FULL SPEECH TEXT
A Clean Green Economy that works for Everyone
Russel Norman
Green Party AGM June 4, 2011
Introduction
I give greetings to the mana whenua of this place, Ngāti Whātua and ngā hapū katoa o Tāmaki Makaurau me ngā hau e wha. E ngā mana, e ngā reo, e ngā iwi o te motu: tēnā koutou. Tēnā koutou. Tēnā koutou katoa.

The biggest economic opportunity in a generation is heading our way.

The next economic wave of innovation is the smart green economic revolution in renewable energy, sustainable food, sustainable transport, green chemistry, cradle to cradle design, low carbon buildings and so much more.

The green economic revolution presents an opportunity for New Zealand to create thousands of green jobs.

It is an opportunity to build from the platform of our clean green reputation in order to sell high value food to a world hungry for natural safe food, and willing to pay a premium for it.

It is an opportunity to leverage our experience in clean energy generation to sell clean energy technologies to a world desperate for ways to cut carbon emissions.

It is an opportunity to harness our smartest minds and brightest entrepreneurs to embrace a $1.3 trillion dollar global green tech market, a market that is not only the ‘next big thing’ but is part of the solution to the survival of our civilisation.

The Green Party says for the sake of our children, for the sake of our planet, and for the sake of the economy, let’s ride that green economic wave.

Let me tell you how we’ll do it.

Today I am going to set out five things we can do to create a clean green economy that works for everyone.

Count the things that matter

Our first task is to value the things in our economy and society that are of real value, not just GDP value.

Every day the old economists and the old parties tell us that maximising GDP is the only way to judge our success.

They tell us that a business that increases greenhouse emissions is just as good as one that cuts greenhouse emissions, if they both make a profit.

They tell us that a corporate raider that breaks up a productive enterprise is just as valuable as a company that produces healthy food.

They tell us the pollution in the Waikato River is a boon for GDP because money is made putting that pollution into the river and money is spent by Aucklanders to get it out again so they can drink clean water.

The green movement has been saying for decades that the true test of a successful society is not the rise or fall of GDP but the wellbeing of our land, our water, and our people.

And now others are starting to say this too. French President Nicolas Sarkozy established a commission headed by leading economist Joseph Stiglitz which highlighted the shortcomings of GDP and pressed the case for alternatives.

As Stiglitz says: “What we measure affects what we do. If we have the wrong metrics, we will strive for the wrong things.”

And even the dry-as-a-bone New Zealand Treasury has felt the water of life coming under the door and admitted that a singular focus on GDP has concealed losses in quality of life.

Measuring the right things is the first step to catching the green economic wave.

Supercharging public energy companies

The second job if we want to catch the global green economic wave is to build on the success of our existing publicly owned energy companies. They are the launching platform for the smart green New Zealand economy.

These companies are the nucleus of the growing clean energy sector. All of them have renewable generation experience – even Solid Energy has a biofuel operation!

These companies have the size and critical mass to compete internationally.

These energy companies have the kind of intellectual property and hands-on practical experience that is desperately sought after in a world hungry for clean energy.

These publicly owned energy companies are worth more today than they were yesterday, and they will be worth much more tomorrow. That is why selling them is a huge mistake.

They can form the nucleus of the clean energy sector in New Zealand, a sector with truly massive export potential.

They have already started to look for export opportunities, building geothermal generation in California for example, but the sky is the limit.

The clean energy sector is booming internationally. The solar, wind and biofuels sector is worth $190 billion this year and is projected to grow to $350 billion in the next decade.

New Zealand can get a piece of that action by being focussed and strategic and building on our strengths.

We can also tap into the creative ideas in the private sector beyond the public energy companies.

I believe in our New Zealand entrepreneurial spirit. I believe that we have the imagination and the drive to patent new ideas and new technologies that will be part of the global green revolution. We need to back ourselves.

Every year at the Sustainable Business awards there are dozens of new start-ups bubbling with great green ideas. An Investment New Zealand report identified 250 companies and organisations involved in researching, developing and commercialising clean technologies in New Zealand.

These clean tech entrepreneurs need a partner with expertise and capital in order to do the research, development, testing and marketing to launch their products into the world.

