The Money Men

what can happen when a prime minister and a treasurer lose faith in each other. Earle Page, on the other hand, provides a case study in just how effective a good working relationship between a government’s two most senior members can be. Ted Theodore was an intellectually curious, self-taught treasurer who had an insight into how to deal with the greatest economic test any treasurer has had to deal with, but who was thwarted and frustrated. Ben Chifley was treasurer during what was arguably our greatest-ever crisis, World War II, and provides a best-practice case study through his relations with his prime minister. Arthur Fadden was a pioneer among modern treasurers as he implemented Keynesian fiscal management. Jim Cairns provides a fascinating profile: he was our most academically qualified treasurer but clearly one of our most disastrous. Bill Hayden attempted to right the fiscal ship of the Whitlam government and did a very good job, but he was appointed too late. John Howard was a young and inexperienced treasurer who grew in the job but failed in his attempts at economic support as his relationship with his prime minister deteriorated. Paul Keating asked Australians to embrace more economic change than any of his predecessors or successors, and an unprecedented period of uninterrupted economic growth was the result. Peter Costello was a competent and solid treasurer who implemented one big reform, the Goods and Services Tax (GST), and who changed the way Australians think about budget surpluses. Wayne Swan faced the biggest economic test since his Queenslander predecessor Theodore, and he employed the Keynesian tactics that Theodore had wanted to implement to ensure that the uninterrupted growth continued.

Modern-day treasurers and their predecessors have dealt with diverse issues, but there are obvious recurring themes. Earle Page picked a massive fight with the powerful owners of Australian cinemas when he brought in a film tax, sparking a significant advertising campaign against him. The lessons of Page’s tenure might have been instructive for Swan as he introduced the Resource Super Profits Tax and took on the mining companies.

So history teaches us much about treasurers. What are the key lessons that I have learnt by writing this book?

A prime minister and a treasurer are partners.

This is a theme that comes up again and again in the chapters that follow. Successful treasurers work in partnership with a supportive prime minister. A prime minister and treasurer do not need to be friends. They may even have once been rivals. But they must work together. A successful partnership will involve a prime minister and treasurer jointly developing and agreeing on an economic plan. A treasurer needs the support of the prime minister to implement reforms. A good treasurer pushes the envelope and argues for a robust approach to vital reforms; to be successful, they do not need to win every argument, but they do need to win most.

Many prime ministers and treasurers have fallen out at the end of their terms and have squabbled about who should be given the most credit for their successes and who should be blamed for their mistakes. But that is not to say that they were not successful partners in office. There are case studies in good and bad practice within this book.

Knowledge counts, not qualifications.

Some of our best treasurers have had a well-developed, acute but entirely self-taught understanding of economics. Keating was unusual among modern treasurers in not having a university degree, but he sought out older, more experienced men of business and taught himself so well that he had a remarkable grasp of market economics. A lack of tertiary education was much more common in earlier times. Theodore left school at twelve but was still one of the most widely read men in parliament. Like Keating, he also sought out experts to help him understand the economy. As a result, he understood what policy needed to look like during the Depression much better than some of the so-called experts who argued for a cut in government spending during a time of acute economic downturn. Hayden had an economics degree, but it was one that he earned by working alone in the parliamentary library late at night at the expense of socialising with his colleagues. He was essentially self-taught as well.

A few economics graduates have also become treasurer. William McMahon and Les Bury (not included in this book) were two, followed by Hayden. I am the most recent. Cairns held a Doctorate in economic history. He was a man of undoubted intelligence but questionable judgement. His story is a case study in how an academic career that might be considered useful preparation for becoming treasurer can in fact be a precursor to a less-than-successful stint in the job.

A treasurer and the Treasury: another key relationship.

Every treasurer will work closely with the Treasury, but some will work more successfully than others. A good treasurer will neither be a captive of the Treasury nor ignore it.

Running through this book is the theme of the development of the Treasury as an institution under the tutelage of successive treasurers. The Treasury established by George Turner was a body of accountants, set up to keep accurate accounts for the government. Theodore searched for advice from economists about how to deal with the Depression but found no such people in the Treasury; he had to look elsewhere. A series of treasurers then oversaw the professionalisation of the Treasury—Percy Spender (not covered in this book), Chifley and Fadden can all claim credit for this. By the end of Fadden’s tenure in the late 1950s, the Treasury was a highly professional organisation on which treasurers could rely for good economic advice.

A good treasurer will test their department. They will hold its advice up to the light and convince themselves of the merit of the Treasury’s ideas. Once convinced, a good treasurer takes the Treasury’s proposals and argues for them, as well as developing their own proposals and seeking the Treasury’s advice on them before settling on