Current government policies not suitable for long-term - Treasury outlook on fiscal future

Wednesday, 24 September 2025

By 2065 it’s projected there will be just two working-age New Zealanders for every person over 65.

The latest Treasury outlook on New Zealand's fiscal future indicates current government polices are not suitable for the long-term and change is required.

Treasury's 2025 Long-term Fiscal Statement, which looks 40 years out, has been warning for 20 years that population ageing will place increasing pressure on New Zealand's long-term fiscal position.

ANZ senior economist Miles Workman said the report should be on the reading list of every New Zealander.

'Because ultimately, I don't think politicians are going to be able to make the changes that are needed here until the voting public is behind those changes,' Workman said.

'So this document is very important in that respect, because it does lay out the problems very clearly.'

The report’s key points included:

Population ageing remains a significant long-term fiscal challenge.
Despite favourable economic tailwinds in the past 20 years, New Zealand's debt is higher than anticipated.
It is vital New Zealand closes its structural fiscal deficit sooner rather than later.
Fiscal pressures will accelerate in coming decades with costs of superannuation and healthcare expected to rise significantly as the population ages.
There is no one solution and successive governments will need to consider a mix of options to deliver fiscal sustainability over the coming years.

Secretary to the Treasury Iain Rennie said New Zealand had been running a structural operating deficit since 2019/20 financial year.

'In 1965, there were seven working-age New Zealanders for every person over 65. Today, that ratio is four to one, and by 2065 it is projected to be just two to one,' Rennie said.

'As the age structure of our population shifts, the cost of maintaining NZS (New Zealand Superannuation) in its current form will rise significantly.

'Similarly, health expenditure could increase from 7.1% of GDP today to around 10% by 2065 if policies remain unchanged.'

He said an adjustment to fiscal policy was required to bring expenditure and revenue into balance, even if more favourable conditions prevailed in future years.

The report warns unchanged policy would lead to debt rising to around 200% of GDP by 2065.