Treasury warns MSD about unsustainable spending

Out of Core Crown Tax Revenue of $61.9 billion, the largest expenditure is by MSD:

"The Ministry is forecasting to administer $24.1 billion in government expenditure in 2015/16, with departmental expenditure only six percent of the total Vote. All other areas are driven by policy settings that we are unable to change without changes in Government policy. Treasury has assessed the risk to the medium-term sustainability of the Ministry’s departmental expenses as amber. Concerns are primarily around the sustainability of New Zealand Superannuation payments and the necessity to manage personnel costs, IT spending and property costs"

 MSD continues

"...Between 2015/16 and 2018/19 the total Vote is forecast to increase by $2.3 billion. We are experiencing an increase in required support for a significant number of our clients (beneficiaries, students, retirees and vulnerable children)...Demand for our services is changing as vulnerable population groups come under increasing financial pressure, especially in relation to housing affordability. There is an increasing focus and awareness of the scale of poverty and vulnerability amongst our children and less patience with government’s strategies for addressing it. Our population is ageing, and also becoming more diverse. The move in the population away from rural areas to large urban centres has increased the vulnerability of some rural communities. Many of these communities are disproportionately or predominantly Mäori who in turn have a much younger profile than the rest of New Zealand. Twenty five percent of the population under 24 years are Māori and this proportion is expected to rise. Demand for our services has changed in response to these demographic and socio-economic trends. "

 Interesting to see MSD getting political here by commenting that, "There is an increasing focus and awareness of the scale of poverty and vulnerability amongst our children and less patience with government’s strategies for addressing it." Really? What do they base this on?

And it is then noticeable that they don't comment on the public attitude to Super spending given the Treasury warning.

MSD seems to be making a case for increasing their Vote, and, when coupled with the child poverty comment, give a direction to raise it by higher taxation.

Equally interesting is the reference to Maori rural communities which I've been banging on  about since the Jobs Jolt days when Labour tried to prevent the unemployed from moving to them but crucially didn't include sole parents. This is the first official recognition of this problem I have seen.