Agency resources and planned performance
Department of the Treasury
Section 1: Agency overview and resources
1.1 Strategic direction
The mission of the Department of the Treasury (the Treasury) 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.
In carrying out its mission, the Treasury has responsibility for the following policy outcomes:
- sound macroeconomic environment;
- effective government spending arrangements;
- effective taxation and retirement income arrangements; and
- well functioning markets.
As a central policy agency, the Treasury is expected to anticipate and analyse policy issues with a broad whole-of-government perspective, understand government and stakeholder circumstances, and respond rapidly to changing events and directions. As such, the Treasury's interests are broad and diverse.
Key priorities over the coming year include implementing the Government's election and budget commitments; continuing work on the Government's Council of Australian Governments (COAG) reform agenda; delivering the Government's comprehensive review of Australia's tax system; continuing to provide sound policy advice on macroeconomic management and microeconomic reform; and promoting strategic responses to the significant challenges facing the Australian economy. The Treasury's ongoing program of international engagement will be central in building capacity in Australia's economic region, assisting in monitoring international developments which will affect the Australian economy and promoting regional macroeconomic stability.
Australia's strong economic growth momentum has been crucial to weathering the current turbulence in world financial markets; however, this growth also has presented challenges. A tight labour market, strong domestic demand and growing overseas demand for resources have contributed to building inflationary pressures within the domestic economy.
In responding to these challenges, the Government has formulated a five‑point plan to fight inflation. The plan encompasses a conservative fiscal target, addresses skills and infrastructure capacity constraints in the economy, encourages private saving and aims to lift workforce participation.
Careful fiscal management, a key component of the Government's plan, is central to the Treasury's fiscal policy advice. Fiscal strategy advice takes into account medium term, as well as budget, priorities, debt and balance sheet management. It includes advising on the Future Fund's operation, implementing the new Funds announced in the Budget and contributing to the Review of Government Spending.
An important component of the Government's fiscal policy is the revenue collection system and its impact on incentives for all Australians to work, save and invest. The Treasury will assist the Government's review of Australia's tax system to create a tax structure that will position Australia to deal with the demographic, social, economic and environmental challenges of the 21st century and enhance Australia's economic and social outcomes.
The Treasury also will undertake other important reforms to the Government's revenue collection system. In particular, it will lead implementation of the outcomes of the Tax Design Review Panel, streamlining and enhancing the mechanisms by which tax laws are amended.
Positioning Australia's economy to deliver the best possible outcomes for Australians will require ongoing commitment to key microeconomic policy objectives.
Central to this policy development will be implementing the broad reform agenda in partnership with the States and Territories. In December 2007, COAG announced a reform agenda addressing issues in health and ageing, productivity, climate change and water, infrastructure, business regulation and competition, housing and Indigenous reform.
Reforms to the architecture of Commonwealth‑State financial relations underpin this program. The Treasury, with the Department of the Prime Minister and Cabinet, provides leadership and policy expertise to deliver the reform agenda according to key milestones, including implementing the new financial framework starting on 1 January 2009.
Housing affordability is important in the COAG reform agenda. The Treasury will help implement major initiatives combining government contributions and lower taxes for first home buyers saving for first home deposits.
The First Home Saver Accounts will complement other important government initiatives to improve housing affordability. The Government also will implement a National Rental Affordability Scheme to encourage investors to provide new and affordable housing at below‑market rent.
Australia's transition to a less carbon‑intensive economy will present major economic challenges. The Government is committed to implementing market‑based mechanisms to reduce Australia's carbon footprint at the lowest possible cost to the economy. The Treasury will continue to provide advice on these issues in 2008‑09. This includes modelling climate change policy, contributing to the design of an Emissions Trading System for implementation by 2010, and also to the design of a system of Mandatory Renewable Energy Targets by 2020.
The Treasury is mindful of the need to ensure a high degree of competition in Australian markets for consumer products. In addition, the Treasury will work to ensure the banking sector is competitive and continues to deliver benefits to Australian consumers.
Recent events in global financial markets have highlighted the need for sound financial sector regulation. Australia's robust regulatory framework and institutions have helped Australia weather the fallout from disruptions to global credit markets. However, the Australian financial system must remain dynamic and responsive, and regulation must be well targeted and not overly burdensome or restrictive.
The Treasury will implement new financial disclosure arrangements to safeguard investor interests. This will help Australians be confident about their financial system and the regulatory environment's efficiency and preparedness for future challenges.
International financial market developments have created an uncertain global economic outlook. Slowing of the US economy poses a number of downside risks which must be balanced against the significant economic growth of India and China.
The Treasury continues to monitor and assess global economic conditions, and provides advice to achieve sustained growth, openness and sound governance in the global economy. This international engagement is crucial to advance Australia's economic interests as it helps maintain macroeconomic stability, meet the challenges of inflation and respond to tight labour markets.
The Treasury will continue to promote Australia's interests through international financial institutions and forums. It also will continue to engage bilaterally with a range of countries to improve economic governance in the Pacific, and develop deeper economic engagement with China and India, reflecting these countries growing importance.
1.2 Agency resource statement
Table 1.1 shows the total resources from all sources. It summarises how resources will be applied by outcome and by administered and departmental classifications.
Table 1.1: Department of the Treasury resource statement — Budget
estimates for 2008‑09 as at Budget May 2008
Table 1.1: Department of the Treasury resource statement — Budget
estimates for 2008‑09 as at Budget May 2008 (continued)
1. Appropriation Bill (No. 1) 2008‑09.
2. Appropriation Bill (No. 2) 2008‑09.
3. Receipts received under s31 of the Financial Management and Accountability Act 1997.
4. Estimated adjusted balance carried forward from previous year for annual appropriations.
5. Estimated opening balance for special accounts. For further detail on special accounts see Table 3.1.3.
1.3 Budget measures
Budget Paper No. 2, Budget Measures 2008‑09, details budget measures relating to the Treasury. Table 1.2 provides a summary of government measures and identifies the relevant output groups associated with each measure.
Table 1.2: Department of the Treasury 2008‑09 Budget measures
Table 1.2: Department of the Treasury 2008‑09 Budget measures
(continued)
.. Not zero, but rounded to zero.
* The nature of this measure is such that a reliable estimate cannot be provided.
Prepared on a Government Finance Statistics basis.
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