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Debt Around the World: New Zealand
By Will Westcott, Travelling Journalist

In many ways, Canada and New Zealand couldn’t be more similar. Our nation’s histories’ mirror

each other in remarkably parallel fashion. British colonialism has left an indelible mark, as has

its clash with the native populations that preceded it. The landscapes, too, are familiar and

equally striking. Rolling farmlands become soaring mountain peaks, which themselves crash

steeply down into wild, untamed seas. Internationally, Canadians and Kiwis alike are renowned

for their politeness, friendly nature, and welcoming personalities.

When it comes to the fiscal health of each nation, there are some similarities but also one notable

difference. While Canada’s debt to GDP ratio sits perilously at the 90% mark (and growing),

New Zealand’s debt load is almost a quarter that size, currently at around 25%. But as Jordan

Williams, Executive Director of the New Zealand Taxpayers’ Union, points out, that doesn’t

mean that there still aren’t major fiscal concerns for the four million odd residents of this famous

island nation.

“While the current government debt isn’t bad on an OECD standard, what’s concerning it is the

long term fiscal deficit, in-terms of the huge entitlement programs that are coming down the line.

The most obvious of these is our superannuation age of 65, which is totally unaffordable in the

long term.” The New Zealand Superannuation Fund, known commonly as the Super, is New

Zealand’s equivalent of the Canada Pension Plan. Williams explains the key ways that the Super

is unaffordable in its current structure.

“First, it is annually adjusted to reflect inflation and average wage growth. So, this means that

it’s not like the government can just hold off increasing it for a few years to make it more

affordable; it simply imbedded in, which is on the scarier end of ways to design entitlements.

Secondly, it’s not means tested. So, if you’re a millionaire or you’re a pauper, you get the same

amount, which is just nuts.”

While the Super is certainly the most serious of New Zealand’s unfunded liabilities, there are

others that are also likely to add weight onto the shoulders of Kiwi taxpayers for years to come.

The Working For Families tax credit, a welfare program geared towards low-income families,

was criticized by former Prime Minister John Key, while he was still in opposition, as

“communism by stealth”. But Key subsequently failed to fundamentally reform the program

during his eight years in power. Another unfunded liability with direct impact on New Zealand’s

younger generation is interest-free student loans.

Since the program’s introduction in 2005, taxpayers have written off more than $6 billion in

interest charges on student loans. Jack Close, a young staffer at the Taxpayers’ Union, argues

that millennials in New Zealand are actually working against their own interest when they use

and support the program. “A couple of New Zealand group have brought up the student loan

issue which I think is a fantastic point. It isn’t really being raised much by millennials because,

naturally, they will see that to be against their own interest. But at the end of the day, it’s not.”

What, then, needs to happen so that Kiwi millennials are better informed about some of the fiscal

entitlements that they will be forced to pay for down the line? Ineke, a young Kiwi mother of

two, believes the answer lies in education. “I think sometimes it’s difficult to actually get that

information. I listen to national radio but you’re always getting this person’s story or that

person’s perspective and it’s hard to really know what’s true. I think there’s definitely a place for

compulsory financial literacy in our schools.”

As is the case in Canada, it seems education is paramount in helping young people understand

the fiscal issues facing their country. When asked if his organisation has any plans to speak more

directly to millennials, Williams answered, “It’s been on our long to-do list, but we’re going to

put the call out in the next few months, looking for some young spokespeople willing to speak

publicly on these issues.” For the sake of New Zealand’s long term fiscal health, that call can’t

go out soon enough.

 Westcott is a young traveling journalist investigating the issues of debt, welfare, and government spending around the world. Focusing primarily on the attitudes of young people to these related issues, he will report from a new country each month.

For more information:
Will Westcott, Travelling Journalist
phone: cell: email: