An independent economist says the Government's run rate for expenditure, even excluding COVID-19, is "absolutely jawbreaking" and its forecast spending is unlikely to be achieved.
Government spending has been seeing steady increases over recent years. Growth in core government expenses, excluding COVID-19 relief money, averages 10 percent between 2018 and 2023.
In the upcoming year, expenses are projected to rise an eye-watering 13 percent. Beyond this, the Government is forecasting a heavy slow-down in spending, but independent economist Cameron Bagrie told AM the figures are hard to believe.
"If you look at the average yearly increase in expenditure, that's the growth rate, it's about 10 percent per year - eight percent per year between 2018 and 2022 and in 2013, even stripping out COVID, it's a pretty eye-watering increase in core expenses of 13 percent - that's absolutely knocking the ball out of the park," Bagrie told AM's Melissa Chan-Green on Tuesday.
However, Bagrie said to be fair to the Government, it inherited some "pretty big structural problems" which required large spending, such as health. But even in spite of that, he said its spending has been huge.
"Healthcare has been underfunded for a long time, we've had to turn the dial in terms of putting some more money in places but that run rate - 10 percent per year on average between 2018 and 2023 - is absolutely jawbreaking."
Bagrie also questioned the Government's forecast expenditure growth. Between 2023 and 2026 the projections see core government expenses growing by just 4 percent, a significant drop from the current rate.
"If you believe the fiscal projections, we are going on one hell of a diet between 2023 and 2026," Bagrie said. "If we are going to stick to the debt objective, if we are going to stick to the objective of getting back to operating surplus by 2026 then you need to see expenses grow less than 4 percent per year on average for the next four years, now is that achievable?
"Well we can debate that but personally I think we've got our back up the wall in regards to whether we can achieve that given the inflationary environment.
"If I look at what we've seen between 2018 to 2023 we've seen a run rate that's 10 percent per year so if I see some numbers put there for 2023 to 2026 that says we are going from a 10 percent per year run rate to less than 4 percent, I look at those projections and I am a little bit sceptical in regards to whether they're going to be delivered."
Government spending is a hot button political issue at the moment with high inflation and skyrocketing living costs putting pressure on Kiwis.
The Government spent an extra $6 billion in this year's Budget. Despite criticising Labour for spending too much, National said it would have also used the $6 billion spending allowance if it was in power.
