Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


Concerns About Control Of Government Spending

MEDIACOM-RELEASE-NZ-BUSINESS-ROUNDTABLE

BUDGET POLICY STATEMENT INCREASES CONCERNS ABOUT CONTROL OF GOVERNMENT SPENDING

The New Zealand Business Roundtable today expressed concern about the provision for $5.9 billion of new spending in the government's Budget Policy Statement and the new long-term target for spending of 35 percent of gross domestic product (GDP).

First, government spending already takes a much larger proportion of national income in New Zealand than in many better-performing economies such as Australia, the United States, Ireland and many of our Asian trading partners.

Second, the quality of much existing spending is poor, as the government is implicitly acknowledging with its criticisms of state- owned entities and the public service.

Third, the quality of the planned new spending is already in doubt. The two major announced changes - to student loans and to New Zealand superannuation - disproportionately benefit students from relatively well-off families and more wealthy superannuitants respectively.

Fourth, it is hard to reconcile big increases in government spending and no efforts to increase operating surpluses with the minister of finance's concern about New Zealand's large current account deficit and the accumulating indebtedness to the rest of the world. The large spending increases will put New Zealand's sovereign credit rating and interest rates further at risk.

Fifth, increases in spending have to be funded largely, if not entirely, from taxation. Taxes have to be higher, sooner or later, than would otherwise be necessary. The ratio of government expenditure to GDP is the best measure of the tax burden. The change in the long-term objective of this ratio from 30 to 35 percent of GDP implies an increase of almost 17 percent in the tax burden. Sharp increases in government spending that raise taxes without providing commensurate value in return are an obvious threat to wealth creation and the need for New Zealand to retain and attract talented people.

This will be third successive parliamentary term in which government spending has sharply increased, yet dissatisfaction with macroeconomic outcomes is widespread. There is no obvious reason why the latest round of spending increases will prove any more beneficial. The adverse impact on the export sector in particular of the last coalition government's $4.5 billion spending package risks being repeated.

While the Budget Policy Statement acknowledges the problem of funding superannuation in future years, it provides no guidance as to how this is to be resolved. Transferring part of the operating surplus to a separate superannuation fund does not address the issue. Unless tax revenues are increased in future or spending on benefits is reduced, the government's financial position is unchanged. The recent commitment to increase the level of superannuation benefits merely makes the problem more difficult.

The New Zealand Business Roundtable concluded that the Budget Policy Statement did little to clear up uncertainty in the business community as to how the government intends to promote economic growth and achieve its goal of 3 percent unemployment - no real improvement in the current 6 percent unemployment rate for the next four years is projected by the government. In preparing the budget and in other forthcoming decisions there is an urgent need for the government to address the inconsistencies between its policies and its stated goals.

ENDS...

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Also, Loan Interest: Productivity Commission On Tertiary Education

Key recommendations include better quality control; making it easier for students to transfer between courses; abolishing University Entrance; enabling tertiary institutions to own and control their assets; making it easier for new providers to enter the system; and facilitating more and faster innovation by tertiary education providers... More>>

ALSO:

Higher Payments: Wellington Regional Council Becomes A Living Wage Employer

Councillor Sue Kedgley said she was delighted that the Wellington Regional Council unanimously adopted her motion to become a Living Wage employer, making it the first regional council in New Zealand to do so. More>>

ALSO:

Scoop Images:
Dame Patsy Reddy Sworn In As Governor-General

This morning Dame Patsy Reddy was sworn in as the New Zealand Realm’s 21st Governor-General. The ceremony began with a pōwhiri to welcome Dame Patsy and her husband Sir David Gascoigne to Parliament. More>>

ALSO:

Ruataniwha: DOC, Hawke's Bay Council Developer Take Supreme Court Appeal

The Department of Conservation and Hawke's Bay Regional Investment Company (HBRIC) are appealing to the Supreme Court over a conservation land swap which the Court of Appeal halted. More>>

ALSO:

With NZ's Marama Davidson: Women’s Flotilla Leaves Sicily – Heading For Gaza

Women representing 13 countries spanning five continents began their journey yesterday on Zaytouna-Oliva to the shores of Gaza, which has been under blockade since 2007. On board are a Nobel Peace Laureate, three parliamentarians, a decorated US diplomat, journalists, an Olympic athlete, and a physician. A list of the women with their background can be found here. More>>

Gordon Campbell: On The Key Style Of Crisis Management

At Monday’s post Cabinet press conference Key was in his finest wide- eyed “Problem? What problem?” mode. No, there wasn’t really a problem that top MPI officials had been at odds with each other over the meaning of the fisheries policy and how that policy should be pursued... More>>

ALSO:

Mt Roskill: Greens Will Not Stand In Likely Post-Goff By-Election

“The Green Party’s priority is changing the Government in 2017, and as part of that we’ve decided that we won’t stand a candidate in the probable Mt Roskill by-election... This decision shows the Memorandum of Understanding between Labour and the Green Party is working." More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news