The government’s top financial advisers are warning that its books are on “an unsustainable trajectory” unless policies are changed to account for the country’s ageing population.
New Zealand’s population is growing older, with an increasing share of the population aged over 65,” Treasury chief economic adviser Dominick Stephens said in a speech to the Chartered Accountants Australia and New Zealand annual tax conference in Wellington […]
“The Government spends considerably more on over-65s than it gathers from them in tax revenue,” he said. “Therefore, as the over-65s become a larger share of the population, the public purse will be stretched further and further.”
I can hear it now. ‘But I paid taxes all my life, blah, blah.’ First, yes, you paid tax but you didn’t pay enough tax – successive governments have borrowed on your behalf. Secondly, you paid tax for stuff in the present then. It’s not like the government was putting together a little nest egg for future-you.
[…] Stephens called out New Zealand universal superannuation system, noting the country has the highest basic pension paid out of general taxation relative to gross earnings among OECD countries.
A universal superannuation system is, of course, stupid. It’s interesting though that people who are for it are at the same time against universal basic income system. But I digress.
[…] Since delivering its first Long-Term Fiscal Statement in 2006, Treasury has repeatedly highlighted that the country’s fiscal settings are not sustainable over the long run, given the impact of population ageing.
It’s not the first time it’s been said.
[…] He noted that while New Zealand’s population was not ageing as quickly as many other advanced economies, due to slightly higher fertility and higher net immigration, the ageing population would be expensive due to the universal and relatively high pension.
[…] In the 1960s there were around seven people aged between 15 and 64 for every person aged 65 or over. Today there were only four, and in 50 years, the ratio will be about two.
[…] And while the New Zealand Super Fund would improve the ability of future governments to pay for superannuation, it would only reduce, rather than eliminate, the tax burden on future generations of New Zealanders.
“To avoid a rapid increase in debt at some point in the future, successive governments will need to make policy changes,” Stephens said. “These are political choices for governments to make.”
So what can be done?
First, most of the blame can be laid on past governments. I’m thinking particularly National under Muldoon.
Second, if you’re Gen Z or Gen Y, or whatever they’re calling younger generations these days, the future isn’t looking good. Hell, even for us Gen Xers the future isn’t looking that great. If you’re a white collar worker, I have some bad news. AI is going to do to white collar jobs what robotics did to blue collar jobs.
Make universal superannuation not so universal? Ha! Good luck with that. Last time any government tried that, the media (which was only print in those days) almost had to hire extra staff to handle all the ‘I worked all my life’ letters.
Touching the super is a vote killer. So far there hasn’t been a government brave enough, or suicidal enough, to actually do what needs to be done.
So I’m not particularly hopeful. The cost will continue to be passed to future generations and then future generations beyond that etc, until it blows up in everyone’s faces.
