I was pleased to see Ross Gittins get a gong in the Australia Day honours list, because I think he’s a passionate columnist and an exemplar of what we need more of – an economist who’s prepared to demystify their profession and place it within its human context. One of my other must read economists from the mainstream media is Peter Martin of the Canberra Times – not itself among my newspapers of choice but whose work I got to know from his laudable participation in the art of blogging. We do, of course, have quite a distinguished crew of blogging economists in Australia – in fact some of the prime movers of the Australian blogosphere – John Quiggin, Nicholas Gruen, Jason Soon and Andrew Leigh come to mind. But Martin is in a rather different media and institutional space as an MSM employee rather than as an academic or consulting economist.
One of the tidbits I picked up via Martin’s blog last year was Treasury Secretary Ken Henry’s keen interest in Indigenous welfare. It turns out this isn’t an isolated or personal concern, but rather fits within a conceptual framework Treasury has developed whereby public policy is evaluated in terms of its contribution to human wellbeing. It’s nice in passing to note that Treasury indicates that sociology among other disciplines has something to contribute to such an analysis. But it’s also interesting to observe that Martin saw fit to highlight this aspect of Treasury’s mission as news in his column this week.
The Department of the Treasury, once correctly thought of as being principally concerned with saving money and advancing GDP, has changed almost beyond recognition.Remarkably – and quietly – it’s done it during the life of the Coalition government.
Its mission statement does not, as you might imagine, require it upfront to increase the nation’s GDP. Nor does it require it to save the government money.
It’s new statement, adopted a few years back, instead simply requires it “to improve the wellbeing of the Australian people�.
We had oodles of debate in the 80s and 90s about the influence of “Treasury orthodoxy”, some of it in my view quite unfortunately lacking in nuance – such as the contribution of Michael Pusey who really had quite an odd notion of causality when building a methodology to try to asssess how public policy came to be dominated by what was then termed “economic rationalism”. I could, if I wanted to, quibble with Treasury’s new framework, but on the whole (and probably unsurprisingly) I find it rather congenial in that it doesn’t take a narrow view of the tasks of policy but gestures towards the sort of humane understanding that Gittins and some of our blogging economists display. But it strikes me as quite extraordinary from a democratic point of view and from the point of view of public debate that such a view could be formulated almost beneath the radar. So I think there actually is an obligation to debate it.
Cross-posted at PollieGraph.
The full
motherhoodmission statement reads thus:This form of words means either:
that the Treasury seeks to trick ministers into taking options they otherwise wouldn’t take.
or
that the Treasury accepts ministers’ perceptions of what constitutes wellbeing and cobbles policy around those prejudices.
Perhaps what they meant to say was:
Although I doubt it.
Read on, Katz.
That’s how they assess policy for its contribution to wellbeing.
So in light of your questions, the supplementary is – what right does Treasury as an institution have to formulate these principles?
I guess the Treasury had to find a new perspective, or fade into irrelevance. Maintaining GDP growth at a steady (but non-inflationary) pace is the task of the RBA these days. Keynesian-style fiscal policy has fallen out of favour with economists, even if it occasionally remains attractive to governments (I’m looking at you, George W Bush).
Bank regulation is up to APRA. Exchange rates float. “Saving money” from the Federal budget, as Martin puts it, is the Finance department’s role.
Ken Henry must have thought, what exactly IS my job these days … ?
Kudos to him for coming up with a thoughtful mission statement, that goes beyond traditional mission statement banalities.
“what right does Treasury as an institution have to formulate these principles?”
Well, I’ve always been a supporter of the notion of the frank and fearless mandarin, dispensing advice frankly and fearlessly. (Maybe I just watched too much Yes, Minister and Yes, Prime Minister!)
Particularly since Treasury now has little formal power, it is all the more important to be an independent and forthright source of advice. And their theoretical framework should be entirely up to them.
With naught but a cursory glance at the policy as Mark has listed it above, i think it sounds like large step in the right direction.
You gotta love mission statements. It all sounds kind of nice, but then I’m fairly sure what Treasury’s real position would be when it comes to the crunch, given the somewhat parlous state of both the global and the domestic economy at the moment. It is difficult to conceive of the department recommending (for example) new education initiatives if it was felt that they could potentially prove inflationary, or else leave the Budget in a less black position than it could reasonably be in.
Added to that, its probably worth mentioning that the Rudd Government has tied itself into a bit of a policy straitjacket with the admittedly diligent way it is sticking to its pre-election commitments (or in some areas, lack thereof). It may well be that the pressure on the government to be economically conservative when it comes to public spending is the telling force on show, rather than what Treasury may or may not think or waffle on about.
