Part 1: Overview (continued)

Departmental overview

The Treasury's mission

The Treasury's mission is to improve the wellbeing of the Australian people by providing sound and timely advice to the Government, based on objective and thorough analysis of options, and by assisting Treasury ministers in the administration of their responsibilities and the implementation of government decisions.

Policy outcome

In carrying out its mission, the Treasury has responsibility for the following outcome:

• Informed decisions on the development and implementation of policies to improve the wellbeing of the Australian people, including by achieving strong, sustainable economic growth, through the provision of advice to government and the efficient administration of federal financial relations.

The Treasury has four policy groups that contribute to achieving this outcome and a further group that provides enabling services, Corporate Services and Strategy Group. The policy groups are:

• Macroeconomic Group;
• Fiscal Group;
• Revenue Group; and
• Markets Group.

Macroeconomic Group

Macroeconomic Group provides advice on a sound macroeconomic environment, which is an essential foundation for strong, sustainable economic growth.

Macroeconomic Group undertakes monitoring and analysis of economic conditions in Australia and overseas, which forms the basis of quality macroeconomic policy advice to portfolio ministers.

Macroeconomic Group also provides advice to government on a range of international economic policy issues, including strengthening multilateral regimes underpinning open trade and capital flows, supporting developing countries' development aspirations and on helping to shape the evolution of regional economic architecture.

Macroeconomic Group is also responsible for payments to international financial institutions as outlined in program 1.2 on pages 68-69.

Fiscal Group

Fiscal Group provides advice on effective government spending arrangements that contribute to the overall fiscal outcome and help deliver strong and sustainable economic growth.

Effective spending measures should meet their stated objectives, minimise behavioural distortions and deliver significant economic and other benefits compared with costs. Fiscal Group provides policy advice to portfolio ministers to promote government decisions that further these objectives.

Fiscal Group is also responsible for the efficient payment of general revenue assistance, National Specific Purpose Payments and National Partnership Payments to the States and Territories as outlined in programs 1.4 to 1.10 on pages 72-85.

Revenue Group

Revenue Group provides advice on effective tax and retirement income arrangements policy and on legislation to implement policy that contributes to the overall fiscal outcome and to strong, sustainable economic growth.

Tax and retirement income policy affects the wellbeing of Australians through influencing individuals' decisions on saving and investment, as well as through labour market participation and businesses' decisions about whether, where and how much to invest.

Well-designed tax legislation contributes to the ability of taxpayers to understand and comply with their tax obligations.

Revenue Group also provides advice on the fiscal and distributional impacts of changes to tax policy.

Markets Group

Markets Group provides advice on well-functioning markets that contribute to improving national productivity and promoting stronger economic growth, thereby enhancing the living standards of all Australians.

Well-functioning markets enable the most efficient use of resources and maximise consumer confidence in markets, which, in turn, enhance community benefits from economic activity.

Markets Group provides advice on policies that promote competitive, efficient markets to enhance consumer-wellbeing; a secure financial system and sound corporate practices; and foreign investment consistent with Australia's national interest.

Markets Group also maintains the operations of the Australian Government Actuary, the Financial Reporting Council and the Takeovers Panel, and provides business management for Standard Business Reporting.

Markets Group is also responsible for payments to support markets and business as outlined in program 1.3 on pages 70-71.

Corporate Strategy and Services Group

The Corporate Strategy and Services Group assists in setting and delivering the corporate strategic direction of Treasury. The group delivers quality and valued corporate advice and services for the department, its people and Ministers.

Corporate Strategy and Services Group is responsible for providing; accommodation and facilities management, communications advice and support, financial management, human resources management, training and development, information management and technology services, freedom of information management, media management and monitoring, ministerial and parliamentary support, procurement, publishing, security and travel.

Corporate Strategy and Services Group functions also include assisting with the development of whole-of-department corporate strategy; providing support to the Secretary, the Executive Board and the Audit Committee, including oversight of departmental structures and systems; designing and facilitating whole-of-department policy discussions; coordinating organisational strategy initiatives; overseeing the risk management framework; and undertaking and assisting with departmental reviews.

Treasury people values

Treasury people are skilled professionals, committed to providing quality advice, thinking analytically and strategically, and striving to achieve long-term benefits for all Australians. We uphold the important values and behaviours that shape the Treasury culture. These values influence all aspects of the way we work.

