KEY POINTS:
Last week, ANZ Bank's chief economist, Cameron Bagrie, issued a report claiming that government spending is skewed towards unproductive back-office services, not front-line activities.
As I searched for a copy of the report, I wondered if the ANZ wanted the Government to do what it did with spending. The bank wants to axe up to 500 administration jobs and move them to India.
Thankfully, ANZ did not propose to ship public service jobs overseas. But its conclusions were just as unpalatable.
To make its point, the report divided government spending into "productive" and "non-productive" categories. Among productive spending were education, law and order and transport.
But what about the Government's biggest expenditures, health and benefits? ANZ simply excluded them, noting "We exclude health as, to be honest, we were unsure where to classify it."
That defies all logic. Most employers would agree that having healthy, alive workers contributes to a productive New Zealand. And health happens to be the place that spending has increased the most but it, along with almost $7 billion in superannuation, is excluded entirely from the report.
That's absurd. But indicative of the type of ideological gymnastics Mr Bagrie has performed in order to say that productive spending is going down.
Some of the things deemed unproductive, like departmental spending, are as equally absurd. This would include programmes like KiwiSaver.
Even the ANZ, Mr Bagrie's employer, doesn't agree with this. It finds KiwiSaver productive enough to offer ANZ customers several KiwiSaver schemes.
Then there's the Department of Conservation. According to the report, it's also "non-productive".
But where would New Zealand's tourism industry be if DoC staff weren't protecting our natural and historic heritage? Of the 2.2 million overseas tourists who visited between March 2006 and March 2007, 668,400 - 30 per cent - visited a National Park maintained by DoC staff.
The West Coast's five National Parks generate $220 million in tourism activity a year, creating jobs for 1800 "Coasters". In the North Island, the Whakapapa and Turoa ski fields are also included in a National Park maintained by DoC. They generate more than $45 million a year and create more than 2100 jobs.
Yet ANZ says this is "non-productive". Similarly, spending on culture is deemed "non-productive". Business professor Richard Florida would disagree. His book Rise of the Creative Class found that to succeed in a modern economy, cities have to attract creative thinkers. Auckland City Council has embraced this concept. Last year, it released a blueprint for growing its creative industries.
The council says these employ more than 13,000 workers in Auckland alone and contribute $1.7 billion to the city's Gross Domestic Product. But even as New Zealand cities strive to compete with others world-wide, ANZ says helping cities to be more liveable through culture is "non-productive".
Then there's education. Mr Bagrie's report singles out its spending to back up its claim that more money has gone into back-office jobs in the public sector than front-line jobs.
Again, the real story is different. Staff at the Ministry of Education has increased because workers providing front-line services to children with special needs were brought back into the ministry in 2002. They are educational psychologists, physiotherapists, speech language therapists and early intervention therapists.
Despite the fact that this shift triggered the rise in ministerial spending the ANZ decries, this context is ignored.
The whole point of the study becomes really confused when it includes a graph showing that government spending in New Zealand is actually lower than the OCED average.
It's true public services have grown in the period ANZ looked at. But it's relevant to note that Mr Bagrie chose 1995 as the starting point for this growth. What he doesn't say is that during the 1990s, public service staffing was cut to its lowest level since World War II.
The most accurate part of the ANZ report comes at the end. There's an admission that its main point - that productive government spending is down - might actually be wrong. Here, we agree. For the reasons I've covered, and many more, a report so shoddily assembled should not guide debate in this important election year.
As New Zealanders debate the kind of public services we want, we need to ensure the debate is based on fact, not fiction.
* Richard Wagstaff is the National Secretary of the Public Service Association.
