Dr Michael Bassett

Dr Michael Bassett

Newspaper Columns


Careless Spending

30/03/2004
Left-wing governments have usually overspent in their determination to fix peoples' lives. Harking back to Sir George Grey's time, Prime Minister Seddon warned his deputy Sir Joseph Ward in 1902 against over-spending: "The Liberal Party has always been smashed up by weak finance". Michael Joseph Savage and Peter Fraser understood the problem and had faith in Walter Nash during the First Labour Government. He could count. Even so, by 1949 Labour was over-spending, thus contributing to the years of inflation that followed. Arnold Nordmeyer was more cautious between 1957 and 1960. Some complained of Presbyterian parsimony. The Kirk-Rowling government made up for him between 1972-5, running up a large deficit in its last year. Then Robert Muldoon caught the spending bug and there was nothing left for David Lange's government to spend by 1984.

Helen Clark's government began its life raising the top tax rate. Yet Michael Cullen has been commendably cautious with overall spending. However, considerable devolution of decision-making has taken place over the last two decades, and the treasurer exercises less detailed control than earlier. He allocates money to departments, but CEOs appear to sign off many grants without referring them back to their political masters. That doesn't absolve ministers of responsibility. Right now the government is suffering because they haven't exercised enough oversight. It's an attitudinal thing in part. Too many of them are like the Alliance MP who said dismissively in 2000: "it's only government money", implying that it was a different kind of currency requiring a lesser level of stewardship. But "loopy" grants (to use the Prime Minister's term) could prove fatal to her ministry. Ordinary people who scrimp and save resent others wasting the money that the taxman has extracted from their hides.

Funding community groups has always been a difficult issue. Well-meaning people want money for ambitious projects. Personal fund-raising requires effort, and they first try to raid the nearest deep pocket. The Government immediately comes to mind. Some departments have small discretionary funds at their disposal, and the Lottery Grants Board has its allocation committees, too. These days the Labour Department's Community Employment Group seems the biggest milch cow. It funded an expensive personal odyssey to study hip-hop and another to examine digital media. CEG paid out 1300 projects a year. They've supported a weird collection of proposals, many involving personal desires with no obvious community benefit. They've even put money into a regional Maori TV channel when Maori TV itself has only just come to air after massive waste of public money.

Waste doesn't stop with CEG. In the tertiary educational sector neither officers nor the minister has monitored the recruiting processes used by some institutions under their wing. There have been several well-publicised rorts. Departments such as Corrections have spent up big on Maori consultation over prison sites, paying top hourly rates to a fraudster. They've funded endless hui as they try to buy off groups producing imaginative arguments about wahi tapu and taniwha. Departmental officers insist they are only doing what misguided legislation obliges them to do. They are right, of course. The politicians, not the bureaucrats, put those clauses in the Resource Management Act and it was only a matter of time before they were caught out. Maori with whom officials are obliged to negotiate have no incentive to settle when a Crown agency wanders about brandishing a cheque book. Even the ACC that has known so many bogus claims in its 30 years, is funding incomprehensible injury rehabilitation schemes such as nasal irrigation exercises to fix shoulders. Government waste on idiosyncratic schemes seems endless. We haven't yet had a case of a Crown agency funding lesbian surfers who never go near the water, something that titillated Australians in the last days of the Keating Labor Government. But my guess is it won't be long before we hear of something just as barmy.

It's all the result of a cocky administration, brim-full of dubious nostrums about how to put the world to rights, empowering officials to spend money that should have been returned to people in the form of lower taxes. At the very least the public expect their elected representatives to be careful with taxpayers' money. Helen Clark's ministers are paying a high price for not reading their political history, and for not exercising adequate departmental surveillance. Voters are unlikely to believe after four years of devil-may-care spending on such things that these limping leopards have changed their spots.