On Friday, Phil Twyford slammed Treasury officials for their KiwiBuild forecasts, calling them 'kids… disconnected from reality' – the Prime Minister says he went too far

Prime Minister Jacinda Ardern says Housing Minister Phil Twyford went too far when he called Treasury officials “kids” who are “completely disconnected from reality.”

Speaking at her weekly post-Cabinet press conference on Monday, Ardern said she “disagreed with the characterisation” Twyford gave to officials when he disagreed with their forecasts.  

“I have made that clear to Minister Twyford.”

Just hours after the Budget was released on Thursday, Twyford threw Treasury under the bus, telling Interest.co.nz its analysis on KiwiBuild’s impact on residential construction was “simply wrong.”

He instead pointed to a Ministry of Business, Innovation and Employment (MBIE) paper which showed much more money would be spent on residential property.

The following day, his rhetoric on the issue was much more pointed.

In a media stand up, he slammed the “kids at Treasury” over its analysis, saying the “bean counters” had it all wrong.

“Some of these kids at Treasury are fresh out of University and they’re completely disconnected from reality.”

His comments were in stark contrast to Finance Minister Grant Robertson’s praise of Treasury and its officials on Friday morning.

“Treasury has a pretty good record with forecasting when you look at it over the years,” he told Interest.co.nz in an interview.

In the Budget lock-up, he praised Treasury for its work in putting the Budget together over the last few months.

Ardern says she would join Robertson in his admiration of the officials, but adds that it’s not uncommon for Ministers to disagree with Treasury.

In 2016, then Prime Minister John Key called Treasury’s long-term debt forecasts “a load of nonsense.”

National’s Gerry Brownlee has also had run-ins, calling a report critical of the post-Canterbury Earthquake recovery effort “the usual sort of rubbish from them.”

Despite saying Twyford had gone too far, Ardern says she also disagrees with Treasury’s KiwiBuild forecasts.

“One of the things that Treasury hasn’t taken into account is some of the elements of KiwiBuild which include buying off plans.

“So, there are some different mechanisms they have used to make those forecasts.”

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42 Comments

... that's OK , Jacinda .... every village has one ... and the little Hamlet of Taxinda has Phil Twyford as theirs ...

Be happy , at least his name doesn't sound like he's Chinese ... ha dee haaaaaaaaaaaaaaaa !

The stark reality is the difference between shooting a line whilst in opposition as opposed to toeing the line whilst in government. And you would have to admit, in the context of the former, this minister was something of a yapper. So inline with an old one my grandmother was rather fond of,put your money where your mouth is. Even the the least bright of our politicians, one would hope, could work that one out.

... I'm wondering if Phil " the tool man " Twyford is the younger red version of the Gnats ace man , Nick " baby-face " Smith ...

Used to think that he he was modeling himself on, and thought he would be the “new” Trevor Mallard. An attack dog sort of thingy? More of a pomeranian, than a rottie though, in my opinion.

Nick Smith had a bit of a red face though.

Is it gummy or grumpy

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Jacinda better hope that Treasury forecasting is wrong because if KiwiBuild and the government's housing reform agenda fails then her credibility like John Key's before her will go down the gurgler......

As for Grant Robertson, he needs to get off his bum and work with his Ministerial colleagues to ensure there is something 'transformational' about this government because it does not have a mandate to continue along with the 'modified status quo' or National-lite goverment.

If the public had wanted the status quo then it would have voted for National....

I agree with you; however, the reality is that the govt understands that many people are quite happy with status quo. For many, never in their wildest dreams would have envisaged their primary asset--the home--appreciate like they have in places such as Auckland.

The point is that the govt needs to be aware of this. Change will alienate a fair number of the voting population. An "external shock beyond govt control" would help the ruling party immensely.

I suspect that they are very wary of the stable support for National, the strong possibility that NZF will fall below 5% at the next election and that swing voters do just that. I must admit I was surprised by the budget. It looked like National lite and I can live with that (not that I have any choice). With living costs rising and it becoming clear Twatford has nothing new to help lower housing costs its just a matter of waiting for some form of economic shock. I’m not sure where it will come from and there’s conflicting evidence out there e.g. I heard that building supply demand is lightening, but then a 840m2 section just sold in St Heliers for $2.4 million (106% of CV). It’s a funny world.

