Ken Henry savages Australia’s political leaders
National Australia Bank chairman Ken Henry has outlined eight “essential reforms” to rescue Australia’s growth prospects as he savages the nation’s political leaders for failing to tackle big challenges including population growth.
Warning against political tactics that “confuse and frighten” Australians, Dr Henry attacked the partisan disputes that have dogged every major infrastructure project and wrecked attempts at tax reform over the past decade.
Dr Henry, who led the federal Treasury under three prime ministers, warned that modern politics was making a mess of budget repair, the ageing population, the rise of Asia, energy security and climate change.
“Our politicians have dug themselves into deep trenches from which they fire insults
designed merely to cause political embarrassment,” he said in a speech at the National Press Club on Thursday.
“Populism supplies the munitions. And the whole spectacle — the whole dreadful spectacle — is broadcast live via multimedia, 24/7. The country that Australians want cannot even be imagined from these trenches.
The former Treasury secretary, who held that position from 2001 to 2011 before leaving the public sector to lead the NAB, contrasted the pettiness of today’s political debate with the more constructive approach taken by Labor and the Coalition under former prime ministers Bob Hawke, Paul Keating and John Howard.
“Today’s dysfunction stands in marked contrast to earlier periods of policy success — where
politics was adversarial, every bit as partisan — but when the tribal tensions within parties were generally well managed and the political contest appeared to energise policy, not kill it,” he said.
Amid a continued dispute over whether Victoria should build the East West tollway in Melbourne, Dr Henry warned that the major political parties could not even agree on long-term infrastructure planning.
“Almost every major infrastructure project announced in every Australian jurisdiction in the past 10 years has been the subject of political wranglin,” he said.
“In the most recent federal election campaign, no project anywhere in the nation — not one — had the shared support of the Coalition, Labor and the Greens.
“Every government proposal of the last 10 years to reform the tax system has failed. “
In a speech to the Committee for Economic Development of Australia that directed obvious anger and frustration at the political class in Canberra, Dr Henry blamed the scaremongering in modern politics for making worthwhile reforms impossible.
“The reform narrative of an earlier period has been buried by the language of fear and anger. It doesn’t seek to explain; rather, it seeks to confuse and frighten,” he said.
“Meanwhile, the platform burns.”
As well as blaming politicians for failing to confront real problems, he called on the business community to lead the argument for change and he noted that the community’s frustration extended to the media as well as to political and business leaders.
On practical measures, Dr Henry warned that the inaction on infrastructure meant the country would be unable to deal with the steady increase in population that has been foreseen for more than 15 years.
Official population projections showed that Australia could add a city of two million people every five years or a new city the size of Sydney or Melbourne every decade but that nothing was being done, he said.
“Instead, they have decided that another 3 million people will be tacked onto Sydney and another 4 million onto Melbourne over the next 40 years,” he said.
“Already, both cities stand out in global assessments of housing affordability and traffic
congestion. And even if we do manage to stuff an additional 7 million people into those cities what are we going to do with the other 9 million who will be added to the Australian population in that same period of time?
“Have you ever heard a political leader addressing that question? Do you think anybody has a clue?”
CEDA chairman Paul McClintock, a former cabinet secretary during the Howard government, said Dr Henry’s speech was likely to be one of the organisation’s “speeches of the year” given the way it summed up many of the frustrations with political leadership.
Dr Henry’s speech concluded with eight “essential reforms” to salvage the nation’s prospects, including a faster plan than the government’s stated policy of reducing the company tax rate from 30 to 25 cents in the dollar over a decade.
“First, apolitical infrastructure planning and pricing, including the widespread use of road user charging,” he said
.
“Second, a much lower company tax rate, or some other mechanism that reduces substantially the cost to Australian businesses of equity capital sourced from abroad, achieved much more quickly than is presently under consideration by our parliament.
“Third, the removal of stamp duties on residential property.
“Fourth, symmetrical tax treatment of interest and capital gains.
“Fifth, an overhaul of state-based royalties.
“Sixth, market-based price signals to guide climate change mitigation and long term investment in the energy sector.
“Seventh, a broader base and higher rate of GST.
“And eighth, a substantial adjustment to roles and responsibilities between the Commonwealth and the states.”
In a gloomy end to his remarks, he said that these eight points were a “minimum” set of reforms to prepare for the future.
“Bear in mind also that our present fiscal position means that ‘buying reform’ through budget funded compensation in excess of normal indexation is not an option,” he said.
“Reforms have to be directed to strengthening, not weakening, the budget.
“Of course, I have no confidence that this list of urgent and essential reforms will be achieved by today’s parliaments.”
http://www.theaustralian.com.au/nat...s/news-story/f21ee54b31c7d771d7abb0eddac98faa
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