Debt set to hit $246k per Kiwi without changes, Treasury warns
Wednesday, 24 September 2025
Treasury is warning that Government debt will hit 200% of GDP by 2065 ‒ or $246,500 per person ‒ if major policies are not changed.
The agency is not recommending any specific policy but notes that with an ageing population the costs of superannuation and healthcare will spiral upwards, without enough working age people to keep paying the taxes for such policies.
It noted that New Zealand had seven working age Kiwis for every retiree in 1960, four for every retiree now, and but would hit just two working Kiwis for every retired Kiwi by 2065.
Without changes, higher health costs and superannuation would mean the Government spends about twice as much per person as it does currently.
This warning is contained in Treasury’s Long Term Fiscal Statement, released on Wednesday afternoon.
The document also details several potential policies to fix the debt track ‒ including higher income taxes, adjustments to superannuation age or eligibility, cutting non-superannuation benefit payments, and reducing health spending.
The agency does not endorse any of these policies but does model them out, and suggests that no one policy would be enough by itself.
If for example the Government were to rely solely on raising GST it would have to hit 32% by 2065 - up from 15% now.
This is far from the first time that Treasury has made a similar warning.
Treasury Secretary Iain Rennie said Government debt was now higher than Treasury had forecast in those previous long-term warnings, despite some trends being more favourable than Treasury expected ‒ such as higher than expected migration providing more working age adults, and older people staying in work longer.
Despite these favourable circumstances, huge shocks had sent debt higher ‒ including the Global Financial Crisis, the Christchurch Earthquake, and Covid-19.
Rennie said New Zealand should celebrate growing life expectancy, even if it created fiscal challenges.
He noted that an ageing population was not the only risk for the books, with climate change and a worsening outlook for the global rules-based order also feeding into the modelling of a dire debt track.
“It is not prudent to rely on a benign future,” Rennie said.
“Our institutional perspective is to put a premium on the value of preserving options for New Zealand governments to respond to the consequences of a volatile world.”
Treasury is required by law to forecast New Zealand’s fiscal situation out into the future.
Rennie noted that policy changes would be far less painful if undertaken earlier.
“We don’t need to tackle 40 years of pressures in one fell swoop. Starting earlier provides more opportunities to share transition costs across generations and avoid more disruptive changes later,” Rennie said.
Finance Minister: Return to surplus is first step
Finance Minister Nicola Willis said there was no one big radical change that would fix the issue, but getting back to surplus was a big first step.
“Treasury says in the report that an important first step is returning to surplus and bringing debt down to more prudent levels. That is precisely what this Government is doing,” Willis said.
She noted that National campaigned on raising the superannuation age to 67 but this did not survive coalition talks.
“Parties will have another opportunity to put forward their policies on these issues at the next election and in subsequent elections.”
Green Party public service spokesman Francisco Francisco Hernandez said politicians needed to change the tax system to support New Zealand’s long term fiscal sustainability.
“It’s clear that that politicians have a choice: facing the true costs of underinvestment and then bringing comprehensive tax reform, or continued underfunding of our health system, steep cuts to public services and pensions,” Hernandez said.
“A tax on wealth and investment in our communities will ensure that New Zealand can continue offering quality public services, including public healthcare, despite a growing and ageing population.”