Green economics the smart way forward

Green economics offers a way out of New Zealand’s economic doldrums without selling off strategic assets, Green Party Co-leader Russel Norman argued in his Party’s first major speech of election year.

“The next economic wave is smart Green economics,” Dr Norman stated, before outlining two critical steps the Government can take in order to catch the trillion dollar wave

He also described John Key’s economic approach as ‘bludging off our grandkids.’
“Instead of inheriting public assets, the next generation will inherit $84 billion in National Party debt,” Dr Norman said, noting that much of the debt came from tax cuts for the wealthy.

New Zealand’s economic shift required two immediate steps, the Green Party Co-leader told an audience in Auckland, the first was an overhaul of the tax system: “The Green Party stands for smart, fair taxes and has the courage to say what National and Labour both know: that a capital gains tax excluding the family home will move capital away from property speculation; it will put downward pressure on house prices and help make the dream of homeownership a reality for more Kiwis; it will redirect much-needed capital to a starved productive sector; and it will reduce spiralling government debt.

“Smart green economics is about having the courage to make the changes our tax system needs so that we don’t dump our debt on our grandkids.”

Selling off assets was part of the problem rather than the solution, the Green Party Co-leader added.

The second step towards Green economics was to deploy price signals and regulation to protect New Zealand’s natural capital, and reward businesses who ‘play nicely with nature.’

“The heart of smart Green economics is understanding that when we look after our environment, we look after our economy,” stated Dr Norman.

“To keep clean and green real we must re-tool our economy. We need market signals that internalise environmental damage – we need a price on carbon, water and waste, so that prices reflect real world costs. And to keep clean and green real we need strong government regulation – serious rules to clean up water, reduce greenhouse emissions and protect our natural capital.”

Dr Norman said the speech showed the Green Party’s intention to engage with central economic issues ahead of this year’s election. “New Zealanders want sound economic management from their Governments. The message of clean, green prosperity is very powerful and persuasive, and we’ll be sharing it widely this year.”

Smart Green Economics - State of the Planet Speech

Dr. Russel Norman Co-leader Green Party Aotearoa New Zealand
30th January 2011

Introduction

I want to start with the land and the water; The Tamaki isthmus, the Waitakere Ranges and the Manukau and Waitematā Harbours - the mountains and harbours created by the earth's crust uplifting and down-faulting millions of years ago.

And I want to start with the people. I give greetings to the mana whenua of this place, Ngāti Whātua and Ngā hapū katoa o Tāmaki Makaurau. I acknowledge te Tiriti o Waitangi as the foundation of our nation.

It’s fantastic to see the new faces and the old faces of so many people in our Green movement – I greet you all. I know that, like me, you are looking forward to election year – an opportunity to put our positive vision for Aotearoa in front of the nation.

E ngā mana, e ngā reo, e ngā iwi o te motu: Tēnā koutou. Tēnā koutou. Tēnā koutou katoa.

Summertime is about the simple stuff: land, water and people. Swimming in the ice cold headwaters of a river; exploring beaches and forests; and spending time with the people we love. It sounds a long way away from today’s speech about the economy - but it is not.

The true test of an economy is not the rise or fall of GDP. The true test of our economy is the wellbeing of our land, our water and our people. It’s that simple.

The next economic wave - smart Green economics

Our vision includes a way forward for New Zealand’s economy.

The neo-liberal economic model has suffered a catastrophic collapse. We have witnessed market failure on a colossal global scale. Lack of regulation has cost taxpayers trillions of dollars.

We have been forced to relearn the lesson of the 1930s – markets need regulating.

Not that New Zealanders really needed to be told – we’ve been through the leaky homes disaster. The National Party’s decision to deregulate the building industry in the early 1990s resulted in leaky homes that will cost our country more than $20 billion to repair – that’s more than five times the cost of the Canterbury earthquake.

The leaky homes fiasco and the global financial collapse were both due to lack of regulation driven by the neo-liberal economic ideology.

The old order is dying, but what will replace it?

There are those in the Government who want to go back to the Think Big economics that came before Rogernomics - Think Big, with its centrally-planned drive for growth regardless of social or environmental costs.

We see reflections of Think Big in National’s motorway projects and in the massive irrigation and hydro schemes proposed for the South Island, facilitated by the removal of democracy from Canterbury.

But Think Big was an economic failure, an ecological catastrophe and a democratic travesty – Stephen Joyce may look to Rob Muldoon for his inspiration, but the Greens do not.

