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
“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.
Will Westcott is a young traveling journalist