Latest news with #austerity
RNZ News
a day ago
- Business
- RNZ News
Despite decades of cost cutting, governments spend more than ever. How can we make sense of this?
By Ian Lovering* of International relations academic Ian Lovering delves into some of the history and social structures at play behind decisions about the national budget. Photo: RNZ Analysis : Recent controversies over New Zealand's Ka Ora, Ka Ako school lunch programme have revolved around the apparent shortcomings of the food and its delivery. Stories of inedible meals , scalding packaging and general waste have dominated headlines. But the story is also a window into the wider debate about the politics of "fiscal responsibility" and austerity politics . As part of the mission to "cut waste" in government spending, ACT leader and Associate Education Minister David Seymour replaced the school-based scheme with a centralised programme run by a catering corporation. The result was said to have delivered "saving for taxpayers" of $130 million - in line with the government's overall drive for efficiency and cost cutting. While Finance Minister Nicola Willis dislikes the term "austerity", her May budget cut the government's operating allowance in half , to $1.3 billion. This came on top of Budget cuts last year of around $4 billion. Similar policy doctrines have been subscribed to by governments of all political persuasions for decades. As economic growth (and the tax revenue it brings) has been harder for OECD countries to achieve over the past 50 years, governments have looked to make savings. What is strange, though, is that despite decades of austerity policies reducing welfare and outsourcing public services to the most competitive corporate bidder, state spending has kept increasing. New Zealand's public expense as a percentage of GDP increased from 25.9 percent in 1972 to 35.9 percent in 2022. And this wasn't unusual. The OECD as a whole saw an increase from 18.9 percent in 1972 to 29.9 percent in 2022. How can we make sense of so-called austerity when, despite decades of cost cutting, governments spend more than ever? In a recent paper , I argued that the politics of austerity is not only about how much governments spend. It is also about who gets to decide how public money is used. Austerity sounds like it is about spending less, finding efficiencies or living within your means. But ever rising budgets mean it is about more than that. In particular, austerity is shaped by a centralising system that locks in corporate and bureaucratic control over public expenditure, while locking out people and communities affected by spending decisions. In other words, austerity is about democracy as much as economics. We typically turn to the ideology of neoliberalism - democracy as much as economics. We typically turn to the ideology of neoliberalism - "Rogernomics" being the New Zealand variant - to explain the history of this. The familiar story is of a revolutionary clique taking over a bloated postwar state, reorienting it towards the global market, and making it run more like a business. Depending on your political persuasion, the contradiction of austerity's growing cost reflects either the short-sightedness of market utopianism or the stubbornness of the public sector to reform. But while the 1980s neoliberal revolution was important, the roots of austerity's managerial dimension go back further. And it was shaped less by a concern that spending was too high, and more by a desire to centralise control over a growing budget. Godfather of 'rational' budgeting: US Secretary of Defence Robert McNamara (right), with US president Lyndon B Johnson (centre), in a Cabinet meeting, in 1968. Photo: Yoichi Okamoto - Public Domain Many of the managerial techniques that have arrived in the public sector over the austerity years - such as results-based pay, corporate contracting, performance management or evaluation culture - have their origins in a budgetary revolution that took place in the 1960s at the US Department of Defence. In the early 1960s, Defence Secretary Robert McNamara was frustrated with being nominally in charge of budgeting but having to mediate between the seemingly arbitrary demands of military leaders for more tanks, submarines or missiles. In response, he called on the RAND Corporation, a US think tank and consultancy, to remake the Defence Department's budgetary process to give the secretary greater capacity to plan. The outcome was called the Planning Programming Budgeting System . Its goal was to create a "rational" budget where policy objectives were clearly specified in quantified terms, the possible means to achieve them were fully costed, and performance indicators measuring progress were able to be reviewed. This approach might have made sense for strategic military purposes. But what happens when you apply the same logic to planning public spending in healthcare, education, housing - or school lunches? The past 50 years have largely been a process of finding out. What began as a set of techniques to help McNamara get control of military spending gradually diffused into social policy . These ideas travelled from the US and came to be known as the " New Public Management " framework that transformed state sectors all over the world. Dramatic moments of spending cuts - such as the 1991 " Mother of all Budgets " in New Zealand or Elon Musk's recent DOGE crusade in the US - stand out as major exercises in austerity. And fiscal responsibility is a firmly held conviction within mainstream political thinking. Nevertheless, government spending has become a major component of OECD economies. If we are to make sense of austerity in this world of permanent mass expenditure, we need a broader idea of what public spending is about. Budgets are classically thought to do three things. For economists, they are a tool of macroeconomic stabilisation: if growth goes down, "automatic stabilisers" inject public money into the economy to pick it back up. For social reformers, the budget is a means of progressively redistributing resources through tax and welfare systems. For accountants, the budget is a means of cost accountability: it holds a record of public spending and signals a society's future commitments. But budgeting as described here also fulfils a fourth function - managerial planning. Decades of reform have made a significant portion of the state budget a managerial instrument for the pursuit of policy objectives. From this perspective, underlying common austerity rhetoric about eliminating waste, or achieving value for money, is a deeper political struggle over who decides how that public money is used. To return to New Zealand's school lunch programme, any savings achieved should not distract from the more significant democratic question of who should plan school lunches - and public spending more broadly. Should it be the chief executives of corporatised public organisations and outsourced conglomerates managing to KPIs on nutritional values and price per meal, serving the directives of government ministers? Or should it be those cooking, serving and eating the lunches? * Ian Lovering is a lecturer in international relations, at Te Herenga Waka Victoria University of Wellington. This story was originally published on The Conversation .
Forbes
a day ago
- Business
- Forbes
Budget Cuts Announced By Six More Major Research Universities
Cornell University is among several research universities recently announcing new austerity measures ... More as they face new financial challenges. The budget cuts at major research universities keep piling up, as more federal funding is frozen or eliminated, enrollment of international students is threatened, and inflationary pressures continue. In the past several days, six powerhouse universities have acknowledged that mounting financial challenges will necessitate major cost-cutting, including the possibility of staff layoffs and academic program eliminations. Those revelations come on the heels of dozens of other institutions announcing throughout the spring that they would be implementing immediate or future budget cuts. Here's a quick summary of the lastest austerity developments. Temple University President John Fry has projected a possible $60 million budget deficit for the upcoming fiscal year. In his June 18 budget update for the campus, Fry said that while Temple had been able to reduce an ongoing shortfall to $19 million during the current fiscal year, it had done so primarily through the use of university reserves, which he admitted was 'not a sustainable practice.' Leading to Temple's financial woes is a decrease in enrollment of almost 10,000 students since 2017, reducing gross tuition revenue by approximately $200 million. In addition, Temple's state appropriation has remained basically flat for the past six years despite significant increases in operating costs. Fry said that although Temple was expecting a second straight year of increased first-year student enrollment next year, it would not be enough to yield 'a substantial improvement in the university's overall enrollment.' As a result, Fry asked departments to reduce their compensation costs by 5%, a directive that will result in the elimination of some positions. In addition, university administrators, including college deans, will forgo salary increases. Cornell University is facing a 'profound financial challenge,' according to a June 18 message on financial austerity from President Michael I. Kotlikoff and other university officials. Citing the loss of hundreds of millions of dollars in federal research contracts, and threats to financial aid, and medical reimbursement, along with inflationary pressures and a possible increased tax on endowment income, the administrators wrote that 'we must immediately address our significant financial shortfalls by reducing costs and enacting permanent change to our operational model.' Without specifying a target amount for the reductions, Cornell officials did say they would 'require financial austerity in all areas of the university,' including restrictions on new hiring and discretionary spending and a reduction in the university's workforce through attrition and terminations. Officials at the University of Kansas are projecting a $22.3 million deficit for the Lawrence campus in FY 2026. In addition, the KU Medical Center faces a $4 million deficit for FY 2026 and a $31 million deficit for FY 2027 'without corrective action.' Chancellor Doug Girod said the university would 'begin implementing strategies to reduce costs and generate revenues to achieve a balanced budget in the year ahead. Those strategies 'will require hard decisions," Girod added. Without budget adjustments, the KU Lawrence deficit could grow to about $117 million by FY 2029, according to a university planning document. In addition to strategies to increase efficiencies and revenue, the university expects to reduce operating expenses by 5% next year. This week University of Minnesota officials announced a combination of budget cuts and historically large tuition increases (up to 7.5% for some students). Those decisions involve an attempt to cover $115 million in reduced revenue, the combination of a $40 million decrease in federal funding and flat state appropriations, which they said 'represents a $75 million loss in buying power with inflation.' The university's $5.1-billion budget for the upcoming year includes a cut of 7% to programs, a reduction that is expected to save $92.1 million in expenses and result in a a loss of up to 350 positions across the institution. The University System of Maryland will operate with a budget in FY 2026 that is 7% smaller than this year, a decrease equal to about $155 million. That cut comes after a 4% system-wide reduction in the current year. In a video message to the system campuses, Chancellor Jay Perman said that the size of the reduction meant that for some of the campuses, 'personnel actions cannot be taken off the table.' 'To those affected by these cuts, there's little I can say that makes it any better,' added Perman. 'I'm sorry that this is happening. It's not a reflection of your value to the system, to your university, to the students we serve.' Some of the institutions in the system may resort to temporary closures, staff furloughs and salary reductions, moves that the board of regents has already authorized. The University of Nebraska System is expecting to cut $20 million in spending in its 2026 budget. According to Higher Ed Dive, those reductions come 'on top of $11.8 million in permanent cuts for the current fiscal year and $30 million the year before.' The university had requested a 3.5% boost in its state appropriation for next year, but it received only a .625% increase. In addition, freezes and cuts in federally funded research and contracts, along with the possibility of reduced reimbursement of indirect research costs, caused further budget constraints according to the university. The university is also looking to raise tuition by about 5% for next year. 'As stewards of the University of Nebraska and of the public trust, we have a responsibility to manage every dollar with discipline, care and transparency,' said NU President Jeffrey P. Gold. 'At the same time, we must maintain our strong commitment to affordability and student access, while positioning us to invest strategically in our academic priorities."