I suspect that they are very wary of the stable support for National, the strong possibility that NZF will fall below 5% at the next election and that swing voters do just that. I must admit I was surprised by the budget. It looked like National lite and I can live with that (not that I have any choice). With living costs rising and it becoming clear Twatford has nothing new to help lower housing costs its just a matter of waiting for some form of economic shock. I’m not sure where it will come from and there’s conflicting evidence out there e.g. I heard that building supply demand is lightening, but then a 840m2 section just sold in St Heliers for $2.4 million (106% of CV). It’s a funny world.

Yes, they're damned if they do and damned if they don't.

Oh wow, much softer tone J.C. what happened to the revolution and the fight for Change? ... closing the gates and crashing the market?

so now it is ok for those who voted for change to accept status Quo ?

So now " For many, never in their wildest dreams would have envisaged their primary asset--the home--appreciate like they have in places such as Auckland." .. Wow !

So it is ok to throw the FHBs under the bus then, and remove means testing from KB allocations and sales? that is the status quo.

But of course it is ok .. as the main purpose was never to fulfill the empty and silly promises this CoLs campaigned on about KB, immigration, doctors, wages etc.... it was, and is, all about holding power , spending on mates, satisfying TUs and Greens, it is about splashing the money and wasting the inheritance.... that's what it is about.

This CoL are doing a very good job in alienating a fair number of the voting population and they will have a taste of that venum in 2020.

Good to see that you are coming along J.C..

So now " For many, never in their wildest dreams would have envisaged their primary asset--the home--appreciate like they have in places such as Auckland." .. Wow !

It's no different to any asset bubble. The sheeple feel good about the situation and themselves. The only problem is that they tend to forget that the negative implications of bubbles have a tendency to bite them on the ass. No reason why this bubble is fundamentally any different.

Dear oh dear !... Well done Ms Ardern, nice work.

Anyone would be confused when KiwiLoan, and Kiwibuy is tangled with Kiwibuild ... what a load of nonsense. KB has now become the slogan of the plan that is not only lacking substance but changing colors, numbers, and name every other day.

Maybe PT needs to see a psychiatrist or attend an anger management course.

Just 8 months in the job and he is already stressed and got told off ! ... poor Phil

Poor Phil is carrying the load dumped on him as a result of the failure from the previous government

LOL. indeed , how else could you spin such a nice story...haha, always blame National.

National must be the only ones to blame for PT's headaches, stress, forgetfulness of prices, flip flopping, and now losing control and getting told off ...!

If only National have built those damn 100,000 homes for PT he wouldn't be under such pressure now ! -- Naughty National ... poor Phil, its not his fault ...

Keep the faith HO - you will need a lot more than that in the coming days...

Don't you worry. I have faith.. I guess you're going to keep whinging like a rotten kid who ain't getting what they want

Haha, careful .. don't use the word "Kid" loosely, you might get told off too !

I have everything that I want .... you CoLs mates are not going to last long - so get used to it.... and get ready for change.

Keep whinging kid, let's see how long you'll keep whinging

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Mark my words ........... Twyford is not going to last the distance , he is allowing everyone and everything to get to him .

His portfolio is a Hospital Pass , the poison chalice if you like , and he is crumbing under the pressure to honour the biggest election promise .

It cannot be done , as we have pointed out

Hospital pass from the previous government

The cancer has spread from National to Labour.

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Twyford and Ardern are both away with the fairies when it comes to this so called Kiwi build, Buy, loan or whatever they come up with next!

Reality is that there would not be many of these first home buyers that they want to cater for buying homes in the near future.

No,wonder that Twatford said that there would be no limit to income to be able to buy these boxes as you will need to be on pretty good income to be able to buy one, even if you wanted to!

The fact is that the $650,000 3 bedders with a 10% deposit would require a mortgage of around $600k and with the low deposit you would not be getting the cheaper interest rates that the Banks currently offer as “specials”.

A Bank is currently working out repayments at around 7.9% in case interest rates go up, so,I wouldn’t want to one of the property bears on here hoping that they do go up more as Banks will increase the repayment calculation at a higher rate again.
Personally don’t think rates will go up but Banks are conservative and don’t want to be lending to the vulnerable.

Anyway $600k at 7.9% is $4361 per month or over 52k per year with interest and principle so you are going to need to be on in excess of 100k I would say of income annually at least each and every year.

If you were on this sort of money you probably wouldn’t want to be living in these box’s that are potentially planned.

Has Twyford or Ardern worked this out?????

