Thursday, July 8, 2021

Heather du Plessis-Allan: We deserve to know if Treasury is really up to the job


Go Chloe Swarbrick. 

She’s insisting that Treasury fronts up and explains why it keeps getting house price forecasts so wildly wrong.

All the way through last year from April right up to December, Treasury kept saying house prices were going to drop. Even when house prices were shooting up at record levels, they kept predicting a drop.

Labour’s blocking Swarbrick’s attempts. They won’t let Treasury front at a select committee to answer the question.

Swarbrick’s promising not to let it go, and good on her, because Treasury’s predictions are now so wildly wrong that you can only reach one of two conclusions: either they’re simply not up to the job, or they are deliberately getting the forecasts wrong because they’ve been politicised.

Either is entirely plausible. Economists Eric Crampton has been arguing for ages that the brains left Treasury ages ago. They’ve stopped hiring mostly economists: in one case they hired 24 new analysts and only four had an economics qualification.   

And as for the possibility of politicisation, well, its’ not impossible that Treasury picks up on the vibe of what its minister wants it to say from the possible range of available predictions.

I think we all raised our eyebrows a bit when, a couple of months after the minister revealed a housing package aimed at bringing down house price inflation, Treasury come out with a surprising forecast of only 0.9 percent house price growth over the next year. How convenient! 

So treasury needs to front up and explain itself. If it’s not politicised then its answers should be pretty vanilla. But if it doesn’t front up, if Labour blocks it from fronting up, it should expect to only reinforce that suspicion.

And actually, we deserve to know whether they’re up to the job and we should be putting any stock in what they say.

I’d bet a few people made investment decisions based on that 0.9 percent forecast. Their calls impact our calls in the end.

So, go Chloe. Get them in the room and make them answer questions so we can judge whether they’re up to it or not.

Heather du Plessis-Allan is a journalist and commentator who hosts Newstalk ZB's Drive show.

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