A Flat Earth Budget (complete text)
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Jeanette's budget speech 2006(mp3, 3.4MB, 20 min).This is a "flat earth" Budget; it is based on the earth being not just flat, but infinite. It is a Budget for a world where natural resources are limitless, where the atmosphere can endlessly absorb greenhouse gases, where we can always live way beyond our means, and never be called to account for it. This Budget ignores the huge changes that happened over the last century, it ignores the modern equivalent of the Copernican revolution, and it assumes that we can carry on as we have always carried on. First, it assumes - with a big increase since previous years - that oil prices will increase to $68 a barrel, and then stay steady throughout the rest of the planning period. We know oil is already over $70 and has been for some time. So, once again, officials are behind the game. I ask members if they seriously think that oil prices will not rise further. This pattern has been going on for years and one has to ask how much longer Treasury and the Reserve Bank will base their assumptions on the futures market. The Greens pointed out the gross errors in the assumptions in the 2004 Budget that predicted that oil prices - wait for it - would fall to $19 a barrel and stay there. Somewhat red-faced, the next month in its June quarter report, the Reserve Bank again predicted falling oil prices but only to $30 by May 2005. When May 2005 came, oil was around $47-48 dollars a barrel. In the September 2005 quarter, the Reserve Bank predicted that oil would stay at $58 for the rest of 2006, that is, this year - the price is currently over $70 - and then would fall to $40 by the end of 2007. This yearŐs March forecast - the latest Gospel from the Reserve Bank - predicted the fall to $40 would still happen, but not until the end of 2009. TreasuryŐs update in December last year finally abandoned $40 and predicted a fall to $54, but not until 2009-10, and the with prices holding steady this year at $59. Apart from a very brief dip in February, oil has not been at $59 since that prediction was made. Now $68 is the new benchmark. It is behind reality and blind to the long-term trends. No one in Government has ever publicly questioned this widely inaccurate information or why there is no agreement between the Treasury and the Reserve Bank except on their agreement that the price trend will be forever down or, as of today, steady, when it has for years now been consistently up. Why does anyone continue to believe these people? Why does the Minister of Finance not tell them to get real? How can anyone construct Budget after Budget on totally unrealistic and discredited figures? I guess only someone who believes in a flat earth. Flat-earthers also assume that climate change does not stop business as usual; in fact, accelerated business as usual is the plan. Yet in just the last year we learnt that levels of carbon dioxide in the atmosphere are now the highest for at least 650,000 years - since before there were humans. We have reports of unprecedented amounts of ice melting, acidification of the oceans, slowing of the Gulf Stream, thawing of the tundra, and freak storms, droughts, and floods. People are looking to the Government for a lead, and what is the Government doing? It said in December that it would start work on a brand new policy, having abandoned the old one, but Cabinet has not even signed off the work plan yet. Meanwhile the Government assumes that FonterraŐs goal of growing dairy output by 5 percent per annum can be achieved without crashing our fresh water systems and our Kyoto commitments. It assumes we can continue to allow our current account deficit to grow, forecasting it to reach $14.5 billion this year, a whopping 9.3 percent of GDP. This is much, much larger in percentage terms than any of our trading partners, even Australia and the US, which are also living well beyond their means. It assumes that the rest of the world will agree with these assumptions and that they will happily continue to buy our unsustainable products and give us the credit to continue to live beyond our income. I do not think so. Let us look at the big triumphant announcement in this Budget. What is Michael Cullen most proud of funding this year? Roads. There is a gigantic of $1.3 billion for more roads, on top of the billions that fund roads already. Nearly as much as is being spent on the Working for Families package will be spent on tarmac. But there is nothing to close the funding gap for public transport. Not a cent - only a statement that the Government will work with local government to help them meet their funding contributions. There is not a cent of money; just some talkies. It is recognised around the world that new roads generate new traffic, and they invite people to take the car instead of the bus or the train. For a Government that has a sustainable development programme of action with a key issue being energy, it is a breathtaking insult. For a Government that has a Land Transport Management Act and a national strategy that requires transport funding to be integrated, balanced, and environmentally sustainable it is probably illegal - if anyone wanted to test it. This is a mad, petrolheaded, road-building, tarmac-focused, vote-seeking Budget, but I cannot work out whose vote the Government members actually think they are courting. It certainly will not be Auckland. Does not anyone over there read the Auckland papers? Letters to the editor are clamouring for better public transport. Aucklanders have moved out of their cars since fuel prices rose, and the use of public transport has doubled in just a year, despite a fare increase. Buses and trains are absolutely chocker at peak hour, and people are demanding more. Many surveys have shown that over 80 percent of Aucklanders want spending on public transport, including on a commuter rail system, not on new motorways. The numbers are overwhelming. If someone thinks that is not true, I will show her the survey figures. So who do Government