The AFR today leads with a leaked speech to a departmental forum by Ken Henry, Secretary to the Treasury. He suggests, among other things, that water policies would have been better if based on Treasury advice; expansionary fiscal policy and industry handouts are dangerous; and there’s a greater risk than usual of “policy proposals that are, frankly, bad” in the pre-election period.

The frisson of a leak always encourages a story. But Henry has made similar observations in the past; his “Managing Prosperity” speech in November 2006 spoke about the risk of policy error, inadequacy of present markets for water and energy, and indigenous disadvantage.

His messages are consistent. This recent speech may be more direct than some, given its internal audience, but the policy issues deserve public airing.

Increasingly, other senior policy makers in Canberra also worry about the long term. Many question in private whether we could take better advantage of 16 years of economic growth to address needs such as water, greenhouse, indigenous disadvantage, education. Why is Ken Henry one of the few apparently prepared to raise these publicly?

In the Australian Government, speaking out is known euphemistically as a “career limiting move”. Few officials are prepared to voice concerns in public. The Prime Minister and his office micro-manage the government’s media relations and discourage policy debates in public. They maintain strict discipline on not only public service but also other Ministers.

The exception is the Treasurer, who by virtue of his own political base is less under the thumb of the Prime Minister’s office – and by extension, his department also has greater independence.

Treasury also has a history of providing independent advice in public forums: it even once had its own journal that occasionally published staff articles challenging government directions. Treasury commentary on policy, even if not always welcomed by government, works in Australia’s economic interests by entrenching that reputation for independence. Personal standing also counts – Ken Henry is a highly regarded economist, and it’s hard to argue that he does not know what he’s talking about.

It would be tempting to see these latest comments as evidence of a breakout of independence, engagement and frankness from public servants. More likely, Treasury will remain the exception to the general rule that officials keep their heads down.

Peter Fray

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