And that’s where the publicly owned energy companies come in.

The public energy companies can step up to form alliances with clean tech private partners. They can form relationships with green tech bright sparks who have new ideas but who need a strong partner.

Supercharged public energy companies can form the hub of a network of clean technology joint ventures. Some of them have already started, for example, Meridian owns 93% of Whispertech, but we can do much more.

Supercharged energy companies can launch our green entrepreneurs into the world, together building a safer future for our kids.

New Zealand will be renowned for its creative solutions to global challenges. And instead of us paying to use other people’s ideas, why not invent our own and they can buy ours for a change.

However, a small country like New Zealand will always face the risk that successful companies will be bought up by overseas owners and have their intellectual property, headquarters, and research moved offshore.

We get left with a branch office that sends the profits offshore and has no focus on exporting from New Zealand. It is an all too familiar story, and it happened to Contact Energy.

We can do something about it.

We can keep it Kiwi - keep the energy companies in public ownership so they stay here and form the launching platform for a clean energy export sector.

Keep the energy companies in public ownership so they stay in New Zealand but let them partner with private sector clean tech entrepreneurs. Those partnerships then have an anchor in New Zealand so we get ongoing benefits of jobs and research, and we don’t lose critical mass overseas.

Now that’s what I call a mixed economy.

John Key’s so-called ‘mixed ownership model’ actually loses the public element of the mix and ultimately leads to the loss of these companies to overseas owners, as the anchor of public ownership diminishes. And we miss the opportunity to catch the green energy wave.

That is not an economic strategy, that is a white flag.

That is not a vision for New Zealand, that is a plane ticket for our best and brightest.

Why does this Government want to be a second-rate follower instead of a first-rate leader?

National says the energy companies need access to capital. Fair enough. But you don’t need to privatise them to do that. There is an alternative way to get access to capital and that is for the publicly-owned energy companies to issue Green Energy Bonds directly to the people of New Zealand.

It is a win win.

After the debacle of the finance companies’ collapse, many New Zealanders are looking for a safe place for their retirement nest egg. Green Energy Bonds would provide such a safe place, while giving the public energy companies access to capital so that they can take advantage of the green energy opportunities. And it keeps the companies in public ownership and in New Zealand

Supercharged public energy companies; partnered with bright green Kiwi entrepreneurs; funded by Kiwi mums and dads with safe Green Energy Bonds; exporting clean technology; now that is a vision for a bright future for our country

Mr. Key, we tried the old recipe of privatisation and foreign takeover in the 1980s and 1990s and it didn’t work.

Capital markets that work for NZ

You only have to look at the banking industry to see what foreign ownership does to our economy.

Foreign banks own nearly 95% of banking assets in our country. Over the last two financial years, the four big Aussie banks paid dividends of over $3.5 billion, dividends drained out of New Zealand.

We need to fix our finance sector to achieve greater levels of Kiwi ownership and make capital available for sustainable investment, and this is the third part of the green economic plan.

The Green Party is serious about fixing our banking system so that we are no longer mortgage slaves to the Aussie banks.

That is why I am announcing today that the Green Party would, over time, move the Government’s banking contract to Kiwibank.

Our Government’s banking should be done by our New Zealand bank.

Moving the Government’s accounts to Kiwibank will require a careful transition over several years.

In the short term we would tender the Government’s master banking contract and seek to break up the current cosy monopoly that Westpac has.

The pressure the Green Party has been applying over this contract has led to the Government now saying that they will open the master banking contract up for tender. A victory for the Greens but our work is not complete.

When tendering the contract, the Green Party would include a national interest test. The Aussie banks will need to demonstrate what they contribute to local jobs and the local economy if they want to get our business.

The Government’s banking should go to banks that offer the Government the best value, not the best rock concert tickets.

By including a national interest test in the tender, we would anticipate that Kiwibank and other New Zealand banks could get at least some of the Government contract in the short term.

In the medium term we would continue to work with Kiwibank to increase its capability so that it can undertake all of the Government’s banking as soon as possible.

There are other steps we can take to increase the role Kiwibank plays in making our banking system more competitive.

