Long story short: Treasury has warned again public debt will rise exponentially in the decades to come because of the rising costs of our ageing population, unless we change one or more of our New Zealand Superannuation promises, publicly-funded healthcare or tax settings.
The current Government isn’t planning any changes, other than to try to squeeze more services out of existing spending. Treasury says that won’t go far. National and Labour talked briefly yesterday after finding a bipartisan approach, but that dissolved within a few hours.
In my view, the only way to avoid the exponential rise in debt in the long run while keeping the current NZ Super and health settings is to increase tax revenue from wealth.
What Treasury advised and how Nicola Willis responded
I interviewed the Treasury’s Chief Economic Adviser Dominick Stephens on Wednesday about the fiscal challenges of our ageing population. It was published this morning via When The Facts Change on The Spinoff. The full interview is embedded below.
Stephens gave a speech last week about how our current publicly-funded NZ Superannuation promises, publicly-funded hospitals and tax settings were not sustainable in the long run because public debt and interest costs would rise exponentially. Here’s the interview, which is focused on the speech.
Yesterday, Finance Minister Nicola Willis and Labour Finance Spokeswoman Barbara Edmonds spoke at The NZ Herald’s Mood of the Boardroom event below. They both spoke about Stephens’ speech.
The ‘news’ from the event was they agreed in a brief exchange at the end to talk in a bipartisan way about NZ Superannuation settings. Here’s the essence of the exchange, as reported by Glenn McConnell at Stuff.
“Barbara, if you’re up for tough conversations, at the last election my party started a tough conversation about New Zealand superannuation.” Nicola Willis
“I am more than happy to have that discussion, and have it together on superannuation. It is a big challenge we are going to face.” Barbara Edmonds
Concluding: “Let’s have that conversation.” Barbara Edmonds
Willis replied, “Well, that’s an achievement.” Nicola Willis via Stuff.
However, the discussion didn’t last long, given Labour’s current policy is not to change the settings and Edmonds told Stuff it was not debating a change.
Edmonds, speaking to Stuff after the debate, seemed less committed to the superannuation conversation.
She said, “If someone is offering to have a conversation, whether it’s the minster of finance, a business CEO, or a local constituent, I’m keen.” Given Willis offered to talk on stage, Edmonds said: “You’d look stupid to turn it down.”
She said it had “only been a few hours” since she agreed to have “a conversation” and so didn’t have a view on whether there should be a change in superannuation policy. She said that wasn’t Labour’s policy, and wasn’t a conversation Labour was having.
“I was surprised at her offer, but let’s have a chat,” Edmonds said. She added, it would be a “high level” chat only.
And with that, the “conversation” effectively wound up. Stuff.
I interviewed Willis in person shortly after the Mood of the Boardroom event and asked about the Stephens speech.
The full discussion is in the video above and the transcript is there too.
Cheers
Bernard
Deep-dive: What does an ageing population mean for Aotearoa?