The NZ Spending Binge

March 15th, 2007 at 7:29 am by David Farrar

Phil Rennie from The Centre for Independent Studies has today published a paper called “New Zealand’s Spending Binge“.

It’s a relatively short paper at 16 pages, so I encourage people to read the whole thing. Some key points are:

* Core government spending has increased by $20 billion since 2000, or 32% in real (inflation adjusted) terms

* If one had not increased spending by this amount, one could have almost abolished income tax and funded the 2000 level expenditure from GST and a low corporate tax rate

* The government has little information on how effective this extra spending has been and the available social indicators we have show negligible improvements since 2000 in life expectancy, infant mortality, hospital outputs, literacy, violent crime, suicide and poverty.

* Much of the spending is middle class welfare churned back to those who pay it. Therefore much public spending today is not ‘new’ spending; it is displacing spending that would have happened anyway, by individuals themselves. It follows that more public spending will not necessarily increase public welfare, and may even reduce it.

* Many people could afford to purchase their own social services if taxes were lower. This would allow for more competition, innovation and personal responsibility, and would reduce unnecessary bureaucracy.

* Australia provides an interesting comparison to New Zealand, because they have a smaller government with more reliance upon private health, education and superannuation. They also outperform New Zealand on most social indicators.

Looking just at health spending up 49% in real term, we have since 2000:

* a slow down in the rate of life expectancy increase
* a slow down in the rate of infant mortality decrease
* a reduction in elective surgery operations from 107,366 in 2000 to 105,437 in 2006
* no change in hospital readmission rates (a key indicator of quality of care)
* no change in hospital mortality rates
* a decline in patient satisfaction with DHB services

A comparison is made with Australia.

Australia has a smaller government than New Zealand; their government spends 34% of GDP compared to New Zealand’s 40%.54 It is also a much richer country with better social outcomes.

Incomes are a third higher across the Tasman, and the Australians also outperform us on a range of social indicators, including life expectancy, infant mortality, income inequality and suicide rates.

Australia doesn’t necessarily have less social spending; the difference is that private provision is more prevalent, and actively encouraged by the Federal Government. In health for example, 33% of Australian spending comes from the private sector compared to 23% in New Zealand. In education, the corresponding figures are 26% for Australia and 17% for New Zealand.

Rennie concludes by saying:

Too often politicians take the view that all government spending is inherently ‘good’. There is not enough scrutiny of public spending, of its benefits and of the alternatives available to policymakers. Too often this reflects an ideological commitment to the role of the state, rather than a dispassionate look at what the state can realistically achieve.
There needs to be a wider debate on what the proper role of government is and what services should be realistically provided by people themselves. We need to consider what governments can do as well as what they should do.

Hear hear,

No tag for this post.

89 Responses to “The NZ Spending Binge”

  1. James () says:

    Tsk…….Rightist propaganda. Nothing to see here…..move on.

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  2. Insolent Prick () says:

    Always thought that Phil Rennie would progress a long way.

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  3. bobrien () says:

    I think Helen would be more concerned with her own personal outcomes (and those of the Labour Party) anything else doesn’t really matter.

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  4. sonic () says:

    Call me Mr Cynical but I’m starting to see a pattern in the reports of the Centre for Independent Studies…..

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  5. Andrew Bannister () says:

    their government spends 34% of GDP compared to New Zealand’s 40%.54

    Australia has a population 5x larger than ours.

    Also, these points:

    * a slow down in the rate of life expectancy increase.
    Ceiling effect. Also, an aging populattion requires more health care.

    * a slow down in the rate of infant mortality decrease.
    Floor effect

    * a reduction in elective surgery operations from 107,366 in 2000 to 105,437 in 2006.
    Again, I wonder how much of that is because of more non-elecctive procedures due to an aging population.

    * no change in hospital readmission rates (a key indicator of quality of care).
    Not true and far too simplistic. If you let everyone die, you have no readmission rates. If you treat more serious illnesses and an aging population will see an increase in readmission.

    * no change in hospital mortality rates.
    People die in hospitals. They always have and always will. I would expect that to increase as a health service gets better. That or at home under hospital care.

    * a decline in patient satisfaction with DHB services.
    That’s because people keep being told that hospital services are getting worse.

    DPF, some of those comments may have some validity, but it doesn’t take much to realise how misleading they are.

    The NZ health service isn’t perfect, but partisan soundbites aren’t going to fix it.

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  6. Murray () says:

    I think we can streamline this entire process.

    Cullen and a team of public servants just stand next to a bank of toilets and flush $100 notes 24/7.

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  7. phil u () says:

    david ..the only line that resonates there is..

    “..there is not enough scrutiny of public spending, of its benefits and of the alternatives available to policymakers. Too often this reflects an ideological commitment..”

