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Govt can address debt, economic transformation this Budget

May 16, 2011

Govt can address debt and economic transformation this Budget

The National Government can rapidly reduce record levels of debt while beginning the process of transforming the economy, Green Party Co-leader Dr Russel Norman said today.

Dr Norman launched the Green Budget initiatives today — a package of Budget measures focused on revenue raising while moving the economy onto a more sustainable footing.

“The Government has the opportunity to use this Budget to begin the economic transition to a more sustainable, prosperous, and fair economy,” said Dr Norman.

“Our long-term prosperity depends on our own natural resource heritage, which must be safeguarded. No environment, no economy.

“Market mechanisms, like a price on water, would help shift the economy in a smart green direction and help the Government balance their books at the same time.

“Likewise, cutting a billion dollars in subsidies to greenhouse gas polluters would be good for the Government’s bottom line and begin the transition to a low carbon economy.”

Dr Norman was highlighting two of five alternative measures he has laid out to help the Government reign in record debt levels while incentivising a switch to a more sustainable economy.

“It’s likely, however, this Government will use the record deficit — a deficit they have to take some responsibility for creating — as a reason to cut and sell, leaving the economy no different from the place we were in when things went wrong,” Dr Norman said.

“A smart government would balance their books by considering some revenue options, like a temporary earthquake levy, while revisiting some of the ways its spending money poorly, like the $7 billion it's pouring into motorways when oil prices are high.

“A clear majority of New Zealanders indicated that they are prepared to pay a small temporary levy on their income to pay for the rebuilding of Christchurch. So why are we adding $5 billion more to a record deficit instead?

The final part of the Green Budget package revisits the need for a comprehensive tax on capital gains (excluding the family home). The case for a capital gains tax was given renewed emphasis recently in the latest OECD Country Report on New Zealand which highlighted this basic distortion in our tax system.

“If the National Government are serious about rebalancing the economy towards greater investment in the productive sector rather than more housing speculation, they’d be following the advice of the OECD, the IMF, and their own Savings Working Group and introduce a comprehensive tax on capital gains except for the family home,” said Dr Norman.

“New taxes on capital gains and water would raise substantial additional revenue, broadening the tax base and enabling the Government to lower debt and live within its means once again.”

Link to the Green Budget document (7 pages):
http://www.greens.org.nz/misc-documents/green-budget-2011

Link to the 2011 OECD Country Report on New Zealand (16 page summary):
http://www.oecd.org/dataoecd/9/25/47616615.pdf


ENDS

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