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Section 2: Outcomes and Outputs Information
Outcomes and Output Groups
The map on the following page shows the relationship between Government outcomes and the contributing outputs for the Department of the Treasury. Financial details for Outcomes 1, 2 and 3 by output appear in Tables 2.1, 2.3 and 2.5 respectively, while non-financial information for the three outcomes appears in Tables 2.2, 2.4 and 2.6 respectively.
Changes to Outcomes and Outputs
Output Group 2.1 has been expanded to include actuarial services, with the transfer to Treasury from 1 April 2000 of the Australian Government Actuary (AGA). The AGA operates on a consultancy basis providing actuarial services on a fee-for-service basis to public sector clients, including the Treasury and Ministers. AGA was part of the Treasury prior to being transferred to the Insurance and Superannuation Commission (ISC) when that agency was formed in 1987. When the Australian Prudential Regulation Authority (APRA) was formed in 1998 and absorbed the ISC, the APRA Board decided that AGA's activities were not core to APRA's function. Consequently, AGA has been transferred back to the Treasury.
Output Group 1.1 lost its debt management component with the transfer of that function as from 1 July 1999 to the newly formed Australian Office of Financial Management.
Outcome 1
Sound macroeconomic environment
A sound macroeconomic environment is an essential foundation for strong sustainable economic growth and the improved wellbeing of Australians. Treasury provides ongoing policy advice to Treasury portfolio Ministers to assist them in developing and implementing policies to achieve this outcome.
A sound macroeconomic environment is characterised by stable prices, low interest rates, healthy economic and employment growth and a sustainable external position. As there are many influences on macroeconomic outcomes beyond the control of the Government, policy is aimed at improving the prospects for the Australian economy, rather than targeting specific outcomes for major economic indicators. Success is judged more by medium- to long-term performance relative to Australia's past and to other countries, than by particular results in any year.
Measures Affecting Outcome 1
Australia's policy towards Papua New Guinea
The Government has indicated to the Government of Papua New Guinea (PNG) that it will consider providing a longer-term government-to-government loan (under the International Monetary Agreements Act 1947) in support of the International Monetary Fund (IMF) Board's approval on 29 March 2000 of a Stand-by Arrangement for PNG. This is on the understanding that agreement would also soon be reached on a Structural Adjustment Loan with the World Bank. This loan would help meet PNG's external financing needs and would be provided in tranches covered by separate loan agreements, over 1999-2000 and 2000-01, on terms that more than cover the Commonwealth's cost of funding.
The provision of a loan facility to Papua New Guinea affects the Commonwealth's investment in financial assets, and for this reason, it is shown as having a zero impact on fiscal balance.
Capital payment to the European Bank for Reconstruction and Development
The Government will participate in a capital payment or General Capital Increase (GCI) to the European Bank for Reconstruction and Development (EBRD) by subscribing to an additional 10,000 shares, through the provision of $46 million in cash contributions over a period of ten years and $159 million at call. By participating in the GCI, Australia will increase its participation in the region, which has increasing demands arising particularly from the war in Kosovo and the Russian crises.
The EBRD seeks to help its 26 countries of operations to implement structural and sectoral economic reforms, promoting competition, privatisation and entrepreneurship, taking into account the particular needs of countries at different stages of transition.
The purchase of shares affects the composition of the Commonwealth's investment in financial assets, and for this reason, it is shown as having a zero impact on fiscal balance.
Capital payment to the Multilateral Investment Guarantee Agency
The Government will participate in a capital payment or General Capital Increase (GCI) to the Multilateral Investment Guarantee Agency (MIGA) by subscribing to an additional 1,306 shares. Participation in the GCI will involve the provision of two cash contributions: $1.96 million in both March 2001 and March 2002, and $19.0 million at call.
Australia became a member of MIGA in February 1999, securing its investment by subscribing to 1,713 shares. MIGA is an affiliate of the World Bank and it provides political risk insurance in developing countries.