South China Morning Post
3 days ago
- Politics
- South China Morning Post
Vibrant Chinese dining culture suffers from heavy-handed austerity control: state media
China's ongoing austerity campaign has been taken too far at some local levels, People's Daily has warned, a month after Beijing launched its latest belt-tightening push. Advertisement In a commentary published on its website on Tuesday night, the party mouthpiece said that while curbing corruption and extravagance was necessary for the austerity campaign, it should not come at the expense of a citizen's daily life or local economies. 'When implementing, some localities have 'layered on restrictions' – equating 'prohibiting illegal dining and drinking' simply with 'banning all eating and drinking',' the commentary said, referring to a common situation in China in which higher authorities impose additional or even stricter requirements at every level, leading to excessive or overzealous implementation. 02:55 US beef off the menu as trade war hits Beijing's American-style restaurants US beef off the menu as trade war hits Beijing's American-style restaurants 'This behaviour is also a form of lazy governance and a variant of formalism, causing businesses to lose customers and dimming the vibrancy of people's everyday lives,' it said. Beijing launched an austerity push in March in an effort to improve the ruling party's image, combat corruption and cut wasteful spending. It urged officials to 'get used to belt-tightening' and show 'strict diligence and thrift'. New measures announced last month included 20 major changes related to official work meals, the use of government cars, inspection tours and other spending. For instance, expensive dishes, cigarettes and alcohol are banned at work meals, and extravagant decorations for official reception venues are prohibited. Advertisement In recent weeks Beijing has sent eight central guidance teams to reinforce the message during inspection tours around the country. The graft-busting Central Commission for Discipline Inspection began releasing details of occasions of excessive drinking by officials – including some who died from consuming too much alcohol – as a warning.
The Independent
3 days ago
- Politics
- The Independent
China bans civil servants from dining in groups in Xi's new austerity drive
China is ordering some of its civil servants to not dine out in groups of more than three in the wake of deaths associated with excessive alcohol consumption at banquets. The move has been linked to Chinese president Xi Jinping 's push for boosting austerity among civil servants, interviews and social media posts show. Released in May this year, the revised austerity regulations for Communist Party members and public sector employees now ban lavish banquets, 'white elephant' infrastructure projects, luxurious car fittings, and ornamental plants in work meetings. According to the new dining guidelines promoted by some localities, civil servant cadres have been asked to be wary of social gatherings, not treat bosses or underlings to meals and avoid 'forming small cliques', a social media post by a Communist Party body in Anhui province said. 'When dining with ordinary colleagues, groups of under three are usually fine,' the post titled 'does it violate regulations to dine with colleagues after work' read. "Avoid dining in high-end places, do not constantly meet the same people, do not take the opportunity to form 'small cliques',' it added. The timing of these measures is not unusual as the notifications come after three cadre deaths in April this year, linked to excessive drinking at banquets in Hunan, Anhui and Henan provinces. The local administration has punished dozens of officials for attempting to conceal details of the banquets and privately compensating the families of the deceased cadre members. The measures have also been confirmed by civil servants across Chinese provinces, confirming the push from Beijing to rein in its cadres on their socialising. A civil servant in Sichuan province said her colleagues were ordered to always go straight home after work. Another cadre in Anhui province said her office recently started implementing daily breathalyser tests, while one in Shaanxi province said she was told to get rid of her office plants. In Gansu province, a civil servant said she was asked to study a list of 20 types of dinner gatherings to avoid. A worker at a state-owned enterprise in Wuhan said she was ordered not to eat lunch with colleagues from other departments or bosses. "Our leader stressed that even if I invite someone in our canteen, spend little and pay the bill, that's not allowed", she said, citing Party discipline. The latest slew of measures has sparked a rare display of disapproval among the cadres, which is regarded as a tightly-controlled group in China, as many took to social media to complain that their personal lives are facing excessive and arbitrary restrictions. "Eating alone is hedonism, eating in a pair is engaging in improper male-female relations, eating in a trio is forming small cliques," a user from Hunan province said on a social media platform, gathering more than 3,500 likes. "Three of us colleagues went out for hotpot at lunch and each of us were punished with a warning," wrote a civil servant in Shandong province. "This is overcorrection, the essence of the guidelines is not wasting public money on lavish banquets but at each level of bureaucracy it gets enforced more harshly," wrote another user in Guangxi region. According to the experts, the move is a renewed push by the Chinese leader's longstanding preoccupation principles on anti-corruption and setting Party discipline. "The drinking culture among civil servants is indeed quite serious but they haven't found a good solution yet so can only implement a 'one size fits all' policy," said Alfred Wu, associate professor at the National University of Singapore. "While Beijing wants to boost consumption, a clean government – which is Xi's fundamental priority - has a price."
