In a speech today, Treasury’s deputy secretary and chief economic adviser, Dominick Stephens, highlighted the financial strain New Zealand faces due to an ageing population, growing government debt, and structural fiscal deficits.
Stephens explained that while healthcare and societal advancements have improved living standards, the country must adapt to longer lifespans, particularly in terms of government revenue and spending.
He said the country spends more on over-65s than it collects in taxes from them, with the ratio of working-age people to retirees shrinking significantly over the decades. This demographic shift will likely require the government to increase revenue or cut spending, with savings and budget reprioritization expected to become central to future fiscal policies.
Stephens also pointed out that New Zealand’s public debt has surpassed earlier projections, now sitting at 39.3% of GDP, well above the expected 13%.
Despite debt levels being relatively low by global standards, the current trajectory is concerning, especially with a structural fiscal deficit of around 2.4% of GDP.
To address these challenges, Stephens called for improvements in productivity, smart adaptation to climate change, and investments in younger generations, while stressing the need for early action to ensure fiscal sustainability. Balancing affordability with work incentives, particularly regarding retirement policies, will be key in the years ahead.
Ditch welfare, we can’t afford it or the results of it.
Stop harming small businesses and private enterprise which are great employment opportunities for young and old, value the older peoples skills and work ethic. Too often very well qualified with good knowledge get dumped of the refuse heap because of their age. And we’re short of teachers.
The culling of the aging population is the agenda in this case.
The biggest cash problem we have is the fact that all the govt’s and institutions want to do away with it, so that they can control every cent of purchasing power you have. USE PHYSICAL CASH EVERY DAY.