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New Zealand Government Debt and the Future We Are Leaving Our Children

Writer: Gary Moller
Gary Moller
12 hours ago
14 min read

New Zealand government debt has risen dramatically over the past two decades, while pressure continues to build on health, infrastructure, housing and other essential services. But the figures themselves are only part of the story. The larger question is what kind of country we are creating, and what sort of financial, social and physical inheritance we will leave our children and grandchildren.


This article is not primarily about debt, health, COVID, infrastructure or any particular political party. It is about stewardship: whether the decisions we make today leave New Zealand stronger or weaker for those who come after us.


The FreeRangers Litmus Test for an Election Year


FreeRangers Litmus Test for assessing New Zealand political policies and their long-term consequences

There comes a time in life when you begin looking at the country rather differently. You spend less time wondering what it can give you and more time wondering what condition you will leave it in.


I find myself doing that increasingly these days. I grew up in Putāruru during the 1950s and 60s, when children had freedoms that would probably horrify many parents today. We disappeared for hours, climbed trees, swam in rivers, went fishing, built forts, rode bicycles everywhere and generally learned about life by getting on with it. Our parents did not have much money by today's standards, but we never thought of ourselves as poor. We had freedom, family, community and opportunity.


New Zealand was far from perfect. Nostalgia has a habit of sanding the rough edges off the past. But there was a reasonable expectation that if you worked hard, saved, looked after your family and took your opportunities, you had a fair chance of getting ahead. Now, with another general election approaching, I find myself asking a fairly simple question:


What kind of New Zealand are we leaving our children and grandchildren?


That question has become what I call my FreeRangers Litmus Test. Whenever a political party announces another policy, another spending programme, another tax, another tax cut, another subsidy or another billion-dollar promise, I want to put the politics aside for a moment and ask:

Will this help make New Zealand a better place in which to live and raise a family, not only for us today, but for the generations that follow us?

It is deliberately a simple test. It does not require an economics degree and it does not require allegiance to a political party. In fact, I think it works best when applied first to the party we support, because most of us are much better at finding holes in the other side's ideas than our own.


Pandemic Spending and the Choices We Made

Take a good look at the graph above. It traces New Zealand Government borrowing since 2000, and there is quite a story in that line.


There have been several shocks along the way. The Global Financial Crisis arrived from overseas. The Canterbury earthquakes left an enormous reconstruction bill. Then came COVID-19 and government expenditure on a scale few of us had previously witnessed. There were extraordinary circumstances during those years, and governments throughout the world borrowed heavily.


A distinctive feature of COVID was the misallocation of about $80 billion or more, with most of this spending directed overseas to a few corporations and individuals. New Zealand did not gain any productive advantage from this transfer. This event could be seen as the largest shift of public funds in New Zealand's history into the hands of a wealthy minority. As a result, there are now some very wealthy individuals, including some former politicians. Meanwhile, the majority of New Zealand citizens are in a worse position.


To comprehend the scale of $80 billion, consider what that sum represents in physical infrastructure. At the estimated $1.25 billion cost of Transmission Gully, it is equivalent to around 64 Transmission Gully motorways. At the $1.88 billion funding envelope for the New Dunedin Hospital programme, it is equivalent to roughly 43 such hospital developments. Just imagine what New Zealand would be like today if that 80 billion was spent on the production of enduring infrastructure. There is another way to look at it. Inland Revenue collected about $60 billion in personal income tax in the year to June 2025. Eighty billion dollars is therefore greater than an entire year's personal income-tax take from New Zealanders.

What interests me now is what happened afterwards. The pandemic ended, but the debt did not. Treasury's Budget 2026 figures put net core Crown debt at $182.2 billion in 2025. It forecasts $191.8 billion for 2026, $216.5 billion for 2027 and $232.4 billion for 2028. By 2030, the forecast is $246.1 billion.


Between 2026 and 2027, the Treasury predicts that net core Crown debt will rise by $24.7 billion. This equates to roughly $68 million per day, or about $2.8 million per hour, continuously throughout the year. It's important to note that government officials, financial analysts, and others need to maintain an optimistic perspective. Failing to do so could potentially lead to accelerating an economic collapse. Personally, I believe the situation is more severe than we are being informed.