Treasury people:

• strive for excellence;
• value teamwork, consultation and sharing of ideas;
• value diversity among our people;
• treat everyone with respect;
• exhibit honesty in all our dealings; and
• treat colleagues with fairness.

Treasury people management principles are:

• open, two-way communications at all levels;
• clear definition of accountabilities;
• remuneration based on work performance, determined by fair and transparent processes; and
• facilitation of an appropriate work and private life balance.

The Treasury's role and capabilities

The Treasury's mission statement reflects the breadth of its ministers' responsibilities and underscores the key importance for the Treasury of a strong relationship with its ministers, built on trust and effective advice. As a central policy agency, the Treasury is expected to anticipate and analyse policy issues from a whole-of-economy perspective, understand government and stakeholder circumstances, and respond rapidly to changing events and directions. As such, the Treasury's interests are broad and diverse.

In undertaking its mission, Treasury takes a broad view of wellbeing as primarily reflecting a person's substantive freedom to lead a life they have reason to value.

This view encompasses more than is directly captured by commonly used measures of economic activity. It gives prominence to respecting the informed preferences of individuals, while allowing scope for broader social actions and choices. It is open to both subjective and objective notions of wellbeing, and to concerns for outcomes and consequences, as well as for rights and liberties.

To facilitate objective and thorough analysis, we have identified five dimensions that directly or indirectly have important implications for wellbeing and are particularly relevant to Treasury. These dimensions are:

• The set of opportunities available to people. This includes
  not only the level of goods and services that can be consumed, but good health and environmental amenity, leisure and intangibles, such as personal and social activities, community participation and political rights and freedoms.
• The distribution of those opportunities across the Australian people. In particular, that all Australians have the opportunity to lead a fulfilling life and participate meaningfully in society.
• The sustainability of those opportunities available over time. In particular, consideration of whether the productive base needed to generate opportunities (the total stock of capital, including human, physical, social and natural assets) is maintained or enhanced for current and future generations.
• The overall level and allocation of risk borne by individuals and the community. This includes a concern for the ability, and inability, of individuals to manage the level and nature of the risks they face.
• The complexity of the choices facing individuals and the community. Our concerns include the costs of dealing with unwanted complexity, the transparency of government and the ability of individuals and the community to make choices and trade-offs that better match their preferences.

These dimensions reinforce our conviction that trade-offs matter deeply, both between and within dimensions. The dimensions do not provide a simple checklist; rather their consideration provides the broad context for the use of the best available economic and other analytical frameworks, evidence and measures.

The Treasury applies and develops its technical expertise, knowledge base and support systems to deliver on the Government's priorities. To maximise our potential, we nurture and strengthen our core organisational capabilities and consistently seek better ways to do business.

Our organisational capabilities are:

• Deep understanding: understanding our mission, the economic and policy environment, and the views of our stakeholders.
• Collaboration: collaborating with internal and external stakeholders to develop effective policy.
• Proactivity and vision: anticipating policy, implementation and organisational issues.
• Influence and reputation: building trust with the Government and other stakeholders, and influencing the policy agenda.
• Improvement and adaptability: being flexible, adaptable and innovative.
• Efficiency and productivity: managing costs, allocating resources and enabling efficiencies.

Financial performance

The Treasury received an unqualified audit report on the 2012-13 financial statements from the Australian National Audit Office. These statements can be found in Part 4 on pages 125-232.

Departmental

The Treasury ended 2012-13 with an attributable surplus of $3.0 million, compared to a deficit of $11.6 million in 2011-12. Employee expenses decreased by $12.7 million from 2011-12, which was associated with the corresponding decrease in operational funding. The Treasury's net asset position decreased by $17.9 million in 2012-13, mainly due to the transfer of the Standard Business Reporting software assets to the Australian Taxation Office.

The Treasury has sufficient cash reserves to fund liabilities as and when they fall due.

Administered

The Treasury incurred $81.4 billion in administered expenses in 2012-13 compared to $86.9 billion in 2011 12. There was a reduction in grant expenses to the States and Territories that the Treasury provides under the Intergovernmental Agreement on Federal Financial Relations.

The Treasury's administered net assets increased by $1.4 billion in 2012-13. This is mainly due to an increase in the value of financial assets offset by an increase in provisions and payables. The Treasury has sufficient cash reserves to fund liabilities as and when they fall due.