    (by all parties..at most times..eh..?..)

    what is needed is a non-partisan/non-ideology-ridden review of govt spending/wastage etc..

    (and that’ll happen shortly after a brace/flock of pigs fly past my window..)

    phil(whoar.co.nz)

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  8. Murray () says:

    Oh christ the stuttering drug wreck is on parole again.

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  9. toms () says:

    It seems that DPF’s aand the National Party’s position is the best way to improve health care is to slash their budget?

    Hmmmm. Wonder how that’ll go down with the voters?

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  10. Lance () says:

    But you see, we prol’s aren’t smart enough to spend our own money wisely. We need the clever leftist political elite to do that for us.
    This way it might be actually possible to achieve the Nirvana of %100 of the population on some form of benefit.

    To resist the wise nanny state is to be evil, a Tory, a Nazi, a hater of the environment and lets just throw in racist and child beater for good measure.

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  11. Murray () says:

    It’ll go down bloody well with me toms especially when I get taxed less and can then afford to buy my own damn health care that doesn’t involve culling tens of thousands of people off waiting lists so the socialist overlords can claim they have reduced the numbers.

    We’ve seen your answer. Your lot are the definition of failure and even now you’re just sitting there sneering and not willing to give up one cent of other peoples money after proving you have utterly no clue how to spend it.

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  12. Insolent Prick () says:

    Toms:

    It seems that the Labour Party’s position has been to throw an extra twenty billion of taxpayers’ money at bureaucrats and unions, for no positive effect on service delivery.

    Hmmmmm. Wonder how that will go down with taxpayers?

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  13. Kimble () says:

    Wow, Murray, that was one hell of a burn. Nice.

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  14. southern raider () says:

    And now they have just announced another scheme to take a 30% equity stake in private homes and you don’t have to pay this back until you sell the house.

    How the hell is this supposed to help new homeowners get into the market? Doesn’t Labour know about the simplest concept in economics called supply and demand. The supply is low and the demand is high so the price is high. So what do they do of course they increase demand even more.

    Worst part is it will be tax payer funds used to buy the equity stake so they will most probably put up personal tax to pay for it.

    What a bunch of wankers!

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  15. sonic () says:

    “I get taxed less and can then afford to buy my own damn health care”

    And screw everyone else.

    Human solidarity is a bit of an alien concept to you guys!

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  16. Lance () says:

    Sonic commented

    “Human solidarity is a bit of an alien concept to you guys!”

    And value for money and basic economics is an alien concept to you (lefty) guys.
    This may be news to you Sonic but communism went broke.

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  17. Kimble () says:

    And intelligent thought is obvioulsy alien to you, sonic.

    Seriously, you have been at this shit for years, so when are you going to grow up and stop using deliberate misinterpretation as the only basis for your counter-argument?

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  18. phil u () says:

    southern raider..

    um..because it’s for ‘new homeowners’..

    (hold that thought..eh..?..)

    and do try to keep up..!

    eh..?

    phil(whoar.co.nz)

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  19. Fred () says:

    Yeah, Aust. has most things pretty right.
    Cracker of a super system.

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  20. Fred () says:

    Oh yeah, see what socialist compulsion brings…..compulsory solidarity with the weasel.

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  21. Bevan () says:

    “And intelligent thought is obvioulsy alien to you, sonic.

    Seriously, you have been at this shit for years, so when are you going to grow up and stop using deliberate misinterpretation as the only basis for your counter-argument?”

    If he did that Kimble, the poor sod would then have nothing to say.

    Ahhhh now I see the benefit!

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  22. Insolent Prick () says:

    Sonic,

    That is fucking pathetic. You cannot seriously argue that when the Government is running a $12 billion surplus, and is spending $20 billion more than it did seven years ago for no extra services, that “human solidarity” is at stake.

    This Government has been vastly wasteful with taxpayers’ money. Requiring state funded fuckers such as yourself to be far more accountable with what you spend on our behalf, and making sure that if we’re giving you more money to spend you make good use of it, is not a mindblowing concept.

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  23. phillipjohn () says:

    The centre for independanty studies should be renamed the centre for new-right ideological propaganda. Taking these guys seriously is like saying, “look, i see that Robert Mugabe has just released a report showing that white farmers have a negative impact on GDP”. So treasure this steaming pile of horse-crap if you like tory boys, just don’t expect to be taken seriously if you run around quoting it.

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  24. iiq374 () says:

    Phil U – maybe you should keep up with the economics Southern Raider brings up.

    Unless those first time home buyers are suddenly buying $1 million houses then it is still a subsidy effect where most of the 30% is going to go to the existing owners (or developers).
    Just look at the GST subsidy for first time home buyers in Australia when that was around.

