This site has previously lamented the gradual denuding of Australia’s public service, which has been stripped raw by decades of government outsourcing, waves of senior redundancies, as well as a preference for governments to seek advice from paid consultants, erroneously named ‘think tanks’, and political staffers.
The end result has been that the days of “frank and fearless advice” have gone, replaced by spin and bought analysis designed to support a pre-conceived political agenda.
Back in February, former senior public servant, Paddy Gourley, penned a ripping treatise on the politicisation of Australia’s public service, which took particular aim at the Australian Treasury:
Towards the end of last year, it paid $16,500 for the preparation a paper by Griffith University professor Tony Makin. It can now be found on a “Treasury Research Institute” website. Makin has a reputation as a fiscal conservative and has been a trenchant critic of the Labor government’s fiscal response to the economic difficulties that developed in 2008. Parkinson put down one of his earlier papers, saying its criticisms were “based on a theoretical model that does not apply in Australia’s case and assumptions that did not hold during the global financial crisis”.
True to his known views, Makin’s paper is highly critical of the Labor government’s fiscal stimulus during the global financial crisis. It has outraged the ALP and thrilled the Murdoch press and other commentators; one said: “ALP spending binge during the GFC has wrecked our economy … now the official Treasury view.”
What is this Treasury Research Institute? It’s part of the Treasury and is directed by the department’s executive committee. It’s a Potemkin institute that has failed to avert the impression that the Treasury is taking sides in a partisan debate. In short, the department is politicising itself, a risk Treasury secretary John Fraser must have realised when he commissioned the Makin paper. It’s all very well to try to promote debate but all this paper has done is encourage partisan anger, including about the Treasury’s role in commissioning it. It would have been better if the department had stuck more to its knitting: providing advice and support to the government of the day. The institute should be shut down before it causes further havoc.
Fairfax’s Ross Gittins made similar arguments late last year about the politicisation of the Treasury:
Among Tony Abbott’s first acts upon becoming prime minister in 2013 was to sack the secretary to Treasury, Dr Martin Parkinson… replaced by John Fraser, a retired funds manager, hand-picked by Abbott…
The Abbott government’s next act of politicisation came a few months later with the publication of Treasury’s fourth five-yearly intergenerational report. It had been turned into a partisan propaganda rag…
The latest stage in the politicisation of Treasury came… with its publication of a report on The Effectiveness of Federal Fiscal Policy, commissioned from Professor Tony Makin, of Griffith University…
Makin’s views on the ineffectiveness of fiscal “activism” – using budgetary stimulus to assist recovery during recessions – are well known, unchanged and unchanging.
He’s the go-to guy for anyone who’d like an independent report asserting that fiscal policy doesn’t work – never has and never could…
This is a measure of the extent to which politicisation has changed Treasury’s tune.
Today, Gittins has returned, reiterating his previous concerns and warning that Labor is planning a further blow to Treasury’s influence:
Since 2000, after Howard as prime minister won Treasury’s 25-year battle to introduce a broad-based consumption tax, it’s been largely downhill all the way on micro reform, with its loss of momentum, direction and purity of motive…
When Fraser sought to punish Treasury in 1976 by dividing it in two, Treasury and Finance, the initial judgment was that he’d succeeded only in doubling its vote in favour of budget rectitude at the cabinet table.
Forty years on, I now doubt that. Its bifurcation has diminished Treasury’s effectiveness in the endlessly recurring task of “fiscal consolidation” (getting the budget deficit down) by robbing it of both the expertise and the motivation to find innovative, politically sustainable ways to limit the growth in government spending…
On the revenue side, Treasury shares the Business Council’s unending obsession with tax reform. Why? To a surprising extent, for the simple, institutional reason that tax policy still lies within its own ministerial responsibility…
Recent Coalition governments have preferred Treasury and other departments to be less the fearless policy advisers and more the handmaidens to the minister and their office.
This politicisation makes it ever-harder to believe Treasury’s persistently over-optimistic economic and budget forecasts are the product of forecaster fallibility rather than political interference…
Should Labor win the next election, it says it will shift responsibility for budget forecasting and the five-yearly intergenerational report (whose credibility Joe Hockey destroyed by turning it into a political tract) from Treasury to the more independent Parliamentary Budget Office.
R.I.P the Australian Treasury. You might as well close up shop and let the IPA take over responsibility for economic and fiscal advice.
