"The Day After Tomorrow"

Budget Speech - 27 May 2004

Rod Donald MP
Green Party Co-Leader

On behalf of the Green Party I would like to congratulate Dr Cullen and the Labour / Progressive Government for its 'Working for Families' package.

It's five years late, it doesn't go far enough and it discriminates against some children because of the origin of their parents' income. But it is worthy of support and it certainly defines the difference between Labour and National.

The last major welfare-reforming budget was in 1991 when National cut the benefits of those who were already on the lowest income and abolished the universal family benefit. Today's Budget goes some way, but not all the way, to reversing those cuts and addressing the poverty they compounded.

National, and their sometimes allies ACT, still have blind faith in the ability of the marketplace to meet everyone's needs. Of course that is nonsense and this package shows that Labour not only accepts that the State has a responsibility to look after its citizens, but it is finally taking serious action. While we are angry that past budget surpluses have been built on the backs of kids living in poverty and we would have liked more money right now to end this indictment, we are pleased to hear Dr Cullen's prediction that today's package will significantly reduce child poverty and we hope it will prove to be so.

This is definitely a Budget for families and we applaud that. It is also good news that there are measures in the Budget that will make the transition from a benefit to paid employment easier. A likely consequence of these initiatives is that the labour participation rate will increase which, ironically undermines one of Michael Cullen's arguments in favour of the New Zealand Superannuation Fund, i.e. that there won't be enough future workers to support us when we retire.

I accept the Government's assurances that no one will be worse off as a result of these reforms, despite the base rate of some benefits actually dropping. What we are concerned about is that beneficiaries without children will be hardly better off. Ever since National slashed benefits 13 years ago beneficiaries have been struggling and they all deserve at least $20 extra a week each.

We are also concerned that the 'in-work' payments obviously discriminate against the children of families whose parents rely on a benefit, whether it's the DPB, the unemployment benefit, superannuation or a student allowance. We understand the intention of the payment, which recognises that going to work involves extra costs such as transport and clothing, but we echo the concerns of the Child Poverty Action Group who urged the Government not to punish children because their parents are getting state support. The Government has partially recognised this discrimination by extending the 'in-work' payment entitlement to those on ACC, yet it has not extended the payment to parents in full-time study, even though they face equivalent extra costs to those in the work force.

I would particularly like to congratulate the Government for ending the ridiculous situation where as soon as a beneficiary started a job their accommodation supplement was cut. This was an extraordinary disincentive to making the transition to employment and will be welcomed by those who receive an accommodation benefit.

But it leaves a big question mark over why the Government hasn't changed the abatement regime for those beneficiaries who are not getting an accommodation allowance. Being able to earn only $80 a week before your benefit starts abating is no incentive to get a job.

Three important initiatives are missing from today's family package. The first is a universal child benefit should be paid to every primary caregiver, regardless of family income. A Universal Child Benefit is still needed in New Zealand despite the increases in family support announced today. The United Kingdom has one in addition to their generous family support packages.

Whereas everyone gets a Universal Child Benefit, we are concerned that not every family will get what they are entitled to under Family Support because they are not aware that they are eligible and, more importantly, some families will get more than they are entitled to, because they have underestimated their income and will be faced with an unaffordable debt at the end of the tax year.

There is also good and bad news for students in this budget. I'd like to acknowledge that 43,000 students will be better off as a result of the parental income threshold being increased. On the other hand the Government is taking the extraordinary step of axing the accommodation allowance for married students under 25. Are they now expected to get divorced and go back to living with their parents?

If the Government is serious about investing in people, if it wants young New Zealanders to be committed to our country rather than taking their talents and energy off shore, it should make the student allowance universal. Instead it is forcing students in to debt, a debt that has now reached $7 billion, more than double when Labour came to office.

What's more, as a result of the Future Directions package students will have to borrow more because it is going to be harder for them to get any work when they are not studying because more beneficiaries will now have a great incentive to enter the work force.

For that reason alone this budget should have included a Universal Student Allowance. At the same time the Government is sending the signal that its worth going to work, it should be sending a signal that it is worth getting a tertiary education or training. We should be telling young New Zealanders that we value them, that we want them to contribute to society and that we will support them during their studies.

There is no such thing as a free lunch. The question is whether students should pay now or pay later. The Green philosophy is that we are all better off if we know that our society will support us when we are young, old or sick and that in turn we are expected to contribute to the community chest when we are well and working.

We are not just concerned about the plight of individual students. We are concerned about the impact ballooning student debt is having on our whole economy and our society. Young couples with student debt are putting off buying their first home because they can't bridge the deposit gap and meet mortgage repayments. They are also putting off having children because they feel they can't afford to.

This is a ticking bomb that will explode when those couples retire. They will still be paying off their mortgage or trying to pay market rent out of their New Zealand superannuation but with no private savings to back them up. In some cases they will still be paying off their student debt as well. Meanwhile there will be fewer new workers than Dr Cullen needs to pay taxes because those families have delayed having children.

