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Dr Muriel Newman

Green scaremongering

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Market gardensIn 2003, the acclaimed physician, writer, director and producer Dr Michael Crichton wrote, “The greatest challenge facing mankind is the challenge of distinguishing reality from fantasy, truth from propaganda. Perceiving the truth has always been a challenge to mankind, but in the information age it takes on a special urgency and importance. We must daily decide whether the threats we face are real, whether the solutions we are offered will do any good, whether the problems we’re told exist are in fact real problems, or non-problems”. 1

While this warning is as relevant today as it was back then, occasionally – just occasionally – the scaremongerers publicly back down. This happened last week when Parliament’s chief alarmist, the co-leader of the Green Party, Russell Norman, withdrew the party’s money printing policy.

Launched with appropriate earth-ending prophecies last October, Russell Norman claimed that nothing short of quantitative easing would rescue New Zealand’s economy from cataclysmic consequences. Quantitative easing is, of course, a tool of last resort used by central banks when they have run out of options. Normally they cut interest rates to encourage more lending and spending, but when rates are close to zero they may “print money” as one of their only other options. This new money is then used to buy Treasury bonds or long term securities from commercial banks in order to pump money into the economy, driving down commercial interest rates and giving banks more money to lend. It is this ready availability of cheaper money to the private sector that boosts borrowing, spending and growth.

The problem for the Greens was that their new policy was typically lacking in realism. Not only did New Zealand’s official cash rate of 2.5 percent give the Reserve Bank lots of room to move if a cut to interest rates to stimulate growth was needed, but our economy was not only improving, it was performing better than most. Furthermore, their policy was not quantitative easing at all. Instead it was an inflationary plan to moneterise government debt by requiring the Reserve Bank to print a massive $14 billion of new money – $7 billion to be used to buy earthquake recovery bonds from the government to fund the rebuilding of Christchurch and $7b to buy foreign countries’ assets to top up the Earthquake Commission’s Natural Disaster Fund.

Shamubeel Eaqub, the principle economist of the New Zealand Institute for Economic Research, described the Greens’ policy, not as quantitative easing “to provide liquidity to banks to promote credit growth in the economy through the private sector”, but instead as the “monetisation of government debt”, since it would force the Reserve Bank to print money to give to the government so it could “monetise its liabilities through higher inflation”. He explained, “A policy like that suggested by the Green Party would see the Reserve Bank’s independence thrown out the window…That kind of stuff is very much a tool used by despot autocrats around the world. It’s just one of the slippery slopes to becoming Robert Mugabe. That’s what they do: ‘We’re going to borrow all this money, and essentially we’ll get the central bank to monetise it’.  It’s tax by stealth.”2

The Greens’ policy was strongly rejected by the Reserve Bank, and ridiculed by the government as a “snake-oil solution” that would undermine the savings of New Zealanders. The Labour Party, which is trying its best to not offend its potential coalition partner, described the policy as “unhelpful”.

The Greens’ back down came only days after the release last week of the opposition’s inquiry into the so-called manufacturing crisis. Ironically, and amusingly,  it coincided with the latest BNZ-Business NZ performance of manufacturing index, which showed the sector expanding at its fastest since 2003 – one of the highest rates in the world. In addition, the New Zealand dollar fell to a 12-month low last week as the Federal Reserve signalled an end to quantitative easing, and weaker Chinese manufacturing and tighter credit news sapped investors’ appetite for risk, sending them rushing to the US currency. This served as a strong reminder that exchange rate fluctuations are driven largely by international, rather than domestic factors.

Opposition recommendations were predictably interventionist – a state where politicians know best. They included changing the Reserve Bank Act to lower the exchange rate, reducing structural costs such as electricity prices by renationalising the electricity industry, introducing a Kiwi-made procurement policy for government, and regulating the economy to prevent capital investment in speculative housing.

But imagine Russel Norman as the Treasurer, telling the Reserve Bank how to manage our economy! How can we trust the Greens to manage the electricity sector when earlier this month they floated the idea of introducing a carbon tax as well as ramping up the costs of the emissions trading scheme – all of which will make electricity more expensive. And that doesn’t even take into account their policies to require New Zealand to reduce our greenhouse gas emissions to 40 percent below 1990 levels by 2020 – below the United Nation’s goal for developed countries of 25 percent – and an impossible 90 percent reduction by 2050. At that stage almost all economic activity would have to cease as New Zealand turned into the pre-industrial nirvana the Greens have long dreamt about. Obviously no sensible government would ever go this far, but that is Green Party policy.3

While the “buy Kiwi-made” recommendation sounds good, will buying more expensive products lead to better government? And with regards to house price escalation, it is Green policies attacking “urban sprawl” in favour of “smart growth” restrictions, that have led to a scarcity of land for building new houses in cities like Auckland, and a resulting housing shortage.

