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March 12, 2007 | by  | in Uncategorised | [ssba]

Hey, Big Spender

Does the Government actually do any good? This might sound like a strange question, but it’s one that New Zealanders don’t ask often enough.

Since 2000, our Government has been on a massive spending binge. In that year, the Government spent $35 billion. This year, the total will reach $55 billion. But how much of it has actually made a difference? Are we a more caring, equal society? Are we healthier and better educated? If so, is it because of this extra spending? If so, how can we prove this? Too often we assume that all government spending is inherently good. Politicians boast about how much money they’ll spend rather than explaining the outcomes of their expenses .

The fundamental question in politics is what the government should do. But we need to start asking what they can do. Over the past few months I have been researching whether our spending binge has been worth it.

You might think that information about government spending would be easy to find. Surely anyone who spends an extra $20 billion would keep a close eye on it and have something concrete to show for their expenses? Well, not really.

In fact, New Zealand has limited evidence on what our money is spent. On a worldwide scale, we’re pretty backward at measuring the results of our spending, most of which has gone towards health, education and social welfare.

Nonetheless, what we can do is look at the overall social indicators for New Zealand, one of the most basic measures used by the United Nations to assess the well-being of a nation. Life expectancy and infant mortality are considered the two most important indicators of a healthy society. Both are largely unchanged since 2000, despite billions of extra dollars invested in the health sector.

Even the number of operations performed in hospitals has not increased. Health has become a black hole for funding, with the Health Minister, Pete Hodgson, admitting that “we haven’t quite got things right yet.”

As far as education goes, little has changed. New Zealand secondary students (on average) perform well on a worldwide scale in mathematics, English and science, but no significant improvements have been made since 2000.

As a society, are we more caring, inclusive and equal, thanks to this spending? Before 2000, Helen Clark stated “the balance in our country wasn’t right…Our society with its history of caring about its members had become a harder, meaner place, with significant numbers of excluded people.” Has this changed? Again, it is difficult to locate any substantial evidence. Till 2004 (the latest available year for this report) the gap between rich and poor has remained relatively unchanged and due to this an increasing number of communities, particularly those of Maori and Pacific Island descent, are experiencing severe hardship.

Though violent crimes have increased by 9 per cent since 2000, the overall crime rate has shown a decline. Crimes involving youth however have increased while the suicide rate has declined by just 2 per cent.

This is a depressing scorecard.

Victoria University Associate Professor in Public Policy, Bob Stephens, recently claimed that we should be patient, as it will take years for results to become apparent. This is a rather weak excuse. How long, exactly, should we wait before seeing any changes? $20 billion is a huge sum of money, and if the government can’t deliver better results after seven years, – I suggest something is seriously wrong.

I’m willing to bet that if the $20 billion had been given to private charities (for example, City Mission, Books in Homes, scholarships, or Maori health providers) there would have been a more noticeable improvement. The reason that people such as Bill Gates donate to private charities rather than governments is because of the limits of what bureaucracies can do. No matter how much we spend, it’s impossible to buy a more caring society.

Instinctively, most of us know this is true. Would you rather give $100 to a charity or a politician?

Here’s another option. If this extra $20 billion was spent on tax cuts, we could almost abolish income tax. Imagine that – not just a tax cut, but no tax on income. It would be a massive boost to our economy, living standards and jobs.

These are all broad ideas but they do present the options we have and the questions we need to be asking the New Zealand Government. As a nation, are we making the best use of our hard-earned money by giving so much of it to politicians to spend? The evidence suggests not.

Phil Rennie is a policy analyst at the Centre for Independent Studies. His paper on government spending will be released this Wednesday at


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Comments (4)

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  1. Zeek says:

    I haven’t noticed much changes in our government since Helen Clark became Prime Minister. I’m on Nationals side.

  2. Tane says:

    Phil Rennie is a staffer of the radical right Centre for Independent Studies, which provides research and propaganda for big business and the National and ACT parties, and he was formerly a parliamentary researcher for the National Party. This guy is no student, he’s a veteran right-wing propagandist. It’s therefore very clever, and devious, of him to plant an article in a student paper running the same rightist spin he’s paid to promote without revealing his background.

  3. Emily says:

    Tane – it records at the end who Phil works for and the website for CIS. Phil’s background is recorded in his bio on the website. How is that hidden?

  4. peteremcc says:

    It’s also quite common for Salient to publish articles from ‘veteran radical left spin non-student propagandists’ however Salient is very good and declares those people’s backgrounds too.

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