Treasury has undergone an independent performance review by the Public Service Commission that identified a self-reinforcing pattern of declining performance at the department.
The review found that pandemic pressures, elevated staff departures and shifting ministerial priorities combined to undermine Treasury's effectiveness. As performance weakened, ministers grew less assured in the department's advice, Treasury's influence across government contracted, and talented staff left. The department's collective confidence fell while risk aversion rose.
The review concluded that the distance between Treasury's current capability and what the country requires has widened substantially. It called for the department to work urgently to restore its reputation and provide strategic leadership and trusted advice.
Finance Minister Nicola Willis said Treasury needed to improve its performance. "They need to up their game and they're committed to doing that," Willis said. She noted Treasury performs well at costing policies and running the budget process but needs to strengthen its contribution to economic debate and generation of new ideas.
Secretary to the Treasury Iain Rennie accepted the need for faster progress in several performance areas. He said Treasury must focus on strengthening economic advice, providing strategic financial leadership, and improving engagement with New Zealanders on fiscal challenges and growth opportunities.
The review's findings align with work already underway through Treasury's transformation programme, but challenge the department to accelerate its improvements. It identified the capacity to drive rapid organisational change while maintaining daily operations as a critical capability Treasury must develop.