Performance review finds Ministers less confident in Treasury's advice, loss of talented staff, reduced influence

Treasury's performance review has found a litany of issues that have set in motion a "self-reinforcing dynamic" as domestic and international concerns pile up.

The independent Performance Improvement Review stated contributing factors to the performance issues included COVID-related pressures, high staff turnover, evolving Ministerial priorities and changing expectations.

That in turn caused the dynamic in which Ministers became less confident in the Treasury’s advice, the department’s influence across the system reduced, Treasury lost talented staff members, with a reduction in collective confidence and ambition, while aversion to risk increased.

"As a result, the distance between the current state and what New Zealand needs from the Treasury increased materially," the report, from the Public Service Commission, stated.

It called for the Treasury to "work at pace to regain its reputation as ambitious and to act with urgency and clarity to provide strategic leadership and trusted advice..."

Finance Minister Nicola Willis said the Treasury needed to "up their game and they're committed to doing that".

"There are some things that the Treasury does incredibly well, it's very good at costing policies, it's very good at running a budget process, but I think there is improvement for them to make in terms of their contribution to economic debate and new ideas for the future."

Secretary to the Treasury, Iain Rennie, said it was clear there was room for improvement and faster change in several areas of Treasury performance.

"As the [review] points out, we must focus on deepening our economic advice and analysis, providing greater strategic financial leadership across the system and improving the way we engage with New Zealanders both on the long-term fiscal challenges and decisions we face as a country, but also in understanding the opportunities and barriers to achieving economic growth.

"Many of its findings and recommendations reflect work already underway across the organisation through our transformation programme. However, like any thorough review, it also challenges us to go further and faster and we will act on that.

The report said the changing domestic and global context raised the expectations of the Treasury over the next four years.

"One of the most critical capabilities the Treasury will need is the ability to drive effective organisational change at pace, while continuing to manage the breadth and complexity of its day-to-day responsibilities. That will require discipline, sharp prioritisation, and a willingness to focus effort on where it can have the greatest impact."