The Treasury

Global Navigation

Personal tools

4.5  Summary

The size of government in New Zealand, as measured by total expenditures or revenues, is roughly around or slightly below the OECD average, although our relatively low use of tax expenditures and expenditure mandates may make us look slightly bigger than we really are. However, the government's share of the economy has been increasing over time and an ageing population will make curtailing this trend a challenge.

Though our composition of expenditure is broadly in line with the OECD average, some evidence suggests there may be expenditure that either does not make significant contributions to stated Government objectives, including economic growth, or is not well targeted. Though it is not possible to draw definitive conclusions from such top-down analysis, it highlights the importance of robust appraisal and evaluation of both existing expenditure and new proposals. Identifying opportunities to reduce expenditures that do not make a significant contribution to government's priorities, and improving the efficiency of government expenditure in general, would allow for reductions in growth distorting taxes or better position the Crown to deal with long-term expenditure pressures without increasing the tax burden. It may also be possible to reduce the economic cost of financing expenditure by reducing our reliance on the more distortionary tax types, particularly those on personal and corporate income.

Page top