Treasury's 'professional judgement' to predict house prices shocks Green, National and ACT MPs

Treasury's admission that officials use "professional judgement" to predict house prices, rather than a solid economic model, has shocked Green, National and ACT MPs, who are demanding answers.

Green MP Chlöe Swarbrick, who sits on Parliament's Finance and Expenditure Committee (FEC), has for three weeks now sought a briefing from Treasury officials on how it comes up with advice on house price forecasting. 

Swarbrick says it's important because in 2020, Treasury predicted a house price fall, which informed Government and Reserve Bank decisions that, instead, saw house prices increase an historic 25 percent in one year. 

National's housing spokesperson Nicola Willis, who also sits on the FEC, sought more clarification from Treasury officials when they appeared before the committee a few weeks ago. Swarbrick then requested a briefing from officials on the subject, but it's been shot down three times by Labour. 

Treasury gave FEC members a written response on how officials forecast house prices. It said a team of 11 use their "professional judgement" to "form views" of house prices and economic outlooks, rather than a firm economic model.  

"We literally have it on the record there, quite explicitly, that they're using their 'professional judgement' - that isn't giving us any form of insight into the variables used to predict house price forecasts, which in turn inform Government policy," Swarbrick told Newshub. 

"I guess what was most helpful is that we have real clarity now that we're not going to get that clarity unless, and until, we have that briefing. 

"We actually have consensus from everybody bar those Labour members, that's three out of the four parties that are represented on the Finance and Expenditure Committee."

Green MP Chlöe Swarbrick.
Green MP Chlöe Swarbrick. Photo credit: Newshub

Willis says the written responses left FEC members with more questions than answers. 

"It seems officials basically collect some housing related stats, throw them in a spreadsheet, and then use their 'judgement' to pick a forecast. It sounds more like a vibe than an economic model," she told Newshub. 

"What informs officials' 'judgements'? Who influences them? Do they talk to the minister about it? Have they learnt anything from wildly inaccurate forecasts in the past?

"These forecasts are of vital public importance and we are not satisfied with the limited information we have received so far." 

ACT's housing spokesperson Brooke van Velden says Labour needs to stop "playing petty partisan politics" and let FEC members get the briefing they want. 

"We have a housing crisis. New Zealanders struggling to save for a home deserve to know we're taking their concerns seriously," she told Newshub. 

"When Treasury says it uses 'professional judgement' rather than firm economic models to forecast house prices, they should expect scrutiny, not protection, from politicians."

National MP Nicola Willis.
National MP Nicola Willis. Photo credit: Newshub / Zane Small

Finance Minister Grant Robertson believes Treasury's written responses were sufficient. 

"I think the responses that the committee has received from the Treasury in writing do cover the material that they're asking about," he told Newshub. "It's up to the committee what they then decide to do with that."

FEC chair Duncan Webb, a Labour MP, told Newshub last week that members of the committee have ample opportunity to ask oral questions when Treasury appears before them about six times a year, as well as the Reserve Bank which has so far appeared three times. 

"Given the extensive opportunity for examination through normal channels, a special briefing was seen as duplicative by the majority of the committee."

ACT deputy leader Brooke van Velden.
ACT deputy leader Brooke van Velden. Photo credit: Newshub / Zane Small

But Swarbrick says FEC members don't get enough time to properly scrutinise officials during those appearances, because select committees are often filled with 'patsy questions' from Labour MPs.  

"It's just unnecessary. This basic information shouldn't be partisan," she told Newshub. 

"This is the kind of information that officials would be producing whether it was a Labour-led Government, a National-led Government, or otherwise."