Targeting Social Expenditure in New Zealand: An Evaluation of the Current Policy Regime

This paper provides a brief account of how social expenditure in New Zealand has been targeted (i.e. means-tested) since the late nineteenth century, outlines the policy framework at the dawn of the new millennium, and assesses the strengths and weaknesses of the current targeting regime. It is argued that the existing policy settings are open to challenge on a number of counts. In particular, they are complex, inconsistent and relatively intrusive, they impose significant administrative and compliance costs, and they generate considerable incentive problems. Nor has the greater reliance on targeting since the mid-1980s prevented an increase in relative poverty and inequality. Given this situation, the paper outlines some possible reforms.