Treasury Secretary John Fraser has resigned, leaving the Turnbull government less than a month to rush in a replacement before he finishes on July 31.
Treasurer Scott Morrison's former chief of staff Philip Gaetjens will be parachuted into the role only a month after he was appointed Australia's ambassador to the Organisation for Economic Cooperation and Development (OECD) in Paris.
Mr Turnbull said Mr Fraser should be proud of his contribution to Australian economic policy.
"In the last three and a half years in the role Mr Fraser has led Treasury to new heights, especially in the areas of corporate and personal income tax reform," he said.
Mr Fraser has been a public advocate for the government's income tax plan and cutting the company tax rate from 30 to 25 per cent, warning Senate estimates hearings that Australia risked being left behind other countries unless it reduced its company tax rate.
Mr Fraser - who has a reputation for delivering blunt public statements - gave a speech to a small audience at the Australian Conference of Economists on Wednesday, a day before his surprise resignation.
"I wouldn't be doing this job, and I didn't particularly want it, but you wouldn't see me through the dust if my ability to give advice was constrained," he said.
He reflected on more than three decades in the public service and warned of the risks of a US-China trade war and the political dangers of ignoring economically marginalised communities in Australia.
"We have a duty in government to support the poorest and weakest in the community - we need to be very mindful as economists and policy makers that we don't blithely say the market will fix it," he said.
"The challenge for Treasury is to be less insular and more open to the world. The US is going extremely well economically but they will pay a price for protectionist policies, I only hope that our diplomats and our politicians can get some common sense through."
He described Treasurer Scott Morrison as "a strong and intuitive economist".
In a statement released on Thursday, Mr Turnbull recommended Governor-General Peter Cosgrove appoint Mr Gaetjens as the government's top economic advisor.
Mr Gaetjens also served as the former chief-of-staff to Mr Morrison's mentor, Peter Costello, and secretary of the NSW Treasury.
"The appointment of Mr Gaetjens puts Treasury in good stead for the future," said Mr Turnbull.
The opposition's shadow treasurer, Chris Bowen, criticised the appointment saying it was "unlikely to restore faith in the Australian Treasury after years of politicisation by the Liberal Party and by Scott Morrison in particular".
"The fact of the matter is over the last two decades, Mr Gaetjens has spent a lot more time in Coalition Treasurers’ offices (13 years) – as Chief of Staff to Costello and Morrison - than in the Australian Treasury (four years)," Mr Bowen said in a statement.
"Scott Morrison has regularly used Treasury to cost all of Labor’s economic and tax policies and then release those costings to select media outlets in an attempt to damage Labor," Mr Bowen said.
"The Treasury is a fine institution that deserves the best people and processes and not the constant politicisation that Scott Morrison has subjected it to."