Labour and National government spending

Written By: - Date published: 9:27 am, July 6th, 2017 - 3 comments
Categories: class war, labour, national - Tags: , , , , , ,

Very interesting piece by Brian Fallow on

Brian Fallow looks at spending by our most recent two governments in real per capita terms and finds stark differences

Now that we have had a ninth Budget from the current Government it is possible to compare its record on this score with that of the previous Labour-led administration.

The difference is stark.

The Government’s operating spend in the coming year will be just 0.6% higher in real per capita terms than in the fiscal year just ending.

And it will be 3.5% lower than it was in fiscal 2009, the last year of Michael Cullen’s tenure as Finance Minister.

That in turn was 24.5% higher than it had been in 2000, before his first Budget.

That point-to-point comparison and the difference between plus 24.5% and minus 3.5% is a bit unfair to National, however.

The change of government coincided with the nastiest recession since the 1970s, which boosted welfare spending in Cullen’s last year and meant a correspondingly higher starting point for Bill English.

It also ignores the fact that the peak year for government spending in real per capita terms, and measured against the size of the economy, was fiscal 2011 when the Christchurch earthquakes hit an economy in the feeble early stages of recovery.

Looking instead at the average real per capita spending over the terms of the two Governments, the Vic/NZIER data indicates a decline of 11.7% between Labour and National.

The declining trend in core Crown expenditure since the 2011 peak, both in real per capita terms and as a share of GDP, is even more stark when you consider that it has coincided with a relentless rise in the share of the Budget taken up by New Zealand Superannuation.

For the biggest ticket item, health, the opposite applies. Real per capita health spending next year will be 4.6% higher than in 2009, but that in turn was 26.7% higher than in 2000.

At least the health spend has increased in real per capita terms under the present Government and held its own as a share of the Budget.

Spending on education, by contrast, will be 7.7% lower in real per capita terms in the coming year than it was in 2009.

Welfare spending, which peaked in 2010 in real per capita terms as the recession flowed through to the labour market, will have fallen 22.5% by the coming year, the Budget forecasts. …

There is much more in the full piece, well worth reading, see also the six preceding articles in the series.

Danyl Mclauchlan has boiled down the key numbers to a useful bar chart…

3 comments on “Labour and National government spending”

  1. Sacha 1

    Fallow misses that demographic shifts mean health since 2009 has been underfunded to meet the increasing level of need as our population ages.

    Coleman has been similarly economic with the truth whenever he claims per capita health funding has gone up enough. That’s not the measure of need. Older people use health services more.

  2. Sigh 2

    Also real per capita doesn’t take into full account the cost pressures. For example, in health the biggest driver is the ageing population, which isn’t accounted for here.

  3. Thinkerr 3

    Saw the bar chart. Have a question.

    Was any of the superannuation spend used to purchase state assets that were being sold (eg power shares)?

    If so, is that equation taken into account out in the real net spend figure?

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