{"id":501602,"date":"2026-06-29T20:30:13","date_gmt":"2026-06-29T20:30:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/501602\/"},"modified":"2026-06-29T20:30:13","modified_gmt":"2026-06-29T20:30:13","slug":"why-taxing-a-shrinking-pool-of-workers-more-isnt-the-way-to-pay-for-our-ageing-population-anz-chief-economist-richard-yetsenga-argues","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/501602\/","title":{"rendered":"Why taxing a shrinking pool of workers more isn\u2019t the way to pay for our ageing population, ANZ chief economist Richard Yetsenga argues"},"content":{"rendered":"He believed it would be difficult for governments to keep taxing a shrinking pool of working people (as a proportion of the population) more to pay for the country\u2019s rising health and superannuation costs.<\/p>\n
\u201cWe know very clearly that taxing flows of income has some weaknesses because the working-age share of the population is declining and the number of old-age dependents is rising,\u201d Yetsenga said.<\/p>\n
\u201cWe also know many economies are more prosperous than they\u2019ve ever been before.\u201d<\/p>\n
Yetsenga acknowledged this was \u201ccomplicated political territory\u201d but believed the \u201cfiscal reality\u201d was that there would be a gap between what the tax system funded and what people expected it to fund.<\/p>\n
The Herald asked Yetsenga whether the New Zealand Government had missed the boat, capturing some of the wealth accumulated by Baby Boomers and those in Generation X, who invested at a time when asset prices shot up.<\/p>\n
Would changing the tax system now not hurt younger people, funding superannuation entitlements for others they\u2019re unlikely to receive themselves?<\/p>\n
\u201cIt is a question I think about a lot,\u201d Yetsenga said.<\/p>\n
\u201cI do think about the moral imperative of people my age and the degree to which they benefited from a fortuitous set of circumstances.<\/p>\n
\u201cHistory, of course, is not smooth. We can\u2019t iron out all the strategic fluctuations, but I think we can be honest and say property prices are not going to increase another 400% for the next generation, and so that does put a very different lens on things … I don\u2019t think there\u2019s anything wrong with looking backwards and saying, with hindsight, would we have made different choices? Because if we decide that yes, we would, the best time to plant a tree was 20 years ago, but the second-best time is today.\u201d<\/p>\n
Yetsenga believed that as the population aged, getting the most out of each worker was also going to become increasingly important.<\/p>\n
\u201cThe labour input to the economy is going be in much shorter supply and that\u2019s going to make productivity much more pressing.\u201d<\/p>\n
Yetsenga didn\u2019t have a silver-bullet solution to the enormous question: how do we make New Zealand more productive?<\/p>\n
He acknowledged that a lack of productivity had seen the Reserve Bank left with little choice but to lift interest rates to suppress economic demand when it overtook supply, in order to keep inflation in check.<\/p>\n
If the economy was more productive, supply would be able to ramp up to meet demand without this creating inflation.<\/p>\n
Going back to the issue of fiscal sustainability, Yetsenga said the economy needed to be productive to grow, so the country had the means to support those who needed it.<\/p>\n
\u201cWithout productivity growth, anything we want to redistribute in the economy very quickly becomes a zero-sum discussion, and we know they quickly become fractious and quite difficult.\u201d<\/p>\n
The Herald asked Yetsenga whether New Zealand needed to adopt more of an American approach, where companies hire and fire staff with less friction, so that human resources can more easily shift to where they\u2019re most needed. Are we too fixated on preserving businesses or jobs that are unproductive, when that capital could be put to better use elsewhere?<\/p>\n
Yetsenga didn\u2019t want to pass judgment on what the right balance was and whether New Zealand was striking it.<\/p>\n
However, he did acknowledge that the process of creating productivity could be uncomfortable and disruptive.<\/p>\n
\u201cBusinesses releasing resources so that more productive businesses can have access to them and can grow is something which brings people uncertainty.\u201d<\/p>\n
Yetsenga couldn\u2019t see any way around this.<\/p>\n
\u201cAs economies age, I think you can see a pattern where governance tends to get a bit more conservative, where people tend to make different choices \u2013 maybe more choices about preserving, and fewer choices about growing.<\/p>\n
\u201cI don\u2019t know that we can change that reality, but we can continue to point out that these choices have consequences and ultimately, it\u2019s productivity that pays for the new and the extra. We need to keep that as a core part of the economic discussion.\u201d<\/p>\n
Jen\u00e9e Tibshraeny is the Herald\u2019s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.<\/p>\n
Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter<\/a> \u2013 your essential weekly round-up of all the business news you need.<\/p>\n","protected":false},"excerpt":{"rendered":"He believed it would be difficult for governments to keep taxing a shrinking pool of working people (as…\n","protected":false},"author":2,"featured_media":501603,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[10791,12465,104637,138,3937,13982,3914,219,42636,3592,2082,6132,56387,130,9812,111,139,4061,69,1118,2847,22213,2744,384,7254,5198,8467,14138,294,15160,21981,180484,1361,223,4468,61,14047,4276,4478,19135,250467,80],"class_list":["post-501602","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-ageing","tag-anz","tag-argues","tag-business","tag-chief","tag-continues","tag-economist","tag-economy","tag-evolve","tag-fall","tag-for","tag-income","tag-isnt","tag-more","tag-needs","tag-new-zealand","tag-newzealand","tag-number","tag-nz","tag-of","tag-only","tag-our","tag-pay","tag-people","tag-policy","tag-pool","tag-population","tag-retiree","tag-retirement","tag-richard","tag-shrinking","tag-taxing","tag-that","tag-the","tag-thing","tag-to","tag-way","tag-why","tag-workers","tag-working","tag-yetsenga","tag-zealand"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/501602","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=501602"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/501602\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/501603"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=501602"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=501602"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=501602"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}