Minchin on big government conservatism

I had been worried that the ‘big government conservatism’ critique of the Howard government may actually please its Ministers, helping to fend off attacks from the left and claim the much fought over middle-of-the road voters. And that seems to be the case. In his quasi-rebuttal of CIS criticism in this morning’s Australian, Finance Minister Nick Minchin says:

IN politics, fighting battles on two fronts is an unavoidable obligation for parties aspiring to hold the middle ground. ….
Such criticisms delineated a bizarre dichotomy between the Government’s critics on the Right, deriding us for creating a nanny state, and the more predictable Labor attacks that the Government was heartless and meanspirited.

Rudd says the Government spends too little on education, while the CIS bemoans that real per-capita education spending has grown faster under the Coalition than Labor. Rudd attempts to portray the Government as attacking working families, while the CIS has the Government showering these same families with undeserved largesse.

Ah yes, and the Coalition is in the sensible centre. But Minchin is still sensitive to the claim that his is a big-spending government. Though conceding that

It is true that spending on health, education and social security has risen under the Howard Government. It is true that in real terms the Howard Government spends more in these areas than Labor did.

He goes on:

Despite the claims of big government conservatism, it is actually very difficult for our critics in the free-market think tanks to cite credible evidence that the size of government has grown materially in the past 10 years as a proportion of the economy.

In my big government conservatism article I did not use spending as a proportion of GDP at all, but instead looked at real per capita spending. My case for doing so was that there is no intrinsic reason why spending should increase at the same rate as the economy generally. Big spending areas of the Budget such as health and social security are more affected by demographic than economic changes, and to the extent that social security is affected by changes in the economy it should be to drive spending down, not up, as people move off benefits into jobs. In an economy that is performing well, which to the Howard government’s partial credit it has over the last decade, measures based on government spending as a percentage of GDP can cover many spending sins.

But even if we take spending as a proportion of GDP as the measure, Des Moore made a convincing argument in the Spring 2006 issue of Policy that the improvement since 1995-96 is due to lower interest payments, and that the government’s ‘discretionary’ expenditure as a proportion of GDP was slightly higher in 2004-05 than it had been in 1995-96.

From a smaller government, lower tax perspective the most positive thing that can be said about the government is that it could have been worse. But the main debate here is not about which set of numbers to look at. It is about the spending programmes themselves and whether they can be justified. I still would not like the family spending programmes even if government spending overall was shrinking.

4 thoughts on “Minchin on big government conservatism

  1. I agree with your sentiments, Andrew, especially on welfare spending. On health and education, one could make a case for overall spending to rise faster than incomes. The real issue is who should be undertaking this spending – the government or individuals with their increased after-tax dollars.

    At least Minchin implied that your attacks were “less predictable” than Labor’s! Also, although he had no choice but to use the % of GDP argument, he is making a rod for his own back come the next recession.


  2. Government = Spending – Taxing PLUS REGULATION

    A further problem is that, in focussing on taxing and spending (measured against whatever base), such analyses ignore half of what the Government does: that being, the regulation of people, organisations and activities. In this context, the recent Regulation Taskforce found (admittedly crude) evidence that the volume of regulation has expanded substantially over the life of the present government. Hence, even if by some measure the government is spending and/or taxing less, this does not necessarily mean that it is practicing smaller government.


  3. Andrew, I glanced over a column in the Oz a week or two ago in which fed govt ministers were crowing about how much the fed govt was spending on services and that the popular notion of labor doing “better” on spending (ie spending more) was wrong.

    Sounds like a potential election theme…


  4. Sacha – Yes, I think it was Christopher Pyne leading the charge. Sounds like an attempt to neutralise perceptions that they are mean, an attempt I am untinentionally contributing to in criticising them for spending so much.


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