The New Zealand Treasury has warned that an increase in spending by the government to pre-crisis level would result in the country’s debt rising to twice the level of country’s gross domestic product (GDP) in 2060.

The Treasury warned that if the Government increased its spending to the level recorded before the financial crisis after recording a surplus in 2014/15, the country’s debt could rise from 27.4 per cent of the GDP in 2020, to 198.3 per cent in 2060. The government is aiming to control the debt to 20 per cent of GDP by 2020 following an advice from the Treasury.

The data showed if the spending is allowed to reach pre-crisis levels, healthcare costs would rise from 6.8 per cent of GDP in 2020, to 10.8 per cent in 2060 and the spending on NZ Super will rise from 5.1 per cent to 7.9 per cent during the time period. The projections were released as part of the Treasury's statement on New Zealand's long term fiscal position that is to help government take early decisions to avoid unsustainable debt.

The Treasury has asked the government to keep its spending level under control to maintain the health of the New Zealand economy.