Introduction and statement of preparation

Secretary to the Treasury - Dr Steven Kennedy PSM

I am pleased to present Treasury’s Corporate Plan 2020-21, as required under section 35(1)(b) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

Treasury is the Government’s pre-eminent economic adviser. This is a significant responsibility which relies on our professionalism, judgment and expertise in providing advice to the Government that supports the effective management of the Australian economy.

Treasury’s purpose is to support and implement informed decisions on policies for the good of the Australian people, consistent with achieving strong, sustainable economic growth and fiscal settings.

COVID-19 – a once in a century pandemic – has delivered an enormous shock to our economy and society.

Our work is vital to supporting our economic recovery over the coming years and is focused on developing economic advice and analysis, as well as designing and delivering programs to support the economy, business confidence and jobs.

Our plan shows how we will direct our efforts to achieve our purpose in 2020-21 and over the next four years. Our work will be informed by the Government’s economic priorities, to be outlined in the October 2020 Budget.

Our plan provides an overview of Treasury’s operating environment, key priorities and activities, capabilities and how we will measure performance.

This is our primary planning document and has been prepared in accordance with the requirements of the PGPA Act.

I look forward to reporting on our progress in the annual performance statements included in the Treasury Annual Report.

Dr Steven Kennedy PSM
Secretary

Our Corporate Plan 2020‑21 to 2023‑24

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Our purpose

To support and implement informed decisions on policies for the good of the Australian people, consistent with achieving strong, sustainable economic growth and fiscal settings.

Our operating context

COVID-19: a once in a century shock

Sharp deterioration in the domestic and global outlook and an uncertain recovery pathway and timeframe

Lingering impacts on confidence, investment and employment

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Our priorities

We will achieve our purpose by promoting:

A sound economic environment

Sustainable taxation and revenue arrangements

Effective Government spending arrangements and regulations

Organisational capability

Well-functioning markets that serve consumers and investors

Sound governance and assurance

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Our key activities 2020-21 and beyond

  • Support the COVID-19 economic response measures and recovery work
  • Deliver the 2020–21 and 2021–22 Budgets, the Mid-Year Economic and Fiscal Outlook and any other economic updates as required by Government
  • Promote a stronger, more sustainable tax system in line with Government priorities
  • Deliver the next Intergenerational Report that will assess the long term sustainability of current Government policies over the next 40 years
  • Ensure payments to the States and Territories are timely and accurate
  • Strengthen Australia’s foreign investment review framework
  • Strengthen Australia's financial system and promote sound corporate and consumer regulation in line with Government priorities
  • Deliver measures focused on supporting small to medium business, the digital economy and reducing the regulatory burden on business

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How

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Ensuring our work aligns with our purpose

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Creating and sustaining productive relationships

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Developing high performing teams

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Rewarding an inclusive culture

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Sound governance and assurance

Our operating context

Environment

Treasury’s operating environment is shaped by the domestic and global economies. 2020 has been a year of economic challenges – from bushfires to the COVID-19 pandemic.

The COVID-19 pandemic is having profound impacts on Australia’s economy and society. The impacts of the pandemic and accompanying containment measures have been evident across all parts of the economy, with record falls in key indicators of business investment, household consumption, the labour market and trade activity.

The most significant economic impact of the crisis has been on jobs, particularly for young people. Beyond 2020, labour market conditions are forecast to strengthen as demand picks up but, as with prior recessions, the unemployment rate will take some time to improve.

We continue to provide economic advice and analysis in response to the pandemic while delivering the Government’s economic support measures. This includes measures to support employers and businesses, individuals and households, and maintaining the availability of credit.

Australia has so far outperformed most other countries in both health and economic outcomes. We have benefited from a strong starting point, including highly effective federal and state public services and institutions, a well-capitalised banking sector, a sound fiscal position and low levels of debt as a share of GDP compared with many other countries.