Well, as a public servant Ken Henry’s job is precisely to accept “ministers’ perceptions of what constitutes wellbeing and cobble policy around those prejudices”. Like it or not (and like all conscientous public servants I bet there’s plenty of times when he doesn’t like it), someone voted for those ministers’prejudices whereas no-one voted for his.
FWIW that mission statement would have had to be approved by Costello, and quite likely by Howard too.
In private life Henry is a strong greenie, BTW – so much so that I suspect he probably votes Green.
as a public servant (though very lowly), I have to say the impression is that to get anything up, you need to have PM&C and either Treasury or Finance on board. Finance HAAAAAAAAAAAAATE spending money, so for a savings measure, approach them. Treasury though, will be persuaded if they think the expenditure will be an ‘investment’, and will often go for new policy directions.
Oh, to be sure. I’m sure Cossie liked the generations bit, since that appeared to be an obsession for him and Howard thought it was just a motherhood statement.
Like I said, it’s not something I’m in disagreement with, but I just wondered about the dysjunction between the “Treasury is evil” debate from the 90s and this set of principles which went unnoticed until yesterday.
I’d also be curious to know about some real examples as to how they’ve used these principles to formulate advice.
Me too, since I’m a bit unsure about what the last two might mean.
Yes it is interesting to speculate what Ken Henry’s thought processes would be on things such as the Mal Brough indigenous NT McMansion to be sold freehold to its new owner, perhaps one who was saving scrupulously from his community employment program job, since scrapped. As an indigeous supporter and environmentalist I have a hunch he would have been questionning the need for a european style home set on the ubiquitous concrete slab. Surely this is one area where indigenous architecture and streetscape planning should be top and centre of any housing plan coming out of Canberra. Your my eyes, ears and finger-on-the-finance pulse Ken.
This should come as no surprise to anyone living in the real world.
Which returns us to the question of the function of this mission statement. Clearly it performs three functions:
1. to project Costello’s fixations through the distorting lens of happy talk.
2. to fool and befuddle anyone fool enough to be misled by spin.
3. to help terminate the career of any public servant above a certain level of seniority who seeks to turn these statements into a mandate to recommend too enthusiastically policy contrary to the prejudices of the incumbent government.
There’s an interesting article in ‘The Age’ today, saying that Treasury has advised Swan that the biggest economic danger is climate change. Interesting, especially in combination with the Garnaut report.
The philosophical debates between politicians as masters and the bureaucracy as ‘umble servants is lengthy, ongoing and unlikely to ever be resolved. it changes regularly, based on all sorts of things, but mostly driven just by common sense. No Secretary (we hope, post-Whitlam) will ever get around a direct command or veto, but they will exercise their considerable powers and talents to ensure that eventually the Government of the day listens to reason.
The bureaucracy is, for a major power base, about as rational and un-ideological as you could expect. Reason and good argument do go a long way. The treasury values statement is really just trying to express ‘the Australian settlement’ of a mostly egalitarian, fair and just society that does not unnecessarily get in the way of opportunity and freedom.
Mark:
This sounds like wonderful news. I do hope so
much that it is true …. and not just more
shift-the-blame and cover-your-backside
ornamentation.
If it is true and there really has been a
complete change of heart and of workstyle in
Treasury then we really can hope for an end to
policies that have ruined and killed good
citizens, that have rewarded utter scoundrels,
that have lost exports, that have destroyed whole
industries, that have spoiled the environment,
that have squandered much public money, that have put
us in peril of attack, that have obstructed
progress and innovation.
I am willing to believe in a miraculous
conversion on the Road to Damascus; such things
are possible – even in Treasury …. but until I
see consistent proof that such a miraculous
conversion has taken place, I shall remain
sceptical though optimistic.
Pablo [11]:
Absolutely spot-on.
See what Blackfellas actually living there need
and want themselves. Then let them have housing
they can use, can appreciate and can feel is
their own. And guess what? Energy-efficient,
appropriate housing will then be built at a
fraction of cost of the “fools’ palaces� and cost
only a tiny fraction to maintain.
If a rising generation of Blackfellas themselves
later want the most advanced housing in the 21st
Century, housing that would make the Finns
envious, that will be great too. Then everyone
[except the advertisers in “lifestyle� magazines]
will be as happy as Larry …. and that includes
the bloke who has been saving to buy his very own
house out his meagre CDEP pay.