Treasury is not independent. It is an arm of government

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From The Australian on Saturday:

“I’m saying that Greece manipulated data and I think this is manipulation of data too,” Professor Pagan said at a Melbourne Institute conference on the IGR in Canberra yesterday.

His allegation provoked a furious response from Treasury’s head of macroeconomics, David Gruen. “We didn’t make it up,” he said.

Oh really? More spin from budget paper no. 1 this week:

The Carbon Pricing Mechanism is expected to raise $24.7 billion in receipts over the forward estimates. The receipt estimates incorporate a carbon price for 2015-16 of $29, based on Treasury modelling in Strong Growth, Low Pollution.

The reality:

European carbon prices have been trading near record lows below $10 and some leading analysts, including Bloomberg New Energy Finance, predict that the carbon price will stay low and remain close to the $4 mark by 2020.


  1. To be honest you should leave economic concepts alone as you have little understnding of them.

    The key two forecasts for the budget are nominal GDP growth and terms of Trade. They both err on the highly conservative side.

    Any talk of Greece and Asutralia is simply bollocks

    1. Ok mate whatever. Way to introduce a non-sequitur. I did not mention nGDP or ToT.

      My basic point is that the budget is not a disinterested analysis of the economy, it is put through a political filter … and that holds whether Labor or the Coalition is in power. Do you think $29 is Treasury’s prediction of the carbon price in 2015-16 or the government’s?

      The problem with this government is that they have so often used Treasury as a human shield rather than just make their own arguments and defend them.

      Someone said to me once that Costello would advice his junior ministers “never use a Treasury brief to win an argument.” Swan and Wong could take that advice a bit more information.

  2. There is a lot that can happen until 2015/16.

    Both nominal GDP and TOT are more important to the budget’s bottom line than that.

    Are you assuming permanent recession in Europe and no attempt to roll back the excess permits?

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