2025 Treasury - Changing Patterns of Government Expenditure 2006-2025

'Population ageing creates a fundamental trilemma for long‑term fiscal sustainability.' The trilemma means NZ cannot simultaneously: 1. Increase health and retirement spending (driven by ageing) 3. Cut other spending Without increasing public debt. All three cannot be done together. 1. NZS cost pressure: As population ageing accelerates (baby boomers entering retirement, fertility rates declining), NZS will consume an increasing share of GDP — potentially reaching 7–8% by 2050s under current settings. 2. Health cost pressure: Older people are the highest users of healthcare. The shift from 5.5% to 6.7% of GDP in health spending over 20 years will continue accelerating as the population ages. 3. Trilemma trade‑offs: If the Government cannot cut other spending or raise taxes, debt increases — which constrains future capacity to respond to shocks and maintain services. 4. Mitigating factor: High net migration among working‑age people has slowed the ageing effect — this is a temporary buffer, not a permanent solution. - Full PDF: https://www.treasury.govt.nz/sites/default/files/2025-10/tp-25-01-changing-patterns-government-expenditure-2006-2025.pdf (opens in a new tab) (accessed 9 Jun 2026) - HTML page: https://www.treasury.govt.nz/publications/tp/tp-25-01 (opens in a new tab) (accessed 9 Jun 2026) - Power BI visualisation: https://app.powerbi.com/view?r=eyJrIjoiMjRhNzY1MWQtZWU5MC00NjgzLWI1ZWItY2RlNWFiNWY3MmE1IiwidCI6ImVlYTYwNTMzLTA5ZWYtNGI3YS05NDA2LTBmMzg1NTFjYzYxMyJ9 (opens in a new tab) (accessed 9 Jun 2026)