Tuesday, May 17, 2011

The Green alternative budget

One of the traditional duties of the opposition is to present an alternative Budget, to show what else we could do and give voters an inkling of the alternatives, that they do have a political choice on what they want government to do. Labour has surrendered that duty, so this year it has fallen to the Greens. And they've risen to the occasion with a short alternative Budget paper [PDF].

The Greens identify the core problem as National's tax cuts, which gave away billions in revenue at a time when the government books were already heading downhill. On top of that, we have the cost of the Christchurch earthquake, and National's blank-cheque bailout of South Canterbury Finance. The government is trying to cut its way out of the resulting hole, but that has a real risk of strangling the economy, just as Ruth Richardson did in 1991. So instead of cuts, privatisation or borrowing, the Greens offer a solution well outside the Neo-Liberal consensus: raising additional revenue. To use the overstretched household analogy, the Greens are suggesting that rather than tightening our belts, we go out and get a job.

What are their suggestions? Firstly, there's an earthquake levy, targeting the rich to raise a billion dollars a year for five years. Secondly, a capital gains tax on property which excludes the family home. This seems to be more of a long-term measure, though it is not clear how it would be phased in. But it would eventually raise $4.5 billion a year. Thirdly, a resource use charge for industrial and agricultural use of water. This is entirely sensible, limiting use as well as charging business for the use of a public resource, and would raise around $750 million a year. Fourthly, an increase in the minimum wage, which would boost the living standards of those on the bottom while also resulting in higher tax revenue for the government. Finally, they recommend cuts to National's road-building program, with some spending shifted to public transport, as a way of reducing investment in a losing proposition (oil). Mentioned in the press-release, but not one of their five core alternatives, is the idea of slashing National's ETS subsidies to polluters, which would save us a billion dollars a year.

These are all good ideas. They'd all help with the Budget, while reducing inequality and shifting us towards a more sustainable future. But National isn't interested in that; instead they're slashing public services while protecting their rich mates, as part of their class war against the vast majority of New Zealanders. Still, the Greens have shown us that there are alternatives. And in November we can decide which we prefer.