Transcript www.interest.co.nz

A view from the Treasury
Conference on
Retirement Income Policy
and Intergenerational
Equity
Day 2 – Fiscal
Perspectives Session
22 July 2010
Underlying ageing process started soon after NZ
was established and it is accelerating
Age dependency ratio (65+ to 15-64)
0.5
History
Projection
0.4
0.3
0.2
0.1
0.0
1860
1880
1900
1920
1940
1960
1980
2000
2020
2040
2060
Treasury must advise on policy choices by
taking long-term fiscal effects into account
Child v elderly poverty:
Effectiveness in poverty reduction via transfers
Children
Retirees
100%
NZL
100%
FIN
SWE
SWE
OECD-19
DNK
80%
IRL
60%
IRL
AUS
CZE
NZL
AUS
OECD-19
NLD
CAN
DEU
40%
CHE
Mid-1990s
Mid-1990s
80%
NOR
BELFRA
FIN CHE
GBR
USA
BEL
NLD
CAN
DEU
DNK
ITA
NOR
GBR
CZE
USA
60%
PRT
FRA
JPN
40%
20%
20%
ITA
PRT
0%
JPN (-0.11, -0.07)
0%
0%
20%
40%
60%
Mid-2000s
80%
100%
0%
20%
40%
60%
80%
100%
Mid-2000s
NZ Poverty rate amongst children 15% [worse than the OECD average of 13%];
NZ is the best in the OECD in terms of combating poverty among the elderly
Source: OECD “Growing Unequal?”
Population ageing, rising expectations and incomes
increase pressures on all government spending
Degrees of unsustainability:
Net debt - onward and ever upward
Net debt (% of GDP)
250%
200%
150%
100%
50%
0%
2005
2010
2015
2020
2006 Statement
2025
2030
2009 Statement
2035
2010 Update
2040
2045
2050
Projections indicative: sound warnings about need
for policy reforms to stabilise growth of debt