Higher than expected debt and structural fiscal deficits are compounding the fiscal challenge of an aging population, Treasury Deputy Secretary and Chief Economic Adviser Dominick Stephens said in a speech today.

The speech reiterates the Treasury’s consistent message that New Zealand’s fiscal settings are not sustainable in the face of long-run population aging.

"As the over-65s become a larger share of the population, the public purse will be stretched further and further," said Dominick Stephens.

The speech explores how falling interest rates, high population growth, and a stunning increase in labour force participation among the over 65s have all helped with fiscal sustainability.

"New Zealand has been extremely successful at keeping seniors in the workforce, partly because older workers face no abatement of national superannuation if they choose to work," commented Dominick Stephens.

"There is no silver bullet solution, we are going to need to pull a number of levers to render fiscal policy sustainable for the long run.

"Boosting productivity will lead to a more prosperous society and give the government more choices.

"It is younger people who matter most for fiscal sustainability. We need young people who are willing and able to support their elders. Young New Zealanders are doing well in many respects, but there are challenges in education, mental health and housing."

The Treasury will publish its next Long Term Fiscal Statement in 2025.

The full speech is available on the Treasury website: https://www.treasury.govt.nz/publications/speech/longevity-and-public-purse

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