    Oh and I was excluding the State Home residents which are already in $1mil houses of course…

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  25. phillipjohn () says:

    If you want to see some more objective reporting on government spending you should see a statistics new zealand report called “new zealand in the OECD” – the following quote is from that said report.

    “New Zealand’s general government total tax and non-tax receipts, as a proportion of GDP, were the seventh-lowest of 27 OECD countries in 2004, at 38.3 percent.”

    So there you are – kind sinks your arguments hey boys?

    you can down-load a PDF copy of the report at this address.

    http://www.stats.govt.nz/products-and-services/nz-in-the-oecd/government-spending-receipts.htm

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  26. Kimble () says:

    It is amazing the way the Lefties stick their fingers in their ears and shout,

    “LALALALALAA Labour isnt wasting money… LALALALALA we arent being taxed more than is needed…LALALALALA every dollar the governmetn spends needed to be spent regardless of what is was spent on…LALALALALA”,

    any time some piece of research or opinion goes contrary to their precious and desperately held on to world view.

    Hey PJ, how bout you actualy READ the report,

    “On a world scale, 40% is the OECD average for spending. However, a closer look shows the world divided into two blocks: the high spending and economically stagnant European nations, and the lower spending and more prosperous countries, which include Australia, the USA, Ireland, Singapore and Hong Kong. New Zealand is right in the middle of these two distinct groups, but trending upwards.”

    Kind of sinks your rather lame argument, eh?

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  27. Peter S () says:

    Kimble,

    Stop worrying the sheep. Did no one ever tell you its mean to taunt dumb creatures?

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  28. Rex Widerstrom () says:

    Whoa there folks. We’ve all stampeded right past a point worth considering (IMHO) from none other than phil, who says:

    what is needed is a non-partisan/non-ideology-ridden review of govt spending/wastage etc..

    Certainly the CIS approaches things from an ideological perspective which makes all of their recommendations but only some of their research debateable (not wrong, just debateable). The trick is in deconstructing the data and proposing alternative causations as Andrew Bannister has done above.

    But I’ll bet the public debate (such as it is – economics in its pure form is seen as ‘too hard’ by most media) will quickly degenerate into one side screaming “Tory wankers!” while the other shrieks “Socialist wastrels!”

    So why not Phil’s suggestion of a “first principles” national debate on how much tax we want our government to collect and how we want it spent?

    Such a debate will nevr happen in Parliament, that’s for certain.

    Of course there are about a million practical hurdles to be overcome along the way, but the Internet permits information dissemination and even debate without substantial cost…

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  29. DavidW () says:

    crap toms, ever heard of efficency?

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  30. Kimble () says:

    The government is growing faster than the rest of the economy. Private growth is determined externally from the players. That is, the growth is based on something that is outside the control or whim of any individual player.

    Government growth is determined by the desire of the government to grow. Sure there is some growth that is natural, more people means more demand for services, inflation adds to the nominal cost etc. But is it reasonable to expect these factors to affect the government sector alone?

    There may be some for whom this increase in share is consistent with their ideology. We see many of them here. They are the ones that seem to think that any increase in government spending is good, regardless of the outcome. They are so lacking in imagination that they cannot comprehend that the money could be spent in any other way that could result in a greater benefit for society.

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  31. Captain Crab () says:

    Phil U’s idea is a good one. We have an Auditor Generals office, perhaps they could do it. I can see the problem being that it will mean accountability as they would have to measure outcomes .

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  32. sonic () says:

    I was commenting on those people who would see the people in our society most in need thrown to the dogs so they could get a 1c tax cut.

    We know who you are, and so do you.

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  33. Captain Crab () says:

    Phil U’s idea is a good one. We have an Auditor Generals office, perhaps they could do it. I can see the problem being that it will mean accountability as they would have to measure outcomes .

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  34. Billy () says:

    Sonic:
    I was commenting on those people who would see the people in our society most in need thrown to the dogs so they could get a 1c tax cut.

    DPF:
    Much of the spending is middle class welfare churned back to those who pay it.

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  35. phillipjohn () says:

    no Dimble,

    In 2004 New Zealand had the second lowest level of government spending as a percentage of GDP in the OECD (Page 31). So dimble clearly you either havn’t read the report, or your just too partisan to report the truth. take your pick i suppose.

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  36. Insolent Prick () says:

    Again, Sonic, you’re deliberately missing the point. The Government is spending $20 billion more than it did seven years ago, with no extra assistance to the most vulnerable in society. The beneficiaries of state largesse have been a whopping increase in the size of state sector pay packets and the size of the bureaucracy.

