Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
[Volume:627;Page:21819] 
1. CLAYTON COSGROVE (Labour—Waimakariri) 
 to the  
Minister of Finance 
: What has been the trend in Government spending as a proportion of GDP in the last 6 years? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 The trend overall has been downwards from 33.1 percent in 1999 to a forecast 30.1 percent in the current year just ending and it is forecast to rise again to about 32 percent of GDP over the forecast period. 
Clayton Cosgrove 
: Which areas of Crown spending have increased and which have declined? 
Hon Dr MICHAEL CULLEN 
: The areas of big increase above the general rate of growth are health and education where spending has increased faster than GDP—that is teachers and nurses and doctors. The declines have been in social security which has dropped from 12.4 percent of GDP in 1999 to 10.1 percent in 2004. Core Government spending is down from 1.6 percent to 1.2 percent of GDP and debt-servicing costs are down from 2.3 percent to 1.6 percent now. The Government remains clear about its priorities in terms of health and education unlike Dr Brash who yesterday promised more in health and today started prevaricating about that. 
John Key 
: Is not the Minister actually misleading the public again as the correct base should in fact be the year 2000 when core Crown expenses were actually 31.4 percent of GDP; and further when we make allowance for the non-discretionary payments such as excluding social welfare in fact core Crown expenditure has been steadily rising and what is more it is yet to rise even further if Labour gets a third term? 
Hon Dr MICHAEL CULLEN 
: I thank the member for his confidence on that last point. On the other points that he made he is now reduced to arguing that we do not have a small public sector relative to other Anglo-Saxon countries. Now for an Auckland member of Parliament to think we are still an Anglo-Saxon country strikes me as pretty strange in the first place. Secondly we do not normally compare ourselves with the United States; and thirdly he is right: some areas of Government spending have gone down. Those are debt servicing and spending on welfare benefits and that has enabled us to spend more on health and education and indeed in the last term of Government on law and order. 
Peter Brown 
: Noting those answers and noting also that we have an ageing population what is the percentage that the Government believes is adequate for long-term health expenditure as a percentage of GDP and when does the Government expect to reach it? 
Hon Dr MICHAEL CULLEN 
: As to the last part of that question I do not think one can make a sensible prediction about what is adequate because that depends on forecasting technology as much as anything else. What I do note is that there is an extraordinarily close relationship between spending on health as a proportion of GDP and per capita GDP. New Zealand lies exactly on that trend line. The only major international outlier is the United States which spends a great deal more on health but with no better outcomes than New Zealand achieves. 
Keith Locke 
: What has been the trend in overseas development assistance spending as a proportion of gross national income (GNI)—I ask about GNI rather than GDP because GNI is more the international standard—over the last 6 years; is it true that spending has gone up only from 0.23 percent of GNI to 0.27 percent of GNI in this Budget; is it true that that figure puts us in the bottom quarter of the OECD; and how can New Zealand stand proud in the international community with that record? 
Hon Dr MICHAEL CULLEN 
: We are actually above the weighted average. We are also on the international ranking above our ranking in terms of GDP per capita. For us to lift spending to 0.7 percent would take approximately an additional $630 million per year which is certainly somewhat less than the cost of the Green Party’s tax proposals. 
Clayton Cosgrove 
: In the Minister’s view how well understood are the expenditure trends he has outlined? 
Hon Dr MICHAEL CULLEN 
: I think it is fair to say that they are poorly understood and have usually been grossly misrepresented by the confusion of core Crown spending with total Crown spending. Total Crown spending includes for example spending on the Air New Zealand share purchase the creation and success of Kiwibank State-owned enterprises and Crown trading entities. Some day perhaps the National Party may understand that. 
John Key 
: Is not the basis of this patsy question from the Government today just a feeble attempt to try to cover up the fact that the Minister’s Budget was a complete and utter failure that most of his caucus personally blame him for the fact that they are now in a terrible position and that all he is trying to do is muddy the waters and the country will not buy it? 
Hon Dr MICHAEL CULLEN 
: No no and no. But the member has one thing right: it is tax or it is a cut in health a cut in education and a cut in law and order which is why Dr Brash is now starting to backpedal in interviews about the National Party’s spending plans. I note that in the last four polls Labour has averaged ahead of National but of course National is so excited to be higher than 21 percent in the polls.