The Government’s economic response, coupled with large declines in taxation receipts and increases in payments, has seen a major deterioration in the Budget position. The evolution of the public health crisis will shape the recovery trajectory and controlling the spread of the virus remains a significant challenge with COVID-19 infections continuing to rise globally. The outlook for both the global and domestic economies remains highly uncertain.

Even where infection rates appear to have been controlled, further outbreaks could set back recovery. These outbreaks and cautionary behaviour of businesses and households threaten the outlook both in Australia and globally. Further, there are risks that the substantial increase in global debt may lead to credit tightening and financial instability, slowing the pace of recovery.

As 2020 continues and our focus shifts from the COVID-19 economic response to the ongoing management of the crisis and recovery, Treasury will support the Government’s response to these challenges. We will continue our work on promoting a stronger and more sustainable tax system, supporting a sound base for economic recovery work. We will support the restoration of trust in the financial system and maintaining the flow of credit through regulatory reform and implementing the Government’s response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

We will support business and consumer outcomes through effective regulation that is fit for the digital age and advocating Australia’s interests in global markets. We will strengthen Australia’s foreign investment review framework to support and encourage foreign investment and streamline investment in non-sensitive areas, while ensuring our national interest is protected.

Furthermore, our work providing advice and analysis to Government will continue, including advice on superannuation reforms and delivery of the next Intergenerational Report. This will lay the foundations for long term recovery by providing an understanding of how demographic and other structural changes may impact economic growth, workforce participation and public finances.

Key priorities and activities

Purpose

Treasury’s purpose is to support and implement informed decisions on policies for the good of the Australian people, consistent with achieving strong, sustainable economic growth and fiscal settings.

Priorities and activities

A sound economic environment

  • support the COVID-19 economic response measures and recovery work.

Effective Government spending arrangements and regulations

  • deliver the 2020-21 and 2021-22 Budgets, the Mid-Year Economic and Fiscal Outlook and any other economic updates as required by Government
  • deliver the next Intergenerational Report that will assess the long term sustainability of current Government policies over the next 40 years
  • ensure payments to the States and Territories are timely and accurate.

Well-functioning markets to serve consumers and investors

  • strengthen Australia’s foreign investment review framework
  • strengthen Australia’s financial system and promote sound corporate and consumer regulation in line with Government priorities
  • deliver measures focused on supporting small to medium business, the digital economy and reducing the regulatory burden on business.

Sustainable taxation and revenue arrangements

  • promote a stronger, more sustainable tax system in line with Government priorities.

Organisational capability

  • ensuring our work aligns with our purpose
  • creating and sustaining productive relationships
  • developing high performing teams
  • rewarding an inclusive culture.

Sound governance and assurance

  • committed to continual improvement of our management and governance practices, to assure Australians that we work with integrity and accountability.

Our approach to performance

Our performance measures align with our purpose, reflect the standards and frameworks which establish and underpin the delivery of our work in many areas, and are responsive to changing priorities and the external environment. They reflect a range of qualitative and quantitative measures, including feedback, outcomes of reviews and analysis of data which measure effectiveness, quality and completeness, and our standard of delivery.

Influential and impactful policy advice and analysis

Provision of informed and impactful advice to Treasury Ministers, underpinned by robust modelling, forecasting and engagement with stakeholders.

Quality of advice

Target 2020‑21 Ministers and relevant stakeholders indicate a constructive and positive contribution to economic policy outcomes, in line with Government priorities. (PBS 2019-20 Measure 1.1)
Targets 2021‑22 to 2023‑24 As above.
Methodology Measured through formal and informal feedback mechanisms, including review and assessment of records of feedback periodically provided by Treasury Ministers, their staff and relevant stakeholders on the usefulness and relevance of advice, as well as the outcomes of reviews and evaluation activities. This includes advice on economic analysis, taxation policy, markets and foreign investment.

 

Consultation

Target 2020‑21 Policy advice considers the views of relevant stakeholders, including other Australian Government entities, State and Territory Government entities, industry and regulators, as required.
Targets 2021‑22 to 2023‑24 As above.
Methodology Measured through formal and informal feedback mechanisms, including through review and assessment of public consultation on initiatives through Treasury’s website, collaboration and engagement with other Australian Government entities, State and Territory Government entities, stakeholder engagement and consultation activities. This includes consultation on upcoming changes to the foreign investment, corporations and taxation legislation and frameworks.