Infographic titled NEW ZEALAND GOVERNMENT DEBT CLOCK shows debt and household share in black digit blocks on a white background.
Screenshot taken September, 2026. For the least update: https://www.debtclock.nz/

Countries, like families and businesses, borrow money, and doing so to create long-lasting productive assets can be entirely reasonable. The more important question is what results from this borrowing. If billions are borrowed to construct electricity generation, water systems, transport links, and other infrastructure that enhance New Zealand's productive capacity for the next fifty years, our children inherit some debt, but they also inherit valuable assets. However, the situation changes significantly when one generation spends the money and leaves the next generation mainly with the debt. This is what the "Uni-Party" (Labour and National) is doing to this country and seems unable to change.

Debt tells us only half the story. The other half is what we leave behind to show for it.

That, for me, is where this becomes a FreeRangers issue.


Where Does the Money Come From?

Election campaigns are peculiar things. Perfectly sensible people who would agonise over spending another $10,000 of their own money can listen quite happily to politicians discussing billions as though they were loose change behind the sofa. A billion dollars is a difficult number to visualise, and once government expenditure becomes large enough, I think we lose our instinctive understanding of what it represents.


But there is no separate species called "government money", and it doesn't grow on trees. It comes from somewhere. It may come from people and businesses through taxation, through charges and levies, from income earned by Crown assets or from reducing expenditure somewhere else. Alternatively, it may be borrowed, in which case future government revenue must service the debt.


Illustration of politicians beneath a money tree representing government spending and public money
You'd think that money grows on trees!

This is why I am becoming increasingly wary of judging a policy solely by the benefit printed in the press release. A proposal might save a household $30 a week, which sounds wonderful, but before celebrating I want to know what it costs to produce that saving and who ultimately carries the cost. If the same household eventually pays more through taxation, charges, increased prices or the cost of servicing government debt, then we have not completed the calculation by looking only at the benefit.

Don't just count the benefit. Count the bill as well.

Health, Hospitals and New Zealand's Priorities

Consider the Green Party's proposal for a publicly owned supermarket competitor, KiwiMart. There is a perfectly reasonable argument behind it. New Zealand's grocery sector is highly concentrated, and greater competition might reduce prices. Lower food bills would certainly be welcomed by families.


The FreeRangers Litmus Test does not tell us automatically whether the proposal is good or bad. Instead, it requires us to complete the calculation. How much capital will be required? Where will it come from? If the money is borrowed, what will the financing cost be? Can we, as a country, afford to take on more debt? Will the business operate profitably? What happens if it does not? Most importantly, what reduction in the average household grocery bill could reasonably be expected, and how does that benefit compare with the cost and risk carried by taxpayers?


There is then another question that I think is too often neglected in political debate:


What else could we have done with the same money? 


Several billion dollars committed to one purpose cannot simultaneously be invested in electricity generation, hospitals, roads, water infrastructure, housing or reducing government debt. Economists call this opportunity cost. My parents' generation had a simpler way of putting it: you can't spend the same pound twice.


Exactly the same discipline should be applied when another political party proposes tax cuts. Tax reductions may increase disposable income and change incentives to work, save and invest, but we still need to know how much revenue will be forgone, what expenditure will change to compensate and what happens to borrowing if the two sides do not balance. The political colour of the proposal is irrelevant. The arithmetic remains the same.


The Long-Term Cost of Government Borrowing

Health is an even better example for me because I have spent more than half a century working in health, physical conditioning, rehabilitation and nutrition. New Zealand's Vote Health allocation for 2026/27 is $33.031 billion, an increase of $2.556 billion, or 8.4 percent, over the opening allocation for the previous year. Broader core Crown health funding is $34.196 billion.


These are extraordinary sums of money, yet much of our political discussion about health still revolves around which party is prepared to spend more. I think we need to ask a more fundamental question:


What are we getting for the money?


We are faced with a significant burden of chronic diseases. Our hospitals are strained, healthcare professionals are overextended, and an aging population will further increase demands on the system in the coming decades.


Statue of Hippocrates beside a health quote about nature, healing, fresh air, sunshine, exercise, and healthy foods on a white slide.

