Our operating context
As the Government's pre-eminent economic adviser, Treasury seeks to support Australia's economic outcomes in a dynamic global environment. The international context is one of volatility and change, and Australia is not immune to this. Treasury will continue to adapt to these emerging pressures and opportunities by evaluating the landscape, engaging with stakeholders to understand their priorities and concerns, and driving innovation in policy, legislation and regulatory reform.
It comes as no surprise that many of the drivers affecting Treasury's environment are economic. Australia's overall fiscal outlook remains strong, and is being supported by a pick-up in economic growth in Australia, and broad-based growth in the rest of the world. The Australian economy has coped remarkably well with the decline in commodity prices and the associated decline in mining investment over recent years. Growth in the domestic economy is becoming increasingly broad-based, and is expected to remain so.
Despite this strong outlook, a number of challenges remain. Productivity growth has been relatively weak, which flows through to slower income growth. This has contributed to strong community concern in relation to cost of living, including housing affordability and the cost of essential services such as energy. Low income growth has also given rise to perceptions of inequality that diverge from what the data indicate. There are also a number of risks to the international outlook, including faster-than-expected tightening of monetary policy in some advanced economies, geopolitical uncertainty and intensifying trade tensions.
Other factors also impact on our ability to achieve our purpose. These centre around issues that have the potential to significantly affect the operation and stability of markets, such as the declining trust in institutions and inequality exacerbated by dislocations in markets, or issues that impact on our work practices.
As a key stakeholder in the financial system, Treasury is attuned to the observations and opportunities for reform arising from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The Royal Commission follows increasing scrutiny on banking and financial services institutions and is partially a result of growing community concerns about the regulation of markets and the economy, possibly heightened due to cost of living and housing cost pressures.
The growth of automation is expected to be a major factor in the coming decades, with both positive (increased productivity and improved consumer outcomes) and negative (workforce dislocation and heightened information management risk) consequences on the economy.
The Government has announced a review of the Australian Public Service to support the service to adapt to a changing world, and operate more efficiently and effectively. Treasury supports the review and will closely monitor its findings.
As a policy adviser, Treasury recognises a heightened pace of change and that we offer advice in a more contestable environment. Governments are now increasingly sourcing advice and other services, traditionally delivered by the public service, from outside the public sector. In order to remain the Government's trusted and pre-eminent economic adviser, Treasury must demonstrate its value by delivering advice that is timely, impartial, evidence-based and high quality.
Treasury also manages the development and implementation of an appropriate and robust portfolio legislative program, in accordance with the Government's priorities. Currently, and into the foreseeable future, this will centre around realising the Government's tax, superannuation, financial system, corporate, consumer protection, competition, and housing policy objectives.
In addition, Treasury has a role in regulating Australia's foreign investment system. Treasury works closely with agencies to identify and manage national interest risks, while recognising the important benefits foreign investment brings to Australia.
Treasury has served the Government well for over a century by providing solid fiscal, revenue and economic policy advice, analysis, legislation and regulatory reform, and the stewardship of major changes in our economy. As we move through our second century, we must innovate, demonstrate our value, and pursue opportunities related to a changing world, to continue to be the Government's trusted adviser on the economy and economic policy.
Our people and organisation
Treasury's success as an adviser to government is dependent on the quality of our workforce. Our employees are our most valuable asset and give us our competitive edge. We rely on innovative sourcing to provide a workforce that is knowledgeable, engaged and skilled. We are also adapting our culture and processes to embrace an interconnected, more diverse and outwardly focused mindset.
In addition to Treasury's Canberra office, we have offices in Sydney, Melbourne and Perth. These offices enable Treasury to better understand the economy across all states, territories and regions and help to form stronger relationships with stakeholders and the wider community, source a more diverse workforce and strengthen our organisational capability.
Treasury is structured into six groups: Fiscal, Macroeconomic, Markets, Revenue, Structural Reform, and Corporate Services and Business Strategy. We aim to run our corporate functions efficiently and effectively in a way that enables and adds value to Treasury's core business areas.
Treasury also has officers deployed overseas who provide important input into our advice to the Government and represent Australia's interests abroad. Officers are posted in Beijing, Jakarta, London, New Delhi, Paris, Tokyo and Washington D.C. We also have staff in Indonesia and Papua New Guinea who work with Ministry of Finance counterparts in those countries.
Treasury operates in a complex and challenging environment, with a broad and diverse range of stakeholders. We have provided greater opportunities for stakeholders to contribute directly to policy development, the quality of our advice and policy outcomes. By adopting a best practice approach to this work, as well as conducting formal evaluations and reviews periodically to inform the ongoing effectiveness of our communication, we aim for continuous improvement.
Treasury delivers significant government communications to the Australian community on major policies and initiatives. Following the successful implementation of the new format for Budget stakeholder engagement in 2018, we will continue the strong emphasis on timely and relevant communication of the Budget to broad audiences through forums such as Budget roadshows.
A key priority for Treasury is to maintain and build solid working relationships with government departments (State and Commonwealth), regulators, industry, consumers, policy commentators, thought leaders, academics and community groups across policy issues to build partnerships that inform and influence policy decisions and outcomes.
While the role of Treasury is well understood by those who have direct contact with the department, we recognise the opportunity to build our reputation more broadly, both in Australia and internationally. Leveraging our presence outside Canberra, we will continue to strengthen Treasury's links with the business community, non-government organisations, academia and other policy-focused institutions and consumers.
Engagement at regional and local levels enables us to see first-hand the economic potential of regional Australia, while our international engagement through international bodies and financial institutions supports Australia's economy in a globalised and interconnected environment. Our annual Regional Engagement Plan complements our policy remit, and embeds structured regional outreach across the department.
Our university engagement efforts facilitate knowledge and expertise sharing, and promote Treasury's work in universities across Australia. A priority activity for 2018–19 will be to develop a whole-of-Treasury university engagement program which integrates with our corporate objectives, including regional engagement.