Earth to Treasury, we have a problem

27th June 2006

The Green Party has welcomed the publication of Treasury’s “Long term Fiscal Position” paper today as a sign that Treasury are thinking 40 years ahead rather than just the next few, but has questioned why the environment seems to have been excluded from the equation.

“It’s great that Treasury is taking a long term view, but the New Zealand economy is dependent on the New Zealand environment yet that doesn’t seem to factor at all in their report,” said Green Party Co-Leader Russel Norman.

“Where is the fiscal impact of not meeting our Kyoto greenhouse gas emission targets, or the economic impact of climate change on the New Zealand economy,” asks Dr. Norman, the Green Party’s economics’ spokesperson.

“The New Zealand economy with its high dependence on dairy and other primary industries is particularly vulnerable to climate change but there seems to be little consideration of the economic impact of climate change over the next 40 years.

“And where is the modelling of the economic impact of the degradation of soils and aquifers on the productivity of the agricultural sector?

“The study assumes that there will be an annual rise in productivity of 1.5% but this will be difficult to achieve if we continue to degrade our soils and waterways, as Morgan Williams, the Parliamentary Commissioner for the Environment, pointed out in his 2004 report, “Growing for Good”.

“Treasury, in its scoping document for this report, “Modelling New Zealand’s Long Term Fiscal Position”, rejected complete reliance on a bottom up approach to modelling fiscal futures by reference to Stein’s Law, which says that if something cannot go on forever it will stop i.e. we can’t keep increasing Government expenditure ad infinitum (p.10).

“Well we would say to Treasury, Stein’s Law also applies to the environment – we can’t keep consuming our natural capital forever and if we do so then our economy will suffer, and it’s time for Treasury to acknowledge there are limits to the environment just as there are limits to how much a Government can spend,” says Dr. Norman.

ENDS

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