21 October 2008

Inflation figures show need for a Green Investment Plan

The Green Party is renewing calls for a green public investment plan, in light of the highest inflation figures in 18 years - driven by high oil prices.

A green investment plan would invest in projects to make New Zealand less dependent on oil, reduce our greenhouse emissions, use our resources more efficiently and keep people in work and business in business.

"Now is the time to speed up the rebuilding of our rail system to reduce the need for energy intensive trucks; to invest in Auckland's commuter rail system so people need their cars less; to build energy efficient, medium density state housing close to improved public transport; to spend the Greens' billion dollar fund making homes warm, dry and energy efficient, employing thousands of people in every community, not to cancel it as National wants to," Green Party Co-Leader Jeanette Fitzsimons says.

"Today's inflation figure of 5.1 percent shows the impossibility of controlling inflation by raising interest rates. Inflation is no longer just the result of economic boom-bust cycles but is driven by the fact that the world is reaching the limits of key natural resources."

"The most obvious one is oil, but fresh water is getting scarcer in many places and fisheries are over-fished. We have reached the atmosphere's limit to absorb greenhouse gases and internationally there is now a cost to emitting carbon. Together these are driving rocketing food prices and are a major component of inflation.

"This inflation figure is likely to be the peak for the moment as oil prices have dropped off but oil prices will continue their long term upward trend in the near future, once again putting pressure on inflation and hence interest rates.

"A green investment plan would have a triple effect:

* Firstly, it would address the current financial crisis by stimulating demand in the economy and employing workers in the building and construction industry which is facing a downturn.

Secondly it would prepare the New Zealand economy for inevitably higher oil, resource and carbon prices.

* Thirdly it would help insulate the New Zealand economy from further inflationary shocks as a result of rising resource prices.

"The side effects would be cleaner air from less fuel burning; a more secure energy supply; healthier people in healthier homes; and more transport choices with less congestion," Ms Fitzsimons says.

ENDS

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