What do you get for $20 Billion?

According to Phil Rennie from The Centre for Independent Studies who has today published a paper called "New Zealand’s Spending Binge", Three Fifths of Five Eighths of Fuck All.

 Key points are;

  • Core government spending is now almost $20 billion a year higher than it was in 2000, a 32% increase in real terms.
  • Total government spending now makes up 40% of GDP, compared to 35% in Australia. Most measurements show government spending is higher now than it was under the Muldoon government of 1984.
  • If this extra $20 billion of expenditure was allocated to tax cuts, nearly all income tax could be abolished. All the remaining public services could be solely funded by GST and a low corporate tax rate.
  • The government has little specific information on how effective this extra spending has been. We lack information on outputs and outcomes from the public sector, which makes it difficult to measure exactly what return taxpayers are receiving for their investment. Other countries do a much more comprehensive job of this.
  • The available social indicators we have show negligible improvements since 2000. Life expectancy, infant mortality, hospital outputs, literacy, violent crime, suicide, poverty and income inequality have barely changed despite a massive increase in social spending.
  • Around the world there is little relationship between higher public spending and better social outcomes.
  • A major explanation for why this spending has been ineffectual is because of middle class welfare. A large proportion of government spending is simply recycled (or ‘churned’) straight back to those who paid the tax in the first place.
  • Therefore much public spending today is not ‘new’ spending; it is displacing spending that would have happened anyway, by individuals themselves. It follows that more public spending will not necessarily increase public welfare, and may even reduce it.
  • Many people could afford to purchase their own social services if taxes were lower. This would allow for more competition, innovation and personal responsibility, and would reduce unnecessary bureaucracy.
  • Australia provides an interesting comparison to New Zealand, because they have a smaller government with more reliance upon private health, education and superannuation. They also outperform New Zealand on most social indicators.
  • Diminishing returns from spending are coinciding with rising costs of taxation. This means New Zealand could achieve better social and economic outcomes with less taxation and spending.

Clearly we have rampant and mad socialism running through the country for no discernible benefit.

 


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