 

Quality of analysis

Target 2020‑21 Models and forecasting activities are based on best-practice and deliver outcomes that inform our economic policy advice.
Targets 2021‑22 to 2023‑24 As above.
Methodology Measured through formal and informal feedback mechanisms, including review of modelling and forecasting outcomes and processes during the reporting period and peer review.

 

Delivery of the economic agenda

Delivery of the Government’s economic agenda, through efficient, effective and timely administration of Treasury’s functions including legislation and administration of payments.

Delivery of economic priorities

Target 2020‑21 Our delivery of the Government’s economic agenda is timely, in line with the priorities of the Government, and realises the intended benefits and objectives.
Targets 2021‑22 to 2023‑24 As above.
Methodology Measured through review and assessment of delivery of the Government’s economic agenda during the reporting period, including election and Budget commitments, in accordance with agreed milestones and objectives, as well as the outcomes of reviews and evaluation activities.

 

Foreign investment regulation

Target 2020‑21 Our foreign investment regulatory performance meets whole-of-Government standards.
Targets 2021‑22 to 2023‑24 As above.
Methodology Measured through review and assessment of the foreign investment regulatory function during the reporting period, in accordance with the Regulator Performance Framework.

 

Legislation

Target 2020‑21 The legislative program is delivered within the required timeframe and the quality of legislation implemented meets a satisfactory standard, in line with Government priorities.
Targets 2021‑22 to 2023‑24 As above.
Methodology Measured through review of delivery of the legislative program throughout the reporting period, in accordance with Treasury’s Legislation Prioritisation Framework and agreed milestones.

 

Delivery of the Budget

Target 2020‑21 Delivery of the Budget, in line with the Charter of Budget Honesty Act 1998 (the Charter).
Targets 2021‑22 to 2023‑24 As above.
Methodology Measured through review and assessment of the delivery of each fiscal report due within the reporting period, in accordance with the requirements of the Charter.

 

Payments

Target 2020‑21 Payments to international financial institutions are facilitated in accordance with relevant legislation and agreements (PBS 2019-20 Measure 1.2).
Payments to the Hub are made in accordance with the new Commonwealth Grant Agreement (PBS 2019-20 Measure 1.3).
Payments to the States and Territories are made in accordance with the Intergovernmental Agreement on Federal Financial Relations (PBS 2019-20 Measures 1.4-1.9).
Targets 2021‑22 to 2023‑24 As above.
Methodology Measured through review and verification that all payments due in the reporting period have been made, in accordance with the relevant authority and legislative requirements.

 

Capability

As Treasury responds to an uncertain and more complex economic environment and an expanded role in delivering the Government’s economic priorities, our capability to deliver our changing priorities must also respond.

In 2020-21 and over the forward years, Treasury will ensure we have in place the capability to deliver on these priorities, through implementing the outcomes of our newly developed workforce plan. This includes the implementation of a learning and development strategy to ensure our people have the required skills, creating pathways for developing our people as future leaders of the Australian Public Service, continuing our work with our State offices, and promoting an inclusive workplace so that our work is informed by a diverse workforce.

Information and communications technology

Treasury operates in a dynamic environment, requiring agile, responsive information and communications technology (ICT) solutions that enable the delivery of high quality advice and policy to the Government. We rely on collaboration across the public service and with industry, access to high quality data modelling and analysis systems, and timely access to information to uphold our position as the pre-eminent economic adviser to the Government.

Recent events which have necessitated remote working have shown us the benefits of ICT investment, to ensure we can deliver for the Government and Australians in challenging times.

In 2020-21, Treasury will refresh our ICT strategic plan, through revisiting priorities and considering changes in our working and technology environment, including business continuity, to build on investments in infrastructure and mobile technology, secure laptops and video-conferencing.

