Population Ageing and Social Expenditure in New Zealand

Abstract

As the population ages there will be potentially significant implications for a wide range of economic variables, including in particular the fiscal costs of social expenditures. Long-term fiscal planning requires estimates of the possible future path of public spending. This article presents projections for 14 categories of social spending. These projections are based on detailed demographic estimates covering fertility, migration and mortality. Distributional parameters are incorporated for all of the major variables, and are used to build up probabilistic projections for social expenditure as a share of gross domestic product using simulation. Attention is focused on health expenditures which are disaggregated into seven broad classes. In addition, we explore the impacts of alternative hypotheses about future health costs. While it can be predicted with some confidence that overall social expenditures will rise, the results suggest that longterm planning would be enriched by recognising the distributions around point estimates of projected social costs.

New Zealand's demographics and population ageing

“…The stochastic approach involves creating multiple simulations for the base population (which is itself an estimate), births, deaths, and net migration. The simulations vary randomly according to the probability distributions of each assumption derived from empirical models using historical data, or from judgements (see, for example, Booth & Tickle, 2008; Creedy & Scobie, 2005;Lutz, 2009). The simulations are combined using the cohort component method to give 2000 simulations of the projected population and thus a probability distribution of population size and other characteristics.…”

How Uncertain Are Long-Run Fiscal Projections? Non-Parametric Stochastic Modelling for New Zealand

“…An example of stochastic population and social expenditure projections using this approach for New Zealand is Creedy and Scobie ().…”

Debt projections and fiscal sustainability with feedback effects

“…A similar approach was adopted by the Australian Treasury (2015). Variants of this kind of procedure were also used to examine projected New Zealand social expenditures only, although allowing for stochastic elements, by Creedy and Scobie (2005) and Creedy and Makale (2014). 2.…”