For this report, we reviewed the Treasury’s latest long-term fiscal statement, which was published in November 2016. New
Zealand is fortunate that the Treasury has the statutory authority and independence to take such a long-term outlook.
The Treasury considers the long-term fiscal statement as a central part of its stewardship role.
The statement and the background papers published alongside it contain important information about the many challenges
and opportunities that New Zealand might face in the future. However, the supporting financial projections focus
primarily on demographic change and the consequences for future superannuation and healthcare spending. Although these
are important matters, New Zealand and the Government are facing a more uncertain future and a broader set of challenges
than just a changing demographic.
As we found in our review of the previous long-term fiscal statement in 2013, the financial projections provide little
insight into the size, timing, financial effect, or interconnectedness of any other potential challenges and
opportunities – individually or as a set of scenarios. Important concerns, such as the financial consequences of further
shocks (including natural disasters), are not presented or analysed. Also, some projection assumptions, such as
excluding New Zealand Superannuation Fund assets from the calculation of net debt, are questionable.
The Treasury acknowledges that its financial projections do not include many significant factors that could affect the
long-term financial position of the Government. Further work is needed to prepare long-term financial projections based
on a set of plausible scenarios of different futures for New Zealand, the public sector, and the Government.
As a result, the financial projections can be too easily dismissed by current and future decision-makers, reducing the
value of the statement. Better projections would have allowed useful analysis and insights for planning and managing the
uncertainties that surround the Government’s long-term financial position.