27 June 2006 Media Statement

Government coping well with an ageing population

The government’s strategy of debt reduction and providing for future superannuation means that New Zealand is well placed to meet the challenges of an ageing population, Finance Minister Dr Michael Cullen said today.

"The Labour-led government has succeeded in reducing gross sovereign issued debt from 35 per cent of GDP in 1999 to slightly over 20 per cent today. That's why we are the envy of so many developed countries. We are future-proofing ourselves against the demands of an ageing population."

Dr Cullen was commenting on the release of Treasury’s first "Statement on the New Zealand Government’s Long-term Fiscal Position."

"The statement provides all members of Parliament, commentators and the community with valuable information about the fiscal pressures facing New Zealand in the future.

"The government sponsored an amendment to the Public Finance Act in 2004 to require the Treasury to publish, at least every four years, a statement on the long-term fiscal position, looking out at least 40 years.

"I particularly welcome the inclusion in the statement of projections that show what needs to be done to manage the government’s finances within the Act’s principles of responsible financial management.

"Previous reports of this type produced both here and overseas typically present projections of spending and revenue divorced from the realities of fiscal prudence. In reality, governments make serious trade-offs each and every year when they prepare budgets and the statement shows the sorts of trade-offs that will be required in coming years.

"This is a timely wake-up call for those in the Opposition who seem to believe you can have multi-billion tax cuts without sacrificing long term objectives. As Standard & Poor's has found, the Labour-led government has got the balance right through a prudent fiscal policy that invests wisely for the future.

"I hope this publication will lead to more informed debate about the long term fiscal consequences of government policy," Dr Cullen concluded.
The statement can be found at:

ENDS

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