Saturday, January 26, 2008

The Myth of Bloated Bureaucracy

A really interesting new web site is Entitleme. The site provides a calculator that allows you to compare the amount of tax you pay in New Zealand and Australia at various income levels, factoring in any rebates and tax credits.

Also interesting are the pie graphs in the bottom part of the page, which show how those tax dollars are spent by the government. Take a look at the sliver that takes up 4.3% of the New Zealand pie called 'core government services'. This is the name for all the ministries and departments that make up what used to be called 'the public service', and I believe also includes prisons.

More on them in a minute, but first, consider the size of the pie itself. The proportion of the country's gross domestic product taken up by government taxation and spending is a source of considerable angst for many neoliberal pundits. In New Zealand, it is between 35 and 40 percent, depending on who you believe. This is about the OECD average. Nevertheless, Business Roundtable think pieces and op-eds from hawkish economicsts go to considerable lengths to argue that it's too high. Some have suggested that there should be an agreed, or even legislated, limit on the government's share of GDP -- given wholesale acceptance of Milton Friedman's pronouncement that most of what the government does is a dead loss to productivity.

These pundits often salt their economic jargon with talk about 'bloated bureaucracy', and place a lot of emphasis on the increase in the number of public servants under the current government. They give the impression that the salaries of chaps in ties take up a significant chunk of taxpayers dollars. A common anecdote is about the increase in central Wellington office rents over the last couple of years, due to demand from the various ministries. Some even go so far as to blame the country's macroeconomic ills on the hordes of 'pdf pushers' spilling out of offices along Molesworth St and The Terrace, claiming that their high wages are creating inflation and pushing up interest rates.

It may therefore come as a surprise that, as a burden on the country's economy and taxpayers, the cost of the public service almost fails to register.

A look at the Entitleme pie confirms this. New Zealand's GDP is about $160 billion NZD. Let's go with the worst case scenario and take the government's share of that to be around 40 percent -- $64 billion. The amount spent on 'core government services' (bureaucracy) is therefore 4.3 percent of this number -- about $2.5 billion.

That still sounds like quite a lot. Surely if you slashed the bureaucracy a bit, it would ease the deadweight burden on the economy? Ok. Let's say we entirely eliminate every bureaucrat, every government job, every department, ministry, commission and quango. This would free up the same amount of money as if New Zealand's GDP grew by 3 percent, rather than 2 percent, for just one year.

Yes, just one extra good year of dairy prices and tourism would create enough extra money to compensate for the wages of all 40,000 pdf pushers who squirrel away generating paper, or whatever it is they do.

What say you, the hardworking productive taxpayer, decide not to be so generous, and insist on firing the lot of them. Wouldn't that bulk up the hip pocket? Well, if you divide that $2.5 billion among New Zealand's 2.1 million taxpayers, there would be enough for an average tax cut of about $20 a week. At current prices that would get you maybe two-and-a-half beers.

Of course, there would be nobody to keep a record of how much tax you had paid, let alone check whether it was the right amount or what it had been spent on. And if you were to write a letter demanding answers on any of these issues, be prepared for the $120 'processing fee' that, say, Electorate Communications Consultancy Services would charge you for a standard answer (I'm basing the amount on what it costs foreigners to apply for a New Zealand visa).

Moral of the story, if there is one? Go ahead and believe, based on evidence or simple prejudice, that there are too many government bureaucats, and that they are overpaid and unproductive. Bemoan the fact that they are raising prices for office space in a few Wellington streets that could better used by, um, firms of lawyers and accountants. But don't take seriously the idea that they are somehow sucking up large portions of the country's wealth.

Tuesday, January 15, 2008

South Island Summer

Here are some more photos from Christmas and New Year in Canterbury. The majority are thanks to my girlfriend Paola and my sister Cecilia (who has a flash camera with fancy lenses). At this time of the year, stringing together a coherent series of words just seems a bridge too far, but I have a new stack of blog posts lined up for the near future.

As always, click to enlarge.

Playing frisbee, Motunau beach, North Canterbury.

Dozens of roses, Christchurch botanic gardens.

Butterfly on mountain daisy, near Lake Coleridge, Canterbury high country.

Lake Coleridge, Canterbury high country (featuring my Mum and Dad).

Sunset over Motunau Beach, North Canterbury.

Saturday, January 12, 2008

Dolphin's Smile

This is the only half-decent shot I managed to get of the Hector's dolphins in Akaroa harbour. There were at least four or five of them around the boat, dipping and skimming between the waves for about half an hour.

So why didn't I get a better picture?

Because, as soon as they appeared and looked interested, us tourists were eagerly scrambling off the boat to swim alongside the world's smallest and rarest dolphins.

Despite the rarity of their species, these little dolphins are not hard to find in waters around Banks Peninsula, and after what must must be seemingly endless boatloads of gawping visitors, are are still curious enough to take an interest and indlulge in a bit of frolicking.

The scenario is that a boatload of tourists, already wrapped up in their hired wetsuits, heads down the long, narrow Akaroa harbour looking for the dolphins. Once a pair or group of four are spotted, you have to wait to see whether the dolphins are interested in 'playing' It's against environmental ethics -- and the permit of the tour company -- to bother dolphins that are engaged in some other activity and that don't first approach the boat.

Fortunately, the first group of four that we encountered began to circle our vessel, darting back and forth in the classic signs of curiosity. Our dolphin guide explained that once off the boat we had to form a loose circle. The dolphins come close to check you out, using their echolocation to find out what you are. Group too close together, and to the dolphins you appear as a twenty-legged monster. Spread further apart, and they can recognise you as individual humans.

There was a freshening northeasterly in Akaroa harbour, and as we got closer to the heads the onshore wind was stirring up the sea. It was the first time I'd worn a wetsuit and it was slightly disconcerting. The buoyancy of the suit makes it easier to stay afloat, but throws you off balance when trying to swim. Your legs are pushed upward, making you feel like you're being tipped forward and downwards.

As we treaded water and tried to stay stable in the choppy waves, the handful of people on the boat were shouting out where the dolphins were as they zipped in and out of our group. "Right behind you!" "There! Just by your left shoulder!". Of course, with about ten people in the water, it was hard to know exactly whom the dolphin was 'right behind'. I was constantly swivelling around to catch a glimpse of a dolphin fin, slicing through the waves

I'm not confident with the mask and snorkel, and the waves were making it difficult to use them, so I had to stay above the water. Some of the others managed to get an underwater view. The closest the dolphins came to me was zipping by about three or four metres away. It was still a pretty unique and inspiring encounter with the natural world.

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