The Green Party is officially ditching its support for the Government’s target to reduce net Crown debt to 20% of gross domestic product (GDP) by 2022.
The party had supported Labour’s Budget Responsibility Rules (which include the debt target) going into the 2017 election.
However, after months of consultation with its members, some of whom are strongly opposed to the target, co-leader James Shaw has confirmed the party has decided to withdraw its support.
He said the “arbitrary” debt and spending targets “are not appropriate and have limited the Government's scope for change”.
“In light of what we know now about the infrastructure deficit, but also because of the changing economic conditions and opportunities, we require a new approach.”
Shaw, who's also Associate Finance Minister, in late November told interest.co.nz he disagreed with using a debt target as a starting point when considering government spending. His view was that the initial focus should be on the outcomes a government wants to achieve. He therefore doesn't want to put a number to a target.
He also pointed to the complexities around a target, saying part of the issue is capacity.
“You could dump a whole lot more money into the economy, but all you’d get would be inflation because we couldn’t get the money out the door fast enough,” he said.
“If you are going to spend that additional money, you’ve got to have a credible pathway that releases it in a way that construction companies and so on can absorb.”
Isn’t Robertson ditching the target too?
The Green Party’s announcement comes ahead of Finance Minister Grant Robertson on Wednesday being expected to unveil a “significant” infrastructure package when he releases his Budget Policy Statement with Treasury’s Half Year Fiscal and Economic Update.
Robertson’s Budget Responsibility Rules say the Government will reduce net Crown debt to 20% of GDP within five years of taking office.
He in May announced that from 2021/22, the target will be changed to a range between 15% and 25%.
However, further to his November 30 announcement that the Government is going to bring forward infrastructure projects, Robertson said it is moving to “the range”.
Interest.co.nz’s interpretation of the matter is that having already met the 20% target, Robertson is moving to the new looser target early.
‘Unlimited material growth is impossible’
Coming back to the Green Party, its announcement regarding debt comes as it adds a “fiscal policy” component to its economic policy.
Its policy document says government spending should be “sufficient to ensure ongoing wellbeing for all and the health of our environment”.
The party says spending is “currently insufficient”.
“The current approach to fiscal management embeds neoliberalism in both legislation and in the way the national accounts are prepared and so, for example, leans towards austerity measures in response to economic crisis.
“The Green Party will promote a broader and more balanced approach to fiscal policy in line with both the overall principles of this Policy, and the recognition that unlimited material growth is impossible.
“The purpose of fiscal policy should be to ensure ongoing wellbeing for all and the health of our environment.”
The Green Party wants to reform the Public Finance Act by replacing the emphasis on controlling specific measurements with a broader view based on the role it sees fiscal policy playing.
Debt debate should consider private debt as well
It also wants the Act to be amended to reframe the approach to debt to focus on both private and public debt.
When asked in November whether he believed public perception around the Green Party's capability to be a prudent manager of the country's finances had improved, making it easier for the party to walk away from the Government's prudent debt target, Shaw said: “I know from the research we’ve done that people see us now as a trusted partner in government and that is obviously different to the perception they had of us in opposition.
"I think that’s because we’ve shown we can get the work done and we’re a pretty reliable coalition partner.”
The Green Party’s fiscal strategy:
1. Incorporates the need to transition to a circular economy which does not rely on unlimited growth
2. Ensures government expenditure is sufficient to maintain and enhance the wellbeing of our people, our planet and our economy
3. Considers the capacity of the economy, such as the availability of raw materials and skills, when making decisions on expenditure, revenue and investment
4. Maintains macroeconomic stability, including full employment and controlled inflation
5. Uses the full range of tools available to finance government expenditure, and chooses the mix between them on the basis of their effects on broader goals.
6. Recognises the multiple roles of the tax system as set out in the Taxation section of this Policy
7. Recognises fiscal, social and environmental costs of both government action and inaction
8. Strengthens the resilience of our nation to sudden shocks and systemic ecological and social crises, including natural disasters.
63 Comments
It’s only words, not even that much noise. Just provides a sort of holier than thou posture, while at the same time it is fully realised, that there is no prospect that it will ever become relevant. Reminiscent, in that regard, of one Mr Norman’s opinion, that he should become Finance Minister
Spend more, open the credit card ... yet be greener?
I dont think the Greens actually know what money /debt is .... or even realise money/debt/wealth is always a call on resources ... To be truely green, you need to close your bank account
There are already too many promises baked in about the future drawdown on resources ...
Those are interesting and extremely complex Qs For "surplus" I am not sure such a Q applies anymore.
ie traditionally assuming growth for ever on a finite planet when a Govn spends it boost the economy when the Govn runs a surplus the opposite effect happens as in effect its taking money out of the economy. The Q is then should the RBNZ be left on its own to put up or drop interest rates, or can the Govn by deciding to run a deficit or a surplus assist in moderating the economy.
If on the other hand you cannot grow an economy any more can we afford to borrow more as there is no growth to support such? no. This is why I find the Greens actions and viewpoint so dis-contiguous. a) They say you cant grow for ever but dont mention [growing] population as the biggest issue we face and have a co-leader with 6 children, refuse to contemplate "suggesting" birth control as it impacts ppls choices so this does not compute. b) they seem to think we can borrow more to ensure well being but the thing is borrowing implies drawing down more resources to pay that borrowing and interest back, does not compute.
We are indeed between a rock and a hard place and no party wants to say anything what so ever let alone have some honest and hard discussions on the matter.
