Just How Bad NZ’s Productivity is!
Last week I posted on how problematic the size of NZ government is.
Duncan Garner picked up on it here – and also interviewed David Seymour on it. Seymour seemed unusually tepid on bringing about smaller government – even going with the “at least we are not Labour” type statement.
I mentioned that the Public Sector is “crowding-out” the Private Sector and making genuine economic growth extremenely difficult. Treasury notes this:
“Government spending in New Zealand has significantly expanded, with some estimates noting the expenditure-to-GDP ratio has doubled from roughly 20% to 40% since 1960, signaling substantial expansion. Concerns exist that high public spending, particularly post-2023, is absorbing resources and potentially slowing private sector growth, with some estimates attributing roughly 20% to 25% of recent economic underperformance to public sector consumption and investment.”
To add to this; a large government sector does nothing to help productivity. How many of the bureaucracies could be regarded as efficient?
Labour productivity in 2023
Copy link to Figure 4.6. Labour productivity in 2023
GDP per hour worked in current prices and current PPPs
Note 1: Maybe we are only ahead of Mexico and Columbia because some of their “horticulture” doesn’t get counted.
Note 2: Our Tax/GDP is 34%. Examples of those ahead of us on productivity are: Australia 29.4%, Switzerland 27.1% USA 25.2%, Ireland 21.9%.
As noted on the first post. Which political parties will run on shrinking the size of the State and – if going into co-alition – make it a genuine bottom line?
In $US Australia’s GDP per capita in 2025 was $65,946 to NZ’s $49,383 (a gap of $16,563).
In $US Austalia’s GDP per capita projected for 2030 is $79,623 to NZ’s $58,552 (a gap of $21,071).
As Duncan Garner noted – this government has broken significant promises to shrink themselves and bring down spending and borrowing. We don’t need/want a change in government – but we NEED this government to change their approach quickly.
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