If I were delivering the Budget today it would be New Zealand's first smart green Budget. It would position our nation to be a world leader in tomorrow's green economy. Our Budget would deliver a plan for a smart green economy that takes our national debt seriously while transitioning our economy onto a more sustainable, export-focused footing.
The centrepiece of my Budget would be a series of structural reforms aimed at rebalancing our economy. The National Government seems to have given up on a balanced economy, but for us, living within our means is critical.
New Zealand faces significant structural imbalances. Our narrow tax base has led to record levels of Government debt. Our rapidly deteriorating current account deficit means we're forced to sell our assets offshore and to increase our overseas borrowing. And our manufacturing and export sectors have stagnated, meaning there's been little in the way of good new jobs being created throughout our economy.
First up, we need to get the Government's books in order, both on the revenue and spending sides. We would broaden the tax system by putting a price on activities that are currently untaxed and damage our environment. Unlike the National Government that has chosen to shift the tax burden on to the lowest paid New Zealanders, our tax changes would focus on those not currently paying their fair share.
A capital gains tax, excluding the family home, is a critical component of economic rebalancing, driving capital from speculative property into productive enterprises that create more jobs and wealth. A capital gains tax would eventually raise up to $4.5 billion a year of much needed revenue.
We would stop subsidising greenhouse pollution by introducing a real price on carbon. The Government is subsidising polluters to the tune of $1.7 billion over the next three years. So at the same time that National is increasing class sizes and making the elderly pay more for their prescription medication, they are giving polluters billion dollar handouts to destabilise our climate. We would stop the subsidy, freeing up billions, and institute a fair price.
We would also reprioritise the $14 billion that National is spending on uneconomic new motorways, diverting it to smarter alternatives like better public transport and using the rest to pay down debt.
The second component of our reforms would include a major investment in productive activity that lead to good green jobs. Central to this plan is expanding our narrow export base with a particular focus on taking advantage of the opportunities presented by the $6 trillion global green market.
This is one reason why we would not sell our state owned power companies. BERL research commissioned by the Green Party shows the sales leave the Government accounts permanently worse off in terms of Government debt, debt ratio, net worth, and total assets.
Instead of selling our assets for a one-off gain, we would reorient our power companies towards exporting their clean energy expertise to the world. By keeping our energy companies in public ownership, we keep all the research and development, new jobs, and profits right here in New Zealand.
We would also make a major investment in new research and development. New Zealand spends below half the OECD average on R&D. An investment in R&D, with a focus on sustainability, would broaden our export base, create high paying new jobs and stop the flow of our best and brightest overseas.
The final component of my Green Budget would focus on our children. National has dug a $2 billion dollar hole in their Budget through its unaffordable tax cuts for those on high incomes. In this Budget, John Key is asking the average Kiwi to pay more for their health and education in order to pay for tax cuts for the wealthiest New Zealanders. Research conducted by the Green Party shows that a family earning around $70,000 a year is over $11,000 dollars worse off due to changes in Government policy since 2008, while those in the top 10% of earners are over $12,000 better off. National's unfair tax switch is driving growing rates of inequality that make us all worse off in the end.
We would ensure every working New Zealander earns enough to support themselves and their family. For that reasons, the Green Party is actively backing the Service and Food Workers Union lead campaign for a living wage. Income deprivation need not be part of a successful modern society like ours.
Our green Budget would raise new revenue, cut spending on uneconomic items like new motorways and pollution, and invest in the export sector and our people. It would be balanced, fair, and optimistic with its gaze firmly set on building a richer New Zealand.
Note: This feature ran in the DomPost on May 24, 2012
