There has been plenty of discussion of alternative budgets this week. Instead of cutting spending I’ve reviewed ways to raise income. Labour has set out an overview what they would do, with (according to Newsroom at time of writing) full policy promised well before the election, in three months time. Out in la la land Don Brash would just implement the recommendations of his 2025 Taskforce. But, as is often the case at this stage of the electoral cycle, it is the Greens who are laying out their ideas in the most detail. Go Frog:
We have choices this Budget day.
We can choose to use the deficit crisis as a reason to cut and sell and leave the economy no different from the place we were in when things went wrong. Or we can use the crisis to begin the transition to a more sustainable, prosperous, and fair economy.
It’s a bit of a stretch to call it an alternative budget, but the Green Budget Paper 2011 sets out some background material, and then five specific policies that the Greens would pursue:
Alternative 1: A temporary levy to rebuild Christchurch
A temporary levy on income would raise $1 billion each year toward the cost of rebuilding Christchurch, significantly reducing the need for additional borrowing.
Expected duration: 5 years
Impact on debt/credit rating: Positive
Sustainability: Neutral
Fairness: Reduces inequality
+$5.4 billionAlternative 2: A capital gains tax shift into productive investment
A tax on capital gains (excluding the family home) is the fairest, most effective way to encourage private saving and strengthen the Government’s books.
Expected duration: Ongoing
Impact on debt/credit rating: Positive
Sustainability: Mildly positive
Fairness: Reduces inequality
+$4.5 billionAlternative 3: Reprioritised spending to decouple the economy from the price of oil
Reprioritising government spending on new motorways into debt reduction and alternative modes of transport.
Expected duration: Next 5-10 years
Sustainability: Positive
Fairness: Reduces inequality
+$7.0 billionAlternative 4: Eco-tax shift to incentivise a smart, sustainable economy
A resource charge on commercial water use would result in the more efficient use of water, leading to innovation in the agricultural sector and a shift to more sustainable forms of production.
Expected duration: Ongoing
Impact on debt/credit rating: Positive
Sustainability: Positive
Fairness: Neutral
+$746 millionAlternative 5: Protecting the most vulnerable workers: raising the minimum wage to $15/hour
Raising the minimum wage to $15 an hour to ensure those in work have enough to live on.
Expected duration: Ongoing
Impact on debt/credit rating: Positive
Sustainability: Neutral
Fairness: Positive
+$153 million
All good stuff from the Greens. I’m particularly glad to see the third point, to make a start on decoupling the economy from the price of oil. If Labour’s full economic policy (when released) doesn’t address this issue well, then they are lost in la la land too, along with Don Brash and the Nats.
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