Phil Rennie in the Herald

Phil Rennie of the Centre for Independent Studies has a piece in the Herald this morning about the abject waste of our current government that has seen spending increase $20 billion with no discernible improvement anywhere.
[quote]Since 2000 our Government has been on a spending binge that would put the late Sir Robert Muldoon to shame.

Politicians now spend an extra $20 billion a year, which works out to $5000 for each New Zealander. Most of this has gone on social policy, which includes health, education, and social welfare.

This is a dramatic increase, but are we getting dramatic results? Too often politicians boast about the inputs, but what about the outcomes? As taxpayers and citizens, we should be asking these questions.

The results so far are disappointing, according to the key indicators used by the UN, OECD and the Government itself.[/quote]

He outlines the policy failures one by one;

  • Health: An extra $4 billion is being spent annually, but it is hard to find evidence we are any healthier as a nation. Life expectancy and infant mortality rates are largely unchanged, while the output and productivity of public hospitals seem to have fallen.
  • Education: the achievement rates of our secondary students have only slightly improved. More students qualify for university but the overall literacy levels are about the same.
  • Society: Violent crime, and youth crime in particular, has increased. The suicide rate has barely changed.
  • Poverty and income inequality: were earmarked as priorities for the new Government in 2000, but again little has changed. Last year the Ministry of Social Development released The Social Report 2006, which showed a slight increase in the gap between rich and poor, and that the incidence of "severe" and "significant" hardship has also increased.

And here are the causes of such in effectual public spending;
[quote]After spending an extra $20 billion we would expect to find better results than this. So why has this investment had such a minimal impact? I argue that the size of government in New Zealand has grown so large that it has reached the natural limits of its effectiveness.

Government spending is now so high (40 per cent of GDP) that it is crowding out private spending. In effect, a lot of it isn’t "new" spending; it is replacing spending that people would have done for themselves, and more effectively.

This is especially true when we consider how much spending is recycled, or "churned" straight back to the people who paid the tax in the first place. Around half of all health and education spending goes to middle and upper-class households, straight back to the people who paid the tax.

The most obvious example of churning is Working for Families, which turns even wealthy families into beneficiaries. Some families earning up to $100,000, many of whom are also paying the top rate of personal tax, are now eligible for tax credits.

This giant merry-go-round of money does nothing to help the poor, is wasteful, ineffective, and means we pay more tax than we need to. Despite their best efforts, politicians will never understand people’s needs better than people themselves.[/quote]

I agree with Phil Rennie, "We can’t "buy" our way to a more caring society; we have to look at more creative solutions. And importantly, we should stop spending so much money on people who could easily support themselves – if only their taxes weren’t so high."

 


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