Tax since 1950

February 10th, 2007 at 4:11 pm by David Farrar

Back on the post showing Government taxation since 2000, someone asked for details of taxation before 2000. Here it is as a % of GDP. Interesting to look at it by Government. Just remember that it generally takes one year or longer for polices by a New Government to register, so don’t pay much notice to the first year of any Government.

revenue%201950.JPG

The Holland Government from 1949 to 1957 kept taxation fairly constant. Under Nash it moved about a bit and they left office with it increasing. The Holoyoake era saw some changes but overall very low and constant at 23% until 1970 and then a jump to 25% for the last two years.

The Kirk Government saw the start of the big increases, rising to 29% almost. Muldoon at first had some reductions, then some increases and overall left office with it just 1% higher.

The massive increase came from the 4th Labour Government. Sure they did some good things with tax rates and increasing the tax base, but they spent like drunken whores and the tax take went from 29% to a massive 36%.

National in the 1990s saw the first sustainable reduction in 40 years and a fall from 36% to just over 30%.

Labour at first maintained this, but the last four years have seen the relentless increase again to 33%.

Now note this is just pure taxation. This does not include levies, fines etc and revenue from monopoly SOEs etc. If you add that all in you are up at 48%. And then add in Local Government and you are over 50%.

No tag for this post.

29 Responses to “Tax since 1950”

  1. RedRag () says:

    Umm if you eyeball an average for the entire 90’s you get a number of about 33%….and Cullen has only just peaked at that this last year.

    Worse still for your thesis Treasury has this forecast:

    http://www.treasury.govt.nz/forecasts/befu/2006/11.asp#revenue

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  2. will () says:

    Didn’t some of these Governments borrow a lot? What does spending look like over the same time period?

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  3. Lucyna () says:

    Wow!

    I was always under the impression that Muldoon taxed everyone to the eyeballs (I used to work with a guy who complained about the 60% tax rate), and the 4th Labour gov’t dropped tax. Except that impression was totally incorrect. That’s just amazing!

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  4. SPC () says:

    Obviously with National cutting taxes and limiting spending on infrastructure (placing limits on non inflationary growth in the future) and Labour not cutting taxes but spending money on delayed infrastrucutre
    and Super Fund (and choosing tosupport families with programmes rather than across the board tax cuts) there is going to be a difference.

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  5. SPC () says:

    Lucyna

    There were many tax rebates in those days – such as one for mortgage interest and another one for families.

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  6. stephen () says:

    Also, in the Muldoon years, the gap between rich and poor was a lot smaller. Increasing income inequality + fiscal drag probably account for a lot of Lucyna’s surprise.

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  7. RedRag () says:

    Stephen,

    Increasing income inequality is dramatically graphed in this speech report by John Whitehead:

    http://www.treasury.govt.nz/speeches/beyond2010/2.asp

    The one that surprised me is that NZ tops the list of OECD countries for the rate of growth of income inequality by a substantial margin.

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  8. SPC () says:

    Red Rag

    Any relationship between an overvalued dollar and depessing labour wages (and also investment) in production would explain concern in government/Treasury/Reserve Bank

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  9. RedRag () says:

    By way of further interest this OECD table widens the debate:

    http://www.oecd.org/dataoecd/8/4/37504406.pdf

    Places NZ just a tad under the OECD average.

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  10. Jim () says:

    Interesting that first link from RedRag (the treasury one).

    Ireland cut tax rates to attract business and transformed itself from poor to wealthy. Strange how that has *reduced* income inequality. The left will find a way to explain that away.

    And the socialist doctrine economies of Finland and Sweden had tremendous *growth* in income inequality.

    Not on the treasury chart, but South Korea has one of the lowest tax rates in the OECD. It also has a lower Gini index than NZ (incomes more equal than in NZ).

    Lovely.

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  11. Carl Anderson () says:

    Interesting to note that tax levels are still well below where they were in 1990. I think viewing tax takes in isolation is not helpful, without looking at the spending levels, state of the economy, and the state of the society as a whole. The only way this graph has any significance is if one starts with the assumption that tax is inherently bad.