The purchase of shares affects the composition of the Commonwealth's investment in financial assets, and for this reason, it is shown as having a zero impact on fiscal balance.
Outcome 1 - Resourcing
Table 2.1 shows how the 2000-01 appropriations translate to total resourcing for Outcome 1, including administered appropriations, revenue from Government (appropriation), revenue from other sources, and the total price of outputs.
Table 2.1: Total Resources for Outcome 1
Note: The negative administered appropriation shown in 1999-2000 relates to a net foreign exchange gain associated with the revaluation of Treasury's administered assets and liabilities under the International Monetary Agreements Act 1947.
Outcome 1 - Contribution of Outputs
Treasury aims to contribute to a sound macroeconomic environment by monitoring and assessing economic conditions and prospects, both in Australia and overseas, and by providing advice on the formulation and implementation of effective macroeconomic policy, including monetary and fiscal policy, and labour market issues.
Treasury provides advice on advancing Australia's interests at international fora such as the World Bank, the International Monetary Fund, the Asian Development Bank and Asia-Pacific Economic Cooperation. Australia is making a significant contribution to international efforts to sustain international economic stability and growth through these fora.
The effectiveness of Treasury's contribution to a sound macroeconomic environment is judged primarily by feedback from Treasury portfolio Ministers on the quality and relevance of Treasury's advice.
Performance Information for Outcome 1
Table 2.2: Performance Information 2000-01
Performance information for administered items (including third party outputs)
Subscriptions to international financial institutions
Facilitation of achievement of Government objectives in international fora, including strengthening the international financial system, multilateral debt relief and institutional reform in the multilateral development banks.
Performance information for departmental outputs
Output group 1.1 - Economic
Output 1.1.1 - Domestic economic policy advice and forecasting
Advice on economic policy and the economic outlook meets Treasury portfolio Ministers' needs in administering their responsibilities and implementing Government decisions that contribute to a sound domestic economy.
Effective presentation of budget documents and other publications to adequately inform public debate.
Output 1.1.2 - International economic policy advice and assessment
Advice meets Treasury portfolio Ministers' needs in administering their responsibilities and implementing Government decisions relating to international economic and financial issues.
Evaluations
Feedback will be sought from key clients on a regular basis on the effectiveness of policy advice.
Results of evaluations will be presented, as appropriate, in Treasury's Annual Report.
Competitive Tendering and Contracting
Treasury has pursued Competitive Tendering and Contracting in relation to the corporate services which relate to all three Treasury outcomes.
In 1998-99 Treasury market tested a large range of its corporate services functions. The outcome was that no tender was accepted as tenderers were either unable to provide the corporate services to the standards specified, or were unable to do so while remaining within the baseline cost to Treasury of in-house service provision.
High quality, cost-effective services in areas such as the management of people, finances and information are critical to the Department's operations. The Department will continue to re-engineer to make best use of corporate services with a view to streamlining service delivery.
Treasury is involved in the Group 11 Information Technology Outsourcing Project managed by the Office of Asset Sales and Information Technology Outsourcing. The Request for Tender is scheduled for release to the market in late May 2000, followed by a ten-week industry briefing and tender response period. Tenders are expected to close at the end of July 2000.
Outcome 2
Effective government spending and taxation arrangements
Individual government spending and taxation arrangements contribute to the overall fiscal outcome but also have their own influence on the goal of strong sustainable economic growth and the improved wellbeing of Australians.
Individual spending measures should be effective in meeting their stated objectives, minimise other behavioural distortions and deliver significant benefits in relation to cost. Taxation measures should meet revenue objectives (or other objectives if taken for public policy reasons) and have regard to the principles of economic efficiency, horizontal and vertical equity, certainty and transparency whilst minimising compliance and administrative costs. By meeting these aims, taxation measures contribute to the wellbeing of Australians, either directly or by providing the revenue base to finance government services.
Policy advice to Treasury portfolio Ministers promotes Government decisions which further these objectives and thereby contribute to this outcome.
