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Population aging and financing of government liabilities in New Zealand

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  • Polackova, Hana

Abstract

In New Zealand in the next 50 years, an aging population is expected to elevate government liabilities and weaken the government's fiscal position. To maintain fiscal balance, the government must either substantially pre-fund future increases in its liabilities or significantly raise taxes in the 2030's-40's, following few small possible tax cuts in the next 10 to 15 years. Expected fiscal problems are related to the increasing costliness of publicly providing for health care and retirement. Moreover, the aging population's negative effects on the fiscal balance could be exacerbated by any slackening in economic performance or in fiscal prudence. Long-term fiscal projections for the country, and literature on the problem, indicate that the most effective way to contain the expected rise in government liabilities is to reform health care and pension policies.

Suggested Citation

  • Polackova, Hana, 1997. "Population aging and financing of government liabilities in New Zealand," Policy Research Working Paper Series 1703, The World Bank.
    • Handle: RePEc:wbk:wbrwps:1703
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    References listed on IDEAS

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    Cited by:

    1. John Creedy & Grant M Scobie, 2002. "Population Ageing and Social Expenditure in New Zealand: Stochastic Projections," Treasury Working Paper Series 02/28, New Zealand Treasury.
    2. John Stephenson & Grant Scobie, 2002. "The Economics of Population Ageing," Treasury Working Paper Series 02/04, New Zealand Treasury.
    3. Ross Guest & John Bryant & Grant Scobie, 2003. "Population Ageing In New Zealand: Implications for Living Standards and the Optimal Rate of Saving," Treasury Working Paper Series 03/10, New Zealand Treasury.
    4. Nick Davis & Richard Fabling, 2002. "Population Ageing and the Efficiency of Fiscal Policy in New Zealand," Treasury Working Paper Series 02/11, New Zealand Treasury.
    5. John Janssen, 2001. "New Zealand's Fiscal Policy Framework: Experience and Evolution," Treasury Working Paper Series 01/25, New Zealand Treasury.

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