    Frankly, when Labour came into power it needed to up the tax take to make up for the previous nine years when the Nats had run down the nation’s infrastructure, civil service and had left the country in a parlous social state.

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  12. RedRag () says:

    Not on the treasury chart, but South Korea has one of the lowest tax rates in the OECD. It also has a lower Gini index than NZ (incomes more equal than in NZ).

    Jim,

    You are being very selective here. Try looking at very low tax Mexico and note that it tops the chart for income inequality.

    Not so lovely eh?

    Nor do I imagine that most NZ’ers would exactly leap at the chance the economically migrate to either Mexico or Sth Korea (lots of Mexicans leaving for the US, and quite a few Koreans here in NZ I note).

    Clearly there is no obvious causal link between tax as % of GDP and income inequality, as there are other equally powerful policy and economic settings involved.

    The useful take-away from posting the inequality graph for NZ is that as the inequality grows our progressive tax system is increasing the numbers of people in top 39% bracket. This is where all the heat for “tax cuts” is coming from.

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  13. the Swift man () says:

    Note that we were at the top of the OECD in the early 1960’s.

    Note that this period was the least taxing.

    Note that parliament com[prised more farmers than lawyers.

    Labour voters are vermin. Lawyers are fucking leeches.

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  14. tim barclay () says:

    Running down the Government system is Labour speak for forcing civil servants to give value for money to the tax payer. Now civil servants are bunch of arrogant lazy busy bodies who do not give 2 stuffs for the tax payer.

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  15. Porcupine () says:

    Well said Jim and Tim and others. Change the broken record Carl – the NZ public “master-vice” is subservient to no-one.

    Thanks again David. This shows the sorry state of affairs we are in nicely. But it does leave out a lot too.

    Firstly, what we get for our taxes. In NZ it is little for most of the hard workers except belatedly the major parties suddenly realised that families need a hand (after 20 years of pooping on them) because they could see the election slipping away from them.

    But in good kiwi fashion this help was targeted – at the no hopers and bludgers again, and also thankfully at the hard working low income earners who have to pay for all this crap. The spinoff of targeting like this, of course, is that the money cycles through government where is can be siphoned off to grow the regulatory bureaucracy and limit our freedoms even more.

    [BTW, Redrag and others - the %rate of increase between 1 and 2 is a lot bigger than between 10 and 11 – New Zealand was just catching up to the rest of the world, that's all – and its not income that’s important – its assets – I have a high income but because of filthy stinking government policies I have trouble accumulating assets.]

    Secondly is that we should be looking at graphs of TOTAL government income and expenditure as a function of GDP.

    In the 1950s the 24% average tax-take subsidised electricity, phone, industrial growth, and numerous other activities. Now this is all user pays. So David is quite correct that what we have traditionally called “taxation” STARTED at 24% in the 50’s and has RISEN to >50% now. I fear that NZ would languish at the bottom of the OECD comparison table for those statistics – it would be interesting to see an unspun country-wise comparison of government revenue.

    These changes have of course gone hand in hand with a change in kiwi attitudes for knowing they live in a fair and equitable country where you were happy to contribute, to one where cronyism and factionalism rules and you just try to take as much as you can get. I’m not saying that other western countries have no problem but our problem is magnified by our “can’t do” mentality. The bottom line prosperity is whether the citizens can afford to live in their own country – we can’t! And when our third world competitors overtake us, will they give us foreign aid?

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  16. Idiot/Savant () says:

    Now note this is just pure taxation. This does not include levies, fines etc and revenue from monopoly SOEs etc. If you add that all in you are up at 48%.

    Misleading again, in its false equation of levies, fines etc – “money levied through the sovereign power of the state”, as the budget documents put it – with government investment income and gross corporate turnover, and its suggestion that these are higher than they are.

    Levies, fines etc have fairly consistently been around 2% of GDP. Investment income is currently about another 2.5%. The SOEs – which have been doing quite well recently – are collectively responsible for around 11% of GDP. It may be interesting BTW to see how that number has changed – didn’t state-owned corporations used to be much bigger? But that’s a question for people with genuine intellectual curiousity, rather than one who is only interested in facts insofar as they can be used as rhetorical props.

