The resignation of Treasury Secretary John Fraser was too good an opportunity to miss.
With no consultation with the Opposition, Scott Morrison has appointed his chief of staff as the new Treasury head. One would have thought there may have been others already working in Treasury who should have been considered first rather than making what appears to be a very politically motivated choice.
Philip Gaetjens was Scott Morrison’s chief of staff from 2015 until a month or so ago. On June 4, Julie Bishop and Scomo issued a joint press release saying that Gaetjens had been appointed as Australia’s next Ambassador to the OECD in Paris.
The chance to put him in charge of the Treasury instead changed all that.
This is the man who served as Peter Costello’s chief of staff from 1997-2007, advising him when he conducted an asset fire sale, when he slashed taxes, and when he hugely increased concessions for the wealthy, skewing investment and locking in structural budget changes whose repercussions are being felt today.
According to the Australian, in 2005, Gaertjens had asked for detailed costings from Treasury on reforms including a flat tax, in which everyone would pay 30c in the dollar and the $6000 tax-free threshold would be abolished. I suppose we should be thankful for small mercies that they were voted out in 2007 before that idea took hold.
Gaertjens was instrumental in developing and introducing the GST and establishing the Future Fund – a huge stash of money now under the control of none other than Peter Costello.
As at March 31, “the Board of Guardians now invests $166bn” – $140.8 billion in the Future Fund, $7.1 billion in the Medical Research Future Fund, $10.4 billion in the DisabilityCare Australia Fund, and $3.8 billion in both the Education Investment Fund and the Building Australia Fund.
Since its inception in May 2006, the Future Fund has had an average annual return of 7.7%. For some unknown reason, they keep $21 billion of it in cash. This enormous amount of money is supposedly sitting there to cover public servants’ superannuation – an entirely unnecessary measure for a sovereign currency issuing nation.
You may be pleased to hear that the Medical Research Fund is diversifying its portfolio and increasing its property holdings. Or you may be like me, and prefer that it be spent on, yanno, medical research? Or that the disability care fund be spent on training the workforce needed rather than invested in “a combination of short-term and medium-term debt instruments.” Or that the education and building funds might bring a higher return than the 2% they are currently achieving if they were invested in education and building.
But hey, it’s Costello’s baby.
It will be interesting to see if Treasury’s assumptions for population growth, GDP, and taxation revenue change in light of Dutton’s personal cutting of immigration. Many say they are already inflated so the next government may find it very difficult to deliver a surplus predicated on growth that Dutton is determined to be seen to be reducing.
It will also be interesting to see if the new Treasury Secretary continues his support for policies that increase inequality.