Review of the New Zealand Treasury’s Revenue Forecasting

Context#

The Treasury commissioned the Review in 2023 and the Final Panel Report was completed on 20 February 2024. The Review was commissioned in acknowledgement that revenue forecasters are facing a more complex operating environment, increasing demands, and the fact the last revenue forecasting review took place in 2005.

The Review was undertaken by an expert panel and supported with independent analysis undertaken by Sense Partners and a Secretariat staffed by advisors from the Treasury.

The main objective was to assess the Treasury’s revenue forecasting performance, processes, and methods, especially government wide issues relating to information flows and policy costings.

There are 21 recommendations arising from the Review. These recommendations relate to internal forecasting processes and modelling, as well as wider institutional settings that have implications across government departments. Taken together, these recommendations would lift the quality and robustness of Treasury’s revenue forecasts and reduce forecast bias, thereby providing a solid base of information for policy advice and decision making.

The Treasury has begun implementing the recommendations from the Review and will be engaging other interested government agencies to make system wide changes. Some of the recommendations can be actioned in the short term and implementation is already underway. However, other recommendations are complex and will take several years to fully implement.