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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
