Treasury under scrutiny: John Martin reviews a recent history of a department that has long exercised influence across all the domains of public policy in New Zealand.

• Author: Martin, John R.

TREASURY: THE NEW ZEALAND TREASURY 1840-2000 Author: Malcolm McKinnon Published by: Auckland University Press, Auckland, 2003, 526pp, $49.99.

Malcolm McKinnon is one of New Zealand's foremost historians whose major works include Independence and Foreign Policy (1993) and The New Zealand Historical Atlas (1997). He has now turned his hand to administrative history in this commissioned work on a key institution in New Zealand government that has received little attention from historians (1)--the Treasury. The degree of public exposure of the Treasury's advice during the turbulent years of 'Rogernomics' and 'Ruthanasia' was unprecedented. (Treasury was 'saviour or sinner, depending on one's point of view, but prominent irrespective'). The extent to which the government accepted advice was also unusual, and conspiracy theories are still advanced to explain it. McKinnon discusses the 1980s and 1990s at length, but this is the narrative of an institution that arrived with the Crown Colony in 1840.

The author is quite explicit in his Introduction: 'this book is analysing not economic policy per se, but the department of government that was, among other things, involved in it'. This is not the book to enable the reader to calibrate the pluses and minuses of the continuing debate about the shift in the early 1980s from the Keynesian to a new institutional economics dispensation as the theoretical underpinning of New Zealand economic management--or indeed whether that is how the terms of the engagement should be described. It will, however, provide an explanation of the developments within the Treasury that contributed to the 'bloodless revolution' from 1984.

In this reviewer's assessment, Treasury has four principal strengths. First, it tells a very good story about the years up to the Second World War, where the archival material is at best sparse. Secondly, despite David Caygill's belief that Treasury officers entered a monastic vocation and all spoke with a single voice, McKinnon has interviewed a significant number of officials whose experience goes back to the 1930s. He has also tapped into the memories of people outside the institution: ministers, officials from other departments and economists employed outside the Public Service. Thirdly, in his discussion of the last two decades, McKinnon has captured the organisational tension and ideological conflict that marked policymaking within the Treasury as well as in the wider community, particularly in the period after David Lange's fourth Labour government took office. But he avoids an unnecessary preoccupation with the personal dimension that undoubtedly accompanied that tension and conflict. Finally, the book is very well written: the complex material is carefully organised; the narrative flows, and good use is made of quotations and illustrations from the primary sources.

Institutional histories can be 'bureaucratic detail at the expense of the big picture'. (2) That is a charge that cannot be laid at McKinnon's door. To a notable extent this is assisted by his emphasis on the people who have worked in the Treasury--centrally, but not only, the Secretaries. In the twentieth century three in particular have, in McKinnon's interpretation, imprinted an identifiable sense of direction on the Treasury.

Turning point

Colonel J.J. Esson (1922-25) was the architect of 'Treasury control' in New Zealand--a similar turning point to that identified with Gladstone in the 1860s in Great Britain. In the decade or so after the First World War, financial management--the ordering of the government's accounts and particularly the control of government expenditure across the board--formerly a matter for the personal oversight of ministers and the Auditor-General, moved to the officials of the Treasury. Esson on retirement from the Secretary's position was appointed 'financial adviser' to the government and played a key role in the retrenchment in public services of the early 1930s. The preferred qualification for Treasury officers in this period was 'accountancy professional'.

In Treasury folklore, Sir Bernard Ashwin (1939-55), one of the most influential public servants well before he became Secretary, personifies a development of the Treasury's role beyond financial management. Economic management was also becoming the Treasury's business. There is no doubt that Ashwin was the principal economic adviser to the first Labour government (in which Walter Nash was Minister of Finance); his influence was marked by his presence on every economically significant board or committee, including the Economic Stabilisation Commission from 1942. But whether this influence was vested in the Treasury or its then Secretary is, in McKinnon's view, more debatable. Symbolically, Treasury, always listed first in the Public Service Classification List until 1940, was henceforth to be found according to alphabetical order. And McKinnon quotes Leicester Webb at the end of the war making a distinction between the old-fashioned departments--among which the Treasury was located--and the new agencies that had sprung up under Labour, particularly during the war, to administer the...