Election Double Shot Interview: Russel Norman

By Bernard Hickey

Over the final two weeks of the campaign I interviewed the major party finance spokesmen, including National's Bill English, Labour's David Parker, New Zealand First's Winston Peters and Green Co-Leader Russel Norman here.

I began by asking Norman about the Green Party's monetary policy. He said the Reserve Bank Act would be changed to extend its targets beyond inflation to include either output or external imbalances.

He also preferred the Reserve Bank board rather than the Governor made monetary policy decisions, as was the case with many central banks overseas. It would include representatives of the productive sector.

"That would help give a broader perspective on monetary policy from the Reserve Bank itself," he said.

"Inflation is important, but you've also got to look at the external imbalances."

Asked about the Green policy on money printing or quantitative easing, he said: "I got myself into some hot water by suggesting New Zealand do quantitative easing like everyone else. Clearly there isn't the political support for that so we backed away from that."

Norman said, however, that central banks would probably change their perspective if inflation headed towards deflation again, "even possibly our central bank would change its perspective and adopt slightly more unorthodox approaches, but that would be an issue for the central bank."

Capital Gains Tax

Along with Labour, the Green Party favoured a Capital Gains Tax, although it would prefer one taxed at marginal income tax rates rather than the 15% rate favoured by Labour.

"Why should one form of income be taxed, like wages, but capital gains aren't taxed -- it doesn't make any sense," he said, arguing it also broadened the tax base and would help shift investment choices away from property investment.

The Green policy was for a capital gains tax that excluded the family home, was on realisation (rather than accruals based) and the details would be worked out by an expert panel, including whether or not it was taxed at marginal income tax levels rather than 15%.

KiwiSaver

Norman said the Green Party supported an auto-enrollment process for KiwiSaver with the power to opt out, rather than the full compulsory scheme proposed by Labour.  Green also favoured a publicly-run KiwiSaver option where the funds were managed by the New Zealand Superannuation Fund and the 'front office' administration was done by either IRD or KiwiBank.

He defended the management of the public option by the NZ Super Fund.

"For a lot of people going into KiwiSaver, having a long term perspective is not a bad idea. It would be particularly suited to a young person coming in who was open to a relatively aggressive strategy, given the Super Fund takes a pretty long term horizon, which it should," he said.

Climate tax cut

Norman reiterated the Green plan for a NZ$25/tonne carbon tax (NZ$12.50/tonne for dairy farmers) that paid for a 1% cut in the corporate tax rate to 27% and a tax exemption for all inomes up to NZ$2,000.

A Green Government would also introduce a new 40% tax rate for incomes over NZ$140,000 per annum to pay for a suite of child poverty spending plans. The trust rate would also rise to 40%.

"We had to match it otherwise you open up an avoidance can of worms," he said.

Foreign buying limits

Norman said a Green Government would prohibit foreign buying of land greater than five hectares and would limit buying of standalone houses on land.

"The Chinese Government has a very clear strategy about acquiring vertical integration of food back into China. Makes sense for them. Perfectly rational and not an unreasonable thing to do, but pretty stupid of us to let them do it," he said.

He compared the likes of Auckland with other cities such as Vancouver, London, Sydney, Hong Kong, Singapore where there was a big element of offshore buying of houses.

"A lot of them have tried to introduce constraints to take some of the heat out of the demand side," he said.

One option was an Australian style ban on sales of existing homes and land, while another option was a Hong Kong-style charge of 15% on offshore buyers.

Auckland housing supply and densification

Norman was sympathetic to Labour's plan to build 100,000 houses in 10 years, but would the Greens would focus more on densification of housing in cities such as Auckland.

"We need Auckland to be our great international city. It needs an absolutely kick arse transport system -- the City Rail Link and so much more -- and it needs to increase densities and we know there's a lot of opportunity to do that within the existing footprint of Auckland, rather than National's approach of endless sprawl. Sprawl is incredibly expensive and inefficient," he said.

He contrasted National's plan for NZ$14 billion of spending on new motorways with Green's plan to shift NZ$10-NZ$11 billion of that into public transport spending.

Dairying and water

Norman said the Green policy was to target swimmable rivers, although it would take some time to get there. This would effectively place a limit on the growth of dairying.

"Once you put in place environmental limits, which a clean rivers rule effectively is, then it says to the dairy sector that if you want to maximise profit then the path of going down to the last drop of milk off the last blade of grass, that path is reaching its limits, and if you want to increase your profits, you may have to look elsewhere," he said.

Norman said the Green policy was to impose some sort of charge on the commercial use of water for irrigation.

"The reason for that is to drive efficiencies. Prices work. I believe in markets," he said, adding any revenues raised would be used to clean up rivers and lakes.

The price would be negotiated after the election, he said.

Here's the first Election Double Shot recorded with Winston Peters, in which he argues for a new monetary policy, foreign buyer controls and migration limits.

Here's the second Election Double shot recorded with Bill English where he argues for the stability of National to keep the economy growing.

Here's the final Election Double shot with David Parker, who argues for monetary policy reform, a capital gains tax and compulsory KiwiSaver.

See all my previous election diaries here.

See the index for Interest.co.nz's special election policy comparison pages here.