The next economic wave won’t be Robert Muldoon with an iPad, the next economic wave is smart Green economics.

Smart Green economics takes the best from Keynesian economics and the best from free market economics and places it within the framework of a planet with finite resources. Smart Green economics can re-tool our economy for the world we live in today.

Smart Green economics is the economics of a world that needs to nurture its people and its environment. It is an economics that recognises that we need to live within our means and value our social capital and our environmental capital, not just financial capital.

It is the economics that says we must stop borrowing from our grandchildren.

Smart Green economics is unashamedly based on a love for Aotearoa, our land, our water and our people.

Warm homes success

Two years ago I gave our State of the Planet speech just after an election. I spoke to you about a Green New Deal for New Zealand; a plan to address both the economic crisis and the environmental crisis. A Green New Deal to create jobs and protect our environment.

I challenged John Key to take up this plan and, to be fair, he picked up one component: our warm healthy homes initiative. I am proud to tell you that by the end of last year over 80,000 homes were retro-fitted with insulation under this scheme. Over half of these were occupied by people on low incomes.

I am proud that the Green Party led this change, and worked alongside government to make it happen.

Over four years we will make 180,000 homes warm and dry. Families will use less energy keeping warm in winter, and they’ll save money on power bills. Parents and children will stay healthier and miss fewer days of work and school due to sickness. And I’m proud to say that, at a time of record youth unemployment, over two thousand jobs are being created.

This scheme is not cheap, but it is an investment in our common future, an investment that will repay us many times over in savings in health, energy and education.

This is smart Green economics in action and a great achievement for the Green Party.

MMP

The warm homes scheme is just one example where the Greens are leading change that’s good for all New Zealanders. We are able to do this because of our MMP voting system. MMP has delivered great ideas like Kiwibank and paid parental leave, as well as the Greens’ warm, healthy homes scheme.

MMP is a fair electoral system which means that every vote counts, unlike other systems where many votes are wasted.

MMP means that women, young people, Māori, Pasifika, and Asian New Zealanders are represented in parliament.

MMP has delivered stable government.

We trust that New Zealanders will vote to keep MMP in the referendum later this year.
National’s poor fiscal and economic management

But beyond programmes that started with the Green Party, this Government is bereft of economic vision and is making a mess of budget management.

Instead of smart Green economics, like a CBD rail loop for Aucklanders, we see faith-based transport infrastructure blow-outs, including ten billion dollars for new motorways.
This $10 billion tragedy locks us into one outdated transport option with high greenhouse emissions, and leaves us exposed to high oil prices. It is poor quality spending at a time when money is tight.

The Government’s cash deficit this year is $15.6 billion. Government debt is projected to hit $84 billion by 2014, and servicing that debt will cost us billions each year in interest, adding to our chronic current account deficit.

The Greens support borrowing for infrastructure that will benefit future generations, like a decent train system for Auckland. But under National it is all pain with no gain. We are borrowing money we can ill afford, to spend on projects that are ill-considered.

On the revenue side of the Government’s books, National’s tax cuts will add $15 billion to government debt by 2015. And for what? A person on the median income got an extra $14 a week, while the head of Westpac got an extra $5000 a week. Borrowing for tax cuts targeted at the wealthiest is reckless and immoral.

National’s leaders then have the gall to use the fiscal deficit that they created to justify spending cuts to social and environmental programmes, such as night classes and community environment grants.

John Key is using the debt his Government created to justify privatisation of public assets. We should be under no illusions; they are heading down a path that will lead to full privatisation and foreign ownership of key parts of the New Zealand economy. As we’ve seen with the banking sector, profits will flow overseas, prices will rise, innovation will be stifled by monopolies and revenue to the Government will drop.

Instead of inheriting public assets, the next generation will inherit $84 billion in National Party debt.

National needs to stop bludging off our grandkids.

Inequality

The income tax cuts combined with the GST increase are widening the gap between those who have the most and those who need the most.

Inequality hurts everyone in New Zealand, rich or poor. Inequality lowers your life expectancy no matter how much you earn. It increases obesity, it fills our hospitals and our prisons and we all pay those bills.

So the smart move is to focus on reducing the gap between the haves and the have-nots, so that we are all better off.

Everyone deserves a fair go; everyone deserves to get their feet onto the ladder of opportunity.

Let me tell you about my family. I am only here today because of the opportunities provided to me and my family.