Probably not because they are just blurt it out and hope that they can get away with it, but as we are all getting to know, they are totally incompetent and it continues to show!!!!!

Did you get tired of typing..

”The Man” only writes the truth and nothing but the truth!
The sooner that everyone sees the damage they have done by voting in the worst government this country has ever seen the better.

There you go bullshitting straight away..... after 9 years of an incompetent government, you claim to say you state the truth..

... it would be a very interesting exercise to put that to the test ... it'd be a subjective opinion of course , as to which government in the rich annals of our history truly was the " worst " ...

I'm reckoning Taxinda's mob havn't had enough time nor internal disasters to qualify .... 2 and a half years to go ... on their way !

The national party is in disarray with a pathetic leader, with hyenas waiting to tear down his carcass

... I wonder what odds the TAB will give me on Mark Mitchell taking the Gnats to victory in 2023 ... after they burn their Bridges in 2020 ...

He’s got that likeable guy sort of look.

Hmm I'm surprised you chose MM. Wasn't he the first to be eliminated?

Collins for leader....

I’m not sure what your point is? There is barely a property in the country that stacks up at 7.9% PA. If interest rates ever get back there I wonder what will happen to “investors”? Unless they can somehow double their rent they will be paying more than they earn.

Jimbo Jones, the point is that the Trading Banks repayment criteria is currently working out repayments as if interest rates are 7.9%.
Our investment house loans for assessing our ability to repay any additional lending is based on repayments on a table loan basis, that is, principal,and interest as if interest rates went to 7.9%.

Anyone looking to borrow would be assessed as repayments at 7.9%. The Banks then look at all,your living costs such as other loans, food, petrol, power, school costs, clothes, utilities etc. etc. and then they work out with all those costs. Plus the loan repayments at the 7.9% whether you can afford it!!!

I suggest that the ones that the COL think they can help will not qualify for a Trading Bank loan but let’s just see what Mr Twyford and co. say, as things are changing weekly aren’t they.

Regardless of what you say, the only solution to the problem (if you choose to admit there is one) is to build more houses. It doesn't really matter how much they cost to build or how much they sell for. Every new house will add to the supply and bring the average house price down compared to what it would be had it not been built. Its pretty simple really, you know I'm right, you just choose to push for policies that help you get rich through high house prices.

If everything else stayed the same, maybe. Problem is the 68k people walking in the door each year.

Point is they need to be doing everything to change what is happening. Build houses, stop net migration and reduce building cost. What we voted in them for!!

Instead they seem to be doing very little and what they have planned looks like it will be almost ineffective (note I said almost, the 3 or 4 house they build this year might reduce the average house price by 0.000001%)

One of the issues that Twyford has is that his boss campaigned on not lowering the value of housing ... and yet to make housing more affordable!
The amazing thing is that anyone at all bought that line.

Lets clarify that - not to lower the value of EXISTING housing. Building lots of smaller units on smaller sections shouldn't really lower the value of existing larger houses on larger sections.
Also affordability can be achieved over time through inflation without house prices decreasing - as long as they don't increase.

Let’s knock that on the head now. For prices to move back towards long term ratios re income and yield by gentle deflation via increased income would literally take decades. The likelihood of that happening is pretty much zero. What is far more likely is that at some point there will be a significant decline in nominal values. Unless you have drunk the “this time is different” koolaid (and plenty here seem to drink little else) the only useful duscussion seems to be how will that reversion to mean occur and how can we best manage it (if indeed we can manage it).

Flat/slow decline of house prices and 6%+ pa wage inflation to inflate away the ridiculous debt load some of the public are carrying.

And where will this non inflationary 6% wage growth come from exactly? It’s pie in the sky. Even 6% wage growth would take in excess of a decade where the overprice vs long term averages is in the range of 30-50%. This “gentle deflation” scenario seems to me the most unlikeliest of outcomes.

Except that that is really the only acceptable outcome. The govt doesn't want a crash, the banks don't want a crash, home owners don't want a crash. The only people that want a crash are those that are waiting to buy, and they are going to get shafted by a crash even if they don't realise it now.

The only way a crash is happening is if the world economy goes into recession.

To be fair to the hapless Treasury gnomes, they at least did state their assumptions in the Budget. The fact that two key ones are well astray after only a matter of weeks simply reflects Yogi Berra: "It's tough to make predictions, especially about the future".
Those assumptions:

The combined effect of these can be seen at yer local servo......and is gonna cut a broad swathe through expenses of all sorts.