Thursday, 13th March 2014


Normally, when a media interviewee responds by saying "Let me answer the question this way", the rest of the answer bears little relationship to the original question.

This was not the case with Ken Henry on ABC 730 last night. His openness and straightforwardness was almost startling.

Raising the GST was inevitable, he said, because we have a structural deficit that won't be fixed via spending cuts alone. The tax cuts of the late Howard years are the main culprits for the budget problems now, and money will need to be raised to pay for the National Disability Insurance Scheme, the new school funding arrangements and Abbott's paid parental leave scheme.

He criticised Abbott and Hockey for announcing the removal of Treasury secretary Martin Parkinson, saying "No government has ever thought it appropriate to remove the head of the Treasury and put in someone who is ... of a more comfortable political character."

And, like Bernie Fraser yesterday, Henry warned the Coalition against replacing Labor's carbon pricing scheme with its own direct action program, which makes no economic sense.

He had other points to make, and the interview is worth watching in its entirety. It illustrates the value of frank and fearless advice, and the importance, often unheralded, of skilled public servants (past and present) and institutions such as the Treasury and the Reserve Bank to making good policy.

The previous government dismissed most of his advice on tax reform. This one would be equally foolish to do the same.

Nick Feik
Politicoz Editor

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Ken Henry says raising GST inevitable, criticises PM over replacement of Treasury boss

"Former Treasury secretary Ken Henry says the GST will have to be raised in the future and warns budget cuts will not be enough to fund spending on new social programs. In the interview, he expressed dismay at the decision to replace current Treasury boss Martin Parkinson, defended the mining tax, and warned against replacing the carbon pricing scheme." (Includes video of interview)

Shorten shifts on mining tax but will block Senate repeal

"Bill Shorten has acknowledged the minerals resource rent tax had damaged his party's relationship with the resources sector, and has refused to express confidence in the underperforming law. He said Labor would go about rebuilding links with the industry before the next election. The concession reflects an acceptance that the new Senate, to sit from July, will repeal the tax."

AlsoCostello to Hockey: don’t back paid parental leave scheme (Phillip Coorey, AFR)

Tasmania election: an uneasy sense of deja vu hangs over Labor

"A tough but beleaguered female Labor leader in a politically damaging alliance with the Greens, assailed by a populist, conservative opposition that enjoys a yawning lead in the opinion polls. Julia Gillard’s administration and Lara Giddings’ Tasmanian government are not, of course, exactly alike, but there’s no escaping the sense of deja vu hanging over the Apple Isle’s election campaign. Giddings heads to the polls on Saturday."

Macarthur Man rises from Labor

"The public has twigged to a major change in national wealth creation. With ongoing globalisation, there is little government can do in economic management other than try to get the business environment right and improve the skills base of its people. Promises of planning, protecting or subsidising ailing industries back to prosperity are phoney. In the new economy, the real power lies with consumers – another area of limited government influence."

AlsoThe real politics of the possible (Jonathan Green, ABC)

Poor Andrew: Australia's most read columnist is in pain

"(Marcia) Langton falsely claimed I was a "fool" who believed in "race theories" and had "argued that (her colleague) had no right to claim that she was Aboriginal". And when Attorney-General George Brandis hotly insisted I was not racist, the ABC audience laughed in derision... I was so bruised by Q&A that I didn't go into work on Tuesday."