members think will vote for this? Are they really only interested in the votes of petrolheads and boy racers? The irony is that this roading binge has been largely paid for by the success of an electricity company that is dedicated to 100 percent renewable electricity and has done so well out of that commitment that the Government has raked in the profits. Now that sustainable companyŐs success is being used to fund massive unsustainability. The Budget pays lip-service to sustainability and climate change with a contingency fund of $100 million to reduce carbon emissions but it spends 13 times that amount increasing our carbon emissions by encouraging a huge increase in traffic on new roads. That is one step forward and 13 steps back, and taxpayers will foot the bill for that in 2012. We know nothing yet about how the climate change fund will be spent. I sincerely hope that it is not for Treasury to speculate on the carbon market by buying and selling credits, as it has suggested it should do, but, rather, to fund serious reductions of greenhouse gases in New Zealand. The 2006 Budget holds levels of overseas development aid at 0.27 percent of gross national income (GNI) through to 2006-07, rising to achieve a massive 0.28 percent in 2007-08. These figures are by international comparisons ungenerous, and they position us as third to last in the OECD rankings for overseas development aid, which is well short of the UN targets of half a percent by 2010 and 0.7 percent by 2015. This Government cannot claim to be following in the proud tradition of Peter Fraser and Norman Kirk in the Budget speech when the Labour Government under Norman Kirk achieved a level of overseas development assistance of 0.52 percent of GNI, and New Zealand was poorer at that time. If the earth were really flat and infinite there would be quite a lot to praise in this Budget. We welcome the slight easing of eligibility for student allowances and bonded merit scholarships. The Greens believe it would be a very worthwhile investment to offer a living allowance to all full-time tertiary students, but at least this is a step towards our eventual goal. We are pleased to see more of the health budget invested in illness prevention. From a purely financial perspective this has to be good economics. It is the sort of innovative thinking that the Greens have been advocating for many years. From the patientŐs perspective it is about hugely increased quality of life. In particular, we welcome funding for preventing obesity and its likely consequence, diabetes, and funding for childrenŐs oral health. We look forward in the near future to further Green Party Đ Government initiatives on this, such as the Nutrition Fund, to promote healthier eating. We also welcome programmes to tackle violence, especially violence against women and children, in schools and with womenŐs refuges. There is little in this Budget for economic transformation towards sustainability, and much that leads away from it. But we do recognise the new funding for biosecurity, biodiversity research, and remediation of contaminated sites. There are still too many biosecurity incursions and we need to do more to prevent new organisms from reaching New Zealand in the first place, but this boost to surveillance and response preparedness is essential if we are to deal to those organisms that do get here. We are pleased to see an increase in the funding for environmental research and the science budget, though it does not go much beyond catching up with inflation. There is a need for new and improved weed and pest control methods, given the potential impact of new organisms on the environment, our health, and the economy. The need is all the greater, given the reality of climate change. Pests that may not have been able to survive here in the past may be able to in the future, and species indigenous to New Zealand may struggle if the atmosphere warms, especially if they cannot move to a habitat where conditions suit them better. For years both the Greens and the select committee reports have pointed out the serious inadequacy of funding for cleaning up contaminated sites. The pitiful $2 million a year in the Contaminated Sites Remediation Fund is mostly used for investigations and has resulted in only five projects to start clean-ups. So we are pleased to see the amount nearly double, but it will still take decades to deal with the 40 to 60 most seriously contaminated sites, let alone the thousands of lesser ones. We also need to address the creation of new contaminated sites today. As the Youth Environment Forum pointed out in its excellent presentation here just a few weeks ago, we still allow hazardous contaminates like electronic waste and millions of appliance batteries to be disposed of in landfills. The Minister was at that presentation and I am glad that he has listened to our young people. Ironically, one of the most important things the Government has done to help us move towards a more sustainable economy is to decide to regulate for local loop unbundling, unconstrained bitstream, naked DSL, and to require at least an accounting separation of Telecom. The Greens have been calling for these changes for some time, and in particular moved an amendment a few years ago to the Telecommunications Act to unbundle the local loop. If this country is to move towards a "post-oil economy" - and those are the Prime MinisterŐs words - then a world-class information technology infrastructure will be a vital component of that. High-speed Internet can help us to overcome our geographical distance and free up the creative and innovative talent that is so abundant in New Zealand. We look forward to seeing the benefits of that over the next few years. Among these initiatives, which the Greens applaud, are a few that we have negotiated with the Government - none of which were mentioned by the Minister of Finance. They are aimed at economic transformation into a sustainable economy that responds to the new imperatives of a round and finite planet. It is a big call, of course - transforming the economy