huge infrastructure bonds and borrowing are to go into roads on top of the $1.5 billion put into additional roading in the last Budget—and that was on top of the $500 million that Dr Cullen found in his back pocket for roading just before the 2005 election. So we can expect an extremely negative effect on our carbon emissions and our 2012 Kyoto position as a result of the Budget Policy Statement and the forthcoming Budget. 
The Budget Policy Statement goes on to say that the most significant influence on the 2007 Budget is that demand remains strong. Dr Cullen is talking there about his squeeze between a rock and a hard place in that if he spends too much more it will be inflationary yet if he gives tax cuts it will be inflationary and the issue that we have an overheated housing market and also very strong consumer demand. A way to deal with that situation is to put a price on carbon which will cause some of that spending to go into capital things like home insulation and more efficient equipment rather than into day-by-day spending and energy waste. That would make our economy more efficient and would at the same time yield a return to the Government. But we do not have a price put on carbon. We have absolutely nothing to incentivise energy efficiency or the research and development that we need in order to make us eventually carbon neutral. 
Clearly the overheated housing market continues to be a concern for Dr Cullen. It is certainly a concern for the Reserve Bank and it should be for Dr Cullen as well. The overheated housing market and the speculation in housing by people who are not living in those houses but are buying them as an investment could quite easily be cooled if we had a comprehensive across-the-board capital gains tax on that speculative investment. That however is always seen as too hard a political bullet to bite and not surprisingly it has not been bitten here either.