19 May 2011

Budget 2011 lacks courage on revenue

The National Government’s refusal to raise revenue has left it with no other options but to cut, borrow, and sell in this year’s Budget, Green Party Co-leader Dr Russel Norman said today.

“You can avoid the need to cut government services, borrow heavily, and sell off state assets, if you consider some revenue raising options,” said Dr Norman.
“By raising revenue in the right way, you can move the economy towards clean, green prosperity. But instead we’re standing still, for lack of a better vision.”

The Green Party published a number of costed initiatives earlier in the week which set out ways the Government can raise revenue to lower its massive debt burden while moving the economy to a more sustainable footing.

“It takes a bit of courage to talk about transformative ideas — like a capital gains tax or charges on commercial water use — when the conversation between National and Labour has been solely about spending cuts versus more borrowing,” said Dr Norman.

“A tax on capital gains would, in time, raise revenue by $4.5 billion per annum and shift investment incentives back towards the productive sector. If you want an economy that earns its way in the world, then our Government needs to support our productive sector.

“Likewise, broadening the revenue base to include a charge on the commercial use of water would raise significant new revenue and lead to the smarter use of our water.

“Unfortunately for New Zealand, the Government can’t see beyond the next boom and bust economic cycle.”

Budget 2011 introduced deep cuts to Kiwisaver, Working for Families, ACC, and tertiary education, and wide cuts to public services. These cuts total $700 million next year and total of $5.2 billion out to 2015. ‘Increases’ in health spending fall $184 million short of those required to keep up with inflation and, as such, represent real world cuts.

“It’s disappointing that we’ve previously had tax cuts that help the wealthy, while for the rest of New Zealand, the price of food and petrol goes up and now KiwiSaver, Working for Families, and other essential government services goes down,” Dr Norman said.

“Middle and lower-income New Zealanders are shouldering a disproportionate cost of the Government's poor economic management.

"And what's worse, none of these cuts will leave the economy in a more resilient or environmentally sustainable position than before,” added Dr Norman.

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

ENDS

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