    Still, at least this time you used % of GDP, rather than pointing out that taxes in 1949 were only a few billion and decrying the “massive” rise since then.

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  17. Porcupine () says:

    I think the bottom line is that this level of government spending is unsustainable except for the use of wealthy immigrants buying their way into the country – while highly skilled NZers who cant afford to live here emigrate to find a better life – and they’ll emigrate to Korea, Mexico or wherever their lives will be better and help their economies – not ours!

    Two questions

    1. OK you lefties – what is a reasonable maximaum for
    a. tax as a % of GDP
    b. total govt revenue as a % of GDP
    given that we want to stay in the first world economy

    2. [One for the economists, seriously] Is 100% of GDP the maxiimum for governemt revenue? Ie if the government could cycle the money through the government-bureaucrat-beneficiary axis fast enough could it exceed GDP on paper or would this just drive up the GDP as well?

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  18. Porcupine () says:

    Speaking of bureaucracy gone mad – I’ve just seen the council towing contractors towing a works car to the impound lot!

    Perhaps the works dept and the traffic dept should sign a “memorandum of understanding” that council cars are parked on “important” business and should not be towed.

    I wonder who will pay the fine – let me think…sob sob sob…WE WILL!

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  19. Owen McShane () says:

    The most interesting observation relating to these curves is that the massive increase in tax take as a percentage of GDP between 1955 and 1855 was achieved without any changes to the income tax rates via legislation in the house.
    It was the result of fiscal drag – a combination of inflation and progressive tax rates which moves people into higher tax brackets without any need to change the rates.

    People often claim that we raised the taxes to fund social welfare programmes and other “good works”. My anlysis (“Where have all the Dollars Gone?” revealed that it was the other way round. The programmes were invented to spend the money pouring into the government’s coffers. My letter to this effect was pubished in the Economist and a later essay in that magazine reported that the same appreared to be true during the Wilson year in the UK.
    This is why the Left or high spending regimes love progressive taxes PLUS inflation. Remember Labour’s claim that only 5% of New Zealand taxpayers would pay the “Wealthy bastards” top tax rate? Remember how they loosened the CPI band to allow higher inflation? I understand 12% now pay the Wealthy Bastards tax rate. Recent wage rounds will increase this percentage even more.

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  20. Porcupine () says:

    I read your article Owen and it is great – hits the nail right on the head.

    So the left love benefits, big business and inflation.

    Not satisfied with fiscal drag they also conpire to dream up new ways to tax us through user pays, levies, RM fees, fines etc.

    And they creep the tax take massively with rates – 400% increase in 15 years when inflation was “low”!

    Owen, as an economist, what is a sustainable tax take and a sustainable total government revenue?

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  21. RedRag () says:

    OK you lefties – what is a reasonable maximaum for
    a. tax as a % of GDP

    Just in the off-chance you are sincere in asking this question I will have a stab at it:

    1. As the OECD table link I posted above suggests, NZ’s tax take is a little under the OECD average. Perfectly successful nations have both higher and lower figures, so not much of a case can be made for either increasing or lowering NZ rates on this basis…except perhaps to point out that surely there is no basis for claiming that NZ is some kind of extreme high-tax hell-hole and trying to whip up a moral panic on that basis.

    2. Those nations that are substantially lower than NZ are either much larger (eg USA) or have very different social structures than us. (For instance if the bulk of a nation’s people are villager/peasants with a life expectancy not much over 65, then you really don’t need a huge old-age income provision for them.)

    3. The comparison table I linked to only tells us about govt income, it does not of course tell us anything about expenditure. If the table included what each nation spent on all categories including health, old-age welfare and education…regardless of whether the provision was public or private…then the numbers would all be a lot closer grouped.

    4. The NZ govt spends around 80% of it’s income on just five items; in order of size; health, superannuation, education, non-super welfare and infrastructure. In order to make any case for reducing the NZ tax take, you have to demonstrate how and where you are going to reduce these items. Making rhetorical noise about “waste” and “bloated bureaucracy” is lazy and largely ill-informed. These things exist of course, but even if you found as much as a 500m dollars worth you have only made a 1% dent in the budget.