While we support the family package the question needs to be asked: is this the best long-term way to ensure families have enough to live on? I said at the outset that the State has a responsibility to look after its citizens. I also maintain that employers have a moral responsibility to pay their staff a living wage. Even before today's package the Government was paying over $750 million in the form of family support, tax credits, subsidies, grants and allowances to people in the work force.

Today's package increases this level of support considerably. There is a strong argument that this is corporate welfare because it is subsidising employers who pay their staff less than it costs to bring up a family in decency. That is why the Government should be lifting the minimum wage to at least $10 per hour and takes the lead on pay equity by implementing it in the public service, starting with nurses right now.

I can understand why some business people would oppose this when they face increasing competition from sweatshop imports. It is simply not fair that the Government on the one hand increases the minimum wage, introduces four weeks annual leave, sets good health and safety standards and environmental conditions for New Zealand businesses and their staff and on the other hand forces those businesses to compete with importers who can buy goods that are made in appalling conditions by exploited workers.

More and more companies are simply giving up. Yesterday's announcement by Sunbeam that it is closing its electrical blanket factory in Palmerston North with the loss of 122 jobs is yet another example of a company shutting its New Zealand manufacturing base and shifting production to China.

Many more will follow if the Labour Government succeeds in its attempts to negotiate free trade agreements with Thailand and China and forces through its unilateral tariff cuts. Its 'making work pay' strategy will also fall flat if the only jobs available for beneficiaries are working at the check out or waiting on tables because all our manufacturers have disappeared off shore.

Despite these concerns the Green Party will be supporting the Future Directions legislation when it is introduced under urgency later this afternoon.

We are less impressed with other aspects of the budget and we remain fundamentally opposed to the Government's policy of allowing the commercial release of genetically engineered crops in New Zealand. I therefore move that "this house has no confidence in the Labour-led minority Government because, despite there being some positive initiatives in the budget, it's continued failure to take adequate measures to protect New Zealand from the release of genetically engineered organisms exposes our health, our environment, and our economy to significant and quite unnecessary risks".

Keeping New Zealand GE free is as fundamental to the Green Party as keeping our country nuclear free. The Labour Government of the 1980s was propelled by public opposition to nuclear weapons and nuclear power into legislating against them.

My greatest disappointment in this Labour Government is that it has refused to listen to overwhelming public opposition, including from its own supporters, to genetic engineering. Despite Labour's intransigence we remain optimistic that New Zealand will stay GE free. There is no sign of any company foolish enough to apply to commercially release a crop here and the GE industry is in worldwide retreat because nobody willingly wants to buy their products. Monsanto's decision to shelf its GE wheat marks the beginning of the end for GE food crops.

Genetically engineered organisms are only one of the threats facing our economy, our society and our environment. Today's budget does little to prepare New Zealand for many of the predictable and not so predictable challenges ahead.

'The Day After Tomorrow' may only be a movie but the environmental backlash it portrays is very real. Manmade climate change has already been held responsible for the growing number of extreme weather events.

To its credit the Labour Government have acknowledge the need to tackle this global problem by signing up to the Kyoto Protocol. On Tuesday Dr Cullen said in the House that it was very important for members to address the issue of climate change because it may well have an impact on the economy.

Despite increasing evidence that this is the case, today's budget does little to either future proof the economy or improve the way we treat the environment. In fact some policies, such as making our economy even more dependent on exports, make us more vulnerable rather than self-reliant.

Only the ACT party rejects the reality of climate change. This issue is too serious to wait until the biggest offender, the United States of America, takes off its blinkers and commits to reducing its use of fossil fuels. The other reality is that fossil fuels, by their very nature, are finite. New Zealand knows that very well as we face up to the Maui gas field running out seventy years before it should have because the Government at the time squandered this precious resource.

It's not just environmentalists who are sounding warnings. The chief executives of the big oil companies have made it clear that world demand for oil is about to exceed supply. Yes there's still a lot of it in the ground, but we are consuming four barrels for every one that's discovered and soon we won't be pumping it out of the ground fast enough to fill our tanks.

The rapidly expanding Chinese economy is speeding up this depletion. While we import more and more goods from China they are using more and more oil in manufacturing, transport and travel. The impact in New Zealand will be dramatic. The latest trade figures announced today show that the cost of crude oil and petroleum imports is up 84 per cent compared with April 2003. We are on an unsustainable path of fossil-fuelled-dependent economic growth and free trade is driving us faster towards the edge of the cliff.

New Zealand can and should change course before it's too late. As celebrated scientist Professor James Lovelock, one of the first researchers to sound the alarm about the threat from the greenhouse effect, said on National Radio yesterday "New Zealand could be the first place in the world, after Iceland that is, to get all its energy from renewables."

