www.geocities.com/nzwomen/SusanStJohn/2002123replyKerr.htm
The Business Roundtable believes that government spending is too high and 'well above' the OECD average and will use any figures they can to support their views. Readers may be heartily sick of this debate, but the claim we are over-taxed is insidious. It prevents constructive use of the state to tackle our urgent needs in health, police, education, child poverty, and basic infrastructure.
Casual inspection of the table of OECD league of nations Roger Kerr supplies (December 19th) must have puzzled some readers as it appears to contradict his claims. New Zealand is clearly a low spender with just 8 countries out of 26 having lower spending. Checking with a calculator gives the simple average for the countries listed at 41.9%, not 37.9% as claimed by Kerr, so New Zealand at 40.2% is also below the average.
So why does the OECD give a figure of 37.9%? The figure is described as 'total of above OECD countries' ie total spending of all the OECD countries is divided by the total of all their GDPs. Thus the USA has the largest GDP by far, the total ratio is weighted very heavily (by a massive 35% in fact) towards the USA spending ratio of 29%. The weighting of New Zealand by way of contrast is just 0.29%. Unweighted averages are more relevant in these types of debate.
General government total outlays is no better a measure that the other OECD ones I quoted. They are all highly suspect because transfer spending is lumped in with other real resource spending. In such comparisons you would, in any case want to put a large margin of error around any average for the many reasons expounded at length already in this tendentious debate. The general government outlays from the OECD December 2001 Outlook shows the NZ figure has already been revised from the 40.2% figure given by Roger Kerr down to 38.6%. All in all it is far too hard to swallow Kerr's claim New Zealand is 'highly taxed relative to other OECD countries'.
Susan St John
Senior lecturer Economics