The Leader of the National Party has been reported today as saying, "I'm not dreaming up a policy to reform welfare .. It's not about benefit cutting or beating up on beneficiaries". His comments are perplexing to an economist.
First, I have no idea why he'd associate welfare reform with "beating up on beneficiaries". A major part of welfare reform is not about changing the level of spending, but instead ensuring that the welfare state functions efficiently and productively. Our health system, first and foremost, requires a reform that will get more bang for the tax-payer buck.
Second, most of what the government does is welfare. Of total public expenditures of about $110 billion in 2021, nearly $80 billion was on health-care, schools, pensions, benefits for the unemployed & other forms of income support. The remaining spending, on things like police, defense and even infrastructure, are small by comparison. As a result, the welfare state largely determines the level of taxes and public debt, which are required to fund it.
So having no plans to reform welfare is almost the same thing as saying one has no plans to reform taxes and few plans to change productivity. It is an admission that National is bereft of ideas. US political leaders talk of the "American Dream", the President of China has referred to the "Chinese Dream", yet it seems the Nats have no dreams for Kiwis.
It's time Mr Luxon did start dreaming, changed his economic advisers and hired ones who are able to come up with concrete (welfare reform) plans to make those dreams come true.
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