Throughout much of my career, I have assisted individuals after problems have occurred, whether due to injury, illness, loss of physical ability, or years of gradual decline. One lesson has been consistently reinforced: prevention is generally easier, more compassionate, and less costly than attempting to fix things after they have gone wrong. It reflects an "ambulance at the bottom of the cliff" mindset.


Ambulance stranded below collapsed cliff road by a health system hospital; protest signs blame health care failures at sunset.

Our health system is still primarily focused on treating illnesses after they occur. This isn't to suggest that we should do away with hospitals, medications, or advanced treatments. Instead, it's about questioning whether our approach is balanced. Can we prevent more chronic diseases before they require costly medical interventions? Can we help individuals maintain muscle strength, mobility, metabolic health, and independence as they age? Are there cost-effective interventions that lead to significant improvements, and are there areas where we spend a lot but see unsatisfactory outcomes? The answer is clearly "yes," but only if there is political insight and determination to make it happen.


Merely adding another 2-3 billion dollars to healthcare doesn't automatically equate to an additional billion dollars' worth of health benefits. A successful health system should be measured by the population's health, not just by the amount of money spent on treatments.


Independence Is Worth Protecting

There is another part of the FreeRangers Litmus Test that cannot be measured neatly on a government balance sheet. I want to know whether a policy helps people become more capable and independent or gradually makes them more dependent upon government. There will always be people who need help. Illness, disability, unemployment, family tragedy and plain bad luck can affect any of us, and a decent and prosperous society should have the capacity to help people through difficult periods and care properly for those who genuinely cannot care for themselves.


However, wherever reasonably possible, I think the longer-term destination should be independence. This applies to health and welfare, but it also applies to families, communities and businesses. Ultimately, it applies to New Zealand itself. A resilient country should retain the ability to feed itself, generate reliable energy, build houses and infrastructure, create businesses, develop skills and give people who are willing to work a reasonable opportunity to get ahead.


This is very much the philosophy behind FreeRangers. Freedom is not simply the absence of somebody telling us what to do. Meaningful freedom also requires capability. A person who is healthy, skilled, financially secure and surrounded by family and community has choices. Someone who is entirely dependent upon others for the necessities of life inevitably has fewer choices, however well-intentioned that support may be. Countries are not so different in this respect.


Good Intentions Are Not Enough

One lesson that comes with age is that good intentions do not guarantee good outcomes. Governments can alter people's behaviour enormously through taxes, subsidies, regulations and legislation. Sometimes people respond exactly as policymakers hoped. At other times they find ways around the rules, stop investing, pass costs on to somebody else or simply leave. A subsidy intended to make something more affordable may increase demand and push its price higher, while a regulation intended to protect consumers may impose compliance costs that large companies can absorb but small businesses cannot.


This is not an argument against taxation, regulation or government intervention. It is an argument for humility. Human societies and economies are complicated systems, and complicated systems do not always respond in the way somebody sitting behind a desk expected them to. Whenever a substantial new policy is proposed, therefore, I want to know not only what happens if everything goes according to plan, but also what happens if it does not. Who carries the loss? How easily can we change direction? What measurements will tell us whether the policy is succeeding, and are we prepared to stop doing something when the evidence shows that it isn't working?


That kind of questioning is normal in business, farming, engineering, medicine and most other areas of life. It should not suddenly become unreasonable when billions of dollars of public money are involved.


Good Intentions Are Not Enough: What's Your Legacy?


Family with backpacks overlooks Auckland at sunset beside signs reading Strong Families and A Brighter New Zealand

This brings me back to where I began. At my age, I increasingly think about what my generation is leaving behind. I don't mean what is written into our wills, but the condition of New Zealand itself. What sort of country will our children and grandchildren inherit when it is their turn to take responsibility for it? Will we leave them reliable infrastructure, affordable and dependable energy, productive farms and businesses, healthy soil and clean water? Will we leave them a health system capable of caring for people when they are sick while also doing a much better job of helping them remain healthy in the first place?


I also wonder whether young New Zealanders who are prepared to work hard and save will still have a reasonable prospect of owning a home and raising a family without being burdened by enormous debt. Will somebody with a good idea, a little courage and a willingness to work still be able to start a business, employ people and create something of lasting value? Will our communities remain strong, and will people still believe that effort, thrift, personal responsibility and enterprise are worthwhile? These are not abstract economic questions. They determine the kind of society in which our children will live.