The Green Party and its predecessor the Values Party have been pushing the message of energy efficiency and renewable energy for over thirty years. And we will keep pushing it until those in power listen or we have the power to make the necessary changes.

This Budget was an important opportunity to protect New Zealanders from sharply rising energy costs - by investing in demand management, solar and wind. The arguments for investing in sustainable energy now to insure us against a bleak future are compelling. Last year's dry winter and this year's South Island transmission shambles are warnings of what lies ahead. Which is why the Greens are disappointed that the Government hasn't taken heed of these warnings by seriously investing more in energy security in this Budget. Of course it is good news that there is an extra $2.6m to assist low-income families to make their homes more energy efficient and $200,000 to encourage greater use of solar water heating but these amounts are so pathetic I am sure the Minister is embarrassed to claim them as victories for sustainability. They pale into insignificance against the $1.2B that Meridian was planning to spend on its destructive Project Aqua scheme.

What is needed instead is for the Government to take a lead by immediately calling for tenders to install solar water heating in all Government buildings where it is cost is effective to do so. A five-year programme to put solar panels in state houses, hospitals, prisons, schools and office buildings would not only reduce energy demand but save the Government money. Free solar hot water would also cut the power bills for State house tenants. While we obviously support the 'Working Families' package, it is an 'end of pipe' solution to the problem of income adequacy that will only get bigger as power prices inevitably rise. A more creative solution would be to help people reduce their energy costs.

The scaling up of the manufacturing and insulation industries resulting from this initiative would bring down the price of solar heaters for private homeowners and landlords. The Government could also support solar mortgages to enable homeowners and private tenants as well as the whole country to get the benefits of up-front energy savings, while paying off the capital cost from those savings. Exactly the same approach could be taken to insulating homes so they are warm and dry and healthy.

The Government has also missed the opportunity to seriously invest in sustainable transport infrastructure in the Budget. We acknowledge and support the Government buy-back of the rail track and the commitment to spending $200 million fixing the mess caused by the private operators and we are obviously very pleased to have jointly developed and are now implementing the New Zealand Transport Strategy with the Government.

But what we want now is an integrated, safe, response and sustainable land transport system and New Zealand owned and operated coastal shipping services.

What we don't need is to pave paradise and put up a parking lot. The National Party solution to New Zealand's present and future transport problems seems to be to build more motorways and create more congestion. The Greens hate traffic jams; we hate people being stuck in cars when they would rather be at work or school or home, we want to ensure that businesses can get goods from one end of the country to the other efficiently, and in particular we want to solve Auckland's traffic gridlock.

National's 'vision' for Auckland transport is simply a repeat of the fifty-year-old motorway madness that created the present problems. It would be an economic suicide note for Auckland at a time of worsening climate change, oil depletion and rising concern about air quality.

National hasn't noticed, but the rest of the world has realised that more roads means more cars, more pollution and more congestion. Instead New Zealand needs first-class public transport services in the cities and throughout the country. And we need a first-class rail freight service to get heavy freight off our roads and back on track.

We therefore call on the Government to make extra capital available to fix buckled rail tracks faster than its planning, expand Wellington's commuter rail, for example, by double tracking where it is needed and electrifying north of Paraparaumu and commit to stage two and beyond of Auckland's commuter rail.

Transfund should also be pushed to fund the rail projects, such as spur lines and freight transfer stations that are waiting on its books. We welcome the extra $22m for passenger transport but note that the alternatives to roading fund of $31m is still not being spent. Transfund is dragging the chain on rail and needs a clear message from Government that it is time to act.

Dr Cullen will be asking, "where is the money coming from?" He won't be surprised to hear me answer that first up it should come from his New Zealand Superfund. I know he has been crowing that his beloved Superfund has done well in the last quarter, but I remind him that the net market values of the international equity investments of the Government Superannuation Fund were still $31 million less at the end of March than when they were first invested in October 2001. In other words, gambling our retirement on the international share market is a risk and the more that is gambled the bigger the risk. What's the use of owning shares in companies like Enron and WorldCom when our motorways are gridlocked, our trains don't run on time and the lights go out at night?

Does this budget prepare New Zealand for the day after tomorrow? No it does not. The Government needs to kick its fixation with economic growth and focus on sustainability, self-reliance and quality of life. Even Dr Cullen acknowledges that New Zealanders rightly believe that success is defined as much by quality of life, a better environment, and more effective health and education services as by narrowly defined economic performance.

If he really believes that, why isn't there serious increasing in funding of biodiversity conservation? Instead, total bio-diversity funding has been cut in this budget, at the very time when DOC is struggling to fund its new Ark programme for protecting threatened habitats.

There is not a single new environmental initiative in this Budget. Dr Cullen has rescued our children from poverty but failed to provide them with a sustainable future.

ENDS

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