Adam Creighton compares bloated Australia to New Zealand, which has just delivered a Budget forecasting a surplus next year:
The culmination of almost two decades of mainly populist budgets, the Abbott government will spend $6200 a person on cash welfare next year, over 25 per cent more than New Zealand’s government will on each of its citizens (converting all amounts to Australian dollars).
Education spending, at $2900 a person, is 10 per cent more generous in Australia but health expenditure is torrential by comparison: Australian state and federal governments will lavish more than $4600 a person to keep Australians alive and healthy, almost 50 per cent more than is spent in New Zealand…
Australia’s population of 23.5 million is about 5.2 times New Zealand’s, but as of June last year we had 8.4 times as many public servants…
If the federal government overnight reduced welfare, health and education spending to New Zealand levels it would be rolling in a $40 billion budget surplus next year rather than wallowing in deficit until 2018 or even later…
[Bill] English, now in his sixth year as New Zealand’s Treasurer, commendably chose not to emulate the world’s greatest treasurer Wayne Swan and kept a tight leash on public spending before and after the global financial crisis, preferring to cut income taxes and lift consumption tax. The Key government, facing election again later this year, is now reaping the rewards.
While Australia’s economy is lumbering back to trend growth, New Zealand is enjoying a boom, its economy predicted to grow 4 per cent this year and 3 per cent next without pushing up inflation.
The country’s unemployment rate is projected to fall to 4.4 per cent during the next few years as ours hovers around 6 per cent.
Apart from a bloated public sector and a wellspring of whingeing, what does Australia get for its vastly more indulgent public spending?
Much higher taxes, for one thing. The marginal income rate most Australians will pay from July — 34.5 per cent — will be higher even than New Zealand’s top 33 per cent rate, which makes a mockery of our 49 per cent top rate, which will be higher than China’s and France’s.
