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:

• 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 and the improved wellbeing of Australians.

Macroeconomic Group contributes to a sound macroeconomic environment by undertaking careful 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 88-89.

Fiscal Group

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

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 takes a whole-of-government and whole-of-economy perspective in developing its advice on the fiscal strategy and spending arrangements across and within portfolios.

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 92-105.

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.

Revenue Group takes a whole-of-government and whole-of-economy perspective in developing its tax and retirement income advice.

Tax and retirement income policy affects the wellbeing of Australians through influencing individuals’ decisions on saving and investment and 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 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 and wellbeing of all Australians.

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

Markets Group provides advice on policies that promote competitive, efficient markets that work 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 90-91.

Corporate Strategy and Services Group

To support the Treasury’s policy outcomes, Corporate Strategy and Services Group provides key services, systems and facilities that provide essential organisational support to the groups.

Corporate Strategy and Services Group is responsible for providing corporate services, products and advice including accommodation and facilities management; communications advice and support; financial management; human resource 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 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;
• to clearly define accountabilities;
• work performance is the basis for remuneration, which is determined by fair and transparent processes; and
• to facilitate 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.

The Treasury is engaged in a wide range of issues that affect the lives of Australians, from macroeconomic policy settings to microeconomic reform, social policy, tax policy and international agreements and forums. The Treasury has a program delivery role in supporting markets and business, and providing Commonwealth payments to the State and Territory governments.

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.

Treasury brings a whole-of-economy approach to providing advice to government based on an objective and thorough analysis of options. To facilitate that 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 2011-12 financial statements from the Australian National Audit Office. These statements can be found in Part 4 on pages 150-259.

Departmental

The Treasury ended 2011-12 with an attributable deficit of $11.6 million, compared to a $2.4 million surplus in 2010-11. Employee expenses increased by $15.8 million from 2010-11, which was associated with the cost of voluntary redundancies offered to staff in the first half of 2012, and the significant drop in the bond rate resulting in a large increase of long service leave expenses.

The Treasury’s net asset position decreased by $23.7 million in 2011-12, mainly due to the reduction of appropriation receivable used to pay for the voluntary redundancies and the increase in the long service leave provision as a result of the bond rate decrease.

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

Administered

The Treasury incurred $86.9 billion in administered expenses in 2011-12 compared to $86.9 billion in 2010-11. There was a small 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 $3.3 billion in 2011-12. This is mainly due to an increase in the value of financial assets and a decrease in provisions and payables.

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

Figure 1: Treasury senior management structure (as at 30 June 2012)

 

Figure 2: Treasury outcome and program structure (as at 30 June 2012)

 

Figure 3: Treasury portfolio outcome and program structure (as at 30 June 2012)