More please (or “What New Zealanders think of public spending”)

The New Zealand Election Survey (NZES) has been running since 1990

NZES’s main source of data are questionnaires which are posted to randomly selected registered electors across the country immediately following each election.

Some of the questions stay the same but others reflect some mix of the issues of the day and researchers’ interests. There usually seem to be quite a range of economic and social policy questions.   They achieve quite a large sample (in the 2014 survey they had 2835 responses) and the reported responses are weighted to, as far as possible, reflect the demographic characteristics of the population (age, sex, race, qualifications and party support)..

I haven’t seen any media coverage of the results of the 2014 survey, but reading through the responses to the policy questions over the weekend I thought some were worth highlighting.

Perhaps the responses that most caught my eye were those around government spending.  These were the first set:

Should there be more or less public spending on:
More Same Less Net (more- less)
Health 66.8 26.7 1.6 65.2
Education 64.2 29 1.6 62.6
Housing 48.6 36.3 8.3 40.3
Police and law enforcement 42.8 45.3 5.2 37.6
Public Transport 41.8 43.3 7.5 34.3
Environment 40.2 45.4 6.5 33.7
Superannuation 31.8 55.4 5 26.8
Business and Industry 29.7 47.8 9.7 20
Defence 18.2 54.3 18.7 -0.5
Welfare benefits 15.4 41.6 24.6 -9.2
Unemployment benefits 12.4 38.6 40.5 -28.1

In most categories, more people favoured keeping expenditure at current levels than favoured either raising it or lowering it, but, equally, for most categories the net balance of respondents were much more in favour of raising public spending than of lowering it.  The only area in which respondents favoured cuts in public spending were “welfare benefits” and especially “unemployment benefits”  (while by similar margins they favour spending more on superannuation).

I was a little surprised.  There are areas where I would favour increased government spending (eg statistics and legal aid), but I’m pretty sure that if faced with this survey I’d not have answered “more” to any of these questions.

Despite the answer on superannuation, respondents narrowly favoured raising the NZS eligibility age to 67 (as they did when the same question was asked of an overlapping sample in 2011)

Agree Disagree
Raise NZS age to 67 between 2020 and 2033 42.2 38.3

That left me wondering why people wanted to increase public spending on superannuation.  Perhaps they want fewer people getting superannuation, but for each superannuitant to get more?  But as we have one of the lowest rates of poverty among the elderly of any OECD country that would be a surprising stance.  Perhaps it is just that people are more hard-headed faced with a more specific question?

The survey also had a few questions about whether some types of government spending is good or bad (ie not asking whether the current level should be raised or lowered).  I found those responses a bit eye-opening as well.

Should government give financial help to
Yes No
Companies for research and development 66.7 11.8
Companies to help them develop products for export markets 61.3 14.3
Sportspeople to allow them to compete internationally 56.6 19
Film makers to encourage filmmaking in NZ 50.7 18.6
Banks to help them in time of economic crisis 26.2 40.9

I’m not sure how I’d have answered the banks question –   there wasn’t an “it depends” option.  I’d like to think I’ve have answered “no”, but revealed preferences matter and in Treasury in 2008 I argued strongly for the use of guarantees and, on balance, still think that was the right advice.

In fairness to respondents, there are no questions in the survey about how they would propose that the country should pay for this spending.  The presence of a budget constraint – even a hypothetical one in a survey –  might have changed how some respondents answered.  But perhaps not by that much.

There was one tax question in the survey, in which respondents narrowly opposed a capital gains tax.  In principle the question was ambiguous  –  asked if we needed a “capital gains tax excluding the family home”, some respondents might have objected to the exclusion of the family home, but would have favoured a more textbook comprehensive CGT.  But I don’t suppose there were many such respondents.

Overall, I’m not quite sure what to make of the results.  One person I showed them to suggested that “ACT should read them and give up”.  They were suggestive of a New Zealand with attitudes perhaps not much different than similar surveys might have found 50 years ago.  There is quite a strong suspicion of (non-superannuation) welfare in these and other questions in the survey, but also a quite striking degree of belief in a role for a fairly large and active government.

