View from The Hill

View from The Hill

Day 25: Public servants say ‘No, Minister’

Kevin Rudd has hit another bump in his campaign. AAP/Lukas Coch

Amid an election row about numbers that has become both feral and arcane the heads of Treasury, Finance and the Parliamentary Budget Office have called out Kevin Rudd’s attempt to use their authority to discredit the opposition’s savings figures.

It was a bureaucratic king hit the like of which we don’t often see, and certainly not in election campaigns.

Treasury and Finance issued a joint statement which undercut the government’s basing its claim that there was a $10 billion hole in the $31.6 billion Coalition savings on official authority. Soon after the PBO did the same.

The public servants’ intervention, though in strict terms only clarifying their roles, made it look like Labor was being tricky. And indeed it had attempted to be too clever by half.

The departments and PBO heads are not trying to be political. Their intention is the opposite – they want to show they’re apolitical.

But their intervention inevitably deals them into the middle of a ferocious political fight and has serious implications, especially when costings are so much at the centre of this election.

Treasury and Finance felt themselves caught in a very bad position, after Rudd, Chris Bowen and Penny Wong put out Treasury, Finance and PBO documents to back up their $10 billion hole claim.

Bowen told their joint news conference that the assertion “is based on advice from the departments of Treasury and Finance and the Parliamentary Budget Office which we are releasing today.”

The government had the costings of known or anticipated Coalition initiatives done before the caretaker period, when it would not be able to get the bureaucrats to undertake them.

The material was there for use during the campaign.

When it was produced the senior public servants were alarmed. At the news conference the costings were portrayed as accurate representations of the Coalition’s savings; it was acknowledged the work had been done earlier but inevitably the reporting blurred the timing.

The department heads, Martin Parkinson in Treasury and Finance’s David Tune knew that if they came out, it would be a strike against the government. If they did nothing, they would be compromised, and the Coalition – likely to be the government in a little over a week - would not forget it.

The pair then issued a joint statement clarifying their departments’ roles.

They said they had been asked to prepare costings on policy options which the government gave them. The costings were completed and sent back to the government before the election was called. “This is consistent with long-standing practice,” the statement said.

These costings were not prepared under the Charter of Budget Honesty process. This provides for the public servants to cost election policies if the parties choose to submit them. In this election the opposition has chosen to have its costings done by the new Parliamentary Budget Office, because it is more arms length from the government.

Treasury and Finance said pointedly that “at no stage prior to the caretaker period has either department costed opposition policies.”

They also noted that “different costing assumptions, such as the start date of a policy, take up assumptions, indexation and the coverage that applies, will inevitably generate different financial outcomes.

"The financial implications of a policy may also differ depending on whether the costing is presented on an underlying cash balance or fiscal balance basis. The Treasury and Finance costings presented in the advice to government reported today were presented on an underlying cash balance basis.”

The opposition savings were prepared by the PBO on an accrual accounting basis.

The PBO said in its statement that all costings it does are “prepared on the basis of the policy specifications provided by the parliamentary party or individual parliamentarian requesting the policy costing.”

The PBO “will not prepare costings of policies attributed to an individual parliamentarian or political party without the knowledge and active participation of that parliamentarian or political party in the costing process”, PBO head Phil Bowen said.

“When the PBO undertakes a confidential policy costing for an individual parliamentarian or political party, it relies solely on the policy details specified by that parliamentarian or political party.

"When an individual parliamentarian or a political party chooses to publicly release a PBO costing that has been prepared on a confidential basis for them, it is inappropriate to claim that the PBO has costed the policy of any other parliamentarian or political party.

"Unless all of the policy specifications were identical, the financial implications of the policy could vary markedly,” Mr Bowen stressed.

The public servants have behaved as they should, although Rudd won’t be thanking them for it. The government ought not have put them in the position it did. It has previously tried to use Treasury for political purposes, and rows have erupted.

The Treasurer described the decision to release the costings advice to the government as a “serious step”. It turned out to be one of the many bad steps Labor has taken in this campaign. Bowen as treasurer should have anticipated that it was dangerous to take liberties with Treasury, already under pressure over its history of failed forecasts and periodically accused by the opposition of having been politicised.

Parkinson’s future is not certain under a Coalition government, Apart from the matter of his own high integrity, he would have been a fool to have let himself be used by the government.

He’s not a fool. He and his public servant colleagues understand how the system should work – they have stood up for the own reputations and those of the organisations for which they work.

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