When more is less

Written By: - Date published: 3:31 pm, May 8th, 2009 - 2 comments
Categories: budget 2009, education, health - Tags:

Colin Espiner writes:

“Another thing that’s being clearly signalled is that Labour’s previous spending promises in health and education won’t be honoured in the Budget. That $3.4 billion of spending Labour planned for 2009/2010… At the same time, Key and English are at pains to say that health and education spending will increase – and that “more money than ever before will be spent on public services”.

How can both these statements be true? Easy. Even adding a dollar to the current health budget would honour the pledge, since spending is already at an all-time high.”

Colin has hit the nail on the head here. Inflation and population growth mean that you can put “more money than ever before” into something while actually spending less. With 3% inflation and 1% population growth, if the government were to spend just $1 extra in the coming Budget than the last one it could technically say it is spending more than ever before but it would really be buying 4% fewer public services.

It’ll be interesting to see how the Government spins the Budget. They will be careful to show they have increased funding in nominal terms for health, education, and the like but in real terms the funding for a lot of public service programmes may have been substantially cut.

2 comments on “When more is less ”

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  1. mickysavage 1
    8 May 2009 at 7:38 pm

    You mean that that nice Mr John Key has been tricking us?

    Surely not, he seems like such a nice man and he has such a nice smile.

    And he has promised us an increase.

    You mean that there will actually be a reduction in Government spending in health and education??

  2. RedLogix 2
    9 May 2009 at 3:00 pm

    Heard Richard Griffin on RNZ’s “The Panel” a few weeks ago come up with this wonderfully ‘yeah right’ moment when he said something like, “Of course no-one voted for National because of the tax cuts they were promising”… As if for about 5 years it wasn’t the only policy that they pushed over and over to the exclusion of all else that was pushed well down the agenda.

    Of course it will be a truly foggy day if English or Key ever admit that Cullen was right, that the surpluses were not structural, that National’s tax cut propaganda was both unaffordable and always nothing more than a sordid ploy to win an election.