The Long-Term Fiscal Model (LTFM) is an Excel spreadsheet-based model created by the New Zealand Treasury to produce 40-year projections.
The projections cover economic and fiscal variables, such as nominal GDP and core Crown net debt, used in the Statements on the Long-Term Fiscal Position.
The latest version of the LTFM is the model produced for:
The main inputs it uses are:
- 2016 Budget Economic & Fiscal Update (BEFU) fiscal forecasts, covering the June-end years 2015/16 to 2019/20
- 2016 BEFU macroeconomic forecasts, 2015/16 to 2019/20
- 2015-base June-end year labour force projections from Statistics New Zealand, to 2059/60
- 2015-base June-end year labour force projections from Statistics New Zealand, to 2059/60.
The modelling approach and assumptions used in He Tirohanga Mokopuna are outlined in the background paper for the 2016 Statement on the Long-Term Fiscal Position available below in Demographic, Economic and Fiscal Assumptions and Modelling Methods in the 2016 Long-Term Fiscal Model.
The published model covers the two main scenarios of He Tirohanga Mokopuna, namely 'Historical Spending Patterns' and 'Stabilise Net Debt'. The one key difference in how the ' Historical Spending Patterns' and Stabilise Net Debt' scenarios are modelled is in the assumed annual growth rates of each major expense type.
The way to model different scenarios is by changing the assumptions for post-forecast, projected year (2020/21 and beyond) variables in the Assumptions worksheet. More information about this can be found in the Guide worksheet of the model.