Measures Affecting Outcome 2
Business Tax Reform
The Government will provide funds to the Department of the Treasury to establish a non-statutory Board of Taxation, and to respond to increased demands for tax policy advice. The Board will be supported by a secretariat based in the Department of the Treasury and the Board will be able to commission research from external consultants. The Board will consult with a wide range of bodies and individuals on taxation policy. This will allow access to private expertise (at a high level) on a regular basis, on all aspects of the tax law.
This is a cross agency measure between the Australian Taxation Office and the Department of the Treasury.
Outcome 2 - Resourcing
Table 2.3 shows how the 2000-01 appropriations translate to total resourcing for Outcome 2, including administered appropriations, revenue from Government (appropriation), revenue from other sources, and the total price of outputs.
Table 2.3: Total Resources for Outcome 2
Outcome 2 - Contribution of Outputs
Effective government spending and taxation arrangements are crucial to achieving the Government's objectives for the economy and the wellbeing of Australians. Ongoing advice to the portfolio Ministers from the Treasury assists in formulating, implementing and explaining government spending and taxation decisions which meet this objective.
More specifically, in the coming year Treasury will provide advice on:
- budget policies, including arrangements for the distribution of resources between the Commonwealth and other levels of government, which are consistent with sustainable public finances and macroeconomic objectives;
- government expenditure programmes, with a focus on those programmes with significant economic or budgetary implications;
- policies to promote the efficient and sustainable use of resources and to improve the competitiveness and productivity of Australian industries, thereby promoting higher levels of sustainable economic growth;
- the development and implementation of policies relating to retirement incomes, including superannuation and the age pension, and other income support arrangements intended to promote the wellbeing of Australians; and
- taxation policies which contribute to the reform of the Australian taxation system in terms of efficiency, equity and administrative simplicity.
The Australian Government Actuary (AGA) will provide services relating to financial matters: for example, benefits depending on contingencies such as injury, death or retirement. The AGA also aids departments and agencies on policy development in areas where it has specialist expertise.
At present, Treasury is devoting significant resources to the implementation of the Government's taxation reform agenda, which encompasses significant reforms to income tax, indirect tax, business tax, family payments and Commonwealth/State financial relations. Those resources will be boosted by an increase in staffing for this outcome in the forthcoming financial year.
The outcome of the taxation reform process will be a taxation system which provides a stable and equitable revenue source to fund government services essential to the wellbeing of Australians. Taxation reform is an important element of an integrated economic policy framework necessary to ensure stronger economic and employment growth and thereby improve living standards.
The effectiveness of the contribution of these outputs to the outcome will be gauged primarily in terms of feedback from Treasury portfolio Ministers as to whether Treasury advice meets their needs in formulating, implementing and explaining government spending and taxation decisions.
Performance Information for Outcome 2
Table 2.4: Performance Information 2000-01
Performance information for administered items (including third party outputs)
Payments to State and Territory Governments
Accurate calculation of amounts payable according to agreed formulae.
Payments made according to agreed schedules.
Performance information for departmental outputs
Output group 2.1 - Budget
Output 2.1.1 - Budget policy advice and coordination
Advice meets Treasury portfolio Ministers' needs in administering their responsibilities and implementing Government decisions as they relate to assessments of the budget position and outlook, and budget strategy.
Effective presentation of budget documents and other publications to adequately inform public debate.
Output 2.1.2 - Commonwealth-State financial policy advice
Advice meets Treasury portfolio Ministers' needs in administering their responsibilities and implementing Government decisions as they relate to Commonwealth-State financial relations.
Effective presentation of relevant information, including in the budget documentation and other publications to adequately inform public debate.
Output 2.1.3 - Industry policy advice
Advice meets Treasury portfolio Ministers' needs in administering their responsibilities and implementing Government decisions as they relate to industry policy.
Effective presentation of relevant information to adequately inform public debate.
Output 2.1.4 - Taxation and income support policy advice
Advice meets Treasury portfolio Ministers' needs in administering their responsibilities and implementing Government decisions relating to taxation and income support policy.
