Wednesday, April 04, 2007

Australia's Treasury "doesn't know anything about water". Or defence, I suppose. Or schools, or health, so why bother consulting it?

Has it really come to this?

Senior Cabinet ministers have moved to sideline the Department of the Treasury in discussions involving water claiming it “doesn’t know anything about” the topic.

The Treasury yesterday released the text of an address to staff by its Secretary Ken Henry last month in which he expressed deep disappointment that Treasury had been sidetracked in the development of the Prime Minister’s $10 billion Australia Day water initiative.

“We have worked hard to develop frameworks for the consideration of water reform and climate change policy,” he said.

“All of us would wish that we had been listened to more attentively over the past several years in both of these areas. There is no doubt that policy outcomes would have been far superior had our views been more influential.”

Dr Henry counseled his Treasury colleagues not to give up. “Water has got away from us a bit in recent times, but it will come back for some quality Treasury input at some stage – it will have to,” he said...

The Treasury published the internal address – dated March 14 - after the Australian Financial Review printed extracts yesterday.

The Treasurer Peter Costello said he had been “interested to read” his departmental secretary’s remarks but added that “Treasury is no water expert. Treasury is good at Treasury, but Treasury has not been engaged in water”.

The Water Resources and Environment Minister Malcolm Turnbull confirmed that the government’s top economic advisor had not been central to the planning of the Prime Minister’s $10 billion water initiative, adding “but they don’t know anything about water”.

“Treasury had an input, but let me say to you, the Treasury does not know how much it costs to pipe a channel, how much it costs to replace a Dethridge wheel with a computerised flume gate, and how much it costs to line 10 kilometres of leaky channel along the Murrumbidgee River.”

“You can have all the smart people in the world running Excel spreadsheets, believe me, but ultimately you've got to have the on-the-ground information… this involves dealing with practical people, people who've got a lot of dirt under their fingernails, and know how things work,” the Environment Minister said.

In his leaked address to Treasury staff Dr Henry made it clear that he was not asking to run water policy, merely to be consulted at the time it was formulated. “Many of the policy problems that we face today have a whole-of-government character,” he said. “We can’t tackle them alone. But neither can anybody else. More significantly, they won’t be tackled effectively without our strong input.”

Traditionally officials from the Treasury, the department of Finance and the department of Prime Minister and Cabinet have had the right to run their eyes over all Cabinet submissions involving expenditure.

But the Prime Ministers $10 billion water plan was announced on Australia Day without being put to Cabinet.

In February the head of the Finance Department's Infrastructure Division told the a Senate committee that Finance heard about the plan only days before and aside from the announcement itself, the only documentation it received was one sheet of paper.

The Finance Minister Nick Minchin defended keeping the plan from his department and Treasury as it was being drawn up saying it cost just “$1 billion a year, let's keep it in perspective''.

The Prime Minister John Howard yesterday responded to the Treasury Secretary’s comments saying he “didn’t quite understand what he was getting at, but in any event the important thing is that the Treasurer and I discussed that plan at some length and it’s very strongly supported in the community.”

He said it was often the case that a department that had lost an argument complained that it would have been better had its advice been taken and that "Treasury is no different". He said it was appropriately consulted.

In a statement published with the speech on the Treasury website Dr Henry denied that he had delivered "a scathing assessment of the federal government's water and climate-change policies" and said he did not "criticise government policy or processes".

In the speech Dr Henry also warned his department to be “particularly vigilant” in the pre-election period in balancing its duty to be responsive to ministers with the need to be non-partisan and non-political.

He said that if any officer felt uncomfortable about what you are being asked or being directed not to do, they should speak to their manager, or directly to him.

“At this time, there is a greater than usual risk of the development of policy proposals that are, frankly, bad,” he said.