Media Release: Historical insights into the Labour government's cyclical overspending

Dr Matthew Birchall
5 October, 2023

Wellington (Thursday, 5 October 2023) - As New Zealand has already begun to vote in the 2023 election, The New Zealand Initiative releases this timely research note which takes a deep examination of our country’s government spending patterns over the last century.

This research note, written by Dr Bryce Wilkinson, analyses the six-year spending spree of the current Labour government in the context of historical precedents.

The Sixth Labour government significantly overspent compared to its projections in its Pre-election Fiscal Plan in 2017. Labour’s planned $11.7 billion increased to $29.7 billion prior to Covid-19 reaching New Zealand. By the end of Labour’s five-year plan, cumulative spending had increased by $77.4 billion.

This report provides a historical overview of New Zealand’s government spending patterns using tax receipt data dating back to the 1910s. It details the impact of global events such as wars, epidemics and economic downturns.

The First Labour government set somewhat of a precedent of increased government spending, which was spent on redistribution efforts such as social security benefits, pensions, education, and health. The trend only continues, as the report shows subsequent Labour-led governments as big spenders.

It takes a chronological exploration of the behaviours of various New Zealand governments post-1957, comparing the approaches and responses of different governments to wider economic challenges.

The dominant focus of fiscal government activity since 1950 has and still is on redistribution but at what point does redistribution make a community worse off?

Dr Bryce Wilkinson notes, “The current big-spending government has historical precedents. It is reasonable to anticipate that the government that eventually succeeds it will have to raise tax revenues and keep a tight rein on spending for many years – unless it acts more decisively."

The full report A historical perspective on the 2017-2023 Government’s spending spree is available from The New Zealand Initiative’s website here.

Dr Matthew Birchall is available for comment. To schedule an interview, please contact:

Matthew Birchall, Research Fellow
P: 022 536 2294

About The New Zealand Initiative

The New Zealand Initiative is an evidence-based think tank and research institute contributing to public policy discussion.

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