Increased transparency from the expansion of freedom of information “has made people extremely careful in the public service about what they put on paper” thinks the secretary of the Commonwealth Treasury John Fraser.
In a wide-ranging discussion on Friday night with the Grattan Institute’s John Daley, Fraser said increased reliance on oral communication in the bureaucracy was “sad”.
“It’s not a bad thing in itself, but open policy debate means people can be candid and at the moment a lot of it is done orally, which is a pity for history and it’s a pity because some of us can’t think very quickly on our feet,” he said.
The event marked the breaking of a 20-year tradition, in which the Treasury secretary spoke after the budget at the Australian Business Economists annual lunch, with Fraser opting instead for an unscripted chat with Grattan’s Daley.
Discussing the role of the Treasury in national governance, Fraser said: “We’re not there to be popular, but we do have a role in helping to contribute to the economic debate in a sensible way.
“…We’ve played a very good role, I think, this year. Rob Heferen, my deputy secretary in charge of taxation, has been remarkably good in participating in a non-inflammatory way in the debate on taxation.”
Apparently referencing the debate over whether the Intergenerational Report was a political or bureaucratic paper, Fraser argued it was “the Treasurer’s document”.
He added that the only thing he found surprising about it “was that people were surprised” about what it said, honing in on ageing as the biggest challenge highlighted in the report.
“Clearly, those pressures in spending that are related to ageing will increase and we need to think it through how we want to calibrate our expectations about what governments can do.
“I was surprised at some of the debates about half a percentage point in the projections — and they are projections — over 40 years … my head just spun. That’s not the point.”
Fraser praised the hard work of his employees, explaining that he’s seen public servants going home at 2am. “I’ve had to kick them out of the department at times, for their own good” in the lead-up to the budget, he stated.
Taxes need to be lowered, privatisation continued and labour market reform discussion in a bipartisan manner, he added.
“As long as Western Australia regulates the supply of potatoes, I will not say there’s not a lot more work to be done,” he joked.
Arguing that there is a lot of competition for high earners around the world, Fraser said that while Australia’s highest marginal tax rate cut in at 2.3 times average earnings, the equivalent numbers in the UK and Canada are 4.3 and 8, respectively.
He also admitted to worrying about the “massive divergences in wealth and income”, though he did not discuss the drivers or potential policy solutions to this.
Former treasurer Peter Costello’s decision to plow “transitory” mining boom revenues into ongoing expenditure has created problems now that commodity prices were coming down again, he said, and now “other people have to address that issue.”
Fraser told the audience he thought Australia “has been served poorly by the lack of investment in infrastructure.” One of the “sadnesses” of the mining investment boom, he thinks, “is that we didn’t use at least some of the proceeds there to build more infrastructure … we’re playing catch-up now.”
The ongoing weakness in Australia’s infrastructure expenditure is not because the financial industry is disinterested, he emphasised.
“It’s not an issue of finance, I can assure you, it’s an issue of lack of projects.” This is one of the reasons Australia is joining the Asian Infrastructure Development Bank, he added.
The Global Infrastructure Hub, launched at the G20 last year to smooth the global pipeline of large infrastructure projects, has already secured office space “with glimpses of the harbour” in Sydney and has attracted paid members in China, Turkey, the United Kingdom and South Korea, he revealed.
Fraser also said that while advisers, who are now much more numerous than when he left the public service in 1993, “add value, there’s no doubt about it … it is a bit of a battle for departments at times, not just Treasury, to make sure there is cohesion on policy advice and — I’m sounding a bit old now, but I am — order in how things go through.”