While sensible people prefer to ignore the Greens and the pronouncements of Russell Norman, unfortunately the media don’t. Their fearmongering and pessimism have gained a disproportionate share of the headlines and therefore traction. Whether it is the population explosion, global famine, peak oil, mineral shortages, the ozone hole, species depletion, Y2K, or global warming, the facts are distorted by scaremongering politicians whose solutions overlook private sector remedies in favour of state intervention.

The reality is, however, that given freedom and market incentives, mankind will always rise to combat and overcome the challenges that confront us, using technology and innovation. In some cases, it is simply economic progress itself that will bring about improvement – as is the case with population growth. Once health care in a country improves to the point where babies no longer die, parents stop having so many children. Around the world, the average family size is continuing to shrink and fears of over population are fading.

Current predictions are that the world’s 7 billion population will peak at 9 billion in 2050 and then fall to 6 billion by 2100. This has led doomsayers’ to claim there will be global famine, as the world runs out of food. But this is strongly refuted by those who understand that technology is already available to solve such problems.

This week’s NZCPR Guest Commentator is Daniel McCaffrey, a writer and editor who has worked with New Zealand scientists on a project to outline how horticulture could feed the world. Daniel was invited to Sweden to share the results of their study, and his article is based on the speech he gave.

“I was invited to Sweden in February to answer the question, could horticulture feed the world sustainably in the foreseeable future. My conclusion is that it will be very easy to feed 9 billion people. Increasing production to these levels is a solvable problem. Here is why.

“Current world production of horticulture products is 2.4 billion tonnes. To feed an extra 2 billion we need to move that production to 3 billion tonnes. That is 600 million tones – a 25% increase. We could add perhaps another 20% to bring the consumption level of the world’s hungry to civilized levels.

“It boils down as usual to supply and demand. How many need to be fed and can possible supplies meet that demand.”

He explains that much of the world’s potential crop land is underutilised: “Only 17 % of Africa’s agricultural land is utilized. There is 83% yet to use. Africa is much larger than you think. You can fit all of Europe, China, the United States and India into Africa and have room left over. In reality, the amount of un-utilized rain-fed cropland is staggering. The unused cropland in Sudan alone – 75 million hectares – is more than enough to feed all of Africa.”

Then, there are the possible improvements in production through modern farming methods: “Average rice yield in North America is 7.9 tonnes per hectare … while in Asia overall it’s only 4.5 t/ha, in China it’s 6.7 t/ha, and in India it’s a pathetic 3.5 t/ha.”

He explains how much produce around the world is not temperature controlled and so goes to waste: “In India only 2% of products that should be temperature controlled are and so 30% of the quantity of fruit and vegetables are lost on their way to the consumer”.

Then there is hydroponics: “Hydroponics has the capability to raise production by hundreds of multiples. Tomatoes go from 5 to 10 tonnes in the field, to 60 to 300 tonnes per hydroponic hectare – stunning increases. The Canadian tomato crop takes 27,000 hectare but could be grown in 4,000 hydroponic hectares – releasing 23,000 hectares for something else.”

In his article Daniel touches on genetic modification as a way of increasing yields and reducing the use of pesticides. But this is another area where scaremongering by the Greens has generated enormous public concern. In spite of New Zealand’s extremely stringent regulations controlling genetic research through the Hazardous Substances and New Organisms Act – with each application assessed by the Environmental Protection Authority, which must consider environmental, human health, economic, social and cultural risks, costs and benefits when deciding whether to approve an application – the Green lobby is currently going around the country scaring local authorities into creating special bylaws to ban genetic modification.

Carefully controlled biotechnology is, of course, the way of the future. It has long been used in plant and animal breeding, medicines and health products, and by denying New Zealand advancement in this area because of rabid scaremongering, the Greens are doing the country a gross disservice.

It is the same story with fracking – a technology that has been used successfully in New Zealand and around the world for decades. Cheap energy in the form of shale gas from fracking is transforming the US economy, reducing the cost of goods and services, and helping American businesses to become more competitive in the global market. Yet here in New Zealand, all we hear is the Green Party’s call for a ban on fracking, even though the Ministry of the Environment has reviewed the technology and found it to be safe.

The Green Party’s ongoing attacks on the agricultural sector are threatening New Zealand’s manufacturing and exporting base, and their attacks on oil and gas exploration – which could help to substantially lift New Zealand’s future economic performance – are responsible for undermining the public will for such opportunities.

It is the same with infrastructure – the Green Party’s call to stop building motorways is ludicrous. They totally underestimate the barriers to economic development caused by inadequate roading. However, it is pleasing to see that some of their claims are falling on deaf ears. Theregional development and operations committee of the Auckland Council has just voted to fast-track the consent for the State Highway One northern motorway extensionthrough a Government-appointed board, rather than dealing with it locally under a process open to Environment Court challenges and endless delays. This will see the project approved in nine months instead of the six or more years it took to gain consent for the previous motorway extension, which was held up by Green activists who tried to derail the project.

The sooner more people take a stand against outrageous scaremongering the better. New Zealand’s future is worth far too much to be held back by the radical Greens.