Bank report flays quality of govt spending

The country's biggest bank is preparing to release a damning report on the poor quality of government spending.

A senior ANZ National Bank official said yesterday the report was likely to cause a "feeding frenzy" and a decision had been made to wait until after today's Budget to release it in a bid to minimise the political fallout.

The Press learned of the report, which is critical of excessive spending on "back-office" government department functions, from sources attending a closed-door presentation by ANZ chief economist Cameron Bagrie this month.

The report is likely to come as a significant blow to the Government as it fights an uphill battle for re-election. The National Party has made halting "runaway growth" in spending on the public sector bureaucracy a foundation of its campaign.

Bagrie yesterday confirmed the general findings of the report but said the bank would not release it until the end of June.

"Some of the numbers behind the scenes, they don't actually look that flash in terms of where the money is actually being spent," Bagrie said.

"We obviously don't want to put that out before the Budget, because I just think that is unfair, and we don't want to put it out straight after the Budget.

"We also want to have it out well in advance of the election because we are not playing politics here."

Bagrie said ANZ had done the research as a follow-on from work on productivity and regulation last year "because a lot of government spending is going into what I call non-productive, or back-office, functions as opposed to the front line", he said.

There was a very strong role for government spending in the economy "but we certainly know that some spending is of better value than others".

"I use this example as a taxpayer I do not care about paying tax if it is going to the teachers, if it's going to the health professionals, if it's going to the firefighters and the police, because you need those basic necessities across your economy.

"What we basically did was went, look, if you assume they are your necessities or your frontline government spending, let's compare the growth rate in expenditure in those areas versus the growth rate and expenditure to the departmental government spending behind the scenes.

"Lo and behold, the Government's departmental spending has massively outgrown the growth (of funds going) into that."

Bagrie said: "The issue I want to get people's heads around is it is not how much money you spend, because no-one knows what is the right level, but it is where the money goes."

The bank's findings were presented to a closed session at a seafood industry conference in Wellington. Bagrie stressed the presentation was non-political.

"But I think that just got a few people interested because no-one has been brave enough to stand up there and say something," he said.

- © Fairfax NZ News

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Regan   #2   05:26 pm Jan 28 2009

Too right. I've heard some people say "I don't mind sacrificing my tax cut if it means they'll commit more money to our failing health system". They haven't realised that after years of the government pumping billions into the health system that the problems have increased, eg. waiting lists are longer, doctor's strikes etc. Why? Maybe it has something to do with the fact that there are more hospital managers than there are beds! This is indicative of the fact that this government doesn't care about efficiency with your tax dollars. And you will hear them trumpet their intention to increase funding further. More funding will not improve the outcomes.

Jean Went   #1   05:26 pm Jan 28 2009

Well done the ANZ National Bank for being prepared to publicly state what many of us already think; they might be listened to, we ordinary everyday folk wouldn't be.

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