How not to cut State spending

Press, Volume CXI, Issue 32541, 26 February 1971, Page 8

How not to cut State spending

The Government appears to be strongly inclined to cut State expenditure more or less evenly across the board. A reduction in State spending is one of the orthodox methods of combating inflation since every claim by the State on the resources of the country adds to the pressure on the economy. But some forms of Government spending are more inflationary than others, and some have—or should have—priority over others. In preparing its latest cuts the Government has apparently given these considerations little or no thought The Government—any government—is often criticised for spending too much money; yet there are calls on all sides for the State to spend, more in one field or another. One of the main tasks of any government is to steer a way through this contradiction; and it is natural —though not necessarily prudent in the long run—for governments to follow a course that upsets citizens generally as little as possible. The present Government seems disposed to make its cuts on as broad a front as possible in the belief or hope that no section of expenditure will appear to be conspicuously singled out for retrenchment If this is the Government’s policy the results will probably be very different from what it expects for small cuts in some areas will have serious and lasting effects. When the cuts in defence expenditure were announced recently, “The Press” argued that they were not only damaging to the morale of the forces but that they were not justified on economic grounds —provided an appropriate proportion of the forces’ spending was diverted from New Zealand to overseas. The education budget is less flexible in this respect than defence expenditure, but no less deserving of high priority. To enable universities and schools to carry through building plans on schedule and to maintain all the services they had planned to provide the Government could have ordered even larger reductions or delays in, say, reading projects and less urgent building schemes. Educationists should keep on protesting against the delays in their building projects and reductions in services until they are reinstated.