    Therefore I will focus on these five items:

    1. Superannuation. No-one is going to go into an election on a platform of “cutting super”. Electoral suicide. Now you can quibble at the margins about Dr Cullen’s NZ Super Scheme, but it is a whole lot better than what the last National govt bequeathed us, which was nothing.

    Lower down however I have some ideas relating to this.

    2. Health. The real “500lb gorilla in the living-room” that keeps even Cullen awake at nights. Every nation is struggling with this one. There is no evidence that private provision is any more effective than public; in both cases the costs to add capacity are rising well ahead of inflation, and demand is increasing ahead of capacity. The resulting waiting lists are a constant political embarrassment, and have been so to all govts for some time now. Or this kind of thing:

    A paraplegic man wearing a soiled hospital gown and a broken colostomy bag was found crawling in a gutter in skid row in Los Angeles on Thursday after allegedly being dumped in the street by a Hollywood Presbyterian Medical Center van, police said.

    http://www.latimes.com/news/local/la-me-dumping9feb09,0,7452706.story?coll=la-home-headlines

    3. Education: Again who is going into an election promising education cuts? NZ already has a rather low rate of 17 yr olds in tertiary education (46% versus the 78% OECD average), and still unmet needs in the vital early pre-school area. Reducing our commitment to education is a plain daft proposition in the modern world, and again there is no evidence to suggest that private provision is obviously better value for money overall.

    4. Non-super welfare. I’ve posted on this before…I don’t think the real issue is the money it costs us, it is whether the money is well spent in the long-term. I suggest across the board everyone recognises that cash alone is not the long-term solution to the “poverty of values” that characterises the NZ “underclass”. The problem is not that these people cannot afford to give their kids breakfast, but largely because they have not the will to do so. There is a real opportunity here….again later.

    5. Infrastructure. The good news here is that both central and local authorities are now compelled to properly reinvest depreciation funding back into actual maintenance and upgrades. NZ went through 20 years of so of underspending in this area, and the cost of catching up the deferred costs has been high. The other positive development is the recent release of “Infrastructure Bonds”. Borrowing to pay for cash-flow positive, productive assets is perfectly legitimate and should create a few billion dollars of breathing room.

    This leaves the other 20% or so of govt expenditure. Even if you managed the unthinkably draconian act of cutting all of this myriad of expenditures in half, (eg armed services, border security, science funding…etc) you have only trimmed about 10% or $5b off the govt tax take.

    And before I hear all the usual rhetoric about “Cullen’s massive surplus”… it was used mostly to reduce govt debt (and interest costs), invest in NZS and pay for infrastructure projects out of cash, again avoiding interest costs. As a result the NZ govt is actually in a cash flow positive position (excluding tax income). This is an incredibly welcome development.

    Set against this is our very poor $12b pa external account deficit.
    Contrary to the usual commentary, the bulk of it is due to overseas banks and companies exporting their profits….to the tune of about $10b pa. In order to prevent this imbalance collapsing the NZ dollar to nothing, the Reserve Bank has to run very high interest rates, which attracts lots of overseas investment cash, which in turn keeps the NZ mortgage market flush with cash, and results in persistently high property values.

    If the NZ govt was to become a substantial consumer of overseas debt as well this would dramatically exacerbate this problem. In essence Cullen’s very conservative fiscal policy (ie he is doing the saving on behalf of the rest of us) is preventing the NZ economy from collapse.

    In summary, it is not at all clear how the current tax as %age of GDP can be dramatically lowered without equally dramatic social or fiscal risks.

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  22. Porcupine () says:

    Thanks Redrag I was genuine even if I cannot agree with you. I’m more in Owen McShanes camp on where the money has gone.

    Although some of what you say may be correct in that these policies are keeping NZ steady in the short term, they cannot fail to damage our place in the world in the long term, unless you accept that we are a dormitory suburb for retirees from the global economy and our industry is moving towards servicing them.

    The point is where does the taking stop? For example rates have risen ~400% in the last 15 years whereas net income has risen only ~50%. There is no sign of it slowing down. Similar trends are seen in central tax take and total government revenue. But despite all this NZ is almost unaffordable for my kids to live in and so they will have to go overseas to save money once they finish their training.

