Treasury boffins not ‘pencil heads living in an ivory tower’ – Makhlouf

Gabriel Makhlouf

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 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.

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Treasury hasn't had a new idea since the 80's!


Treasury is risk adverse. Nothing apparently wrong with that, but Treasury seems to be risk adverse irrespective of the cost. Example, buying EQC reinsurance for around three times the cost of risk when the government is easily big enough to self insure.


Talk talk talk- lets wait for some action


The Treasury needs to prove that they are not "pencil heads", by their smart and visionary actions, not just words.


Jesus Wept! Gabby Makhlouf is more dis-connected that I suspected.
Quote from the oracle: "whether the economic growth that has occurred in the last 250 years was an historical anomaly that is now over". That is the job of an Economic History Department in a University.

His job is to stop his muppets from repeating ad-nauseam the errors of the past 30 years.

I suspect he sees that Cunliffe will be the next PM. He knows change will be forced on him. He is so so very off key.


Given that Makhlouf was a) Gordon Brown's right hand man at the UK Treasury and b) that Gordon Brown is now seen as one of the worst Chancellors/Prime Ministers the UK has ever had (witness the calamity that is the UK governments' books, the poisoned chalice that Brown handed on to the present government) why an earth was Makhlouf ever appointed here in the first place? He must have been integral to Brown's disasterous decision making - and now we have to listen to his pronouncements?


"a stable climate"
this says it all as to how totally out of touch they are. Like overpaid canutes full of their own self importance.
"hothouse of ideas"
Well I'd be happy to put a bonfire under them and make them suffer for their failings.


ah the haters and the wreckers of the NBR web comments section. Makhlouf was not, as far as I know, Gordon Brown's "right hand man" in the UK, Didn't he come from UK Customs and Excise? Admittedly a bit of an odd lineage, but hardly a capital crime.
The Treasury should be applauded for be willing to refresh its thinking and be a centre of economic policy excellence. As for "the mistakes of the last 30 years", how come NZ is one of the more healty looking developed economies post-GFC? (current account deficit notwithstanding).


Well 'as far as I know' Glando isn't a great deal is it. A brief bit of research on Maklouf by your good self would have revealed that he was Principal Private Secretary to the UK Chancellor of the Exchequer, Gordon Brown.

If that isn't right hand man I don't know what is......


Compared to what?
Our closest neighbour with the largest number of kiwis flitting back and forth has survived for a million reasons better than anyone, yet we languish in the bottom of any table and the only reason there aren't riots in the streets is what the country is borrowing every week to allow most to think she'll be right.
I'd rather treasury came up with a single bright idea - join Australia.


Our passage through the GFC was less traumatic than Europe and US because of the Reserve Bank of Australia. The RBA stopped their Banks, which own the NZ banks, from trading in the flawed derivites and sub-prime markets. Thankfully we were saved from the devastation caused by the Merrill Lynch et al sharks throughout the developed world. The NZ Treasury had no say on the matter.


Well just maybe there is a very narrow glimmer of hope here that this new fellow Marklouf takes objection to being called a "pencil head" - which he is, he would not have be appointed if he wasnt!!
So maybe, just maybe, he will posatulate some propositions that show that he has some perception of what is reality in the real world of commerce and small to medium business enterprises, including farming and manufacturing.

The silo thinking that has pervaded Treasury for probably the past 30 years has critically failled to see a whole of country, just bits of it in depth detail from time to time.

So Mr Marklouf to prove you are not just another pencil head, you need to present a positive proposition to the country that shows that you can see and comprehend of the connections of all the parts that will build a better economic wall for this country.

Sir if you continue the Treasury approach of analysing to the nth degree the odd individual brick in the wall with out consideration of the collateral effects that changing that indivdual brick will have on the whole wall.To continue that Mr Marklouf will prove you are another "pencil head"

The label sits with yousir until you prove otherwise Sir


Adopt the Australian $ ultimately.
Get NZ'ers primed and used to seeing dual currency trade in the Aussie owned supermarkets until they realise that we are just a branch office.
Get politicialns used to the idea they will have to head & ultimately commute to Canberra more often.
Became a state of Australia.


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