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New Zealand’s fiscal policy choices - the big picture John Whitehead 13 December 2007

Analyzing New Zealand's fiscal policy decisions in the context of an aging population, dependency ratios, and the application of the 2006/07 surplus for sustainability. Examines net debt and investment implications up to 2040.

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New Zealand’s fiscal policy choices - the big picture John Whitehead 13 December 2007

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  1. New Zealand’s fiscal policy choices - the big picture John Whitehead 13 December 2007

  2. The population will be older Proportion of population 65 years and older

  3. Dependency ratios 80 70 2000 2050 60 50 40 30 20 10 0 Italy China Spain Japan Ireland Korea Russia France Finland Norway Sweden Canada Australia Australia Germany United Denmark Kingdom Netherlands United States New Zealand Pop 65+ as % of pop 15-64

  4. 2.0 1.8 2.0 2.6 Application of the 2006/07 surplus Core Crown cash Less share retained by SOEs/CEs and NZS Fund NZS Fund Contributions Physical Assets (e.g. schools) + - = Operating balance 8.6 2.9 8.5 3.0 Advances (e.g. student loans, to DHBs) Adjust for non-cash items (e.g. depreciation) Residual cash

  5. Sustainability challenge

  6. Net debt (inc NZS Fund assets) % of GDP 60 50 40 30 20 10 0 -10 -20 2000 2010 2020 2030 2040

  7. Net debt with higher investment % of GDP 60 50 40 30 20 Includes additional investment that boosts growth 10 0 -10 -20 2000 2010 2020 2030 2040

  8. Net debt with higher investment % of GDP 60 50 Includes additional investment, no boost to growth 40 30 20 Includes additional investment that boosts growth 10 0 -10 -20 2000 2010 2020 2030 2040

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