Editorial: Hard decisions on spending

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Televised political debates can produce telling moments. One such moment in the debate on TV One last Tuesday night came when the Prime Minister was scorning the National Party's policy to cap the growth of the public service. "People will be fired," Helen Clark shouted, again and again, before National leader John Key replied that 300 people "were fired today at Carter Holt Harvey".

The point, as a momentarily chastened Helen Clark seemed to realise, is that the public service is not somehow cordoned off from the real economy, and certainly cannot be used as a job-creation sump. The public service exists on the taxes generated in productive sectors and its costs need to be constantly watched if the economy is to function properly.

In this country the core public service, so-called, is the desk-bound staff of Government departments as distinct from the wider "state service" which includes policemen, schoolteachers, nurses, social workers, everyone in state employment. National has been careful to aim its promised cap only at the public service and promises at the same time to strengthen what it calls "frontline" services.

Some of its other promises, such as programmes to tackle youth crime, training more doctors and abolishing parole for more violent offenders, could require additional social workers, medical courses, prison staff. It is unlikely National will contain the public payroll overall unless it can bring itself to go somewhat further than a "cap" on the core public service.

When National last came to power, in 1990, it set up a "razor gang" of its MPs to go through departmental budgets line by line. Even that exercise did not find enough savings to avoid cuts to wider social programmes the following year in a successful effort to bring the Budget back towards a balance.

This time, National is proposing something less than its previous razor gang. Mr Key says that if elected, it will call in departmental heads and ask them to do a line-by-line review of their spending. To undertake any extra activities, the departments would have to find the finance from savings in their existing budgets.

This does not sound very different from the normal round of negotiations that precede every annual Budget. Finance Ministers always start by telling departmental heads they must find savings for anything extra they want to do. What gives us any hope that Bill English might be a tougher nut to crack than Michael Cullen has been?

Only the character of his party. National may be much less interested than Labour has been in endless studies and consultation exercises around fairly academic ideas such as sustainability, work-life balance, pay equity and the like. Labour has made a habit of commissioning grand exercises of fine-sounding principles which the party does not know how to translate into concrete actions and nor, it usually turns out, does the study they subsequently commission to tell them.

So National may find some savings in agencies with not much to do. The Families Commission is already on its list, though that agency was an initiative of United Future, whose support National might need to govern. But there should be no shortage of other pet projects and token social agencies we can do without.

Whichever party leads the next Government, it is going to have to take careful stock of its spending. The pre-election fiscal update, projecting the budget in deficit for a decade, will acquire more importance after the votes are counted and a government installed. The financial crisis and the recession will be seen in better perspective and hard decisions will have to be made. A public service cap is the least we may need.

- NZ Herald

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