The Size of the New Zealand Government

Twenty months on the job, the president of Argentina singlehandedly eliminated fiscal deficit. It is now zero percent of GDP.  He cut the number of government ministries from 18 to 8. Call him funny, nutcase, or whatever you like. He has been called many names. Here in New Zealand, we have a new ministry of regulation. It is supposed to eliminate waste. I wonder if anyone knows how must waste it managed to cut. It seems that the Argentine PM did not need any new bureaucracy to eliminate waste.

Based on available budget data and estimates from the 2024/25 fiscal year, a ballpark figure for the total annual spending of New Zealand’s 30–40 government commissions would likely fall between NZD 500 million and NZD 1 billion.

Here are some questions. Do these 30 – 40 commissions provide good value for money services to New Zealanders? Are they productive? Measuring the productivity of the government is impossible because output is not clearly quantifiable. I am sure the government has not done any cost-benefit analysis commission by commission.  I have not seen one and I have not heard about one.

Major commissions with standalone budgets:

• Office of the Auditor-General: ~$162.8 million
• Office of the Ombudsman: ~$56.4 million
• Serious Fraud Office: ~$17.1 million
• Parliamentary Commissioner for the Environment: ~$4.4 million

Commissions funded under broader votes (e.g. Justice, Health, Treasury):

• Human Rights Commission, Electoral Commission, Law Commission, Privacy Commissioner, Climate Change Commission, etc.
• These typically receive between NZD 5–30 million each, depending on scope and staffing.

Smaller or specialized commissions:

• Broadcasting Standards Authority, Children’s Commissioner, Māori Language Commission, etc.
• Often funded in the NZD 2–10 million range.

Because many commissions are embedded within larger departmental votes, their exact allocations aren’t always published as separate line items. But aggregating known figures and reasonable estimates across 30–40 commissions indicate that NZD 500M–1B range.

 

Fearmongering

 I migrated to NZ from the US in 1994 because I was given a job offer at the RBNZ. Besides, the only reason to stay in NZ and raise a family was the fact that NZ is a non-nuclear country, no fearmongering and no warmongering. 

Less than a month ago, the NZ government announced its objective to increase productivity growth ​(economic growth​). 

Now, the NZ Minister of Defense seems to suggest that NZ should increase military spending to deter China! 

​Politics aside for now, these two goals are contradictory. If the Minister wants an increase in military spending (to a 2% of GDP) as required by Nato, it will crowd out an equal amount in private investments. If the money were to be printed, we get inflation, the RBNZ has to deal with it by raising the interest rate. ​If the government wants to increase taxes it would violate its objective to reduce taxes. Generally speaking, such a whim would be very costly.​ 

I showed before those countries with lower government expenditures / GDP ratio grew much faster than others. Here is a scatter plot of the average real GDP per capita growth and the average government consumption expenditures (military spending is a consumption expenditure) / GDP ratio from 1990 to 2023. You could see how the three Asian economies grew richer than the G7 and New Zealand. It is likely that such proposed increase in military spending would result in lower growth over time.

​The story the Minister of Defense is quoted telling is that NZ is mineral-rich, and China has its eye on it! If this is the case, then why not export more of it to China? We have a trade surplus with China. In addition to dairy products and other agricultural commodities we export minerals. China would be even happier to help us with capital investments. I am unaware of China's previous military interventions to steal resources. China usually traded with other countries, not invade them. This idea that some superpower will come to steal NZ resources sounds like a colonial mentality flashback. 

And note that if the NZ government increases military spending it would be in the form of capital expenditures such as weapons, planes, ships...etc. not manpower. Where do we get these weapons from? Most likely the US and the UK will sell us their old machines to us. It looks like New Zealanders will be the losers. Trade with China is the best security for NZ, and this is a long geopolitical argument, but I find Don Brash and Helen Clarke's argument of independent foreign policy very convincing.