Effective presentation of relevant information, including in the budget documentation and other publications to adequately inform public debate.
Output 2.1.5 - Actuarial services
Efficient provision of high quality professional services, with income from consultancy fees relative to total costs meeting specified quantitative criteria.
Evaluations
Feedback will be sought from key clients on a regular basis on the effectiveness of policy advice and payments to State and Territory Governments. Results of evaluations will be presented, as appropriate, in Treasury's Annual Report.
Competitive Tendering and Contracting
Treasury has pursued Competitive Tendering and Contracting in relation to the corporate services which relate to all three Treasury outcomes. See Outcome 1.
Outcome 3
Well functioning markets
Well functioning markets contribute to the achievement of high sustainable economic and employment growth and the wellbeing of Australians, by enabling resources to flow to those parts of the economy where they can be used most productively. Well functioning markets operate when investors and consumers have confidence and certainty about the regulatory framework and are able to make decisions that are well informed and free of market distortions and impediments.
Treasury provides advice on policy processes and reforms that promote a secure financial system and sound corporate practices, remove impediments to competition in product and services markets and safeguard the public interest in matters such as consumer protection and foreign investment.
Measures Affecting Outcome 3
There are no Budget Measures under Outcome 3.
Outcome 3 - Resourcing
Table 2.5 shows how the 2000-01 appropriations translate to total resourcing for Outcome 3, including administered appropriations, revenue from Government (appropriation), revenue from other sources, and the total price of outputs.
Table 2.5: Total Resources for Outcome 3
Note: Under administered appropriations, grants under the Commonwealth Financial Counseling Program and the Banking Act 1959 have transferred to the Department of Family and Community Services and the Australian Securities and Investments Commission respectively.
Outcome 3 - Contribution of Outputs
Treasury provides advice to portfolio Ministers to assist them in carrying out their responsibilities in formulating, implementing and explaining the policies needed to achieve well functioning markets - markets that are competitive, efficient, informed, fair and transparent.
Advice is provided to the Government on foreign investment proposals and on general foreign investment policy matters, including Australia's participation in multilateral and bilateral agreements on investment. In addition, awareness and understanding of the Government's foreign investment policy is fostered in the community and in the business sector, both in Australia and overseas, and compliance with policy is monitored.
In relation to the financial system, Treasury provides policy advice on the legislative framework for prudential supervision of financial institutions (including in the areas of banking, insurance and superannuation) by the Australian Prudential Regulation Authority (APRA) and other regulation of those institutions. It monitors developments in the financial sector and provides advice on their policy implications. Advice is also provided on the Government's initiative to enhance Australia as a Centre for Global Financial Services.
Treasury participates with other government departments and agencies in formulating policy for the progress of structural reform in key sectors of the economy, including energy, transport and communications. Treasury is responsible for coordinating the implementation of national competition policy initiatives, monitoring the effectiveness of competition and pricing provisions in the Trade Practices Act 1974 and the Prices Surveillance Act 1983, and advising on legislative amendments.
In the coming year, the Government will present the Financial Services Reform Bill which will reform the regulation of financial products, markets and services, and also legislation to enable Commonwealth securities to be settled electronically. Legislation will also be developed to amend the Corporations Law to reform the system of registration and regulation of auditors.
Treasury will continue to progress reforms to reduce the paper compliance burden on Australian companies and enable the Australian Securities and Investments Commission (ASIC) to make greater use of communications technology. It is proposed that fees set under the Corporations Law will be altered as part of this process.
Treasury will provide secretariat services to the recently established Financial Reporting Council and advise on the implementation of the new accounting standard setting arrangements. Advice will also be provided on the new directors' duties and corporate governance provisions and general company law issues.
There will be increasing involvement in progressing international cooperation - particularly in the Asian region - in corporate governance, financial reporting and corporate insolvency. In addition, advice will be provided to Government on possible reforms to Australia's corporate insolvency system.