    The government is running a $12 billion surplus. It is totally absurd to claim that the only way tax cuts are affordable is to cut services.

    It is equally absurd to claim that much greater accountability for the extra spending would lead to “people in our society most in need thrown to the dogs.”

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  37. hhmhm () says:

    “The government has little specific information on how effective this extra spending has been. We lack information on outputs and outcomes from the public sector, which makes it difficult to measure exactly what return taxpayers are receiving for their investment. Other countries do a much more comprehensive job of this.”

    so of course the solution is cut the spending, even though it may being doing good, because we are either too lazy or too stupid to develop better indicators.

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  38. Kimble () says:

    yeah hhmhm, thats it, obviously he is saying that spending has to be cut before finding out if it is doing any good. You idiot.

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  39. Captain Crab () says:

    No one is suggesting spending should be cut. We just want to know that the money is being used efficiently and that the services we need are being provided.
    To do that, there has to be measurement of what is produced.
    Happens every day in the private sector.
    This whole idea that National will slash and burn is a Labour myth used to scare people. Rather like telling pensioners National would sell their state housing. Its a crock of shit and is just more labour smear as they continue to try and say those on the right dont care.

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  40. sonic () says:

    Gotta love National the slogan

    “Labour is spending too much and taxing us too much”

    So are you planning to cut spending?

    “Of course not, thats a smear”

    Laughable, truly laughable.

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  41. Insolent Prick () says:

    Of course National is going to cut spending, Sonic. It would be bloody irresponsible of them not to.

    First on my priority if I were finance minister would be to cut your taxpayer funded salary. Then I’d take the knife to a good thirty percent of the bureaucracy. Then a full review of all the wasteful things that Labour is frittering taxpayers’ money away on.

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  42. centrepete () says:

    The quoted decline in child mortality was 6.1 – 4.8 per 1000 live births since 1997. On first glance that seems a pretty good reduction of over 20%. That Rennie reports this as insignificant is puzzling, and it does beg the question, for someone who hasn’t got the time to look into the rest of the conclusions he draws, is how objective is the report really, and how much is is merely being a partisan political instrument. Further more, I was perturbed to notice the Dominion Post’s rather flaccid dissection of Rennie’s conclusions, particularly by the child mortality point.

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  43. hhmhm () says:

    Umm Dimble the whole point of the report is to paint current social expenditure as wasteful so as to garner support for tax cuts and the roll back of the state. You get a D- for connecting the dots. I just find it ironic that Phil Rennie can’t actually tell us the spending is wasteful because by his own admission there isn’t the eivdence base to do it. Hes skirting around the edges; the spending could actually being doing alot of good. We simply don’t know and we need to.

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  44. hhmhm () says:

    Umm Dimble the whole point of the report is to paint current social expenditure as wasteful so as to garner support for tax cuts and the roll back of the state. You get a D- for connecting the dots. I just find it ironic that Phil Rennie can’t actually tell us the spending is wasteful because by his own admission there isn’t the evidence base to do it. Hes skirting around the edges; the spending could actually being doing alot of good. We simply don’t know and we need to.

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  45. hhmhm () says:

    That may be why DPF conveniently left that point out of his summary… ooo conspiracy theories abound… I must be turning left wing

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  46. centrepete () says:

    Also, I’m so sick of the inevitable comparison to Australia. Australia’s economy has so many fundamental differences from NZ’s. For example Australia has a huge amount of various natural resources which eclipse new zealand in their economic importance. These include Ferrous, Non-Ferrous, and metals, Diamonds to name a few. The economic booms of India and China have hugely boosted demand for Australian resources, while in contrast New Zealand’s traditional exports of meat, wood etc face wide competition and currency pressures. Whoever makes a generalised comparison to australia is demonstrating how little they know.

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  47. Captain Crab () says:

    no sonic, National will ensure your money is spent wisely and efficiently. Surely you dont really believe that what they do now is as good as it gets?
    The slogan is more like “Labour taxes us too much and then wastes it”
    WFF is the classic example. It would have been more efficient just to take less tax rather than have one govt dept collect it and another to give it back..

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  48. tim barclay () says:

    The Labour Party needs to justify where the $20 billion has gone. It is an absolute scandal that the Labour Party has inflicted this on us. God I pray for the total political destrucion of the Labour Party

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  49. Kimble () says:

    hhmhm, the whole point of the report is to show that spending has increased massively with very little recorded benefit being attiributed to it.

    You dorks approach this whole taxation and spending thing from a moronic angle. You reckon that spending should go ahead regardless of whether it is actually doing any good or not. And you shout down any discussion which leads to very sensible questions about accountability.

    Fuck it, lets increase the income tax rate to 95%, spend all the money, and never consider if there is any benefit to society.