    How do you explain that one modest income could bring up a family in 1950 and now we struggle to do it on two “high” [by NZ labour govt standards] incomes?

    All of your points could be debated but you have heard it all before.

    But as an example the high cost of health overseas that is complained about is the very expensive technology (PET, gene arrays etc). But NZ doesnt spend on that – our high cost of health is becuase of job creation and bureaucracy.

    By all of this rabid social spending we are killing the goose that lays the golden egg as well as perpetuating the entrenched notion that the world owes NZers a living.

    And we are reaping the social benefits of it by worsening of all social indicators over that same 50 years the government revenue went up. How do you explain that?

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  23. RedRag () says:

    I’m more in Owen McShanes camp on where the money has gone.

    Well it isn’t a secret. A few hours reading at http://www.treasury.govt.nz should be very informative. We are debating hard numbers here and there is little need to make rhetorical speculations.

    And we are reaping the social benefits of it by worsening of all social indicators over that same 50 years the government revenue went up. How do you explain that?

    It is entirely an illusion that things we far better in the 50’s. They were not….they were different.

    At least five major social changes have occurred over the last 50 years, and each of them has impacted govt expenditure dramatically:

    1. We live longer. Our grandparents, especially the men, rarely lived much more than 5 years after retirement. Nowadays we commonly see people who have lived 30 years after their retirement. This has dramatically increased a whole range of costs…most of which fall on the govt.

    2. In the 50’s health care was a fairly rudimentary affair and local doctors and nursing staff were far less mobile globally. We did not have to pay them globally competitive pay rates. As an example of how bad this is nowadays, Angola has stopped training nurses to an international standard, because it was loosing 100% of them immediately on graduation.

    Our expectations of what the “health system” could do for us was a lot lower, nor did we burden it with an especially high standard of administration…lots of things just got brushed under the carpet by a very stuffy ‘old-boy’ network of seniors.

    3. In the 50’s few of us stayed at school much past 15yrs old. We simply didn’t need to. Nor did we need much more than the basic 3R’s to get a job, and lots of functionally illiterate folk managed just fine anyhow. By contrast nowadays even the most commonplace trades, builders, plumbers, mechanics etc…all undertake significant amounts of tertiary education. And the range of subjects is forever expanding to help us keep pace with the dramatic changes in sciences, technologies and the far higher levels of business sophistication in the modern world. All of this extra cost has fallen on the public purse.

    4. In the 50’s few of us owned cars, most of us lived within walking reach of public transport to work, leisure and family. A basic roading network sufficed. Compare this to the huge costs of modern high-speed motorways.

    5. Last and not least, relatively few women worked outside of teaching and nursing. As a result there was a huge amount of unpaid social work undertaken by women, looking after the elderly, the infirm and disabled. As women moved into the workforce, much of the costs of this have now fallen onto the taxpayer.

    All of these things have driven up the demands and expectations we have placed on govt and public sector, along with a whole bunch of other lessor things we usually take for granted. (eg the quality of the water we drink nowadays in vastly higher than it was 50 years ago). We have moved from being a substantially rural society, in which many folk had the means to be very self-reliant, to a much more complex and interdependent urban one which places each of us into much more complex relationships with all those around us. Inevitably the ratio of the public versus private sector has risen in response.

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  24. David Farrar () says:

    Red Rag. If one merely increased current spending at say $1.4 billion a year instead of $1.9 billion then in three years one would be able to have a $1.5 billion annual tax cut withotu even touching a cent of current spending.

    Your entire premise falls down on the assumption that one needs to touch current spending. One does not.

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  25. RedRag () says:

    David,

    Umm yes, $1.5b spread evenly over say 2m working taxpayers would be about $15 pw. More than chewing gum I guess, but still likely to be given a derisory press.

    Nor have you touched on the the Business Tax Revue underway and likely to involve a much larger sum. Anything less than several billions not likely to be welcomed as significant.