Its not an argument its a statement of fact and Math. We are on a finite planet but we have expotential population growth and they in turn have expotential demands for energy. We cant keep doing this, sooner or later its collapse time unless we curb both significantly.
Populations are only growing in 3rd world shirt-holes that mistreat women. We have easy access to more than enough cheap energy (Uranium and Thorium, not to mention PV) to provide every human on the planet with more power than used by current era Americans at prices lower than we currently pay, forever. Only two real problems humans have: 1/ Rise of big-brother type hegemonic totalitarian autocracy (China and tendencies of western left), liberal democracy is not stable, repressive authoritarianism is. 2/ Nigh-on inevitable creation of Super-intelligent AI in next 20-50 years that has decent chance of ending life on earth as it pursues its own agenda.
... and nuclear power will provide electricity "too cheap to meter" .... yes we've heard it all before
The reality
- it doesnt ...
- it doesnt work with existing infrastructure
- electricity is only part of the energy puzzle
- file it under wish science - if it was feasible and cheap we would have it already
Western right as well as western left. There seems to be little difference in the tendency to mass surveillance, leader-knows-best and authoritarianism. Just minor differences in services that sides are willing to provide to the populous...and who gets handed money (companies/mates vs. population).
Nice straw man
Its the link between money having any value and growth that no one appears to grasp
Money = debt = wealth = a requirement for growth
Otherwise all promises fall over
And given our finite resource base (and increasingly buggered resources), it will
Interest rates closing in on zero tell us exactly that is in progress .. we're close to free money and no takers? say what
So savings / pension funds / cash /wealth claims.... everything that assumes it will be worth more (of any trade-able resource) in the future .... becomes a fiction
Agreed, they have no idea. But then with all the conflicting "pulls" on the Govn and economy its hardly un-suprising no one knows which way to turn. Even having a co-leader with 6 children shows total lack of understanding of resource limits and that population matters, hence why I have given up on them.
So Green policy is:
- the government must borrow and spend as much as possible increasing consumption amongst state sector actors.
- reduce consumption immediately to save the planet or we are all doomed.
The only way to achieve those two antithetical goals is to:
- tax the ever-loving crud out of the non-state sector and crush it's consumption into dust.
Here's a question ............
Our august leaders take more from us as a % of GDP than the Aussie Government does over the ditch
Our Government clearly does not need all this money , they have a budget surplus , so they are not spending it .
We have something called the working poor ............people too poor to feed their families properly, to the point we give some back in a money go round called Working for Families .
Why not just take less tax from the worker and let people keep more of their hard -earned money ?
Why not just take less tax from the worker and let people keep more of their hard -earned money ?
That's exactly what WFF does - it is a tax credit which (as you suggest), "let's people keep more of their hard-earned money".
The real answer isn't tax credits but higher (i.e., living) wages in addition to bringing the cost-of-living down (where such costs are within the government's ability to regulate).
I think the current government brought back the independent earner tax credit;
https://www.ird.govt.nz/topics/income-tax/tax-credits/independent-earne…
Before WFF there was the family benefit, I believe. Have you always been against targeted assistance by the state to children in need?
WFF is a handbrake on productivity. Increasing it pulls the handbrake a little bit harder or jams it into reverse.
For advanced economies, all REAL economic growth should be about productivity increases, particularly focussing on efficiencies and moving up the technology chain. NZ has been doing close to none of this for about 2 decades with the occasional shining star (Xero/FPH/Scott Tech).
Driving all to the poorhouse.
He should resign as AFM.
Now.
https://www.interest.co.nz/opinion/100497/new-zealand%E2%80%99s-focus-w…
And
Bang on. I am aware that due to hugely insufficient capacity the Waikato Hospital is turning away hundreds of patients in order to cope with a handful of severely injured patients from Whakaari, a decade of no investment biting us in the ass again courtesy of the safe pair of hands
Green "infrastructure" - final backup is diesel gensets... "Electricity was cut across the Alice Springs region around 2:30pm yesterday and was not restored in some areas until 10:47pm. ...The outage was caused by a cloud which rolled in to Alice Springs about 2:00pm on Sunday, which caused a "reasonably large increase" to the system, Mr Duignan said. "That resulted in the majority of our units going into an overload condition," he said. "Those units stayed in an overload condition for a number of minutes before they tripped off on their protection systems … the battery energy storage system went to full output before it tripped off as a consequence of the outage."
https://www.abc.net.au/news/2019-10-14/michael-gunner-nt-review-alice-s…
Greens never were good at math. Though now you can't take National seriously either. "Let’s assume that in every one of New Zealand’s elections between now and 2100, governments are chosen that continue to fulfill the promise of going to zero by 2050 and staying there. ...if New Zealand meets its promise of zero emissions in 2050 and stays at zero for five decades, then the greenhouse-gas reduction, according to the standard estimate from the United Nations’ climate panel, will deliver a temperature cut by 2100 of 0.004 degrees.
New Zealand is considering spending at least $5 trillion to deliver a physically unmeasurable impact by the end of the century."
https://nypost.com/2019/12/08/reality-check-drive-for-rapid-net-zero-em…
... are you saying that crippling our economy by spending $ 5 trillion on CO2 neutrality doesn't give you the warm fuzzies ... c'mon , we're all feeling good here , doing our bit , stealing no childhoods ...
Admittedly ... it would feel a little bit better if our sacrifice actually did some good ... but hey , you can't have everything ...
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