    Why dont you guys actually READ the report, it answers quite a lot of the objections you have raised.

    “Clearly in New Zealand’s case, EVEN WITH OUR LIMITED INFORMATION, there appears to be little relationship between the dramatic increase in public spending and the general social welfare. Given the scale of the new spending, it should be much easier to find obvious improvements.”

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  50. sonic () says:

    “First on my priority if I were finance minister would be to cut your taxpayer funded salary”

    Well that would net a saving of $0.00 as I dont get one, still nice try!

    One Nat tells us no cuts, the other wants huge cuts.

    I wonder how Mr Key will square that circle?

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  51. Redbaiter () says:

    “Why dont you guys actually READ the report, it answers quite a lot of the objections you have raised.”

    Even if they did read it, they wouldn’t understand it. They’re Socialists- its a religious thing…

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  52. Kimble () says:

    Here is a nice quote,

    “There is little information to indicate that New Zealanders are getting more services and better results from the public sector for the large increase in resources provided. What little information exists is not encouraging.”

    – Treasury briefing to Minister of Finance, September 2005

    Here is another good quote for you,

    It is not up to us to justify NOT spending $20billion. It is up to you lot to justify it.

    – Kimble

    So go ahead, justify it. WTF has another $20b bought us?

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  53. David Baigent () says:

    philipjohn 12:57 pm today

    I was quite impressed that you could link to a report that could state….. “New Zealand’s general government total tax and non-tax receipts, as a proportion of GDP, were the seventh-lowest of 27 OECD countries in 2004, at 38.3 percent.”…..

    Thinking that this was a reasonably acceptable level at 38.3% of GDP for 2004, I requested an update.

    The reply was as follows:

    “This publication was a one-off for which there are no immediatie plans to update.”
    Regards
    Ronald Mair
    Information Officer
    ronald.mair@stats.govt.nz
    http://www.stats.govt.nz

    Now it seems that the report may well be dated 2004 but it refers to a preceeding time span making the 38.3% figure more believable.

    More disturbingly however it looks like there will be no update untill the data is improved.??
    stats.govt.nz “know” but cannot say…..

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  54. Captain Crab () says:

    National should commission a new one. Could be a good weapon in an election year if the figures show a huge rise over the past three years.

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  55. Kimble () says:

    Go to the link I posted and you can see up to date figures and projections for the next three years.

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  56. econ101 () says:

    David B says – “National should commission a new one.”

    They could save some money by just using the OECD reports on which is all that stats were reporting and which consistently show NZ to be in pretty good shape economically.

    Kimble, between 1993 and 1999 National spent between 45.6% and 40.5% of GDP per year. Under Labour’s fiscal management spending fell to as low as 37.1% of GDP and until 2006 was always below 40%, something National never “achieved”. Currently at 40.7% and projected to be 41.2% for 2008.

    Outrageous, eh.

    As for measuring the quality of spending, how is that going to be done without employing a few measurers? Which, I think, National are opposed to on the grounds that they stop people getting elective surgery, or something.

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  57. Billy () says:

    econ101 makes an excellent point. Neither of them can be trusted when it comes to spending our money.

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  58. Kimble () says:

    econ101, yafm.

    The spending level FELL from 45.6% to 40.5%. It fell in all but one year. And that year was the one in which the Asian crisis which unquestionably hit the private sector more than the public. For some perspective (something you obviously lack) the figure for 1992 was 49.4%.

    As for Labours management, well, the average %of GDP tax-take minus spending for National over the period you mentioned was 1.4% with the highest figure being 3.1%.

    The average over a similar period for Labour is 3.2, and, get this, for only two years was the difference less than the highest National posted. Not over taxing us? Pulease.

    You guys just cant get past the idea of “all government spending is good”, can you? Zero concept of efficiency or opportunity cost. Change your name because econ101 is obviously a stretch for you.

    I mean, what sort a moron thinks that National WOULDN’T hire more ‘measurers’ if it would help to better allocate resources?

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  59. Richard () says:

    Kimble:

    “So go ahead, justify it. WTF has another $20b bought us?”

    Well, let me see. Hospital waiting lists are significantly shorter, because they were just *culled*. Drivers speed less due to police emphasis on speeding fines (except where H1 is involved), so obviously serious and violent crime must be significantly down to allow such a focus. Umm… there’s a lot more bad legislation going through parliament, Cabinet is about the biggest it’s ever been, there are 30% more Government bureaucrats to match the rising population (what? Population *hasn’t* risen by 30%???). There are fewer people on the unemployment benefit because they’re all now on sickness and DPB. Adoptions are at an all-time low, so obviously we don’t have a problem with teenage pregnancies or single parents any more.

