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A letter to treasury

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Peter Reith



The attached letter has been sent to the Secretary to the

Commonwealth Treasury, Mr Tony Cole, this afternoon by fax.

Even under normal circuir.e ances the Australian people should be able to expect the estimates that lie at the heart of the annual budget to contain an honest assessment of the Australian economy by Treasury officials.

But with a million people out of work, and Australia struggling for breath in the worst recession for 60 years, tomorrow's budget is far more critical than normal.

At this economic crossroads the Australian people have a right to have absolute confidence that the estimates the budget is built upon have not been fudged.

In recent times we have seen the Keating Government's estimates on both the budget deficit and growth exposed as hopelessly inadequate.

Further, specific allegations have been raised in a leading national daily suggesting that key estimates in several budgets in recent times have been "fiddled" with for political reasons.

The Australian people deserve a reassurance that the budget strategy the Government unveils tomorrow is built on honest foundations.

17 August 1992 Canberra

Contact: David Turnbull (06) 277 4277 D121/92


Deputy Leader of the Opposition

17 August 1992

Mr A S Cole

Secretary to the Treasury Department of the Treasury Parkes Place PARKES ACT 2600

Dear Mr Cole

I refer you to recent serious allegations that Treasury

Department forecasts for the preparation of budget estimates have been repeatedly interfered with by ministerial direction over recent years.

You will be aware of the long tradition that Statement 2 of

Budget Paper Number 1 is supposed to give the Australian people a clear, accurate and impartial assessment of the state of the economy. It should be an assessment that is independently

prepared by the Treasury and free of political influence.

However, it appears that this is no longer the case, and indeed Prime Minister Keating made it clear in the House of

Representatives on 24 June 1992 that as far as he was concerned Government ministers were integrally involved in the drafting of Statement Number 2.

Further, you will no doubt be aware of the latest in a series of allegations about the veracity of Treasury economic forecasts in an article in the Sydney Morning Herald of Thursday, 13 August 1992.

The Sydney Morning Herald provides three specific examples of how key economic estimates that emerged from the Joint Economic Forecasting Group were blatantly manipulated by the Treasurer's ministerial advisers.

The political interference included:

. the insistence on an investment growth figure of 12%, in

the 1989 budget;

. the reduction of the current account deficit from a

Treasury forecast $21 billion to $18.5 billion in the 1989 budget;

. and the manipulation of the 1990-91 forecasts on growth to play down the real warning signs of an approaching slowdown in the economy with the unrealistically high growth

forecasts of 2%.

Parliament House, Canberra, A.C.T. 2600

Further there have been allegations raised that the preparation of the now discredited One Nation economic forecasts was

principally done in the Prime Minister's office and die not have the full backing of the Treasury economists.

Indeed at Senate Estimates Committee B meeting on 3 April 1992 Treasury officers were careful to point out that the One Nation "scenarios" were not to be treated in the same manner as normal budget forecasts.

Given these allegations, and given the reliance that the

Australian community puts upon the honesty of the Government's budget forecasts, I ask whether you will ensure that the economic forecasts in Statement Number 2 of tomorrow's Budget are not tainted by political interference from the Prime Minister's office or the Treasurer's office.

To that point I ask that you provide me with a written assurance that the economic forecasts are independently prepared by Treasury and the Joint Economic Forecasting Group without any political interference of members of the Prime Minister's or Treasurer's staffs, respectively. ;

I expect that you would understand the Australian community's concerns about the veracity of the budget forecasts and so I also ask that you make that written reply as soon as possible, but preferably not later than 5 pm today.

Given the wide public interest in this issue I have taken the liberty of releasing a copy of this letter to the media.

Yours sincerely / ’ /

Peter Reitn m p