Both my grandfathers were out-of-work heavy-drinking carpenters who barely survived the Depression with their families intact. My mother never went to high school and at 13 went to work in a paper bag factory. My father grabbed the chance to learn a trade, becoming a fitter and turner, and then an engineer. We grew up in a Housing Commission house in Brisbane where I shared my room with three brothers. We all went to the local state school. I was the last of six children and the first to go to university.
My family had opportunities thanks to good public education, affordable stable housing, decent wages and conditions, and social security. All of this was part of the struggle of the union movement.

My family climbed out of poverty on a ladder paid for by other people’s taxes. In turn, my family has paid taxes to provide a ladder for someone else.

Michael Joseph Savage called that social security.

When the current Minister for Social Development was a single mum, she too was given an opportunity. A government allowance helped her through university, and she became a government minister. She has since slashed the allowance that got her where she is, pushing away the ladder of opportunity, and making it harder for other single mums to go to university.

I call that shameful.

There are 20,000 New Zealand children going to school each day without food, or shoes or raincoats. Nearly 20 percent of Kiwis aged between 18 and 24 are unemployed, the rate is even higher amongst Māori.

Smart Green economics says invest in children, education, training and jobs. National puts money into prisons and motorways.

Smart Green economics says workers and unions are central to economic success and we should increase the minimum wage to at least $15 an hour. This government weakens labour laws at the whim of a multinational corporation.

Smart Green economics says invest in our kids right from the start, because they are the future. National has cut funding to early childhood education.

Capital gains tax

The truth is that the Government needs more revenue and the Greens are the only party in Parliament to put forward a serious plan to generate serious revenue – a capital gains tax excluding the family home. In virtually every other developed country you pay tax on income whether that income comes from wages or capital gains.

The Green Party stands for smart, fair taxes and has the courage to say what National and Labour both know: that a capital gains tax excluding the family home will move capital away from property speculation; it will put downward pressure on house prices and help make the dream of home ownership a reality for more Kiwis; it will redirect much-needed capital to a starved productive sector; and it will reduce spiralling government debt.

The National Party is building up massive government debt because they won’t make changes that the tax system desperately needs. Labour is scared to do more than tinker at the edges.

Smart Green economics is about having the courage to make the changes our tax system needs so that we don’t dump our debt on our grandchildren.

No environment; no economy

The heart of smart Green economics is understanding that when we look after our environment, we look after our economy. The National Party says it's a trade-off: we must consume our environment to grow the economy – mine our national parks and aquifers for short term profits. We say clean and green is the foundation of our prosperity. No environment, no economy.

As a small producer at the edge of the world, we need an export brand to sell our products overseas. That brand is clean green New Zealand, 100% Pure. Not 50% Pure. Clean and green is the best brand you could ask for as the world becomes more environmentally aware. The brand is already worth $18 billion to New Zealand, and can be worth much more in the future.

Clean, green and safe is the brand that resulted in the dramatic increase in dairy exports to China after their melamine scandal. Clean and green stands behind our multi-billion dollar tourism industry. Our organics sector has grown into a half billion dollar industry building from clean and green and GE Free.

To keep clean and green real we must re-tool our economy. We need market signals that internalise environmental damage – we need a price on carbon, water and waste, so that prices reflect real world costs. And to keep clean and green real we need strong government regulation – serious rules to clean up water, reduce greenhouse emissions and protect our natural capital.

By making prices better reflect true environmental costs and introducing real environmental regulation, we reward those businesses who play nicely with nature.

Green Jobs

The global market for clean technology, goods and services is already $400 billion per year. It is going to grow to nearly $2 trillion by 2017. If we can access just a fraction of this market we will prosper.

We have opportunities. Mighty River Power is exporting the technology for geothermal electricity generation. Meridian Energy has a solar power plant connected to the California grid and is about to build another in Tonga.

In November last year the Windflow 500 turbine, made in Christchurch, was one of the first in the world to be certified by Lloyds as being able to operate at the windiest sites. Windflow is the only utility-scale wind turbine manufacturer in Australasia and is now moving to export into the British market.

Māori business, based on use of our natural resources, forestry, fishing, farming and tourism, and growing all the time, is also part of this move towards a green economy.

These businesses are just the start of the Green economic revolution that will reshape our world.

Smart Green economics is about providing green jobs and protecting our natural environment – it is about investing to create a bright green future for our grandkids rather than bludging off them.

Koura farmers and clean water

To protect our economy we have to protect our natural capital and nothing could be more important than water.

