Healthcare spending

Touching the third rail of superannuation is a brave act by any government, but what about those other curly questions?

Good on you, Bill. I respect political courage. Too often in New Zealand, superannuation promises have been used to buy elections, beginning with Rob Muldoon back in 1975. He made the age of entitlement to universal super 60; it took years of pain and a raft of broken promises to get the age lifted to 65 (back where the old age pension began).

The government is restraining its spending on healthcare – perhaps by over $2 billion a year. Is that what we really want?

A common assumption is that public spending on healthcare rises faster than GDP. There are three reasons behind this assumption.

First, an aging population requires more healthcare. The over-65s consume more healthcare resources than the under65s (and the over-85s even more so).

As times goes on the government will spend more on healthcare. That means higher taxes. Is there an alternative?

I was on the Treasury external panel which advised on its last Long Term Fiscal Projections. The great challenges arise from rising demand for government funded services and the aging population.