By Steve Painter
New Zealand's NewLabour Party claims the recent budget of the National Party government pushed the country's economy from recession to depression by cutting demand without "putting in place balancing measures to promote development". NewLabour has produced an alternative budget which it says could arrest the country's economic decline within a year.
At present, NewLabour says there are many indicators that the depression is still deepening: retailers have been forced to extend their mid-winter sales from weeks to months, investment is still declining, unemployment is still rising, building construction is declining while housing waiting lists are growing longer, and exports are declining.
Against the drastic cutbacks of the Nationals, NewLabour's alternative budget proposes a seven-point plan of economic reconstruction. Titled "Rebuilding New Zealand", the plan proposes:
- "A development strategy to include coordinated investment in education and training, an Economic Development Bank, and Regional Development Agencies which will result in 45,000 new jobs in the first year and sustainable job creation afterwards."
- Extensive tax reform, including a financial transactions tax and other measures to discourage speculative activities, a land tax that would fall most heavily on expensive inner-city sites, a progressive income tax and elimination of the existing consumption tax (GST) on food and its reduction from 12.5% to 8% on other items.
- Government buying of shares in privatised monopolies and strategically important sectors such as telecommunications and transport.
- A commitment to universality in provision of social services, ending the recent trend towards user-pays and means testing. This would include free medical prescriptions and treatment by GPs, and restoration of benefits abolished or slashed since the National government came to office.
NewLabour's strategy of "balanced development" would also involve restructuring the international debt, revaluation of the currency and a return to Reserve Bank control over the exchange rate, import controls including temporary control over luxury imports that don't add to productive capacity, and control of prices of essentials.
Wages would be cut initially because of the dire economic situation, but the party says this would be balanced by the new tax scales, abolition of the GST on food, and an increase in the social wage. The GST would eventually be abolished completely.
Other measures would include a drive to upgrade education and training as part of a long-term attempt to move the economy away from reliance on forestry and agricultural exports. A five cents per litre tax on petrol would be used to help finance environmental projects.
New development and industrial projects would be compelled to include environmental concerns in the planning stages and polluters would be made to pay the full costs of any damage to the environment. Defence spending would be cut drastically, including by cancelling the Anzac frigates contract.