Minima

• Marty G
• 15 years ago
• Categories: budget 2009

One of the oldest tricks in the book for a government that’s cutting public services is to say ‘we’re not cutting, we’re spending more in our budget than ever before’ while not mentioning that their spending ‘increase’ doesn’t match inflation and population growth.

We need to know what constitutes minimum increases to preserve current services:

• $750 million for health. This was the basic increase for the last few years under Labour and National pledge to keep it. Sounds like a lot but the health budget is $11 billion and inflation in the sector is high. Most of the $750 million is just to cover inflation. Most of the rest is to cover population increase and demographic shift (older population, more health demand per person). Any actual increase has to be additional to the $750 million. If not all of the $750 million is there, it’s a spending cut.
• Education. Same as Health, a huge budget needs a big increase just to maintain the status quo. Something in the range of $500 million. If it’s not all there, services will have to be cut.
• Social welfare. The demand for the unemployment benefit and superannuation are going up fast. The extra funding will definitely be there for this. Unless National breaks its promises and cuts welfare.
• That’s the big stuff but there’s plenty of smaller budgets too that provide important services. In each of them, the minimum increase needed is about 4% just to offset inflation and population growth.

Another classic trick to watch for is to close down one programme, start another that costs the same or less and call it new spending. The question with these spending changes is whether the new spending programme is better than the previous one.

This government, for instance, has decided it needs to prioritise elective surgery. In opposition they turned the number of electives the be all and end all of the health system’s performance (in fact it’s only a few percent of what it does). Now they want to show success by increasing the number of electives but they want to do it without more money for health. Solution: close down primary health care programmes and plough the money into electives. It’s a bit like skimping on fencing at the top of the cliff so you can afford a better ambulance.

Paula Bennett looks like she’s trying the same trick with funding for social services NGOs.

The message here is don’t take the government’s spin at face value. Ask is this ‘increase’ really an increase and is there a hidden cut?

– Marty G