Cooperation

Effective stakeholder engagement is core to Treasury’s work. It helps us enrich our advice to government, assists in better decision making, and enhances our relationships with the Australian community. Treasury’s stakeholder group is broad and diverse and includes not only the other Government entities and departments we partner with to develop and deliver economic policies and programs and our portfolio bodies; but industry, regulators, consumers, academics and community groups of all sizes.

Within Treasury, we value the creation of collaborative and productive working relationships across all areas of the department, as we partner to develop and deliver outcomes. We will further enhance this collaborative approach to policy development through the establishment of a strategic policy coordination function.

In 2020-21 and over the forward years, Treasury will continue to engage with all stakeholders and partner with other Government entities and delivery agencies to deliver economic and fiscal reform as well as economic response programs. Treasury is dedicated to ensuring that our broader stakeholders also have an opportunity to contribute to the policy making process through formal consultation programs and other relationship building initiatives. Building and maintaining these cooperative relationships is key to enabling Treasury to deliver robust and considered advice.

We also remain committed to extending our reach through continuing our regional engagement work, allowing us to see firsthand the economic potential of regional Australia, and engaging with international bodies and financial institutions to support Australia’s economy in a globalised and interconnected environment.

Risk

Risk management at Treasury is an enabler of good decision making and robust advice to Government; and supports accountability, transparency and engagement with opportunities. Our risk management work is supported by frameworks, processes and tools to promote consistency in identification, communication, monitoring, decision-making and management of risks and opportunities, with oversight provided by the Executive Board.

In 2020-21 and over the forward years, Treasury will continue to enhance our risk management capability with a particular focus on managing shared risks with our delivery partners, as we deliver the Government’s economic priorities through this time.

In June 2020, the Executive Board agreed Treasury’s risk appetite, enterprise risks and our tolerance for these risks, across three key areas.

Our enterprise risks

Treasury Enterprise Risks Our tolerance for risk
Influential and impactful policy advice and analysis
  1. We build and leverage our relationships with Government and other stakeholders as we have a low risk tolerance for poor cooperation impacting on our advice and analysis.
Low
  1. We invest in our modelling and analytical capability to provide advice which is reliable and we have a medium risk tolerance for not being considered the only source of advice to Government.
Medium
  1. We pursue and make the most of opportunities to drive policy and regulatory reform which improve Australia’s economic outcomes and we have a medium risk tolerance about being unable to control the ultimate decisions.
Medium
Delivery of the economic agenda
  1. Our delivery of the Government’s economic policy and program priorities is timely and realises the intended benefits, as we have a low tolerance for creating economic and/or compliance risks.
Low
  1. Our legislation program is managed efficiently to reflect the Government’s priorities and the laws we prepare are legally robust, because we have a low tolerance for creating unnecessary burdens on, or creating uncertainty for, regulators, industry and consumers.
Low
  1. Our payments to the States and Territories, or to meet our international obligations, are timely and accurate and the Government’s funding agreements are streamlined as we have a low tolerance for payment risks.
Low
Capability, people and culture
  1. We value, develop and utilise the full potential of our staff as we have a low risk tolerance for being a workplace which does not attract, retain and develop talent and future leaders.
Low
  1. We embed a culture of safety, compliance, accountability, ethics, business resilience and security awareness in our people, as we have a very low to low risk tolerance for any of these factors impacting our reputation and ability to deliver.
Very Low to Low
  1. We invest in information management, systems and IT capability to improve our efficiency and effectiveness and have a medium risk tolerance for the implementation timeframes associated with these improvements.
Medium

Our appetite for risk varies according to the activity undertaken and that accepting these risks is based on good professional judgment. This requires everyone to understand both the potential benefits and risks and that sensible measures are in place to mitigate and manage these risks.

We look to manage these risks by:

  • pursuing opportunities to drive policy reform, and invest in building and leveraging relationships with our stakeholders and our analytical capabilities
  • actively planning, managing and monitoring risks to delivery and benefits realisation
  • investing in people and technical capability, and embedding a culture of safety and accountability.
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