    I think that’s about it.

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  60. Kimble () says:

    econ101, yafm.

    The spending level FELL from 45.6% to 40.5%. It fell in all but one year. And that year was the one in which the Asian crisis which unquestionably hit the private sector more than the public. For some perspective (something you obviously lack) the figure for 1992 was 49.4%.

    As for Labours management, well, the average %of GDP tax-take minus spending for National over the period you mentioned was 1.4% with the highest figure being 3.1%.

    The average over a similar period for Labour is 3.2%, and, get this, for only two years was the difference less than the highest National posted. Their highest? 4.2% Not over taxing us? Pulease.

    You guys just cant get past the idea of “all government spending is good”, can you? Zero concept of efficiency or opportunity cost. Change your name because econ101 is obviously a stretch for you.

    I mean, what sort a moron thinks that National WOULDN’T hire more ‘measurers’ if it would help to better allocate resources?

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  61. Kimble () says:

    econ101, yafm.

    The spending level FELL from 45.6% to 40.5%. It fell in all but one year. And that year was the one in which the Asian crisis which unquestionably hit the private sector more than the public. For some perspective (something you obviously lack) the figure for 1992 was 49.4%.

    As for Labours management, well, the average %of GDP tax-take minus spending for National over the period you mentioned was 1.4% with the highest figure being 3.1%.

    The average over a similar period for Labour is 3.2%, and, get this, for only two years was the difference less than the highest National posted. Their highest? 4.2% Not over taxing us? Pulease.

    You guys just cant get past the idea of “all government spending is good”, can you? Zero concept of efficiency or opportunity cost. Change your name because econ101 is obviously a stretch for you.

    I mean, what sort a moron thinks that National WOULDN’T hire more ‘measurers’ if it would help to better allocate resources?

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  62. Kimble () says:

    wtf?

    wtf??

    wtf???

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  63. econ101 () says:

    Kimble – sure, I considered using the earlier data but I thought that was unfair on National considering we live in the post mother of all budgets era. But I see you are shifting the goal posts a little now. That tax take difference you mention is going into a savings fund and offsetting private balance of payment issues that would otherwise be very serious.

    “I mean, what sort a moron thinks that National WOULDN’T hire more ‘measurers’ if it would help to better allocate resources?”

    The ones that believe we can improve health outcomes by sacking a few managers in Wellington.

    Tell me this, what sort of moron thinks that running a fiscal surplus for 7 years and overseeing 7 years of continuous economic growth with a top tax rate of only 39% and unemployment below 4% and beneficiary levels always falling, is a failure?

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  64. RedRag () says:

    The basic lie in the Rennie report is where he INLCUDES all local govt and SOE outlays to get a figure of $65b or 40% of GDP and then makes comparisons with other countries core govt spending…in particular with Australia’s 35% figure.

    When you spot a fundamental dishonesty like that you just KNOW the rest of the report isn’t worth wasting precious life-seconds on….but briefly:

    Rennie admits that most of the increased spending has gone on just three items:

    1. Health
    2. Education
    3. Tax credits … ie nett tax reductions.

    Public health spending has almost doubled since 2000. Most of it on doctors and staff salaries…mainly to stop them from leaving the country. And still the public squirms about waiting lists. Care to go into an election with a policy to HALVE health spending back to 2000 levels?

    Education. Again care to go into an election promising to CUT the education spend? With the cost of “school donations” regularly a hot button topic in the news?

    Superannuation… again…care to cut that?

    And the constant comparisons with Australia are simplistic and deeply flawed. Australia has always been a far wealthier nation than NZ…and likely always will be. It’s fabulous mineral wealth, the like of which NZ will never have will ensure that difference for generations to come. No govt policy will ever wish that away.

    At the end Rennie betrays his real agenda with an idle speculation about a 0% tax rate. Uhuh.

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  65. Kimble () says:

    “The ones that believe we can improve health outcomes by sacking a few managers in Wellington.”

    Or perhaps it is the ones who sees a 49% increase in spending with no improvement in health outcomes and think that it must be money well spent. In fact, they shout down any and all attempts to question whether it is being spent wisely or could be spent elsewhere for a greater benefit to society. They dont care.

    “Tell me this, what sort of moron thinks that running a fiscal surplus for 7 years and overseeing 7 years of continuous economic growth with a top tax rate of only 39% and unemployment below 4% and beneficiary levels always falling, is a failure?”

    Surpluses are unconditionally good things. NZ’s economic growth is attributable to the government on the day it happens. Maintaining a top tax rate at 39% means that taxes haven’t increased. Unemployment figures are more important than productivity figures. Perhaps you need to attend summer school, econ101.

    The last point is the most interesting. Beneficiary levels falling? Why then is the level of transfer payments increasing?

