29 May 2011

NZ approach to public sector reform more measured than UK

6:19 am on 29 May 2011

The British government has embarked on a massive programme of public sector reform. By comparison, the New Zealand Government says it's taking a different approach.

Chancellor George Osborne is determined to rein in the deficit in the next four years.

Mr Osborne has outlined a massive programme of reform. About 80% of the savings is to come from the public service and 20% from higher taxation.

Almost half a million public servants could lose their jobs.

Reform think-tank chief economist Patrick Nolan says the coalition's simply doing what it has to do.

However, The Economist's political correspondent Janan Ganesh says opinion polls indicate the people are worried about the depth and speed of the deficit reduction programme the government is pursuing.

Similarly in New Zealand, the National Government often blames the previous Labour Government for the state of the books.

As a comparison, the British Crown ran a structural deficit equal to about 8% of GDP in 2010 while New Zealand was running a structural deficit of about 4% of GDP.

Finance Minister Bill English says the New Zealand Government is taking a different approach to Britain. He says the New Zealand approach is much more measured.

But the Public Service Association says the sector has done a lot of belt-tightening already, with about 2000 job losses.

National secretary Brenda Pilott says the Government is playing politics with the public sector cuts, as none of them will take effect until after the election.

A Radio New Zealand political reporter who made a recent trip to Britain, says that can be read another way: National will campaign on the proposals and will consider that a mandate for change if it wins the election.

More on public sector reform in Britain can be heard on Insight on Sunday.