Double shot interview: Bernard Hickey talks to Green Party co-leader Russel Norman about intensive dairying, child poverty and the possible need (eventually) for money printing

Bernard Hickey talks to Green Party co-leader Russel Norman about intensive dairying, child poverty and the possible need (eventually) for money printing

By Bernard Hickey

In the last week of the election campaign I managed to grab Green Party co-leader Russel Norman for a quick chat about what the Greens might do in government.

I spoke to Finance Minister Bill English on November 9 and Labour Finance Spokesman David Cunliffe on September 30  and on October 27.

Norman said the Greens' 3 biggest priorities were cleaning up New Zealand's waterways, reducing child poverty and creating green jobs.

"Currently we are absolutely trashing our rivers and lakes because of intensive agriculture and in the long-run we're going to lose our clean, green and safe status,'' he said.

The Greens are proposing an irrigation levy of 10 cents per 1,000 litres which would raise an estimated NZ$370 million to NZ$570 million a year. Of that, the party plans to spend NZ$140 million a year on cleaning up rivers, paying down debt or replacing other kinds of tax.

"The whole idea of green tax reform is you take taxes off wages and companies and put them on pollution and resources,'' said Norman.

In addition to a fencing and planting programme to protect the waterways, the party is also proposing to put into place a set of rules around intensive agriculture.

"There's no fiscal implication there, but clearly there would be a significant piece of work to get those rules in place,'' said Norman.

Criticism of such a move on the grounds it would damage output and hamper exports was short-sighted, he said.

"Farmers might say that and dairy corporations even more so, but when you ask people why New Zealanders get access to markets overseas and why we get a premium on our product, it's because it's seen as clean, green and safe."

Child Poverty

With 270,000 children living in poverty, Greens are also campaigning on a platform to reduce child poverty.

"We think supporting children with money so they can get a decent start is a worthwhile investment. It's not cheap but I think alleviating child poverty would be a great investment in our future."

Green jobs

The creation of 'green' jobs' forms the third plank of the Greens election priorities.

Norman pointed to jobs created by a home insulation scheme.  The Greens want to extend the programme for 200,000 more homes and suggest there is a three-to-one return on the investment because of the savings it generates through improved health income.

The party's more "ambitious" plans relate to the use of State Owned Enterprises.

"The really ambitious stuff is around SOEs and thinking about them as a base for an export section in clean technology. We want to say 'Look these energy companies have expertise in  renewable energy, a rapidly growing sector of the global economy, they have a certain critical mass, some of them are exporting already.' We want to get them to work together and partner with private sector entrepreneurs."

The Greens said their proposals would improve the budget deficit by around NZ$8 billion over three years, including tax increases and lower spending. It would then increase spending by NZ$4 billion, leaving net improvements to the deficit of around NZ$4 billion over threes.

"The net effect is we'd raise NZ$8 billion. That's not just increased taxes, that's from cuts as well. We'd cut the motorway building project because it's insanely expensive NZ$20 billion over 10 years, we'd save on subsidies for greenhouse emissions, when you put them all together it's NZ$8 billion over three years, and then our costs of NZ$4 billion over three, so you end up NZ$4 billion ahead but this doesn't cover everything. We've left some fiscal leverage there so we can account for some other stuff there."

Money printing

Norman also commented on Reserve Bank monetary policy, saying the bank could introduce a maximum loan to value ratio of 80% if there were fresh signs of a housing bubble.

Then I asked him about whether the bank should get involved at some stage in quantitative easing or money printing.

"We've still got some space on the OCR and this gives us certain advantages and we've also got the Australasian banking system -- we do complain about the Australian banks take NZ$2 billion a year out of our economy -- but the Australasian banking system is still relatively stable," he said.

"It's certainly true that down the track there could be the need to use some unconventional measures and like every other central bank the NZ Reserve Bank will need to look at it."

"They did do a little bit of unconventional stuff during the GFC, but kept it very, very quiet," he said referring to the RBNZ's emergency lending facilities to the banks which allowed them to securities mortgages and use them as collateral to borrow from the RBNZ.

"The other unconventional thing they could do is for the Reserve Bank to buy government debt. If the government is going into the international market and was struggling, that's one way to do it," he said.

"We're trying to push the boat out and have that conversation about what unconventional central bank action would look like," he said, pointing in particular to recent Swiss Central Bank moves to cap its currency.