Budget 2017 analysis of real per person spending shows real winners and losers
Researchers at Victoria University of Wellington and the New Zealand Institute for Economic Research (NZIER) have found that while overall real per capita government spending is basically stable, a breakdown of new and projected Crown expenditure shows a significant transformation in the make-up of government spending.
31 May 2017
Two areas are forecast to grow rapidly in real per capital terms over the forecast period to 2020/21, defence spending (+6.3%), and New Zealand Superannuation (+6.5%).
Three areas are forecasts to shrink in relative importance debt servicing (-7.5%), welfare (excluding New Zealand Superannuation) (-5.5%) and other services (-5.7%), which includes transport and communication, housing and community development, environmental protection, and economic and industrial services.
Heath and education are the largest areas of government spending and together account for around 40% of total current spending.
Health spending is projected to increase by 1.2% in the 2017 Budget year, and is set to rise relative to population and inflation by 2.1% by 2021.
Real per capita education spending is projected to decrease slightly in the coming Budget year (-0.3%). However, over the forecast period, education spending is projected to increase above current levels by 2021 (+3.4%).
See the accompanying table for further breakdowns of real per capita spending changes.
This analysis has been produced on the basis of adjusting all areas of core central government spending for the consumer price index (CPI) and population changes. Researchers caution that this approach does not directly address cost pressures in specific areas of spending, or the changing demand for government services within the nation’s population. Researchers are not commenting on outputs, or the quality of government spending.
Accompanying this research is a full account of the methodology and assumptions. Wherever possible, the figures, projections and assumptions have been taken directly from government sources and applied to the new spending information in Budget 2017.
Download the spreadsheet to view data and interactive visualisations.
NZIER’s analysis was supported by its Public Good programme.