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  • Paul Tilley

Does Treasury still have policy influence?

Updated: Aug 2, 2019

Treasury has long been a central policy adviser to governments - but over its history its influence has waxed and waned. My book Changing Fortunes: A History of the Australian Treasury tracks these changing fortunes. The following article summarises them.

Does Treasury still have policy influence?

For its first 30 years Treasury was a budget manager and administrator. Found wanting as an economic policy adviser in the Great Depression, Treasury subsequently developed its economic capacities to become the government’s principal policy adviser. Treasury’s policy thinking, then and now, has fundamentally been driven by a market-oriented neo-classical economic framework in support of policies that strengthen the economy’s long-run growth potential.

As outlined in Changing Fortunes: A History of the Australian Treasury the level of Treasury’s policy influence, however, has waxed and waned.

As the powerful budget and economic manager through the golden years of the 1950s and 1960s Treasury was the dominant policy adviser to Australian governments.

  • Treasury’s influence waxed.

This status did not sit comfortably, though, with the increasingly assertive governments of the post-Menzies era and, overlaid with the stagflationary economy of the 1970s, Treasury was pushed out into the cold by the Whitlam and Fraser governments.

  • Treasury’s influence waned.

The 1980s and 1990s brought the reformist Hawke/Keating and Howard/Costello governments and Treasury became a partner in the economic reforms of that period.

  • Treasury’s influence waxed.

The 21st century has brought greater difficulties for economic reform. First, the largess of the resources boom paradoxically made making the case for reform harder. More recently, the deteriorating political scene has robbed any government of the sustained political capital needed to pursue difficult reforms. In the day-to-day political battles that have dominated policy debates over the last decade it is facts and figures, not policy advice, that are demanded of the public service.

The balance of policy influence has shifted to the political offices and external stakeholder groups with the public service becoming more information providers and implementers of government decisions.

  • Treasury’s influence has waned.

A challenge for Treasury (and other public service agencies) is how to maintain its capabilities. With Treasury’s economic policy advising capacities being less called upon, they are in danger of withering on the vine. In the raw politics of the last decade the skill set in demand has been can-do responsiveness to quickly provide facts and figures for the daily political and media skirmishes. As the more senior and experienced staff with substantial policy advising experience leave, there is a diminishing pool of people for more junior staff to learn from.

For the sake of good policy development in Australia, hopefully the political scene will stabilise and government will have the scope to again pursue a substantial economic reform agenda. Policy advising agencies such as Treasury need to be ready, if and when that opportunity presents itself. To be prepared for its influence to wax again.

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