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Assessing New Zealand's long-term fiscal outlook

In comparison to most OECD economies, New Zealand currently has a strong fiscal position. Many governments around the world are still recovering from the economic and fiscal impact of the Global Financial Crisis. New Zealand's fiscal surpluses are forecast to increase in the short-term, with the ratio of public debt-to-GDP beginning to decline. However, long-term spending pressures are projected to build – see Table 1.1 – and these will require government action in order to maintain sustainable debt. Section Six sets out the spending projections in more detail, the implications for deficits and debt, and the range of possible options to address New Zealand's fiscal challenges.

Table 1.1 – "What if" projections of government expenses
(percent of GDP)
  2015 2030 2045 2060
Healthcare 6.2 6.8 8.3 9.7
New Zealand Superannuation (NZS) 4.8 6.3 7.2 7.9
Education 5.3 5.4 5.5 5.7
Law and order 1.5 1.4 1.4 1.4
Welfare (excluding NZS) 4.2 4.5 4.7 4.7
Other (excluding finance costs) 6.3 6.7 6.7 6.7

Note: 2015 are actual results. Projections are from the "Historical Spending Patterns" scenario in Section Six. These projections represent a "what if" scenario and are not a prediction for how expense areas will actually grow.

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