At the moment Kiwibank only represents around 3% of the total value of the banking sector. A bigger, stronger Kiwibank can help New Zealanders save on their mortgage repayments through breaking up the Aussie banks anti-competitive cartel.

We would allow Kiwibank to reinvest more of its profits back into its business and grow its capital base so it can compete with the big Aussie banks.

Kiwibank is one part of the capital market changes we need, but only one part. We also need to address the drivers of debt.

In New Zealand we’ve become used to borrowing everything we need but that can’t go on, not with gross external debt of over $250 billion. Much of this borrowing was to fund speculation in urban and rural land over the last decade. We have to look at ways to reduce our borrowing for real estate.

One way to reduce borrowing is to introduce rules so that only New Zealand citizens and permanent residents can buy New Zealand land.

Keeping our land in New Zealand hands means there is less pressure on rural and urban land prices from overseas buyers. This is particularly important with overseas governments looking to buy assets in New Zealand right now. Kiwi farmers and families hoping to buy their first farm or first home won’t have to compete with international buyers and hence won’t have to borrow so much just to get a foot in the door. This frees up capital for more productive uses.

It also means the profits from agriculture stay local and are not lost out of the economy.

This has additional benefits for the currency. If New Zealand land and public assets are not available for sale to overseas investors, we will see less upward pressure on the New Zealand dollar, which is currently being driven up on news that the Chinese Government’s Investment Corporation is looking to buy up billions of dollars of New Zealand assets.

A lower dollar will help our tradeable sector – both exporters and those who compete with cheap imports.

But wait there’s more, our proposal for a capital gains tax, excluding the family home, will redirect savings and investment away from unproductive housing speculation into more productive investments.

A capital gains tax will make houses more affordable for young buyers who are currently priced out of the market, and over time it will raise $4.5 billion a year in revenue for the Government.

It sends a signal to investors to place their capital somewhere other than housing.

We need our capital for productive green investment and these measures will help make that change.

Sorting out the capital markets is vital to the New Zealand economy and the green transition. The Aussie banks have had free rein to control capital and they made a mess of it - borrowing for speculation in land and housing to maximise their profits at the expense of New Zealand. It’s time to mobilise capital markets to be part of the solution not part of the problem by investing in a smart green economy.

Restore the clean green and safe brand

The fourth thing we can do to catch the green economic wave is restore and protect our clean green and safe brand by taking action to clean up our natural environment.

By accident or design, we are known globally as clean and green and safe.

In a world worried about carbon emissions, polluted water and contaminated food, having a reputation for being clean and green and safe is a huge advantage.

In a world where retailers from Tesco to Walmart are reducing their emissions and waste, while increasing their profits, being seen as green is a competitive advantage.

Being sustainable is now necessary to even get on the shelves of major overseas retailers, as the New Zealand hoki industry found when it was thrown out of a UK supermarket because of their disgraceful bottom trawling practices

But we are already losing our green reputation as demonstrated recently when John Key was interviewed on the BBC and questioned about our polluted rivers, much to his surprise.

The world will tolerate us being less than 100% pure but only if we acknowledge the fact, and only if we have a plan to clean the place up. Sadly, the current Government fails on both tests and they are recklessly endangering our $18 billion brand.

This is big money.

The single biggest export industry in New Zealand in the last decade was tourism. This is an industry entirely built on clean and green branding. Visitors don’t come here to get infections from one of our rivers, as fun as that is, as I can testify. They come here because we show them stock footage of clean rivers. If we continue to destroy our environment we will destroy our single biggest export industry.

Tourism has its own challenges, especially from oil prices and carbon emissions, but let’s not add to its problems by crapping on the brand.

The second biggest export over the last decade was dairy. And in the last year it has become our top export, because of sales to China. Let me tell you why the Chinese have made dairy our biggest export industry. It’s not the free trade agreement. It’s not because they are looking for the cheapest dairy commodities on the planet. It’s because Chinese families think New Zealand food is natural and safe. And they’re scared witless that Chinese dairy food is contaminated and dangerous for themselves and their kids.

The dairy industry is as dependent on the clean green and safe brand as tourism is.

