How New Zealand responds to climate change will determine whether we remain a first world country. As it is, the median wage in Australia is now $24,000 higher than in this country, and more than a million Kiwis have already decided their future is better overseas.
New Zealand’s climate response is not impressive. Ministers have concentrated on reducing emissions, with little success. Expensive gimmicks like electric car subsidies make no difference to overall emissions, simply transferring any savings to another user. Ministers have largely ignored adaptation.
Politicians pretend that New Zealand’s emissions will make a difference. But it is not called global warming for no reason. While New Zealand must support a global response, no emission reduction by this country will stop cyclones. We must prepare for a warmer planet. After nearly six years, James Shaw, the minister in charge of climate change, is yet to produce an adaptation plan.
Recent cyclones demonstrate that the climate is not waiting for the Government.
The sticking point is money. Who is going to pay?
Christopher Luxon says National would borrow to pay for the flood recovery. The Reserve Bank governor is clearly signalling that borrowing will be inflationary.
James Shaw says the Greens would tax excess profits. The answer to excess profits is more competition, not a tax that will be passed on to customers.
Despite Labour being elected on a pledge of no new taxes, Finance Minister Grant Robertson is refusing to rule out new taxes. Labour is already collecting record tax revenue.
What is wrong with all the responses is that they are in denial.
Just replacing infrastructure with more roads and bridges that will be washed away in the next flood is futile. The country needs to be more resilient and the cost will be huge.
No surcharge on the “rich” or tax on excess profits can fund such a rebuild. New Zealand will go bankrupt in a sea of debt if we attempt to fund the rebuild on borrowed money.
There is an alternative, but one that requires painful choices.
Politics is about priorities. The politicians are assuming that present government spending has a higher priority than climate change.
A zero-budget approach would ask the question: is it more important that millionaires receive a winter energy payment or is it more important to build resilient highways to the North, the Coromandel, East Cape and Hawke’s Bay?
In five years under Labour:
- Core Crown expenses have gone from 27 per cent of GDP to 35 per cent - a huge increase.
- When Labour came to power, the individual tax take was $33.2 billion. Last year it was $51.4b.
- Just 9 per cent of taxpayers pay 42 per cent of all income tax.
- The number of civil servants has increased by 14,000.
- Government services have gone backwards. One hundred thousand children are chronically absent from school. This winter it is likely that our health system will fail to cope.
Even before the cyclones, Government spending was reckless. Despite full employment, the Government books do not balance. The Labour Government’s economic policy is tax, borrow and spend.
Unbelievably, the Government is still intent on proceeding with think big projects that met no cost/benefit test, such as the $14b light rail scheme for Auckland that is more likely to cost $28b.
While doing away with paying millionaires the winter energy payment is a no-brainer, the savings have to go much deeper. We need to ask: why do we pay millionaires NZ Super?
The old age pension used to be means tested. It needs to be again.
We need to examine middle-class welfare. The free student fees scheme has not resulted in more low-income students getting a tertiary education. The three-quarters of a billion dollars goes almost entirely to students from high-income households. Targeted assistance would not only be much cheaper, but likely more effective too.
Companies are receiving millions of dollars in corporate welfare. Is it more important to give tax breaks to Hollywood or to have flood protection?
The list of middle-class and corporate welfare programmes is long. The Act Party estimates that axing it all would save $6b in the first year and $9b in the second - more than enough to fund the cyclone recovery.
Act’s plan exempts health expenditure from scrutiny. We cannot. Treasury projections of future health costs reveal our health system is unsustainable. Centralising health administration to Wellington will fail. Singapore is a much better model. Funding climate-change resilience must include a sustainable model for health.
The political parties need to be up-front about the costs of climate change. Claims that childcare can be funded by the Government not seeking expert advice is just silly. Making the country climate resilient will require the best advice there is, and it is expensive.
Far better if our politicians were to follow Keith Holyoake’s advice: “Tell the people, trust the people”. Tell us the real costs of climate change. Tell us about a realistic plan to fund it.
- Richard Prebble is a former leader of the Act Party and a former member of the Labour Party.