Social welfare has shrunk as a portion of total govt spending – but that’s before Covid-19 upset the figures

We were checking out the cost of our social welfare system, when  government responses to the Covid-19 pandemic made nonsense of all our old concepts of government assistance.

The virus has turned everybody – by the looks of it – into state beneficiaries and has  significantly raised government spending projections.

Never mind.  We will go ahead anyway and show what we found when we compared social welfare spending in the six months ended December 31 2019 with social spending 20 years previously.

The comparisons were made using data dredged from the Financial Statements of the Government of New Zealand.

Among our findings, corporate welfare beneficiaries were doing much better than 20 years ago – in terms of their slice of government spending – before the virus triggered much greater injections of government assistance.

The other big change from 20 years is the proliferation of social welfare programmes recorded as transfer payments in the financial statements (see table below).

Social assistance

1999 2019
$m $m
New Zealand                                Superannuation 2517 7674
Domestic purposes benefit 723
Community wage 985
Family support 478
Student allowances 190
Other social assistance                 grants 1409
Family tax credit 1076
Jobseeker support and
     emergency benefit 1013
Supported living payment 800
Accommodation assistance 913
Sole parent support 585
Income-related rent                   subsidy 36
KiwiSaver subsidies 477
Other working for families
     tax credits 304
Student allowances 305
Winter energy payment 276
Best start 77
Disability allowances 198
Other social assistance                benefits 807
Total 6302 14,530

True, social security and welfare spending is by far the biggest item of Government expenditure,

  • In 1999 it was $6441m, 36.3% of total spending of $17,720m.  
  • In 2019 it was $17,735m, 30.1% of total spending of $58,979m,

This is far ahead of health (19.2% of the total in 1999, falling to 16.8% in 2019) and education (17.2% of the total in 1999, falling to 13.4% in 2019.

So what accounts for this?

Growth in corporate welfare, by the look of things.

Transport and communications accounted for $399m in 1999, or 2.4% of the total.  This has burgeoned to $5844m, or 9.9% of the total.

Economic and industrial services accounted for $399m, or 2.3% of the total, in 1999.  This has soared to $5024m, or 8.5% of the total.

Primary services accounted for $127m in 1999, or 0.7% of the total.  This has risen to $1206m, or 2% of the total.

Housing and community development has done nicely, too, which should not surprise us as  the government scurries to provide more affordable housing.  Its $18m spending in 1999 was just 0.1% of the total.  This has risen to $1280m, or 2.2% of the total.

When we look at social services transfers, New Zealand Superannuation remains the biggie, rising from $2517m to $7674m.

But it is the only item on the tables in the respective financial statements which provides comparative data.

The dole was not called the dole 20 years ago and is not called the dole now.  But nor does it have the same name as it had 20 years ago.

Programmes from the past, such as the domestic purposes benefit, have made was for new programmes, too.

We look forward to updating our tables when the six months figures to December 31 2020 are published.




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