More damaging claims against Treasury, this time in the context of their discussions with the Coalition:
…secret minutes of that meeting, obtained by The Australian, reveal how much it was politicised and influenced by the opinions of the senior bureaucrats, while some of their conclusions didn’t take market impact into account.
The minutes reveal the officials told the independents the mining tax would not hurt the resources boom – contrary to most market opinion – and that the opposition had broken budget rules…
The officials effectively dismissed the opposition’s arguments on other key areas of their claimed savings – such as interest on the National Broadband Network and the reduction in unemployment benefits – despite the fact that market conditions made the bureaucratic views at least open to debate.
Add this to a growing list of political activism by Treasury head Ken Henry, and one gets the distinct impression that the Treasury meetings with the independents were merely designed to ambush the Coalition. Andrew Robb gives one example of how Treasury manipulated figures to the ALP’s advantage. Essentially the Coalition used an interest rate of 5.5 per cent to calculate the debt servicing cost of the NBN – a figure pulled from the government’s own report on the NBN – yet Treasury at the last minute came up with a figure of 4.9 per cent. A figure yet to be substantiated by anyone in Treasury. The effect was to make the Coalition look like they had over estimated the cost of the NBN and hey presto the phantom black hole Tony Windsor criticised Abbott for. From AFR (no link):
“The implementation study put for the same interest rate assumption used by the Coalition in calculating its savings in not proceeding with NBN borrowings, which reflected the bond rate.”…
While Treasury relied on this analysis, it came up with its own interest rate assumption for the NBN. “Treasury can’t have it both ways,” said Mr Robb
“It defies logic that the interest rate will go back to 4.9 per cent over the forward estimates at a time when terms of trade are forecast to spike at record levels, together with a forecast for strong growth … ,” Mr Robb said.
So Ken Henry was looking for an opportunity to hurt the Coalition, and tweaking the interest rate figure was probably the easiest way to do it. This clumsy tactic makes Henry’s bias clear for all to see.