for a mere $26.5 million at this stage, but there is more value in those few dollars than in the disgraceful sop to the road builders or the doubling of the vote for the Security Intelligence Service. I hope that Rod is looking over our shoulders today and rejoicing that the Buy Kiwi Made initiative he negotiated with Michael Cullen on Radio New Zealand during the election campaign is finally bearing fruit and is funded to the tune of $11.5 million over 3 years. Rod was passionate about the importance of increasing our domestic manufacturing and producing capability, supporting our workers, reducing our dependence on imports, and ensuring that fewer of the worldŐs non-renewable resources are used to make and transport the produce that we use each day. The first major initiatives in Buy Kiwi Made will include a media marketing campaign, a boost in the level of information available to consumers about buying locally made goods and services, and support for the long-running Buy New Zealand Made campaign. We are also very keen to ensure that Kiwi firms and Kiwi products get a fair go in Government and local government procurement practices, and in business to business transactions, and on providing more support for the development of "buy local" initiatives like craft markets and farmersŐ markets. I particularly want to salute my colleague Sue Bradford who has picked up this initiative of RodŐs and is running with it strongly, with support from Trevor Mallard. Our only other level one initiative in our agreement with the Government is to develop and enhance energy-efficiency programmes, including building the scale and reducing the cost of the solar water heating industry. I have been working with officials on designing this programme, which is quite complex, and we expect funding to follow when the work is complete. Our education for sustainability Budget initiative, developed by Metiria Turei, sets in place a long-term plan to provide our young people with the tools and skills they will need to deal with the ecological, social, and economic problems that this generation seems determined to leave them. The $13 million over the next 4 years is a serious investment in future-proofing our country, and will steadily increase resources and support for schools. Excellent initiatives are operating at the moment - the Enviroschools programme, the Environmental Education and Professional Development programme, which is a Green Party initiative from a previous Budget, and a wide range of community and marae-based environmental education programmes. This money will build specifically on the first two, which in turn support the others. When it comes to organics, New Zealand lags way behind European countries like Sweden, Denmark, Germany, Austria, and the UK. Despite the promotion of our clean, green image, less than 1 percent of our agricultural land is in organic production. It is actually a tiny 0.24 percent. In Austria, it is 12.5 percent. That means we are missing out on the expanding international niche market for organic food, and organic retailers are finding it hard to source sufficient organic food. We need more growers, and the Green Party Budget initiative of $2.2 million will establish an advisory service for organic farmers and aims to help as many as 200 conventional farmers convert to organic production every year. That will provide advisory services, education, research, and other assistance to enable the mentoring of new organic farmers by experienced ones. These Green initiatives stand like beacons of a new direction in a Budget that is overwhelmingly about the old direction. The public are already sensing that new direction. Thirty years ago, when the Greens first warned that economic growth based on resource depletion was unsustainable and that there were unacceptable environmental and economic consequences from the burning of fossil fuels, we were a voice crying in the wilderness - out of step with the Muldoon Government, political consensus, and public practice. Today, as the public leave their cars at home because they cannot afford to fill the tank, as they trade in their gas-guzzlers for more efficient vehicles, as the motor trade tells me that it is saddled with 6-cylinder cars it cannot sell, as commuters fill the buses and the rail carriages until there is standing room only, and they demand better services, Green warnings and Green solutions are at the centre of the public debate here and around the world. It is time they were heard by Governments. It is interesting how little support there has been for the last-ditch stand of the flat earth climate deniers, who have just launched their climate science coalition. Even a year ago they would have got some traction with the wishful thinkers. But over the last year the public have seen the evidence piling up. Managing an economy is about managing not just financial capital but natural capital while at the same time taking care of human capital. We have more than 20 years of research and practical application that charts ways of doing this. We have international measures for the ecological footprint of nations and the genuine progress indicator can be applied universally. Yet we continue to measure only money flows in the market exchange. As long as we count only the growth in the exchange of goods and services we will not move beyond flat-earth economics. Growth in the money value of what we buy and sell only makes sense in a world where there are no resource constraints and where unlimited pollution can be absorbed by an unlimited environment. But the earth is not flat. So we find this Budget disappointing in the areas that really matter - future proofing our country against the challenges that are approaching. As in the last term we will not vote for it. Looking across the House there is nothing we could vote for there either, so we will abstain, independent and free to make up our own minds on each issue.
Keywords: decoupling, economic growth, pollution, technological progress, structural
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