Future shock

Written By: - Date published: 2:19 pm, May 30th, 2009 - 18 comments
Categories: budget 2009, public services - Tags:

Yesterday, my comrade Zetetic wrote that despite all the bad stuff in the Budget there was still a “meta-victory” for the Left because the ‘social wage’ hadn’t been attacked. That is, health, education, and social welfare aren’t cut in this year’s Budget.

Well, I’ve been doing something Zetetic has probably been wise enough to avoid. I’ve been digging into the Budget (specifically the Budget Economic and Fiscal Update) and Budgets past to look at the spending tracks over the last few years and what National plans to spend in the ‘out years’ (the next three after this coming one). I found out these totals, then I got the inflation and population growth numbers (past and projected). That let me work out the amount per person adjusted for inflation that is has been and will be spent in the big areas of Health, Education, and Law and Order (I’ve left out welfare because that’s not within the government’s control unless it changes eligibility or payments).

It makes some distinctly bad reading.


Health spending will peak next year, then slide 8% by 2013.

Education peaked this year and will drop 7% by 2013.

Law and order goes up a little this coming year, then is cut 6% by 2013.

Plain numbers are pretty hard to imagine but instead think what 8% fewer doctors and nurses per 1000 people or 7% fewer teachers or 6% fewer Police means for the public services we rely on every day.
-Marty G

18 comments on “Future shock”

  1. Well, I’ve been doing something Zetetic has probably been wise enough to avoid. I’ve been digging into the Budget (specifically the Budget Economic and Fiscal Update) and Budgets past to look at the spending tracks over the last few years and what National plans to spend in the ‘out years’ (the next three after this coming one).

    I think you are being unfair to National. It is not standard practice to include funding in out years for population increase and demand growth. Instead – as is clear from e.g. the 2008 Information Supporting the Estimates of Appropriations for Vote:Health [PDF] they just project the most recent years spending forward three years, less any timed spending which expires.

    This is dishonest accounting – everyone knows these votes need $1.25 billion between them every year just to stand still. But it is the standard practice, and I think it is unfair therefore to try and paint National as planning to cut per-capia entitlements. Yes, they probably are – but its premature to rely on these figures to support it.

    Alternatively, you may want to compare the projected spending track for health linked above, and that for 2009 [PDF]. Looks like a bit of an own goal, neh?

    • Marty G 1.1

      Hmm. Well it would be a brave man who disputes I/S on these things and I’m not at all fimiliar with budget docs so it’s a learning experience. Still I have some quesitons. If these are just assumptions that current spending stays flat why do some of the sectors have nominal increases in the outyears? Like welfare, law and order, arts culture and heritage?

      Is that from outyear spending announced in this budget?

      And you’re right that they need at least $1.25 billion just to stand still (health alone needs at least $525 million), yet the allowance for new spending beyond 2011 isn’t large enough to allow that. So there have to be cuts.

  2. Johnty Rhodes 2

    As any good socialist goes, you cannot seem to decipher the difference between spending & investment. Maybe the cost per unit may decrease if we take waste out of the system. In the real world lean thinking is taking more imputus and the focus is on adding value to the customer. In the past 10 years Labout doubled the health budget with no real gains to the customer. If this waste is taken out things can be done cheaper, maybe we will lose 8% beaurecrats (money wasters) and gain 8 nurses (value adders). Anyway, where will the income come from to increase budgets? Borrow & hope? The good times are over my friend, lean that we have to live on a tighter budget and minimise waste.

    • Marty G 2.1

      “No real gains.” Maybe if the only thing you measure is elective surgeries.

      What about subsidised doctors visits and perscriptions? And a rising life expectancy and free cervical screening etc? These are gains. They don’t come free.

      Besides. A huge amount of the increase was just to stand still. We had to increase wages for doctors and nurses to keep the ones we had and get more. There’s a worldwide shortage of health professionals and if we want some we ahve to compete.

    • lprent 2.2

      Maybe if there was waste in public services then they’d have found it in the 90’s. What they did was get a relatively short increase in ‘efficiency’ until exhaustion sets in. Then the services part to fail.
      What you are talking about is just code for cutting services… Commonly used by morons with no understanding of how to increase efficiency.

  3. Below Standard 3

    Stupid Scaremongering – “but instead think what 8% fewer doctors and nurses per 1000 people or 7% fewer teachers or 6% fewer Police ”

    Get rid of some of the inefficiencies which are currently loading down the productivity of these sectors and suddenly you don’t need as much money to get the job done at a higher standard.

    • lprent 3.1

      National failed to find those efficiencies last time in the 1990’s. They simply reduced the amount of money on services and the services started to fail to deliver. What makes you think that they are capable of finding them now.

      • Below Standard 3.1.1

        What makes you think there aren’t savings to be made?

        Secondly and 8% reduction is nothing like 90’s style.

