Dr RUSSEL NORMAN (Co-Leader—Green):
I start today by acknowledging the passing of Bevan Tipene-Matua, who was a leader within the Green movement and within Māoridom. He will be sadly missed but well remembered.
Today we are talking about the Budget Policy Statement. The Green Party would like to address the six pillars that the Government has put forward within the Budget Policy Statement. Before we do that, it is important to understand the context within which we approach the Government's Budget. For us the objective of economic policy is to achieve prosperity for New Zealanders while at the same time cutting our use of natural resources and cutting our pollution. We need prosperity while restoring and protecting the integrity of ecosystems, and that is the definition of sustainability.
The Government has put forward six pillars, the first of which is investment in infrastructure, which actually means roads. What the Government is saying is that it wants to spend about $20 billion on motorways over the next 10 years, and it wants to borrow that money in order to do it. This is Steven Joyce's "think big" project. It is a project that takes no account of the two giant issues that are currently facing the world. Those two giant issues are climate change and the end of cheap oil. This project is in total denial about the two greatest realities facing the global economy. Roads mean more greenhouse gas pollution, more oil dependency, more obesity, and more air pollution.
The Auckland State of the Environment report was released yesterday. It showed that there had been a 9 percent increase in kilometres travelled by car in the years 2004 to 2008. That is an extra billion kilometres. As a result there has been $547 million a year in health costs as a result of that road usage. The problem we have is that the oil import costs on New Zealand are dramatic. The last time oil prices peaked in 2008 it had a massive impact on New Zealand's balance of payments figures, because it had a big impact on our trade balance.
If we do not reduce our dependency on oil, then as oil prices go up again we will face exactly the same problem and we will find ourselves having to work harder and harder in order to pay for the oil that we import. Last time it was virtually the entire exports of the tourism industry that were required to pay for our oil imports, so a strategy that makes us more dependent on oil imports, by investing in motorways, is a pretty stupid strategy.
Last year the executive director of the International Energy Agency, which is the international body we all pay to predict future oil prices, said: "I can't rule out the possibility of an oil supply constraint in 2013 and 2014." In December 2009 the International Energy Agency, the international experts whom this Parliament pays in order to predict the future prices of oil, in its oil market report, said that there's two demand scenarios in front of us. One is an oil demand growth of 1.4 percent from 2009-2014, which would give us an oil crunch in 2014. The agency said that the semi-recessionary growth, which would be only 0.5 percent growth globally per annum, would postpone the oil crunch to some time after 2015. The International Energy Agency is very clear that we are facing an oil price shock. The chief executive of the Total Oil company recently said that the oil price would rise to more than $145 per barrel on concern that supplies may fall short as early as 2014: "We are running the risk of another oil crisis when demand outstrips supply around 2014 or 2015." The spokesperson for the chief executive officer of Total said: "There won't be enough oil and gas by the middle of next decade".
So while oil is getting more expensive and all the experts we pay to give us advice on it are telling us that the price of oil will increase dramatically over the course of the next decade, we are borrowing money to invest in infrastructure that will make us more dependent on oil. So while the price of emitting greenhouse gasses is only going to increase as prices are factored into the international market in greenhouse emissions, we are building infrastructure that increases our greenhouse gas emissions. In fact, we are borrowing money to build the infrastructure that will result in increased greenhouse gas emissions. So while congestion is a major cost for our urban centres, we are building the infrastructure that induces greater road use and moves the congestion to another point in the road system.
We know that only investment in buses, trains, ferrys, cycling, and walking can actually solve the transport problem, as everyone who has ever done any study in transport actually knows, but instead what we are doing is borrowing $20 billion over the next decade in order to invest in the one thing we know that does not work, which is brand new motorway projects. National, and Labour before it, had a "think big" motorway building project, and it will end in tears like the last *Think Big project.
The second pillar that National has talked about is regulatory reform, which means leaky houses. The last time the ACT Party types did a job on cutting red tape in New Zealand, they came up with a thing called the Building Act 1991, which was laissez-faire legislation saying that one could build whatever load of rubbish one liked. The cost for that, which we are currently facing, depending on who one reads, is somewhere between $11 billion and $22 billion to fix up the leaky houses as a result of the last attempt to cut red tape in New Zealand.
In terms of GDP, it is cost comparable to the devastating earthquake in Chile—somewhere over 10 percent of our GDP will have to be spent to fix up the last time we let the ACT Party people decide what regulations should govern the Building Act in New Zealand. It was tremendously expensive. They got rid of the rules that said a builder needed to know how to build a house that would keep the rain out. They said: "That is the Nanny State; we will get rid of that rule in 1991"— that was the National Party, and the policy was developed under the Labour Government that came before it. They got rid of the rules that said that external cladding had to keep the rain out, because a rule like that was clearly an example of Nanny State—it is a "Nanny State" rule that says the rain has to be kept out! They got rid of the rules that said framing needed to have a bit of boron treatment, because that was a Nanny State rule.
Some of those National members who promote the idea that it was the Greens who promoted that need to know that this was decided on the New Zealand Standards Committee, where the timber industry had a majority vote over the researchers who opposed the change. In fact, it was a result of the deregulation coming through the New Zealand Standards Committee in which the timber industry had a majority. They got rid of the rules that said a building had to keep the rain out, because they think that is Nanny State. Tens of thousands of New Zealand households are today having to wear the pain as a result of the last time a National Government deregulated the building industry.
So, when the ACT Party types put their ideology around regulatory reform, I ask members to remember that it could again cost us $22 billion, with thousands of families living with the heartache, pain, debt, and illness that is the result. That is all due to the *Rogernomes in Labour—and National before that.
Let us look at another pillar that is being proposed here: tax reform. In tax reform the Government is proposing to cut the taxes paid by the top earners and for that tax cut to be paid for by an increase in GST, which will fall on those who have the least money. The fiscal difficulties that were created by Labour's round of tax cuts just before it left office, and by Labour's failure to deal with the housing bubble are real; there is no question about that. But what the Government is proposing to do about them will not fix them; we actually need thoroughgoing tax reforms such as a capital gains tax that excludes the family home, which would make a difference because it would be highly progressive, it would fall more on the wealthy than the poor, it would broaden the tax base, and it would drive investment away from the housing boom. That would be an important and significant tax reform we could make, not to mention putting a serious price on carbon and a serious price on water, which would drive the economy to be more efficient in its use of carbon, in its production of carbon, and in its use of water.
We need to move our economy in a sustainable direction. We need to reduce our use of resources and production of pollution. Unfortunately this *Budget Policy Statement fails to do that. The only good thing about it is that it is not Don Brash's policy statement so dog eat dog is not its central thesis but it does not have a lot of vision. The world is changing and that is the reality we face. It is constrained in resources and in pollution. That creates fantastic opportunities for new businesses in New Zealand to make a prosperous living out of New Zealand living up to its reputation for being green and for being smart. So, once again, I encourage the Government to start to steal our ideas rather than to steal the inheritance of future generations.
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