Sunday, March 31, 2024

Dr Eric Crampton: Public service cuts and context

Richard Harmon's Politik newsletter provides a bit of the context that ought to have been showing up in other media reports on potential reductions in public service staffing.

Media has been reporting on staffing cuts on the order of about 7%. Is that a big number or a small number relative to growth in the overall public service?

The public service in 2023 had headcount 38% larger than it had in 2017, when National was last in office, and 19% larger than in 2019, before Covid.

There has not been 20% population growth since 2019.

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Budget 2024 needs to provide a credible path out of deficits, ideally focused on getting Core Crown expenditure, as a fraction of GDP, back to where it was in 2019 - at least as an interim goal. That would only take things back to where Ardern had had it in the 2019 Wellbeing Budget.

The 2019 Wellbeing Budget was not austere. It was set to increase Core Crown expenditure's fraction of GDP by about a percentage point as medium-term steady state, from just under 28% of GDP to just under 29% of GDP.

The 2023 Half-Year Fiscal Update had forecast 2024 Core Crown expenditure at 33.4% of GDP, and a forecast path down to 31.4% by 2028.

Shaving that back down to 29% more quickly isn't austerity, or at least not the swear word version of it. It's just retrenching after a giant shock.

And it sure would be great if news outlets appalled at 7% cuts to Ministry rosters could remind folks that that would still generally be a substantial increase on pre-Covid staffing.

Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE


Allan said...

73.4% increase in Information Professionals, i.e. people employed to tell us how good the govt, was and 51.1% increase in managers to manage them and the other increases in beaurocracy. Sorry guys, just see it as being good while it lasted but eventually you would always have to find work which produced something saleable.

Richard Compton said...

What on earth is an "Information Professional"? What do they do, and why did they top the list of increased numbers of public servant categories?