Treasury Secretary Gabriel Makhlouf
Steve Braunias’ Secret Diary of ...
MONDAY
I had my feet up on the desk and was staring out the window when one of the team popped his head in the door and asked if I was busy.
I don’t know what he thought it looked like but of course I was busy. I’m the head of Treasury. I don’t get paid just to sit around and stare out of windows.
“It’s just that there seems to be a bit of a problem,” he said.
I told him I had enough problems. I’m about to take up a new position as Governor of the Central Bank of Ireland, and it’s been an absolute nightmare trying to decide what to take and what to leave in storage.
The fool just stood in the doorway. I looked at dining out options in Dublin on Trivago, and ignored him. Restaurant Patrick Guilbaud sounds very good. It’s got two Michelin stars and is only 11 minutes by car to the bank’s offices on the River Liffey. The cellar houses over 30,000 bottles from all over the world and some vintages are very rare. Its website claims, “Our bespoke glassware is designed to suit the development of each varietal.” What’s a varietal? And how to choose between the grilled seabass, and the pheasant and partridge pithivier? And what’s a pithivier? So many questions I don’t know the answer to!
TUESDAY
The same fool was blocking the doorway to my office when I arrived at work. He asked if I was busy. I told him I didn’t know whether he could tell the time or not, but it was late morning, and I had to get ready to go out for lunch.
“It’s just that sometime appears to be hacking the Budget papers from our website,” he said.
I said, “What of it?”
The fool just stood in the doorway. My phone rang, and it was Finance Minister Grant Robertson.
He screamed, “Someone appears to be hacking the Budget papers from your website!”
I said, “I know! I’ve been fully briefed! I’m all over it!”
He screamed, “What are you going to do about it?”
Hate those questions I don’t know the answer to!
WEDNESDAY
Pinning it on Simon Bridges was a masterstroke. It was the fool’s idea; he said the hacked information had been leaked to National, which meant they were most probably behind it.
“I agree with you,” I said.
I told Robertson.
“I agree with you,” he said. “I’ll demand his resignation!” Crisis averted, job done.
A pithivier is a pie usually made by baking two disks of puff pastry.
THURSDAY
Crisis.
Bridges has denied any involvement, and demands my resignation. On the same day as the Budget! And not just any Budget. The Wellbeing Budget has my fingerprints all over it. In March I gave a speech about the need for Treasury to focus on “living standards and intergenerational wellbeing”.
It’s really the Gabriel Makhlouf Budget. It’s my legacy. It’s what I’m going to be remembered for.
Damn it.
FRIDAY
The fool was sitting at my desk with his feet up when I arrived at work. There was a cardboard box on the floor. I stood at the window and stared out.
With just three weeks left in his role as Treasury Secretary, Gabriel Makhlouf has found himself at the centre of a storm after the National Party managed to access Budget information early through the Treasury website.
Makhlouf had referred to “hacking” and called in the police to investigate, only for the police to discover National had simply used the search engine and done nothing illegal.
It has sullied the end of Makhlouf ’s nine years in New Zealand, before he leaves to take up the top job of the Central Bank in Ireland.
The easy breach of Treasury’s website and Makhlouf ’s flawed response will go down as his biggest mistake. It prompted National leader Simon Bridges to call for his resignation and overshadowed Finance Minister Grant Robertson’s moment of glory — the first “Wellbeing Budget”.
It will have compounded the Government’s frustration after Treasury miscalculated the impact Labour’s Families Package would have on child poverty.
That was just three months after Labour got into office. Makhlouf apologised and said Treasury had fallen short.
On this occasion, Robertson said Makhlouf had not offered his resignation, but he told media the Treasury Secretary had apologised for the blunder on Tuesday night. “He said he was very sorry this had happened.”
A spokeswoman for the Irish Minister for Finance Paschal Donohoe told the Irish Times the controversy would not affect Makhlouf ’s appointment as Central Bank of Ireland governor, adding that it was a “matter for the New Zealand Treasury” to deal with.
Makhlouf was born in Egypt, to a Cypriot British father and Greek Armenian mother.
His father was a UN diplomat and Makhlouf ’s early years were spent in countries including Bangladesh (then East Pakistan), Samoa and Ethiopia and he spent much of his career in the United Kingdom.
He was a civil servant with Customs, Revenue and Treasury. He also had a role at the OECD, leading work on tax rules, including money laundering and tax havens.
He moved to New Zealand in 2010, after being headhunted for the role of Deputy Secretary of the Treasury.
When the top job came up in 2011 he decided to stay: “I thought ‘well, actually I love this place, and I love this job’.”
He was appointed partly because he advocated innovation. He saw Treasury’s job as improving living standards.
Under National, he was charged with helping ensure the country rode out the global financial crisis and got back into surplus.
In 2016 he was appointed for a second term.
However, he and then Finance Minister Bill English were increasingly at odds over direction.
They did not agree on English’s push for a “social investment” approach or Makhlouf ’s Living Standards Framework, which National ignored, believing it was a waste of time and effort.
Makhlouf initiated the framework to measure the impact policies would have on living standards and social issues, saying it would improve advice. Treasury now uses it to help weigh up bids as part of the Budget process under Labour.
Sometimes Makhlouf has pushed against political masters.
He advocated raising the superannuation age, despite two of the Prime Ministers he served under — John Key and Jacinda Ardern — ruling it out.
He had also advocated for cuts to programmes such as Working for Families and student loans.
In 2012, Makhlouf argued in favour of increasing school class sizes to allow more money to be invested in quality teaching — promoting measures such as performance-based pay.
There was an immediate revolt by the teacher unions.
The National Government, including English, initially decided to push ahead with it but failed to sell the merits of it and eventually dropped it under intense political pressure.
Makhlouf also sometimes found himself in the position of having to defend Treasury against its political masters.
That included Key in
2016 dismissing some Treasury forecasts as “a load of nonsense”.
Gerry Brownlee was a serial Treasury critic — he once described a report on the Christchurch rebuild effort as “the usual sort of rubbish from them”.
The most recent was in May
2018, when Housing Minister Phil Twyford dismissed Treasury’s KiwiBuild forecasts saying some “kids in Treasury are fresh out of university and they’re completely disconnected from reality”.
Makhlouf noted to Interest that he was the one who had signed off on those forecasts: “It’s been a while since someone has called me a kid so I don’t know whether to take it as a compliment.”
Makhlouf won that one at least — Treasury’s prediction KiwiBuild would take longer to gear up than Twyford expected proved correct.
At the time, Makhlouf said he was “disappointed” at Twyford’s comments.
This week, Robertson used that same word about Makhlouf.