    The government has been lucky with the economic good fortune NZ has had. They recieve more in taxes than any NZ government in history. So much so, that even they cant find enough things to spend it on.

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  66. econ101 () says:

    “The government has been lucky”

    I knew that was coming. Your arguments were getting a bit desperate. Godwin’s law applies if that line is trotted out when a government has been in power as long as this one has. The rest of your post is simply an extension of that statement.

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  67. Kimble () says:

    “When you spot a fundamental dishonesty like that you just KNOW the rest of the report isn’t worth wasting precious life-seconds on”

    Funny you should say that Redrag.

    From the source Rennie cites, “Note: Data refer to the general government sector, which is a consolidation of accounts for the central, state and local governments plus social security.”

    …but breifly.

    “Care to go into an election with a policy to HALVE health spending back to 2000 levels?”

    The problem with excessive government spending is that it is VERY difficult to rein back in. Doing so makes you very unpopular with just about everybody. National has already had to do it once and were vilified for it. It didnt matter to people that the current level of spending was unsustainable. The Opposition (who over spent when they were in power) loved to crow about how they are the friend to the people and the penny pinching current government is all about selfishness and big business.

    In this very debate we have this sort of idiotic rhetoric, with accusations that National thinks that cutting funding will improve health provision. No one is saying that. No one ever has. What IS being said is that if so much more is being spent, why dont we see the results?

    It is VERY easy to spend other peoples money. All governments do it and all governments will tend to over do it when they have the opportunity to some degree or another. Why? Because there is zero cost to them.

    The Labour government is on a spending binge, they are being highly irresponsible. They are increasing the costs of government, not just for today, but for every year in the future.

    And obviously the 0% income tax wasnt a suggestion. Rennie himself acknowledges this when he says, “This is a radical and purely theoretical EXAMPLE…”.

    With so much being spent on education, why are all you leftie dickheads illiterate?

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  68. Kimble () says:

    So you are saying, econ101, that NZ’s growth is 100% attributable to Labour being in power?

    That the world economy has little to do with little old New Zealands economic fortune? Global commodity prices? Pah! Economic growth in China and India? Pah! Leveraging off the benefits of a derugulated economy (you know, hard work done by previous governments)? Pah!

    Come on then, front up, what massive economic changes has Labour brought about that has led, inexorably, to the growth we have seen? What do you think National would have done differently that would mean NZ’s growth would suffer?

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  69. Fred () says:

    O% tax income tax + GST to suit.
    Rennie, baby, you could just about lure me and my millions back.

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  70. econ101 () says:

    Ok Kimble, you did the Godwin thing, but I will bite.

    “So you are saying…NZ’s growth is 100% attributable to Labour”

    No, where did I say that? But nor is everything down to “luck”. If it were, why are you blaming the government for stuff you don’t like?

    “what do you think National would have done differently”

    Well, Don Brash would not have hesitated to thump the country into recession if he thought it necessary. That was his track record after all. Indeed, he spent much of 2005/6 stating that that was what was about to happen. It was “unavoidable”. “Luckily”, it was avoided.

    The stability of growth has been as important as the growth itself, and yes, I do think Cullen (and Bollard) deserve credit for that aspect of things.

    And, to coin a popular word, pah.

    Fred, keep your millions, there are other kiwis of all political persuasion making and investing their millions here. See, they happen to believe NZ is a great place, with great people and worth the effort and giving the required ROI.

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  71. Fred () says:

    You’re right econ…what was I thinking?
    It wouldn’t be so bad over there if there was at least a Conservative opposition.

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  72. Kimble () says:

    The government of the day can really only stuff things up. The best thing they can do for the economy is set up decent rules of fairness and trade and then get out of the way.

    The actions of any government against a background of a strong global economy will always look good. The government would really have to fuck things up to look bad (think: Zimbabwe).

    This government is on a spending binge. They are lucky they can get away with it because the world economy has been very kind and their tax coffers are over-flowing because of it. But with their overspending they are increasing the costs of government today and in the future. In the future we may not be so flush.

    They make a big deal about paying down debt. But what they are doing with their irresponsible budget expansions is increasing the likelihood of future governments having to go into, or further into, debt.

    We are posting huge surpluses. They would be even larger if the government had been more restrained in their spending increases. Why? What is the rationale for taxing so much more than is needed to be spent?

    Why is the government substituting public expenditure for private? Why are they simply churning?

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  73. Kimble () says:

    Yeah, Fred, keep you money where it is. We dont need you stinking investment dollars OR any charitable donations you would make!

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  74. Fred () says:

    “charitable donations”…. you have a fine sense of humour, sir.

