"Getting a good return on public spending is good for the Crown's books over the medium term," he said. "That is why we have been supportive of putting extra resource into the welfare area.
"We know that if you are a solo mum under 20 who gets on the benefit the probability of your staying on it for 20 years or more is very high. That is just one example.
"So why don't we focus on identifying those groups of people and trying to support them into work?"
The request for information the Treasury issued on November 6 invites feedback on what programmes are working as well as on where there are gaps to be plugged or failures of co-ordination between state agencies.
Questions it seeks answers to include: What are successful ways to find and engage with the most hard-to-reach children and families? How could existing services, whether provided by the Government or others, be better delivered? What services are needed but not currently available? And are the underlying causes of poor outcomes being addressed?
Submissions close on December 4.
Discussing the issue of child poverty in its briefing to the incoming ministers, the Treasury urged a focus on improving outcomes for the most disadvantaged rather than on the broader issue of inequality in the distribution of income.
Inequality measures have been stable since the mid-1990s, it says.
But it notes that the link between parents' socio-economic status and a child's educational and health outcomes is high.
It also acknowledges that the proportion of low-income households feeling housing stress is increasing, especially in Auckland, as rents rise more quickly than incomes.
Hence the focus, Makhlouf says, on identifying population groups who drive long-term costs to the state and concentrating support on them.
The sharper the focus on results, on bang for the taxpayer's buck, the more likely it is the Government will meet its long-term fiscal goal - reducing debt to rebuild the ability to withstand future shocks - as well as achieving a more inclusive society.
Makhlouf rejects the suggestion that the broad approach, which the Treasury calls its Living Standards Framework, constitutes "going soft".
"Our core beliefs have not changed," he said.
"We still believe markets are important, prices are important, incentives are important."
But in the real world policymakers have to recognise that many factors drive the decisions people make, and they can't all be captured by elegant mathematical models economists have become so fond of.
"If you want a prosperous, sustainable, inclusive New Zealand that is confident, that is [internationally] connected, that is innovative, you have got a whole bunch of things you have to do: a fiscal strategy that manages public debt and makes sure you are spending public money wisely, enabling through the education system and in other ways New Zealanders to participate in the economy, and moving the economy to export- and investment-led growth and away for the old property investment and consumption model."
The Treasury's pre-election economic and fiscal update forecast economic growth to slow from 3.8 per cent in the current March year to 3 per cent next year and just over 2 per cent the two following years.
It will update its forecasts in its half-year report on December 16.
"But we still expect the real economy to continue to grow solidly," Makhlouf said.
"Our focus should be to move from being described as a 'rock star' economy to a 'rock solid' one."