Reuters
4 days ago
- Politics
- Reuters
China's civil servants banned from dining out in Xi's austerity drive
BEIJING, June 17 (Reuters) - Some Chinese civil servants have been ordered not to dine out in groups of more than three after deaths linked to excessive alcohol consumption at banquets, according to interviews and social media posts, as Beijing's austerity push ramps up. Revised austerity regulations released in May targeting Communist Party members and public sector workers now bans lavish banquets, "white elephant" infrastructure projects, luxurious car fittings and ornamental plants in work meetings. Analysts say the renewed push is a sign of President Xi Jinping's longstanding preoccupation with anti-corruption and Party discipline, suggesting previous controls were not effective. "The drinking culture among civil servants is indeed quite serious but they haven't found a good solution yet so can only implement a 'one size fits all' policy," said Alfred Wu, associate professor at the National University of Singapore. "While Beijing wants to boost consumption, clean government - which is Xi's fundamental priority - has a price." The measures come after three widely publicised cases of cadre deaths since April linked to excessive drinking at banquets. Dozens of officials have been punished in connection to the deaths in Hunan, Anhui and Henan provinces, where they attempted to conceal details of the banquets and privately compensate the families of the deceased. But new dining guidelines promoted by some localities this week go even further, asking cadres to be wary of social gatherings, not treat bosses or underlings to meals, and avoid "forming small cliques", according to a social media post by a Communist Party body in Anhui province. "When dining with ordinary colleagues, groups of under three are usually fine," read the post, titled 'does it violate regulations to dine with colleagues after work'. "Avoid dining in high-end places, do not constantly meet the same people, do not take the opportunity to form 'small cliques'." The guidance triggered a rare outpouring of complaints on social media from one of the most tightly-controlled groups in China, who increasingly feel that their personal lives are subject to excessive and arbitrary restrictions. "Eating alone is hedonism, eating in a pair is engaging in improper male-female relations, eating in a trio is forming small cliques," read a comment from a user in Hunan province with over 3,500 likes. "Three of us colleagues went out for hotpot at lunch and each of us were punished with a warning," wrote a civil servant in Shandong province. "This is overcorrection, the essence of the guidelines is not wasting public money on lavish banquets but at each level of bureaucracy it gets enforced more harshly," wrote a user in Guangxi region. A civil servant in Sichuan province said her colleagues were ordered to always go straight home after work. Another cadre in Anhui province said her office recently started implementing daily breathalyser tests, while one in Shaanxi province said she was told to get rid of her office plants. Another civil servant in Gansu province was asked to study a list of 20 types of dinner gatherings to avoid, while a state-owned enterprise worker in Wuhan was ordered not to eat lunch with colleagues from other departments or bosses. "Our leader stressed that even if I invite someone in our canteen, spend little and pay the bill, that's not allowed", citing Party discipline, she said. Some cadres in Anhui even reported cold calls from local discipline inspectors asking them to recall the rules from memory or be reported to their supervisors. However, three civil servants in Beijing, rural Guangdong province and Chongqing told Reuters their workplaces did not have excessive implementation. Others told Reuters they welcomed the regulations, as they hated being peer-pressured into drinking with their bosses. The rules supplement the "eight-point regulations", a code of conduct intended to curb rampant corruption in China's vast bureaucracy, which Xi launched soon after taking power in 2012. The number of cadres nationwide punished for violating the 2012 thrift regulations ballooned from 9,292 in February to over 16,500 in April, the latest month for which figures are available. (This story has been refiled with changes to the byline and the dateline)