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  75. uk_kiwi () says:

    One point that was touched on is the failure of Labour to index tax thresholds to inflation.

    Given wage inflation of 3-4% pa, in just a few years someone on the median income will be in the top tax bracket! This is clearly ludicrous, and will probably be the carrot that Labour offers voters in 18 months.

    Regarding the shared equity housing scheme, there has to be some initiative shown here. Home ownership is something the government should definitely be encouraging- renting gives no stability, no stake in society, and no sense of responsibility.

    The US system of offsetting mortgage payments against taxes might be a solution?

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  76. RedRag () says:

    “One point that was touched on is the failure of Labour to index tax thresholds to inflation.”

    Actually Cullen intended to introduce just this a few years back, but it got derided out of the water as the “packet of chewing gum tax cut’. Remember?

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  77. Clint Heine () says:

    All you lefties are right, after all, we need to spend 20 billion extra a year to keep us down the path of socialist enlightenment.

    For a country as small as ours, we sure do spend a lot on nothing. No wonder poorer countries a decade or two ago are roaring past us and not looking back.

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  78. iiq374 () says:

    Would you please stop trotting out the lie (or utter ignorance) that Australia’s success is due to these great big mineral reserves we don’t have.

    Yes alot of their success is due to using the mineral resources they have access to – but that is a *very* different point.

    NZ has huge gold and high quality aluminium reserves (both trash resources I know…) but most attempts to use most of them have been turned down (I actually agree with some of the turn downs due to where they are) but that was our choice; so don’t blame Australia’s success on luck, differentiate the choices.

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  79. Redbaiter () says:

    Gotta love National the slogan “Labour is spending too much and taxing us too much” So are you planning to cut spending? “Of course not, thats a smear” Laughable, truly laughable.

    Sonic is a scummy little socialist arsehole but in this case he’s damn right. Key and the leftist cardre in control of National have to go. Boycott National.

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  80. Redbaiter () says:

    Gotta love National the slogan “Labour is spending too much and taxing us too much” So are you planning to cut spending? “Of course not, thats a smear” Laughable, truly laughable.

    Sonic is a scummy little socialist arsehole but in this case he’s damn right. Key and the leftist cadre in control of National have to go. Boycott National.

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  81. Kimble () says:

    RedRag it got derided as “packet of chewing gum tax cut” because with the tax cut you could buy a packet of chewing gum.

    Given the surplus the government is currently running (which is on top of the HUGE increase in spending they have been able to find reasons for) the tax cut was a sad sad joke and everyone knew it. Cullen insulted the entire tax paying population with his pathetic tax cut.

    It was the tax cut you give when you are so idealogically against cutting any taxes (or keeping them where they are) that only the threat of political anihilation will force you to release you grubby desperate grip on other people money.

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  82. Bogusnews () says:

    The findings of this report are nothing new. Treasure has warned the government on at least two seperate occasions of the shocking waste within state expenditure. In their last report they noted three things: that spending was growing so rapidly it would affect the ability of our economy to grow, that expenditure was “sprawling” not targeted which would indicate some strategic thought, and finally that there was no sign of any improvement in output.

    I have said for a long time that this government is the most incompetent we have ever seen. How else could you spend an extra 20Bil and get nothing for it. For example, in health, expenditure is up from 6.5Bil under N to nearly 10 Bil. Yet Clarke had to admit prior to the last election that the waiting list (before the slashing) had increased from 100K under N to 180K under Labour. How do you increase expenditure on health by 40% and have the waiting list double unless you are incompetent?

    What is really upsetting though is that the ones who I’d love to see helped, the low paid, have missed a fab opportunity. If Labour wasn’t flushing all our money down the toilet they could have abolished tax altogether for those on low incomes. What a difference that would make.

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  83. Bogusnews () says:

    The findings of this report are nothing new. Treasure has warned the government on at least two seperate occasions of the shocking waste within state expenditure. In their last report they noted three things: that spending was growing so rapidly it would affect the ability of our economy to grow, that expenditure was “sprawling” not targeted which would indicate some strategic thought, and finally that there was no sign of any improvement in output.

    I have said for a long time that this government is the most incompetent we have ever seen. How else could you spend an extra 20Bil and get nothing for it. For example, in health, expenditure is up from 6.5Bil under N to nearly 10 Bil. Yet Clarke had to admit prior to the last election that the waiting list (before the slashing) had increased from 100K under N to 180K under Labour. How do you increase expenditure on health by 40% and have the waiting list double unless you are incompetent?

    What is really upsetting though is that the ones who I’d love to see helped, the low paid, have missed a fab opportunity. If Labour wasn’t flushing all our money down the toilet they could have abolished tax altogether for those on low incomes. What a difference that would make.

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