Facta non verba is a Latin motto that translates as "deeds not words". It should be the motto of the federal Treasury for the rest of Kevin Rudd's first term.
Treasury has long enjoyed its reputation as the last bastion of economic common sense in Canberra, and Treasury secretary Ken Henry has spent the past few years lecturing politicians on their responsibilities. Last year, in a now infamous speech, he complained that the then coalition government wasn't taking his advice.
Now Treasury has its chance. It can prove it deserves its reputation.
There's hardly anything of significance that Henry is not a member of. He's on the Reserve Bank of Australia board; he's on the committee that will say how the government should spend the billions of dollars in its infrastructure slush fund; and he's chairing the review of the tax system.
There's no shortage of bad decisions Henry should be attempting to get his political masters to reverse. Stunts such as FuelWatch, and pork barrels like the future funds, should be anathema to any right-thinking Treasury official. If Treasury is as influential as everyone imagines, and if it wants to get even more influence, then it needs to demonstrate it can convince the government just how bad these stunts and pork barrels are.
This week came the announcement of $35 million of federal funding to Toyota to build a hybrid car in Australia. The announcement should have brought on bouts of apoplexy in Treasury. Toyota was going to make the decision anyway -- with or without taxpayers' money.
Giving car companies subsidies to encourage them to make fuel-efficient cars is the equivalent of the government paying McDonald's to make salads instead of hamburgers. No company should require a government handout for it to appreciate the realities of the marketplace. If a company only responds to changing consumer preferences because it is being paid to do so by the government, then it's a company that taxpayers shouldn't be wasting their money on.
Many of Henry's criticisms of policymaking in Australia have been accurate. The reform imperative did wane in the last term of the Howard government, and both sides of politics have been all too eager to spend the boom's proceeds for short-term electoral advantage.
However, criticism is easy. Following Henry's lament that the coalition used its numbers in the Senate to block an increase in road user charges for trucks, Nationals senator Ron Boswell took the opportunity last week to point out some facts of life to the Treasury secretary. As Boswell said, if Henry was so willing to tell politicians what to do, he could quit his job and try to become one. Which is exactly what John Stone did. Given Treasury's success (or lack thereof) at forecasting budget outcomes, politics rather than business might be a better option for Treasury officials seeking new careers.
When it comes to arguing for good policy, it's been the Productivity Commission, not Treasury, that's done the heavy lifting in Canberra. Whether the issue is banning plastic bags or the benefits of free trade, the Productivity Commission can usually be relied upon to provide recommendations based on sound principles. And usually the Productivity Commission will suffer the opprobrium that comes with telling people things they don't want to hear. Last week the commission released its submission to the Bracks inquiry into the motor vehicle industry. The commission identified that taxpayers paid $300,000 a year for every car industry job "saved" by tariffs. The result was that the commission was accused of being "out of touch", "passed its use-by date" and nothing more than "flat-earthers". It's a testament to the commission's success that Rudd didn't have the courage to ask it to conduct the motor vehicle inquiry. He knew the commission would tell the truth, regardless of the cost to its relationship with the government. Instead Rudd got a Labor ex-politician to do the review.
Treasury, as a department under the direct control of a minister, is in a different situation to that of the Productivity Commission. The commission is intended to be independent, the Treasury is not. But Treasury and its secretary have a far greater capacity to directly shape policy.
Of course ministers can disregard departmental advice, and there's not much a department can do if a minister wants to pursue bad policy. But ultimately departments and their secretaries aren't judged on the quality of the advice they give. They're judged on what their ministers do with it.
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