Wednesday, July 29, 2015

NZ on a similar trajectory to Greece

A post at Kiwiblog about pensions crippling the Greek economy prompted me to look at the path NZ is on.

The following figures are all from a Treasury Report, Affording Our Future 2013:

Of course, most of the people reading this blog won't be around in 2060. But our children will be.

Treasury suggests as responses:

• Government taxes more as a percentage of GDP than it does currently.
• Government restricts spending growth in some areas, relative to historical growth rates. Spending in a particular area may still grow as a percentage of GDP, but not as much as it could grow.
• Government reacts to demographic change. Because one of the major drivers behind future financial pressures is population ageing, services are redefined to compensate for the fact that people are living longer, healthier lives.
How come they didn't suggest growing GDP at a faster rate?

Anyway, the message is,
"No matter what policy changes we decide on, it is important that we decide on them early. Fiscal pressures are already starting to build, and the sooner we can address them the easier it will be. The next step in managing fiscal pressures is deciding what choices we will make to achieve a prudent level of government debt by the end of this decade and maintaining it beyond that date."
Just what Greece failed to do.

And my impression is NZ isn't making any hard decisions either.


Anonymous said...

How come they didn't suggest growing GDP at a faster rate?

doesn't help. Pension costs, certainly, scale by age, not by GDP. And as we've seen this year, so do benefits. As GDP goes up, pensions and benefits become more munificent, staying the same or increasing as a proportion of GDP.

the only solution that is mathematically tractable in the 2060-2100 timeframe is to get the government out of Healthcare, Pensions, Welfare, and Education. All the way out. As ever, this should be intuitively obvious to anyone who can work a calculator.

Jamie said...

How about creating some earners!!!

That's big bickies that is. And ya'll wanna turn ya heads up at that and sniff at it like it's nothing.

I'm still waiting for someone to nut up and come up with some better ideas than flogging the farm to the Chinese-communists.

Turning me into a criminal in the lands I risked my neck for - I got one word for ya'll


Anonymous said...

The following observations make your stats less accurate:

The Greek men in the kafenio. Seems like all of them especially plumbers.
Generally the hours between 2.00pm and 5.30pm are dedicated to lunch and the sacred afternoon siesta, especially in the hot summer.


Jamie said...

Jamie said...

Mr Peters raises a fair point...

“It is rich of Mr Key to trumpet ‘free trade deals offer real benefits with jobs and economic growth in New Zealand,’ when he is blocking an opportunity for our struggling New Zealand dairy exporters,” says Mr Peters.

“The United States Department of Agriculture ranks Russia as the second largest dairy importing nation in the world, trailing only China.

How come Mr Key is happy to do deals and bend over backwards for the Saudi's and the sell the farm to the Chinese-commies but when it comes to Russia - Oh no can't do that - human rights and all