"Treasury is risk adverse. Nothing apparently wrong with that, but Treasury seems to be risk adverse irrespective of the cost."Featured comment
BUSINESSDESK: New Zealand's Treasury secretary Gabriel Makhlouf says his department is seeking to be more outward facing to dispel the impression of "pencil heads living in an ivory tower".
"I'm conscious that if Treasury wants to build public understanding and turn perceptions around – to gain a reputation that better matches the reality of the organisation I lead, the importance of the work we do, and the talents of the people I work with – then we have to earn it," he told a lunch meeting of the Trans-Tasman Business Circle.
His speech was titled The Changing Face of the Treasury and said it was part of a wider phenomenon where people were "re-examining a few economic assumptions that used to be taken for granted, or asking what the objective of economic policy should be, or even whether the economic growth that has occurred in the last 250 years was an historical anomaly that is now over".
"The world is in the midst of what will be a prolonged period of instability and risk – an age of volatility," the former British civil servant said. "Rapid changes in economic power under way now will mean that the structure of the global economy is likely to be very different in 10 years."
One of those changes is the emerging economies in Asia. While the US and Europe will remain large and relatively wealthy, "it's pretty clear that for the foreseeable future, emerging markets – particularly in the Asia-Pacific region – are where the action will be."
The "pencil heads" comment was left by a member of the public on the interest.co.nz website and Mr Makhlouf said he has been sent emails saying Treasury produces predictions which are mostly wrong.
He cited its in-house Living Standards Framework that attempts to establish a framework for the department's work and proves, he says, that Treasury's view of the world "is far broader than many people realise".
"Treasury recognises that living standards are affected by physical and financial resources such as infrastructure, housing and savings, people's health, education and skills, social institutions and conventions and natural resources such as water quality, a stable climate and biodiversity.
Treasury needs to widen its ambit to be more than "crunching numbers, stretching dollars and pinching pennies".
Under his leadership he wants the department to become "an exciting and energetic hothouse of ideas" and one "renowned for credible analysis and well-researched evidence that presents a more complete picture of complex issues".
He cited Treasury's work on the quality of teachers in schools as a "controversial" example of the department's wider gaze.