    The notion that Cullen is sitting on a vast pile of unspent cash tucked under some mattress somewhere is of course total nonsense. It has ALL been spent somewhere, and much of it on retiring public sector debt, or paying for new infrastructure without incurring new debt….which in the long run reduces govt finance expenses. (Last I looked the govt interest costs were running at about $2.2b pa, but I think they have reduced since then.)

    My entire premise is simply this. Yes you can reduce taxes, but you also have to tell us exactly what gets does not get spent on as consequence. The numbers are a hard mistress.

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  26. Porcupine () says:

    Redrag, the detailed rebuttal of your long post is getting out of hand.

    The simple fact of the matter is that even New Zealand has far too many people than there are productive jobs for. So we face a social dilemma. The governments way of dealing with this over the past 50 years has been to develop an incredibly complex network to redistribute the wealth coming into the country. Part of this has involved paying people to do nothing, with the social problems that brings. Part has involved paying people to regulate other people where no regulation was needed. This was essential to develop an infrastructure where people’s income could in most cases be tightly controlled. (eg I work in an industry where my employer is not allowed to pay me more even if they think I do a good job and deserve it).

    Now my solution, which may not be correct is to, in the short term, divert a lot of the tax money into stimulating productive industry so that NZ is not so vulnerable. After that you could have a sinking lid policy on tax like DPF suggests without an absolute decrease in expenditure. Then perhaps we could afford to live in our own country.

    Perhaps another way would be to bite the bullet and bring in a 3 day week or a 5 hour day or whatever but this would be very problematic for our competitive situation – and could not be implemented in education because it takes time to learn and on the whole teachers are always looking for creative ways to reduce their hours.

    Think about it next time you encounter how the government has solved an issue – the most inefficient, capital poor, way – why? – its ALL about employment – auditing, OSH, EEO, mainstreaming, premature parole, homecare,…. there’s more than your poultry 1% GDP that could go on really helping people and stimulating a sustainable economy.

    Some things I cant let slide [if you can be bothered]:

    1. We live longer….Stop blaming the oldies for high government spending. I think you are exaggerating the 5/30 year life span – NZ had the highest standard of living then. The real oldie factors are likely to be – oldies ducking to Aussie b/c they cant stand NZ and therefore not spending and paying taxes in NZ and fat in the health and welfare systems that look after the oldies. And frankly I don’t care if some hard working oldies get a bit of my tax.

    “2. In the 50’s health care was a fairly rudimentary affair and local doctors and nursing staff were far less mobile globally. We did not have to pay them globally competitive pay rates.”

    – fallacy – they got globally competitive rates for doing a globally competitive job. Now we would rather employ 3 mediocre doctors or nurses to do the job one would have done then (thus fulfilling the govts prime directive) and 3 administrators to make sure they don’t get a globally competitive salary.

    ” Angola” – we are also doing that – just not officially

    Our expectations of what the “health system” could do for us was a lot lower”

    This is just BS – That old boys network is a figment of the paranoid left’s imagination and I expected diatribe like this from sonic, toms and spc but you should know better. One dedicated doctor and an administrative nurse could run a hospital cost effectively in those days – now everyone has to get their cut thanks to Clark, Coney and crew. I suppose you think there was an unfortunate experiment?

    “3. In the 50’s few of us stayed at school much past 15yrs old. ”

    You are too humble. You know what you’re on about. Although I wonder about the other lefties I mentioned. Its simple maths – if X% got SC in those days and X% get a bachelors now then intelligence to get SC then = intelligence to get Bachelors now. Simple fact is they made you work in those days but now its all wet nursing people through with “student centred learning” and other diatribe. So the bachelors degree people now have at least 3 disadvantages – they’ve been institutionalised to a certain extent by the long educational gestation, they come from a system that hasn’t selected the right person for the right course, and they probably lack some of the raw cunning of people who succeeded just with SC or whatever.

    “By contrast nowadays even the most commonplace trades, builders, plumbers, mechanics etc…all undertake significant amounts of tertiary education.”

    The apprentice system worked fine – they were just as intelligent and innovative then if not more so and have never been commonplace. Now its just another layer of employment to have much of the practical stuff taught academically – and cheaper for the government capital expenditure wise. Same for nurses.

