Govt Spending Impoverishing Our Grandkids

Finance Minister Bill English’s shocking revelation in the house today that public sector spending in the financial year ending June 2009 was $93 billion - over 50 percent of GDP - should send shockwaves into every New Zealand home, ACT New Zealand Finance Spokesman Sir Roger Douglas said today.

"Five years ago public sector spending was sitting at 41 percent of GDP. but since then has increased by over $33 billion. This massive spending binge highlights just how much the last Government, led by Clark and Cullen, were prepared to pillage the pockets of New Zealanders," Sir Roger said.

"A recent study of almost 40 years of OECD data showed that countries which grew the most were the countries in which public sector expenditure was lowest. If we review New Zealand’s statistics against this, it paints a bleak picture for our future.

"Countries that spent below 25 percent of GDP enjoyed average annual growth of 6.6 percent, while those that spent 25-30 percent experienced growth of 4.7 percent. However, countries that spent over 50 percent, which is where New Zealand is sitting now, grew by less than 2 percent.

"To put it another way, over those 40 years the wages in those countries with growth of 2 percent rose by approximately 120 percent (from $10,000 to $22,080 annual income after 40 years), while the wages in those countries that grew by 6.6 percent went up by 1289 percent (from $10,000 to $128,910 annual income after 40 years).

"New Zealanders need to realise that there is no such thing as a free lunch. You can have all the Government handouts you like, but they come at a cost. That cost is measured in the lost opportunity of economic growth, lower wages, and fewer goods and services.

"Government spending must be reduced in order to increase New Zealand’s growth potential. If we cannot get public sector expenditure under control, it will be our grandchildren that will be paying the price of our excess," Sir Roger said.

ENDS