Then there is the condition of the Government's finances. It would be a poor legacy if we enjoyed the benefits of ever-increasing expenditure during our lifetimes while quietly forwarding the invoice to generations that were too young to have any say in the decisions. Borrowing may be entirely justified when we leave behind productive assets of comparable or greater value, but borrowing becomes much harder to defend when the money has been consumed and all that remains is the liability.


Every generation receives an inheritance from those who came before it. That inheritance is much greater than money and property. It includes roads, hospitals, farms, businesses, institutions, knowledge, freedoms, customs, communities and opportunities. We enjoy the fruits of trees planted by people we never knew, and there is an obligation attached to that privilege.

Our job is not merely to enjoy the inheritance. We should try to hand it on in better condition.

Apply the Same Test to Your Own Life

Over the coming months, every political party will announce policies deserving serious examination. Some may prove excellent, some may prove dreadful, and most will probably lie somewhere between the two. I am not interested in applying one standard to Labour and another to National, or in giving the Greens, ACT, New Zealand First, Te Pāti Māori or anybody else a free pass. The FreeRangers Litmus Test is useless if we use it merely as a stick with which to beat politicians we already dislike.


In fact, I suggest doing the opposite and applying the test first to the party you are inclined to support. It is remarkably easy to discover flaws in an idea proposed by somebody on the other side of politics. It takes considerably more discipline to examine critically something we desperately want to believe. We should be prepared to ask exactly the same questions of everybody: What will this cost? Who ultimately pays? What evidence supports it? What else could have been done with the money? What happens if the assumptions prove wrong, and how difficult will it be to change course?


There is another question that deserves more attention than it receives during election campaigns. Does the policy strengthen New Zealand's productive capacity or weaken it? Ultimately, our ability to fund health, education, superannuation, infrastructure and social services depends upon people producing goods and services of value. We can argue endlessly about how the national cake should be divided, but somebody still has to bake it. Policies that discourage investment, work, saving, innovation and enterprise may eventually reduce the amount available to everyone, just as policies that genuinely improve productivity may increase what can be shared.


None of this means that the cheapest policy is necessarily the best policy. Sometimes the sensible decision is to spend substantially more today because doing so will save money, prevent suffering or create valuable assets tomorrow. Prevention in health is an obvious example. Maintaining infrastructure before it fails may be another. The FreeRangers Litmus Test is not a test of how little government can spend. It is a test of whether what we are doing represents good stewardship of the resources entrusted to us.


What Kind of Country Are We Handing On?

One day, sooner than most of us care to contemplate, New Zealand will belong entirely to generations younger than ours. They will inherit the roads and hospitals we built, the businesses we created, the farms we maintained, the rivers and soil we cared for, the institutions and freedoms we protected, and the debts we accumulated. They will also inherit the consequences of the things we neglected and the opportunities we allowed to slip away.

I would like those generations to be able to look back and conclude that, on balance, we were good custodians. We enjoyed what previous generations handed to us, certainly, but we also repaired a few things, built a few more and left the place in better condition than we found it. That seems to me a modest expectation of any generation fortunate enough to inherit a country such as New Zealand.

Perhaps this is asking too much of politics, but I don't think it is asking too much of us as voters. Between now and election day, whenever another attractive promise arrives, I intend to stand back from the political salesmanship and put it through the FreeRangers Litmus Test. I will look at what it costs, who pays, what we receive in return, what we give up to obtain it, what could go wrong and, above all, what remains when the spending is finished.

Then I will come back to the question with which I began:

Will this help make New Zealand a better place in which to live and raise a family, not only for us today, but for our children and grandchildren?

I am not going to tell anybody how to answer that question or how they should vote. But I do think that if more of us applied this kind of discipline to every political promise, regardless of which party made it, we might have a rather better chance of handing the next generation a country that is stronger, healthier, more resilient and in better financial shape than the one we inherited.


Sources and Further Reading


The figures and public-policy information referred to in this article have been drawn principally from official New Zealand sources. Readers are encouraged to examine the original material and draw their own conclusions.



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