Our clean green and safe branding is a better guarantee of market access than a trade deal will ever be. There’s nothing like consumers actually wanting your products.

We’ve been lucky so far with our brand, but our luck won’t last – hoki won’t be the last New Zealand product to be banned for being unsustainable.

If the dairy industry is left to its own devices, with National and Labour too scared to regulate them, then we will end up with toxic rivers of slime up and down the country and the Chinese will say ‘hey we’ve got our own toxic rivers of slime, what’s the advantage of buying food from New Zealand’?

We need to regulate those dirty dairy corporations that are trying to make a quick buck and pouring crap into our rivers. We can protect the reputation of New Zealand Inc and we can protect the reputation of the good dairy farmers.

Getting the price right

Ok, if we’re going to have a prosperous New Zealand economy which rides the smart green economic wave, then the fifth thing we need is a functional market with real prices that give companies clear signals about where to invest.

Currently we don’t have proper price signals on carbon emissions and water use and it sends all the wrong messages to New Zealand companies about investing in polluting technologies versus investing in clean technologies.

The current Emissions Trading Scheme means that the dairy sector won’t face the full price of its greenhouse emissions until 2084, no kidding. So Fonterra spends less on research that would cut greenhouse emissions, and it spends more lobbying central government so its taxpayer funded pollution subsidies continue.

Fonterra’s new milk plant at Darfield will be coal fuelled because they figure coal won’t face the true cost of its harm to the rest of the economy and society for years.

So the taxpayer inherits the financial cost of our emissions- $2billion in subsidies over two years were allocated in the budget- and our children inherit the real cost – a destabilised climate and rising sea levels.

The Government is distorting the market to subsidise greenhouse pollution. It’s an intergenerational crime against humanity, and it’s anti-market.

We need a realistic price on carbon to curb this market distortion. That is what Australia looks set to do and our friend Senator Bob Brown, the leader of the Australian Green Party, will tell us more about that when he speaks to our conference on Monday.

Then there’s water.

The dairy corporations don’t invest in efficient use of irrigation water because they get it for free. So these corporate vandals pump it and pump it, and spray it with gay abandon in the rain, on windy days, and on days when the soil is already soaked, because there is no economic cost to wasting it.

And that means our rivers and aquifers are drained more and there is more leaching of pollution. We all pay the cost in degraded rivers and aquifers while the dairy corporations make the profits.

The latest OECD Country Report on New Zealand calls for a price on water for irrigators.

Speaking of the OECD, one of the most interesting pieces of research that came out from them last year was the study showing that eco-taxes increase innovation.

If you want a knowledge intensive economy you need to create the incentives to create the knowledge. Irrigators don’t invest in the technology that would tell them how much moisture is in the soil, and hence how much water it needs, because they don’t pay for water and they don’t pay for pollution.

A price would create an incentive to adopt new technologies. Directing our research and development budget towards green solutions would help too.

The recent OECD country report on New Zealand said we should look to become the leading exporter of technologies that mitigate greenhouse gas emissions from agriculture –but we need the market signals to drive that innovation.

It is one of the realities of the 21st century world that Greens argue for market prices, while polluters and the National Party argue to keep market-distorting subsidies in place.

Conclusion

Today I have outlined five ways that New Zealand can have a prosperous future by riding the green wave of innovation that is circling the planet.

We can learn what to value, and not be stuck with GDP.

We can have supercharged public energy companies, partnered with clean tech entrepreneurs, funded by Kiwi mums and dads, exporting clean technology to the world.

We can make the capital markets part of the solution, instead of part of the problem.

We can protect our valuable clean green brand by cleaning and greening our country

And we can make markets reflect true environmental costs and benefits.

We can have a clean green economy that works for everyone.

But it will only happen if the Greens are in Parliament in force. We need at least 10% of the party vote this November. And we need to retain MMP as the fairest electoral system.

It is our collective destiny to live at a time of extraordinary opportunity and extraordinary danger. There is a giant wave headed in our direction, fuelled by a century of fossil fool economics

It’s time to get our heads up, look forward and start paddling for all we’re worth.

Our children’s very lives depend on it.

Ends

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