John Key MP - National Party Finance Spokesman

28 February 2006

Razor gang more about spin than substance

The Government's public sector spending reviews are more about spin than substance, says National Party Finance spokesman John Key.

"The problem for the Government is that differing ideas are emerging from Ministers about the objectives of the spending reviews announced last Thursday," says Mr Key.

Last Friday on Morning Report, Associate Finance Minister Trevor Mallard said: '...part of the objective is to get higher quality government spending and as a result of that it could well be that we need more policy analysts in a certain part of particular ministries than in another part...'

He also said: 'Overall, across government agencies, jobs will go up over the period of these reviews.'

But Finance Minister Michael Cullen warned in a speech yesterday: 'State sector CEOs need to be aware we expect that dividend to emerge starting from this year, and that one of the implications of that will be careful management of labour costs.'

"Is the objective to save money or isn't it?" asks Mr Key. "What's the point of a spending review if it doesn't save the long-suffering taxpayer some money?

"Shuffling policy analysts around within departments, as Mr Mallard suggests, won't achieve anything."

The Treasury briefing to the new Government - dismissed at the time by Dr Cullen as an 'ideological burp' - noted the ballooning state sector wages bill and questioned whether New Zealanders were getting more services and better results from this spending (p36).

"It also noted a significant proportion of this spending had gone to 'expansion of head offices'," says Mr Key. "In other words, it had gone to the bloated Wellington bureaucracy.

"For all Labour's talk now of a dividend from its spending increases, it is six years too late. They should have expected value for money from the start.

"With these reviews they are putting out conflicting signals - one message to the public sector unions and another to the wider public. But the end result will simply be that nothing tangible is achieved.

"Core Crown spending has risen from $34 billion annually in 1999-00 to more than $50 billion now. That's a 47 per cent rise since 1999-00 - while inflation over the past six years has risen only 16 per cent and population growth has been only 6.6 per cent.

"There have been no controls - just a massive spendup at the taxpayer's expense. And looking at the conflicting objectives Ministers are talking about, the Government's so-called razor won't even scratch the surface of runaway government spending."

ENDS

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