While the Panama papers and examining the entrails of The Bachelor are getting headlines the government books are in a healthier state than forecast:
The $167 million operating balance before gains and losses (OBEGAL) surplus for the nine months to 31 March was $334 million better than forecast, Finance Minister Bill English says.
Core Crown revenue was $206 million higher than forecast, largely due to core Crown tax revenue being $702 million higher than forecast by the Treasury in December.
These aren’t big numbers in relation to the government’s total finances. But given the global financial position and the impact of low dairy prices, this is an achievement.
This was partially offset by core Crown interest and dividend revenue being $456 million lower than forecast.
Mr English says because of sustained, moderate growth in the economy, the Crown accounts are in good order ahead of the delivery of Budget 2016 later this month.
“We’ve been successful in turning an $18.4 billion deficit in 2011 to a surplus last year. In Budget 2016 our focus is shifting more to repaying debt.
“Budget 2016 will reflect this Government’s continued commitment to responsible fiscal management. At the same time it will build on the good progress we’ve made over the previous seven Budgets, with further investment in a growing economy and public services.
“We measure success by results, rather than the level of spending.”
It’s not what they’re spending but the impact that spending that matters.
One area that always takes a lot of spending is welfare.
The government is taking the investment approach which means spending more in the short term for longer term social and financial gain.
A report from Deloitte and NZIER says that the investment approach needs to become a mainstream way of working across more of the social sector.
State of the State New Zealand 2016: Social investment for our future advocates broadening the use of the social investment approach to manage New Zealand’s future fiscal challenges and support better outcomes for Kiwis.
NZIER Deputy Chief Executive John Ballingall says the State of the State takes a close look at government finances and the burdens New Zealanders could face in the future.
“A combination of our ageing population, low productivity and revenue growth, and the need to reduce government debt will impose huge fiscal pressures in coming decades – particularly in social spending. More importantly, too many people in New Zealand are experiencing poor life outcomes and too many of their children are at risk of following them,” says Mr Ballingall.
Deloitte partner and public sector leader Dave Farrelly says it’s the sum of these factors which drove us to focus the report on social investment, an approach to funding social services focusing on root causes to prevent the need for these services in the future.
“For example, with social investment the task is not to deliver the next 100 prison beds for the same cost as the previous 50. It’s to remove the need for those new prison beds altogether,” says Mr Farrelly.
“Today social investment is like a start-up – a small number of people are working incredibly hard to bring a big bold vision to life. Tomorrow, social investment needs to become a mainstream way of working,” he says.
In the six months of research for the report, Deloitte and NZIER spoke to some of the most senior and influential leaders in the public, non-government and private sectors – all of whom provided a unique perspective on social investment.
State of the State proposes a package of bold reforms to realise the aspiration for social investment in New Zealand. The recommendations are:
1. Release, every four years, a government-wide statement to define the outcomes and targets for at-risk New Zealanders
2. Establish a new agency to commission specialist social services for people at risk of poor life outcomes
3. Embed the social investment approach to funding quality and sustainability in the new agency’s operating model
4. Enable better access to government-held data and detailed evaluation reports
“We suggest a structural reconfiguration that some will find challenging, while acknowledging we don’t yet have all the answers,” says Mr Farrelly.
“But we must be bold in tackling these challenges today to maintain our way of life in the future,” he concludes.
Social investment is working and the reforms Social Development Minister Anne Tolley is promoting will do more.
Trans Tasman notes:
. . . The reform being pushed through by Tolley is perhaps the most far-reaching undertaken by the Govt and could stand as its greatest legacy if it achieves its goals. Already it has made some headway in improving the lives of Maori children who are more than twice as likely as Pakeha children to grow up in households experiencing hardship, and fare worse in most indicators. A report by the University of Otago-based Child and Youth Epidemiology Service shows increasing numbers of Maori pre schoolers are getting early childhood education. There’s also been a halving of school suspensions for Maori students, an increase in immunisation rates, fewer young Maori smoking,and falling hospitalisation rates for Maori children for injuries from assault, neglect or maltreatment. Tolley is understood to have secured an additional funding, probably of the order of $500m in this year’s budget for the reform. . .
Turning around benefit dependency and all the financial and social costs that go with it will not be neither easy nor cheap but the investment approach is working and it’s a much better story than many of the others which are getting attention at the moment.