Then again, for better or worse, although government spending in New Zealand is very large –  central and local government current spending totalled 37.1 per cent of GDP last year –  there were only three OECD countries where current government spending now accounts for a smaller share of GDP than in New Zealand.  And in all but a handful of countries the government spending share of GDP has risen somewhat over the last decade or so (as it has in New Zealand).  Korea is at the low end of this chart, with current government spending of 28.6 per cent of GDP last year, but as recently as 2002 that share was only 22.0 per cent.  Between rising government spending and the continuing encroachments of the regulatory state, whatever ails the world economy at present doesn’t look to have been an outbreak of small government.

gen govt spending

6 thoughts on “More please (or “What New Zealanders think of public spending”)

  1. These are the standard answers you get from these questions. The answers say more about what the public likes and values such as Health & Education, and what it dislikes i.e. “bludgers on welfare”. I believe that the answers have tended not to change over the years regardless of the level of actual government spending.

    I suspect that if the questions were framed differently eg “Would you be personally pay additional tax of $50 per week if the government spend this tax on healthcare”; then the increasing bias would moderate substantially.

    Like

  2. Of course, actual levels of government spending (as a share of GDP) haven’t changed much (at least over the years these sorts of polls have been run)

    It wasn’t really the health and education answers that surprised me, but (eg) the desire to increase superannuation spending and “business and industry”, and the strong support for other business support – export incentives, R&D subsidies etc.

    On your final point, yes I’m sure you are right, but I don’t see much sign, other in public opinion, or from cross-country perspectives, that we are anywhere close to “peak government”.

    Like

  3. What would be interesting is broader information (like this from the British social survey http://www.bsa.natcen.ac.uk/latest-report/british-social-attitudes-30/key-findings/public-spending.aspx ) on attitudes to overall taxation and spending. What is clear is that structurally it is almost always a good time to spend more – there are points at which public debt escalates and leads to a switch.

    The Treasury Colmar Brunton survey as part of the long-term fiscal work provides some information along the US lines. See below.

    In another sense the sorts of things at the top of the list are not surprising. They both lie at the heart of why the size of the state has increased over time. They have (i) have an income elasticity of greater than 1; and (ii) have arguable baumols’ cost disease that makes their relative prices stay high – say comparet with a computer. This means they comprise a greater and greater share of consumption/production. At last this has been the case in much of the last 100 years – and appears not to have changed much in countries that are richer in NZ.

    Survey

    33 percent The current balance between services that are provided for free and services that are means-tested is about right
    39 percent Some more services, for example healthcare, education, or NZ Super, should be means-tested so that resources target the most needy
    23 percent. The state should provide more services to everyone for free

    Like

  4. Yes, it would be nice to have the richer data – altho arguably it is revealed in the political complexion (governments that make serious attempts to cut spending are quite rare and don’t often last that long).

    Not sure I buy the Baumol argument for health, but certainly accept the income elasticity point. But as I said to an earlier commenter I was less surprised by the health and education answers (perhaps with the exception of the 2011 survey question in which 65% thought education should be free up to and including university) than by some of the business/industry ones.

    And growth of the role of state? Health and education to be sure, but welfare is also a very large component. I was reading a NZ econ history last night which had a table from the 1901 or 1911 census – at that time a total of 1% of the population was dependent on state welfare.

    Like

  5. Yes, the results are pretty much I have seen for almost any nation.

    more spending but less taxes!!

    on small government I am not sure it is compatible with a modern economy.

    Like

  6. on your final observation, I guess that is an open question. Is it that we need this much govt (regulation and spending) to be prosperous, or simply that for the time being we have a public demand for it. On the welfare system (plus most public health and education), I’d put it down to demand rather than necessity. I’m less sure about the regulatory side.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s