One of the great privileges of my job is getting to meet people all over New Zealand who are fighting to protect our water. This summer, I launched my dirty and threatened rivers campaign on the magnificent braided Wairau River near Blenheim and I met Peter Wilhelmus who has been farming salmon and koura – native freshwater crayfish – near the Wairau for years.

Now the Wairau River is in mortal peril because of a hydro scheme. But there’s another challenge to this river: intensive agriculture.

Farmers like Peter need clean water, and sadly, dirty water killed off Peter’s salmon. When the Council finally investigated, they found that the stream was highly polluted with high levels of nitrate and faecal bacteria from intensive agriculture upstream.

Peter is still battling along breeding koura, but pollution has taken a huge toll on him and his business. Freshwater aquaculture has great potential in our smart Green economy but it needs governments to protect our natural capital and stop water pollution.

The big picture is that unregulated agribusiness is driving the decline of water quality across our country. Drinking water for rural towns like Dunsandel is polluted by dairy corporations. Rivers are being dammed and drained to irrigate industrial dairying.

The Canterbury District Health Board warned that if the Central Plains irrigation scheme went ahead there would be a risk of infant death because of nitrate pollution in the groundwater – that’s pollution from intensive dairying.

In response, the irrigators offered to ship in clean water. They just don’t get it – people want clean groundwater, they do not want to drink imported water while living on top of a poisoned aquifer.

National, and Labour before, has been subsidising Think Big irrigation schemes with government grants. Labour even gave Central Plains Water, a private company, the power to forcibly take farmers’ land for canals. It is environmentally tragic and economically suicidal.

Right now the Minister for the Environment is sitting on rules to clean up rivers and lakes - a draft National Policy Statement on Freshwater Management - a set of rules that would reward the good dairy farmers. The polluting corporations are lobbying heavily to stop any action.

Nick Smith has a choice – he can sign clean water rules into law or he can weaken them and do nothing. This will be the test of whether he is the Minister for the Environment or the Minister against the Environment.

Water is our natural capital; we pollute and squander it at our peril. No water; no milk. No environment, no economy.

Climate change

The economic costs of destabilising the natural environment are starkly revealed by climate change.

2010 was the equal hottest year on record.

The economic costs of extreme weather events - storms, floods and droughts - are vast, as shown once again by the most recent floods in Australia. While no one extreme weather event can be blamed on climate change, the frequency and severity of these events will increase as our climate changes.

We hear often about the costs of taking action on climate change, but the costs of not taking action on climate change are much much larger.

Bizarrely, the current Government is subsidising climate pollution. Under National’s modified Emissions Trading Scheme we are going to spend 100 billion tax dollars to subsidise big polluters, helping them destroy the stable climate on which our prosperity, and sometimes our lives, depend.

We are stealing our grandchildren’s stable climate in order to keep the fossil fuel party going a bit longer. National must stop bludging off our grandkids.

Cost of living

We can start thinking smarter and greener as a nation.

The smart Green way to deal with rising electricity prices is to insulate our homes so they need less power to heat, and to have minimum energy performance standards for household appliances.

The smart Green way to deal with rising petrol prices is to make our cities and towns as compact and efficient as we can, to invest in buses and trains, and to make it safe to walk and cycle.

The smart Green way to deal with rising food prices is to encourage local production of fresh fruit and veges, including farmers’ markets and backyard growing.

The smart Green way to deal with rising housing costs is to use tax rules to put downward pressure on house prices and to increase the supply of affordable social housing.

National and Labour say the way to deal with rising prices is more growth, more dams, more motorways, more coal, more exports, more long hours, more intensive dairy, more GDP. They will get the last drop of milk from the last blade of grass to pay the petrol import bill so we can drive the holiday highway, only we’ll all be working so hard there won’t be a lot of holidays. They will trade away our sovereignty and dignity by making trade deals with human rights abusers.

This is the path to a treadmill of working ourselves and our natural environment harder and harder until we all collapse.

The Green way is to work smarter within the limits of the natural world.

Conclusion

The old economic order is dying, and we have a choice to make. We can cling to a dying regime or we can turn and embrace our future. Ahead lies a great opportunity and the Green Party can lead the change to get us there.

With smart Green economics our young people can have decent work. We can re-tool our economy to protect our natural capital and build on our billion dollar brand. We can live in a fairer and more equal Aotearoa New Zealand, that doesn’t borrow from our grandchildren but leaves them with abundance and prosperity.

Together we can begin the new era of smart Green economics, for our children’s sake, for our planet’s sake, and for our own sake.

ENDS

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