29 Oct 2009

Treasury issues warning on rising debt

5:06 pm on 29 October 2009

The Treasury warns the Government could be spending $110 billion per year on debt servicing costs by 2050, if nothing changes.

In a long-term fiscal statement, which looks 40 years ahead, it says the sooner the Government acts to bring spending into line with income, the better.

Treasury Secretary John Whitehead says these are just projections, but New Zealand faces clear challenges in the future.

Mr Whitehead says the situation has changed since the first long-term fiscal statement was produced in 2006.

"The first statement said we had time about 25 years from then until about 2030 before the Government's accounts might move into deficit. Three years later and we are facing that future now. We are in deficit, and deficits are forecast to last for quite a few years yet."

Mr Whitehead says the Treasury has outlined a range of options about how to rein in spending but none of them are easy.