3. AARON GILMORE (National) Link to this
to the Minister of Finance
How large is public sector spending relative to the economy?
Hon BILL ENGLISH (Minister of Finance) Link to this
There are several components of public sector spending: departmental spending and entitlements, and additional spending by State-owned enterprises and Crown entities. This is all consolidated into the total Crown accounts. Local government is also a significant part of the economy. When all those elements are included, total public sector spending to June 2009 was $93 billion. That was just over 50 percent of GDP. That figure has increased from 41 percent of GDP—or by $31 billion—in the past 5 years.
The growth in public spending from 41 percent of the economy to 50 percent of the economy in the past 5 years is clearly unsustainable, and some of it was irresponsible. Budget 2010 has kept within $1.1 billion for new operational spending, and we are shifting $1.8 billion of low-priority spending over the next 4 years from low-quality and back-office programmes to front-line services and more effective public programmes.
Despite the unsustainable, and, in some respects, reckless, increase in public spending over the last 5 years, I have heard several ideas that would increase public spending without any matching increase in productivity. Hiring about 3,000 more Wellington-based bureaucrats and extending a range of public spending on low-quality programmes with no regard for the debt that it would incur are ideas from the Labour Opposition.
Grant RobertsonIs the Minister aware of data from the State Services Commission that shows that the public sector decreased in size by 25 percent from 1989 to 2008 and has remained largely static as a percentage of the total workforce during that period, including being the same percentage when he was first appointed as a Minister as it was when Labour left office?
The member can pick any numbers he likes—[ Interruption] Well, his 1989 numbers will include a very large New Zealand Rail and a very large New Zealand Post Office, which had large numbers of people working for them, and the Labour Government of the time decided they were far too big and decided to shrink them. The fact is that, along with most of the New Zealand public, we believe that much of the spending under the previous Government was reckless and ineffective, and we are fixing that problem.
I seek leave to table a document provided by the State Services Commission that shows that the number of people employed in the public sector has been static as a percentage of the employed labour force.
Mr SPEAKER