Very quietly, a cut here and a decrease there, a failure to keep up with inflation in one place, and ignoring increasing population in another place, the Government is walking away from New Zealand's longstanding social compact.

In his Budget speech, Bill English proudly says that government expenditure is down to less than 30 per cent of GDP, and that's the way that it's going to stay.

But how is this retreat from the economy achieved?

It happens by spending less on health and less on education, and not spending enough on housing for the least well off New Zealanders.


Health spending is going from $15.2 billion to $15.6 billion. That's an increase of 2.6 per cent. But inflation is predicted to run at 2 per cent, and population growth is running at around 2 per cent. In real terms, the health spend per capita is going down.

It's the same story in education. Operating expenditure is going from $13.9 billion to $14.2 billion, a 2.2 per cent increase. That's not enough to keep up with the growth in school rolls.

There's not much for housing either. There's some money to build another 750 state houses in Auckland, but that's not nearly enough. When even families who are in full time work can't afford to rent a house in Auckland, then we know there are real problems that need to be addressed, soon.

These are important issues. How much health care and education do we want? What kind of housing do we need? How do we look after all New Zealanders?

The Government is giving its answers to these questions in this Budget, and it's saying we should do less. It talks about investing in people, as though they are units of production from whom the last drop of profit must be squeezed, instead of citizens joined together to create a flourishing life for all of us.

The problem is that New Zealanders have not agreed to this. If anything, given recent publicity around housing and health, it seems New Zealanders actually want the government to do more.

It's an important conversation. And the government should be having it in the open, not burying it in the Budget.

• Dr Deborah Russell is a senior lecturer specialising in taxation at Massey University and a Labour Party candidate.