Leo McKinstry is a columnist for the Daily Express in England. In a recent article titled Bloated public sector must be cut down to size he could be talking about New Zealand. The interesting point is that the UK has been living under a Tory government for the past thirteen years, which Leo describes as turbulent. He says the party is exhausted and unpopular. That is true, and the same could be said of the Labour Government after just six years in office, though for different reasons.
McKinstry begins his article by saying a fundamental contradiction lies at the heart of the British state. On one hand, government spending has never been so high, nor the public sector workforce so large. As a result of this remorseless expansion, overall taxation is at its highest level since the Second World War. Too many public services appear to be mired in crisis, reflected in bitter complaints about underfunding and staff shortages.
He goes on to say part of the explanation for this paradox can be found in the mismanaged nature of the state machine, where waste is endemic and inertia chronic. A recent report stated that a quarter of the navy frigates haven’t spent a single day at sea over the last year. This coincides with a Ministry of Defence budget that saw the largest sustained increase in the last thirty years, going from £45.9 billion to £51.7 billion. Staff numbers at the MoD have increased from 57,550 to 60,640.
It’s the same story at tax collector H.M. Revenue and Customs where staff numbers have increased since 2016 from 66,900 to 71,000. McKinstry says for the government the only way out of this malaise is boosting growth and in turn that means tax cuts so that wage earners have more to spend (exactly what National and Luxon are saying). He points out tax cuts can’t be funded by borrowing; therefore they have to be funded by lower public expenditure, either by raising productivity or slashing costs.
If only Grant Robertson could grasp this basic fact. In the UK, according to McKinstry, Chancellor Jeremy Hunt has understood this reality, telling a recent conference in London that the sector must be “much, much more efficient” and “deliver more for less”. Having pointed out that public service productivity has actually fallen by 5.7 per cent since the pandemic, Hunt warned that without action, state debt would double. One example is the fact that 443,000 police hours are wasted every year in form filling.
He says equally damaging is the public sector’s fixation with diversity and identity politics, which fuels an inward-looking, grievance-led culture keener on social engineering than the delivery of services to the public. Perhaps an even more serious problem is the public sector’s bloated size, which both undermines accountability and costs taxpayers a fortune.
One in three British workers is employed by the state. That is a total of 10.6 million, almost double the usual official estimate of 5.7 million. In Whitehall alone, the civil service has expanded by 100,000 since 2016. McKinstry writes that instead of letting bureaucracy spiral out of control, the Tories should have embarked on reform years ago. Now, at the eleventh hour, it is their only hope of revival for the economy – and survival for their party.
In my view the NZ Labour Party, going into this election, is in exactly the same boat.