Consumer affairs policy advice will be directed to the continuing implementation of Government commitments on consumer affairs. This includes the review of industry self-regulation and the development and review of `codes of conduct' policy for consumer protection in electronic commerce. Consumer protection interests will also be promoted through the Trade Practices Act, production of consumer information materials, maintaining a consumers' on-line website and helping to ensure the safety of consumer products.
The Royal Australian Mint is a semi-autonomous body responsible for the production of coinage. Treasury will continue to chair the Royal Australian Mint Advisory Board and also provide advice relating to the currency system.
Performance Information for Outcome 3
Table 2.6: Performance Information 2000-01
Performance information for administered items (including third party outputs)
Compensation - companies regulation payments to the States and the Northern Territory
Amounts payable, according to agreed formulae, are accurately calculated.
Payments are made according to agreed schedules.
Performance information for departmental outputs
Output group 3.1 - Markets
Output 3.1.1 - Foreign investment policy advice and administration
Treasury advice meets portfolio Ministers' needs in fulfilling their responsibilities.
Government policy is appropriately represented and Australia's negotiating position is pursued effectively in international fora.
Proposals are processed efficiently to meet the needs of Ministers, the Foreign Investment Review Board (FIRB), foreign investors and their agents. Performance is currently regarded as satisfactory if:
- around 90 per cent of the roughly 5,000 proposals received each year are processed within 30 days of receipt of a completed application; and
- responses are provided on average within 5 days to around 40,000 general telephone and mail inquiries each year.
Treasury effectively disseminates and explains the foreign investment policy to improve the standard of applications and compliance with policy requirements so as to continue to reduce the proportion of foreign investment proposals requiring Interim or Final Orders.
Table 2.6: Performance Information 2000-01 (continued)
Performance information for departmental outputs (continued)
Each year Treasury undertakes compliance checks on around 1,000 previous proposals subject to conditions - possibly leading to prosecutions, but aimed at an overall reduction in non-compliance with policy.
Output 3.1.2 - Financial system and markets policy advice
Advice meets Treasury portfolio Ministers' needs in administering their responsibilities and implementing Government decisions as they relate to financial system and markets issues.
Effective presentation of relevant information to adequately inform public debate.
Statutory and other procedural requirements are met.
Secretariat services provided to advisory bodies are effective.
Representation and/or liaison by Treasury officers with other agencies, private sector organisations and international bodies, is assessed by participants as effective.
Output 3.1.3 - Business and consumer policy advice
Advice meets Treasury portfolio Ministers' needs in administering their responsibilities and implementing Government decisions as they relate to business and consumer affairs policy.
Effective presentation of relevant information to adequately inform public debate.
Statutory and other procedural requirements are met.
Secretariat services provided to advisory bodies are effective.
Representation and/or liaison by Treasury officers with other agencies, private sector organisations and international bodies, is assessed by participants as effective.
The extent of progress towards improving self-regulatory mechanisms in the marketplace and introducing enhancements of the consumer protection and unconscionable conduct provisions of the Trade Practices Act.
Table 2.6: Performance Information 2000-01 (continued)
Performance information for departmental outputs (continued)
Output 3.1.4 - Circulating coin and like products
Advice meets Treasury portfolio Ministers' needs in administering their responsibilities and implementing Government decisions as they relate to coinage and Royal Australian Mint operations.
Effective presentation of relevant information to adequately inform public debate.
Statutory and other procedural requirements are met.
The Royal Australian Mint meets targets for operational efficiency and rate of return.
Evaluations
Feedback will be sought from key clients on a regular basis on the effectiveness of policy advice.
In relation to companies regulation compensation payments to the States and the Northern Territory, there will be an evaluation of the accuracy of calculation and the timeliness of payments.
There is ongoing evaluation of foreign investment policy administration in the context of statutory deadlines and target response rates.
Results of evaluations will be presented, as appropriate, in Treasury's Annual Report.
Competitive Tendering and Contracting
Treasury has pursued Competitive Tendering and Marketing in relation to the corporate services which relate to all three Treasury outcomes. See Outcome 1.
