If Prime Minister Kevin Rudd genuinely believes Treasury is conservative when it forecasts economic growth of 4 per cent within two years, then it would be interesting to know his definition of optimistic.
Treasury officials are not used to being laughed at on budget night but, as soon as their growth forecasts were revealed, no other reaction was possible. Of course there is a chance that for once Treasury will have made a prediction that proves to be correct. But there's at least as much chance of Treasury being wrong.
Treasury's forecasts are based on the notion that the Australian economy will recover from this recession in the same way it did from the recessions of the 1980s and 1990s. This is a heroic assumption.
If there's one thing about the current crisis that can be agreed upon, it is that it is different from and worse than other post-war downturns. Despite this, Treasury remains happy to assume growth will return at the same pace and same scale as it did in previous decades.
It's not just Treasury's forecasts that are a worry. There's also the spectacle of Rudd continuing to insist that the forecasts are "conservative". Treasurer Wayne Swan has gone one better, claiming they are "very conservative". When Opposition Leader Malcolm Turnbull came closer to the truth by describing them as "highly optimistic" and "top of the range", Swan retorted by saying that anyone who doubted the wisdom of Treasury was "silly".
The Prime Minister has spent the days since the budget defending Treasury and labouring the point that Treasury is independent. He has pretended to be offended that anyone would criticise the integrity of Treasury.
But Treasury is not independent. It is a government department responsible to its minister; the secretary of the department is a political appointee.
There might once have been a time when Treasury was regarded (and regarded itself) as independent of the political persuasion of the government of the day but that time has long since passed. Based on its track record since Rudd's election, Treasury has proved itself anything but independent of the Labor government.
Whereas once it was the voice of fiscal prudence, Treasury has embraced record budget deficits and record levels of government debt. Whereas once Treasury could have been relied upon to undertake rigorous assessments of the impact of policies such as the cash handouts, the abolition of Work Choices or the introduction of the emissions trading scheme -- and to make those assessments public -- now Treasury accedes to the government's measures in silence and in secret.
Last year, Treasury secretary Ken Henry said it was entirely appropriate that the policy development for the government's bank deposit guarantee be undertaken away from the prying eyes of public scrutiny.
As bad as Treasury has been on policy, it is on matters of principle that Treasury has proved singularly lacking in independence.
When Rudd embarked on his crusade against neo-liberalism in The Monthly, he was attacking the principles of economic liberalism to which Treasury had adhered to since the 1980s. If Treasury really was independent, as the Prime Minister claims it is, then some sort of response to this assault could have been expected. But no response was forthcoming.
During the Howard government, the Treasury secretary had no compunction about complaining that Treasury wasn't consulted on policy initiatives. But when the Rudd government embarks on a repudiation of everything his department once stood for, the Treasury secretary remains mute. This is ironic given that, not too long ago, Henry was an eloquent defender of neo-liberalism.
In a speech to the Sydney Institute in 2005, he listed the reforms of neo-liberalism such as floating the currency, eliminating tariffs, and significantly "deregulation of capital and financial markets". He said: "It is now widely accepted -- not only by commentators but also within the general community -- that these policies have been a great success.
"Australia's ranking in the Organisation for Economic Co-operation and Development by gross domestic product per capita has moved from 18th in the early 1990s to eighth today.
"Overall, the reforms of the 1980s and the 1990s have seen Australians experiencing much higher standards of living in 2005 than would have been the case had governments not had the determination and perseverance to pursue difficult, but necessary, policy changes".
When Henry repeats in 2009 what he said in 2005 we'll know that Treasury is truly independent. Until he does, Treasury will be just another government department.
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