The country's most senior economic bureaucrat has delivered a scathing assessment of the federal government's water and climate-change policies and warned his department to be vigilant against the "greater than usual risk of the development of policy proposals that are, frankly, bad" in the lead-up to the federal election.

In a speech to an internal Treasury forum, obtained by The Australian Financial Review, Treasury Secretary Ken Henry confirmed his department had little influence in the development of the government's recent $10 billion water package, and expressed his regret that its advice both on water and climate change had not been followed in recent years.