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

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.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Stick to the water Russel....finance aint your thing mate. Put it this way...printing is akin to discharging raw sewage into the drinking supply....

Stick to water Wolly, then maybe you will be able to see what he said instead of just going with  what you want him to say so that you don't have to change your stereotype.

Wolly,

nah, he's just as clueless as just about everyone else, when it comes to monetary economics. Quantitive easing does diddly squat to stop deleveraging, let alone promoting growth in the monetary supply. All it does is change the price of money by suppressing interest rates. But banks and individuals aren't motivated solely by price. They also care about return on investment. Money growth is happening primarily in emerging markets because theres more opportunity for greater returns on capital, than there is in mature developed markets. With a few exceptions, like electricity, water, internet and gas supply, which have captive markets. Hmm wonder why the Chamber of Commerce are so keen on privatization eh? Oh and real estate too.

"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," 

That right there is the first piece of common sense I  have heard from a politician since Muldoon's crack about kiwis leaving to aussie, to go on the benfit.  Why wait?  Why not do it now?  It benefits a very few people when our taxes are used to pay the interest on govt debt.

10 billion on motorways is not that big, compared to what we borrowed justthis year. We need them for producvity, not to mention for driving our electric green cars on. 

Borrowing $$$ this year was a bad idea. Spending $10B on roads is a bad idea.

I don't see how the two of them add up to a good idea.

I think most batteries have a service life of 10 to 12 odd years,

"26 Apr 2011 – The batteries have and 8-year/100000 mile warranty."  though aother sites are saying 5 years......with the CGA of course it could get interesting....

However you are right in that its a significant impact and its 10s of millions of batteries per year across the world.....and yes I think the comments ive seen suggest the battery pack is at least 1/3rd the cost of a new car.....so at 10 years old that car will be worthless...no one would but a $20~25k battery pack in a car worth at most $5k.........that is an insane cost for private motoring....I cant see how that is going to be working on any scale by 2020. Personal transport is going to be way smaller....like the waikato uni car....and less common.....I dont think I will have the money for a car for instance.....maybe a 3kw electric scooter....... Disposal , I assume they will be recycled....

regards

 

http://en.wikipedia.org/wiki/Wood_gas

I have already make preliminary plans:)

Your maths is as wonky as your logic and indeed economics, IMHO, its a significant amount aginst  what we borrow.  Say 200million a week on average....that is (about) your 10billion a year..we wouldnt need to take on....

Productivity, in roads....not really, not when you consider what else we could do with that money.....for instance that is a few hydro, geo or tide farms installed that would guarantee our power supply in a dry year or 2 year event.....we are so near our limits that a 2 year dry could see us have brown outs and even blackouts.....that would decimate our manufacturing....

Green cars, unlikely that in ten years there will be 2 electric cars on many drives that at present holds 2 petrol cars, (indeed a car and a large SUV).  An MiEV today costs $60k and lasts about 10 years, 3 times the initial cost of its petrol equiv version and 1/2 ~ 2/3rds the lifespan...ie once the batteries go at about the 12 year mark its likely the car will be worthless....a new set of batteries will be way more than the car is worth. The HP isnt going to work well....not on something that is depreciating that fast....and especially that I expect many ppl who will be in significant neg equity will not have the means to service HP....

If there are cars then its likely at least one will look like this,

http://www.stuff.co.nz/waikato-times/news/6010074/Ground-breaking-electr...

and made locally in NZ.....

Especially for commuting....and indeed it might be the only one on the drive way. So big roads, no.   Goods movement, that will be interesting, to move goods you do it in bulk, thats sea transport and rail...so that 10billion is better spent on electriying our small rail network I suspect.

regards

 

 

 

 

 

The 10 billion spend and borrowing is over many years, and the cost is being paid for by future generations, not by users now. Productivity requires better transport, it';s all very well producing things to sell overseas if you can't then transport it ina timely manner. Billions are already lost in lost productivity on motorway conjestion. All very well having lots of power, but you can have an oversupply, and that doesn't increase productivity. Look at what happened down south where they instead sold the oversupply of power very cheaply to the aluminium smelter. Cutting power use, and more energy effiencieny along with high power prices has helped to minimise the need for future generation, and there is quite a bit under construction now, includiong wind power.

That NZ green car is fugly. The japanese and europe designers are good at designing those sorts of mini green vehicles. Perhaps even apple will create something in the future, that will make green cars cool.

Printing ... JDI:

http://www.changenz.co.nz/posts/money-and-inflation.aspx

drill the links, see how it could be done, learn and think - even you Wolly.

Have a great weekend all, cheers, Les.

I'd need to think on that Les, The variables are always like covertables only  really suited to a static weather outlook......sunshine.

Yu have a great one too.

I would love to see the result of the RBNZ targeting house prices at the same time as the Greens policies restrict land supply and increase compliance costs etc.

I hope that when they start printing money its on recycled paper and they use reuseable ink cartridges

No critical analysis of the size of the balance sheet of the Swiss National Bank (for it's ~8 million citizens) compared to the balance sheet of the RBNZ (for our 4.3 million citizens).