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.