Treasury should play it straight

TREASURY has been sucked into the political vortex - a threatening, slippery, dark place even for experienced Canberra hands such as Ken Henry.

At Senate estimates on Tuesday evening, Treasury officials finally came clean about the department's use of consultants Open Mind Research Group to prepare the ground for the Rudd government's $38.5million advertising splurge to defend its proposed resource super-profits tax.

For two weeks, Wayne Swan's office and Treasury officials had refused to answer questions from The Australian about why the department had engaged the Melbourne company, from April 8 to May 30, at a cost to taxpayers of $349,000.

The Treasurer's people were on the road selling the budget and referred initial and subsequent inquiries to Treasury's principal communications adviser, Tony Murray. He said the purpose of the project was "commercial-in-confidence", a rare thing to claim when the existence of the contract itself and the "outputs" of the research were not classified as confidential. Maybe this was a national emergency, but the people had not yet been told.

We now know the Treasurer's office was frantically developing a new public relations strategy to counter the miners' assault on the RSPT and was waiting on cabinet secretary Joe Ludwig for the green light to exempt the advertising campaign from normal scrutiny.

In a letter to Ludwig on May 10, Swan wrote: "Campaign developmental research also points to the fact that the community feel they have the right to be kept in the loop, and that they are disadvantaged if others are aware of anticipated changes and can therefore take these into account in their decision-making, while the less informed cannot."

Despite questions in writing from this newspaper about whether the market research was related to the Henry tax review or the RSPT, neither Swan's office nor Treasury would provide even broad answers, the latter again citing commercial confidentiality.

When the opposition pursued the issue at estimates, Treasury folded, confirming the concept of a resources rent tax was market-tested by its consultants. That testing, according to officials, uncovered "a low level of community engagement with tax", hence the need for the vast advertising spending.

Swan's advisers know these things eventually get out. Labor, lately, does not seem to care. But public servants should be straight, true and smart about taxpayers' dollars, as they have traditionally been. Why change?

Perhaps it looks sneakier than it is. Or maybe there's more to come.

The way they splash cash means no one is yet calling Labor "mean". "Tricky"? Yes.