On Monday, Prime Minister John Key named a ministry every bit as bloated as in his first term, or Helen Clark's last one for that matter.

Does a country of 4.4 million people really need 28 ministers - 20 in Cabinet and a further eight outside?

The United States, after all, gets by with a Cabinet of 16, one for every 20 million Americans. We have a minister for every 158,000 people.

Different systems, of course. But still.


Top of the new Government's agenda and No 1 item on its post-election action plan is to halve the Budget deficit next year and be back in the fiscal black within three years.

"If not sooner," the Prime Minister keeps adding.

It is a pity, then, that belt-tightening and the quest for efficiency in the public sector did not start at the top.

The division of ministerial labour is getting a bit too fine-grained.

We don't just have a Minister of Justice (Judith Collins) but also an Attorney-General (Chris Finlayson), a Minister of Courts (Chester Borrows) and Ministers of Police and Corrections (both Anne Tolley).

Encountered some dodgy food?

Don't bother the Minister of Health (Tony Ryall) about it, or the Minister for Primary Industries (David Carter) either, or even the Minister of Consumer Affairs (Chris Tremain).

It is a matter for the Minister for Food Safety (Kate Wilkinson).


Wilkinson is also Minister of Labour, but skills and employment are part of Steven Joyce's portfolio, or one of them.

She is Minister of Conservation too, but not Minister for the Environment. That is Nick Smith.

Smith is also Minister for Climate Change Issues but not for International Climate Change Negotiations (Tim Groser).

And so on.

Nearly a quarter of all MPs are ministers, including two-thirds of the Maori Party's and all of Act's and United Future's.

But it is not just about keeping support parties sweet.

It is about managing the ruling party's caucus.

More than 40 per cent of National's MPs, 24 in all, are ministers.

Such a large executive means the odds of a back-bencher eventually getting a ministerial warrant are good enough to keep them in line. Breaking ranks by departing from the party line, as Nikki Kaye did over plans to mine on the conservation estate, is rare.

This system of patronage with the "baubles of office" is especially unedifying in a time of fiscal austerity, ushered in by last May's zero Budget.

Last week John Key signed a confidence and supply agreement with the Act Party which includes a commitment to enact a fiscal rule that would limit growth in public spending, with some carve-outs, to inflation and population growth.

This was not a concession reluctantly conceded to secure all one of Act's votes in the new Parliament.

It was something National could happily concede because its policy is for public spending to keep shrinking in real per capita terms.

Where once we heard about "taking the sharp edges off the recession", now the talk is all about the imperative of returning the fiscal bottom line to surplus in three years .

Fiscal policy, in short, is the process of veering from an economic tail wind to a head wind.

Last year's deficit, excluding the impact of the Christchurch earthquakes, was around 4.5 per cent of gross domestic product.

Eliminating that in three years is no one's idea of a doddle.

The Treasury's estimate of the fiscal impulse - an indicator of how stimulatory or expansionary fiscal policy is - is around minus 2 per cent of GDP in the coming financial year and again the following year.

As fiscal consolidations go, this is pretty aggressive.

It will directly affect those who depend on the Government for a salary, a benefit or the purchase of their goods or services, compounded by a multiplier effect on the broader economy.

For most of the public sector it is an environment of frozen budgets, sinking lids and a need to find ways of doing more with less.

The pre-election economic and fiscal update forecast core Crown spending to increase from $74.6 billion in the current financial year to $75.6 billion in 2014/15.

That is an increase of just 1.5 per cent in nominal terms, not nearly enough to keep pace with population growth, never mind inflation.

However, it would reduce public spending from an elevated 35 per cent of GDP this year to a more normal 31 per cent by 2014/15 - assuming that the Treasury's sanguine view of the outlook for economic growth pans out.

That 1.5 per cent nominal increase in the Budget over three years factors in an allowance for new spending of around $800 million a year over the next couple of years and $1.2 billion in 2014/15, most of which is likely to be soaked up by health and education.

Transfer payments are forecast to rise from $20.5 billion this year to $22.6 billion in three years, but almost all the increase, $2 billion, is in New Zealand Superannuation.

That suggests a bleak outlook for the more than 300,000 beneficiaries in the context of a welfare reform agenda.

How successful that agenda is will depend crucially on the ability of the economy to generate jobs at a faster pace than it has been.

The unemployment rate stands at 6.6 per cent and has wobbled around an absolutely flat trend line of 6.5 per cent for the past 2 years.

In other words the economy has been creating jobs, but only at a rate that keeps pace with growth in the labour force.

In the latest consensus forecasts compiled by the New Zealand Institute of Economic Research, economists have revised down their expectations of employment growth for the current and following March years, in line with a general downgrading of the economic outlook.

They still expect 100,000 more jobs by March 2014, many of them in the labour-intensive construction sector when the rebuilding of Christchurch gets under way in earnest in the second half of next year.

But about half of those 100,000 jobs would be required to mop up growth in the labour force.

Put that in the context of 56,000 people drawing the unemployment benefit as of the end of September, 151,000 officially unemployed and 254,000 jobless (which includes those available for work but not actively seeking work, which you have to be doing for the statisticians to count you as unemployed).

But at least in the Beehive there is full employment.