    “And the range of subjects…”

    No its not Redrag. Just because you call it climate science – its still just good old geography or meteorology. The reason why the range of subjects is expanding is because we keep training academics. A small number of really intelligent hard working people then go on to drive the innovation now as then. The rest of them would not have jobs unless there was growth in academia and the public service. This is a global problem but NZ is still one of the worst because our economy is very vulnerable when these people are no longer needed. One way to overcome this is to develop more knowledge based industry in NZ. This government is failing miserbly at that because they are morally opposed to many of these industries and what they would mean for wage control.

    4. – accepted – Solutions needed b/c building more roads cant solve the problem.

    5. And here in lies the crux. If the aged, infirmed etc were still the responsibility of the family then many of our social ills simply would not exist. Because we think pushing a pen around a desk is so much more high powered than actually getting off our butts and helping someone we pay the government to do it for us.

    [apologies for long post]

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  27. RedRag () says:

    Porc,

    Has it occurred to you that all of the changes I mentioned have happened under right wing and well as left wing govts? All of these things have happened in conservative nations like the US equally as they have here? Or do you imagine that some magical force field should have descended over NZ 50 years ago, insulating us from all change and freezing in place everything as we knew it then?

    You asked why has the size of the public sector increased over the last 50 years. In direct response I listed a number of social changes that HAVE occurred (none of them the result of some evil socialist plot), and HAVE increased the size of the public sector in that period. Your idea of a “rebuttal” has been to tell us that none of this should have occurred and you would prefer things to have stayed the way they were 50 years ago…well that isn’t a rebuttal it is just bit of hypothetical nostalgia.

    Part of this has involved paying people to do nothing, with the social problems that brings. Part has involved paying people to regulate other people where no regulation was needed.

    You seem stuck in the dated idea that the only productive work is to be found in the private sector, when a man is to be seen banging away at some physical task like digging a ditch. Characterising ALL public sector people as “do nothing parasites” is indulging in lazy, offensive stereotyping. In my 35 year plus working life I have seen just as much inefficiency in the private sector as I have in the public. (Let me assure you that ALL human endeavour falls grievously short of perfection in this respect.) Yet it is my observation that at the same time in most workplaces, public or private, the majority are capable, diligent people who strive to do an honest days work for an honest days pay.

    You have also failed to apprehend how the very nature of work itself has changed in just a few generations. My grandfather did hard physical work in the meat industry all his life ( he never got to retire, he was killed in a work accident 3 months beforehand)…and if by some bit of magic I could bring him to life for a day, and he was to accompany me about at the work I do, he would be utterly perplexed and baffled by what he saw. He would have trouble recognising what I do for a living as work. (Yet let me assure you if I was not to do it properly a whole city might become aware of this in a few short hours.)

    In turn our grandchildren will do jobs that we can barely imagine, or if we could, we might think of them as playing about. Work we define as productive is essentially what we work that we value….as our the horizons of our values expand…so does the range and nature of “productive work”.

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  28. icehawk () says:

    “Didn’t some of these Governments borrow a lot? What does spending look like over the same time period?”

    Well, yes. And it matters. In the long run, taxation and govt spending must even out. When the govt spends more than it taxes they’re just deferring the tax burden for later. So a govt’s spending is a more honest measure of the true burden of taxation they are imposing – since they can be imposing the burden on later taxpayers by sliding into debt.

    For example, one large reason why the taxes in the late 80s were so high was covering Muldoon’s debts.

    As for the fuss about taxes going up since the 50s: the number one biggest thing our govt spends money on is superannuation. Muldoon’s super scheme, invented in the 70s. That is the really big difference between govt spending now and forty years ago.

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  29. croc () says:

    The RBNZ has plenty of room to lift rates if it chooses to do so. New Zealand’s M3 money supply was 16.5% higher in December than a year earlier, while the index of top-50 NZ blue chip stocks has doubled from four years ago. The RBNZ’s 7.25% overnight loan rate might sound high, when compared to Japan’s or the Euro zone, but clearly, monetary policy in New Zealand is very easy.

    so,our money supply has increased 16.5% in the last year,,,looks like we have some serious inflation coming…..the yen carry trade is going to get interesting…….this will give culllen a real problem

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