As New Zealand has already begun to vote in the 2023 election, The New Zealand Initiative releases this timely research
note which takes a deep examination of our country’s government spending patterns over the last century.
This research note, written by Dr Bryce Wilkinson, analyses the six-year spending spree of the current Labour government
in the context of historical precedents.
The Sixth Labour government significantly overspent compared to its projections in its Pre-election Fiscal Plan in 2017.
Labour’s planned $11.7 billion increased to $29.7 billion prior to Covid-19 reaching New Zealand. By the end of Labour’s
five-year plan, cumulative spending had increased by $77.4 billion.
This report provides a historical overview of New Zealand’s government spending patterns using tax receipt data dating
back to the 1910s. It details the impact of global events such as wars, epidemics and economic downturns.
The First Labour government set somewhat of a precedent of increased government spending, which was spent on
redistribution efforts such as social security benefits, pensions, education, and health. The trend only continues, as
the report shows subsequent Labour-led governments as big spenders.
It takes a chronological exploration of the behaviours of various New Zealand governments post-1957, comparing the
approaches and responses of different governments to wider economic challenges.
The dominant focus of fiscal government activity since 1950 has and still is on redistribution but at what point does
redistribution make a community worse off?
Dr Bryce Wilkinson notes, “The current big-spending government has historical precedents. It is reasonable to anticipate
that the government that eventually succeeds it will have to raise tax revenues and keep a tight rein on spending for
many years – unless it acts more decisively."
The full report A historical perspective on the 2017-2023 Government’s spending spree is available from The New Zealand Initiative’s website here.