I rise in support of the comments by my colleague Dr Russel Norman. The purpose of the Appropriation (2008/09 Financial Review) Bill before us today is to confirm expenses incurred for the 2008-09 financial year that are in excess but within the scope of an existing appropriation in accordance with the Public Finance Act.
I begin by recognising the Minister of Finance for his cautious custodianship of the country’s public purse for the period in review. I am aware that he is responsible for only seven of the 12 months involved and that his Government would claim that was an insufficient time to make the mark it intended in battling the economic recession that it had inherited. But we have already had an additional 8 months since the end of the period under review.
So our judgments are inevitably coloured by the passage of time since then, in which his Government has had sole responsibility for macro-economic policy and financial management of this country. This is no simple responsibility. I count, as constituting the Government reporting entity in Part 3 of the Public Finance Act for which he and his colleagues are responsible, some 41 departments, 19 State-owned enterprises, 17 Crown entities, and 23 other organisations including the New Zealand Superannuation Fund and the Reserve Bank of New Zealand. We are talking of some $55 billion of revenue and $64 billion of expenses, a net operating deficit of $11 billion, a gross debt of $43 billion, and a net Crown worth of $100 billion. It is a major challenge to ensure that the economy is prudently managed and the financial statements are well prepared.
So our judgments are inevitably coloured by the passage of time since then, in which his Government has had sole responsibility for macro-economic policy and financial management of this country. This is no simple responsibility. I count, as constituting the Government reporting entity in Part 3 of the Public Finance Act for which he and his colleagues are responsible, some 41 departments, 19 State-owned enterprises, 17 Crown entities, and 23 other organisations including the New Zealand Superannuation Fund and the Reserve Bank of New Zealand. We are talking of some $55 billion of revenue and $64 billion of expenses, a net operating deficit of $11 billion, a gross debt of $43 billion, and a net Crown worth of $100 billion. It is a major challenge to ensure that the economy is prudently managed and the financial statements are well prepared.
As the Minister said in his covering statement “By taking the shock on its balance sheet, the Government has helped to cushion New Zealanders from the worst of the recession”. Given all this, why then does the Green Party oppose adoption of the appropriation review? Why will we be voting against the Government on this bill, which is essentially a serious annual exercise? It is because of the philosophical divide that separates this House. There is a numerical divide and there is a philosophical divide in this House.
Numerically the House is divided between the two largest parties, between National and Labour. Usually some 69 votes square off, though not always, against 53. But philosophically the House is divided 113 to 9.
What is the nature of this divide? It has to do with the fundamentals of economic and financial management, which go to the heart of government and on which this financial debate rests. All other parties embrace the concept of unlimited economic growth. We heard that from the Minister of Finance, from Mr Cunliffe, and from Mr Burns just recently. In contrast, the Green Party alone repudiates this concept. The Green Party embraces the concept of a steady-state economy: economic development, yes; economic growth, no. There can be no more fundamental party divide in a political democracy than over underlying macroeconomic belief.
What is the nature of this divide? It has to do with the fundamentals of economic and financial management, which go to the heart of government and on which this financial debate rests. All other parties embrace the concept of unlimited economic growth. We heard that from the Minister of Finance, from Mr Cunliffe, and from Mr Burns just recently. In contrast, the Green Party alone repudiates this concept. The Green Party embraces the concept of a steady-state economy: economic development, yes; economic growth, no. There can be no more fundamental party divide in a political democracy than over underlying macroeconomic belief.
This House, and, in a more general sense, this country, is divided between those who belief that human technology has freed us from the primitive grasp of Nature and those who believe that indefinite economic growth on a finite planet is a logical impossibility, even allowing for technological growth. It is important, therefore, that we explain, even in a technical debate of this kind, the theoretical tenets on which the Green philosophy rests and which prompt us to vote against the Government while acknowledging to some degree its financial stewardship.
This has to do with the relationship between the biosphere and the economy. The Earth’s biosphere continues as a whole in an approximately steady state. Contrary to what the opponents of steady state theory say, this does not mean that the Earth is static. Much qualitative development can happen inside a steady state. This has happened on Earth, and it can happen inside today’s modern global economy. But after millennia of relatively harmonious living on the planet, human society has changed within just the last 200 years, with the enormous growth of the economy relative to the encompassing ecosystem. It is as if the aggressive child is killing off its nurturing parent. The distinction has to be made between growth and development. Growth is simply more of the same stuff. Development is the same amount of better stuff.
The natural world is no longer able to provide the sources and sinks for the metabolic throughput necessary to sustain the oversized and overheated global economy. Yet with the global population growing from 6.7 billion to 9.2 billion and every country determined to increase its per capita GDP, the economic managers of our times call, nonetheless, for the mindless pursuit of more growth. We are locked in an economic asylum of circular logic that is incapable of accounting for the externalities beyond the perimeter’s limits. Those externalities in the 21st century will prove to be lethal to most, if not all, societies. Economic growth has, in fact, become uneconomic in the sense that it cannot be sustained indefinitely, which is, of course, its primary objective.
We in the Greens advanced this critique of orthodox neo-liberal economic policy in our address in reply to the Prime Minister’s statement in February. We reiterate that critique today, and we will continue to do so until and into the next election.
The financial statements contain the audited results for the 2008-09 year in comparison with two sets of forecasts. The first is the original Budget as published in the 2009 Budget Economic and Fiscal Update, and the second is the estimated actual forecast, as published in the 2009 Budget Economic and Fiscal Update. There is an obvious, intimate relationship between the budgetary planning of the Government and the final financial statements. It is, therefore, consistent with Green Party philosophy that governmental approaches to macroeconomic planning and evaluation adopt a broader set of indices than the purely economic and financial ones that we currently use and which are before us today. The Green Party has been prescribing this for at least a decade now, and this is finally becoming mainstream.
Last year President Sarkozy of France established the eminent commission led by Joseph Stiglitz and Amartya Sen. The commission was asked by the President what was the best way to measure economic health. It concluded that GDP was inadequate as the principal measure. Perhaps, concluded the commission: “Had there been more awareness of the limitations of standard metrics, like GDP, there would have been less euphoria over economic performance in the years prior to the crisis. Metrics which incorporated assessments of sustainability would have provided a more cautious view of economic performance, but many countries lack a timely and complete set of wealth accounts, the true natural balance sheets of the economy that could give a comprehensive picture of assets, debts, and liabilities of the main actors of the economy.” President Sarkozy has embraced the commission’s findings. He said, with his usual candour: “The world over, citizens think we are lying to them, that the figures are wrong, that they are manipulated, and they have reason to think like that. Behind the cult of figures, behind all the statistical and accounting structures, there is also the cult of the market—that it is always right”.
We have reached a stage where we must incorporate environmental and social indicators into our macroeconomic management and our national financial accounts. To that end, I have been working with colleagues recently to develop a member’s bill that could amend the Public Finance Act to ensure that our budgetary planning and our financial reviews take these indicators into account. It is my hope that I can submit this bill into the ballot within a month or two and that we can engage in a constructive dialogue on what is the best way to improve matters.
