The Government faces an interminable cycle of debt and deficits, which would see New Zealand's debt levels rise to more than two trillion dollars in 40 years if it doesn't get the costs of an ageing population under control.
That's according to Treasury's most recent analysis of the Government's long-term finances, a draft of which has been put out for consultation. The document looks at the state of the Government's finances over the long term and questions whether they are sustainable.
The cost increases will be driven by the cost of healthcare and superannuation, which will both increase under the weight of an ageing population.
The cost of healthcare will rise from 6.9 per cent of GDP this year to 10.5 per cent in 2061 and the cost of superannuation will rise from 5 per cent of GDP now to 7.6 per cent of GDP in 2061.
The size of government spending will swell to 43.4 per cent of the economy, up from 33.1 per cent currently. Tax revenue won't keep up, meaning that by 2061 the Government will spend vastly more money than it raises, leading to a deficit of 11.7 per cent of GDP.
Even the cost of servicing that debt will increase. Currently, the Government spends just 0.6 per cent of GDP on debt servicing each year. This will increase to 7.6 per cent by 2061.