        • lprent

          That is a similar level to what they tried in the 90’s in the operational (rather than the benefit) areas. Didn’t work then, it was a total disaster with steadily falling levels of service.

          We wound up with a dysfunctional police who couldn’t turn up to burglaries. A teaching sector that teachers were actively leaving to find any other job.

          Health is a slightly different story due to its continually increasing demand for services in an aging population. It kept growing.

          Essentially they look like they’re trying the old classic ‘sinking lid’ type policies. So far there doesn’t appear to be even as much thought as last time. I don’t expect different results. We start burning muscle rather than fat very fast.

      • Phil (not Goff) 3.1.2

        After the 1990 election, National only had to deal with six years of Labour government. This time they’ve got to trim the fat from nine.


  4. rave 4

    I think we can leave these calculations to the empiricists.

    What is absolutely certain is that this government wants to cut social spending because it is a drain on ruling class taxes. How and how quickly they do it will depend on the electoral risk, as they want to get back in again to complete the privatisation push.

    The rationale for this is that they want to cut the costs of labour even further for both international capital and for small business. NZ is already a low wage country but its got to be a lower wage country. Reason being that cutbacks on R&D means that increased productivity can only come from longer and harder hours of work at lower pay. Preparing to push out the super age will keep people working longer and cost less in retirement. Equals a cut in overall social wage funded out of profits. Subsidising private health and education means that the middle class will find it a bit cheaper to buy these as commodities, while workers will be denied access to public services as their funding is eroded by inflation.

    Second they have to cut the costs to capital to encourage productive investment. Hence placating S&P to help the Aussie banks keep their borrowing rate down in the hope that loans to business will be cheaper. Hence reforming the RMA and supersizing Auckland. Hence the missing tax cut is a non event because the middle class recipients are getting their income upped in other ways.

    The whole point of this recession and coming depression is to cut the costs of labour and capital so that the banks and big corporates are persuaded that investment is profitable in NZ rather than somewhere else. Of course this only applies to production that has comparative advantage, not textiles, airlines, dishwashers or call centres.

    If you want a formula to apply to this government, look at the requirements to improve profitability in NZ, and what a government must to to achieve that while at the same time staying in office.

    This is a zero sum game so Govt has to work on the sums while placating the zeros.

  5. RedLogix 5

    If this waste is taken out things can be done cheaper, maybe we will lose 8% beaurecrats (money wasters)

    Like many people you really have no idea what ‘beaurecrats’ do. It is of course a very generalised description (a bit like the term ‘technician’ which can mean anything from someone who is working on the CERN accelerator, to someone who welds agricultural machinery).

    In essence though beaurecrats are the people who make the mechanism of government work. Modern government is based on a cascade of interlocking authorisations, from Acts of Parliament, various public sector finance mechanisms, departmental regulations and policy. Everything that the public sector does, no matter how large or small must be both authorised and accounted for. Every interaction with the public, or expenditures of monies is to be undertaken according to policy and rules. Beaurecrats are the technicians who devise, implement and audit these rules.

    The alterative is for public servants to more or less make things up as they go along. In countries that have weak, ineffective beaurecracies, public servants are very inclined to simply make things up in the favour of those of most recently crossed their palms with an acceptably large amount of cash. In other words chaos, inefficiency and corruption become the norm of the day. On the other hand those with plenty of cash and patronage, do tend to do rather well out of it.

    Which is the real reason why right winger are always whining about beaurecrats here in the country.

    • Zaphod Beeblebrox 5.1

      Unless they are called consultants or service providers or working for treasury who are working to protect us.

      • croong 5.1.1

        Yes those bureaucrats like Barry Matthews and Mary Anne Thompson make such a difference, we’d be mad to get rid of them.

        • Zaphod Beeblebrox

          You will find incompetence in all industries
          I was thinking of Mr $2000/day Graham Scott is he a bureaucrat or a purchase advisor?

        • Zetetic

          croong can name two bad eggs in 40,000. What a hero.

          For croong’s next trick – ‘kill all the tigers because that one in Auckland ate that dude’

          • croong

            I see your geography is of a similar standard to your political commentary.

  6. BDB 6

    I do not believe the whole point of the recession, and their desired depression is to lower the costs of labour.

    The budget is fiction.
    Bad fiction, it is not a Budget but a set of fabrications with justifications for more cost cutting of basic social needs.


    Our AAA credit rating is fiction.

    ‘Guy the ecconomist /”jour nilist”gave the budget a 7/10’
    I know what I would ask him to rate and its not the Budget.

    Part of the problem we face when State/Corporate Govt is left unattended and unaccountable using fabricated data to retain its now undeserved power.

    Cervical screening saved how many lives by providing early and correct interventions? The complex NZ health system needs to be fully understood before correct opinions on Govt health spending can be made.

    Meningitis ripoff anyone?
    softcore insulation scam?

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