Ken Henry a welcome addition to the public tax debate
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Ken Henry’s appearance at the Press Club yesterday was a thing of wonder. Not so much for the anecdotes about hairy-nosed wombats and Jim the grazier, whose folksy take on business tax arrangements re-invigorated Henry’s lifelong passion for tax reform. Nor, certainly, for his dead-batting of the many questions that invited an unbureaucratic candour. No. The wonder came from finally having a powerful, disinterested advocate for tax reform speaking his mind in public. It’s unprecedented. There’s a debate, not exactly a raging one but at times very heated, occurring at the moment about politicisation of the Treasury. When it comes to politicisation of the bureaucracy, neither side of politics traditionally has clean hands. The Hawke Government ended permanent tenure for department heads. Keating boasted of his influence over the Reserve Bank. The Coalition came to power in 1996 with a visceral loathing of the bureaucracy, and took deep pleasure in inflicting cuts and sacking six secretaries, including one because they confused him with someone else. The Howard years witnessed a steady politicisation of the Australian Public Service, under the mantra of “responsiveness”. I tried to draw Henry on that sort of long-term perspective yesterday, hoping that he might be more forthcoming in taking a long view than he would with more politically-charged commentary on recent events. He didn’t bite — ever the professional. The Rudd Government has, so far, been wholly different except in one key aspect. To the chagrin of his backbench — and, almost certainly, of 99% of public servants in Canberra — he dismissed no secretaries, not even those who morally bankrupted themselves by happily participating in the worst excesses of the Howard years. And Rudd, while happy to work bureaucrats to death, has also publicly demanded higher-quality and more independent advice. Putting aside what increasingly looks like a concerted Coalition attack on Henry, there is an emerging strand of criticism that Rudd and his Treasurer have been hiding behind the bureaucrats, using them as props in their attempts to portray the Government as “decisive” and “ahead of the curve”. The Prime Minister and Treasurer’s reliance on Henry for these purposes, in particular, has drawn criticism from Peter Costello. The point is a fair one, but that’s not the whole story. Rudd and Swan litter their discussion of their response to financial crisis with references to how they have followed the advice of the regulators. That, of course, defeats the purpose of having a democracy. We didn’t elect Ken Henry and Glenn Stevens, however competent they and their staff may be. And using bureaucrats as shields won’t help the Government anyway. Voters take out their resentment on politicians, regardless of how much they followed advice. But it’s not the whole story because the Coalition hid behind bureaucrats and staff every bit as much when it was convenient. The children overboard and AWB affairs gave the game away (politicians ready to blame underlings, whether in their own offices or in the Public Service) for allegedly failing to tell them inconvenient facts. The Coalition backbenchers who call out “stop using Henry as a shield” at Rudd in Question Time might reflect on the shameful performance of Alexander Downer, Mark Vaile, Peter Reith and John Howard in office. And the Rudd Government is different in another very important way. It has launched a full-scale tax review (OK, nearly full-scale, the GST rate is omitted) without, apparently, the faintest idea what it wants. And Henry’s address yesterday was less as Treasury Secretary than as head of that review, in which he raised fundamental changes — improvements — to the business taxation system and the interaction of the tax and transfer systems. That’s why it was a thing of wonder. As George Megalogenis correctly noted this morning, the notion of an unguided tax review is rare in Australia. Previous tax reviews have been run by strong Treasurers (or their Prime Ministers) with a very clear idea of what they wanted. This review is a genuine attempt to identify significant reforms. Not merely does it breach the old rule about not having an inquiry unless you know the result beforehand, but it also breaks the plausible deniability rule. The Government can’t dismiss this review if it doesn’t like the results. It can’t, as it did with Garnaut’s climate change work, reduce it to just one “input”. This is a review done by the Government itself, and by its best and brightest, including two senior secretaries. It turns out there’s an upside to having a Treasurer who lacks the aggression and self-confidence of Costello and Keating. So now we have a genuinely independent review, one not driven by either political or commercial imperatives, one focussed on hunting down inefficiencies and distortions, one not beholden to the interests of the Government, or pushing the barrow of private interests. It may only be a one-off. The Government may find the review outcomes so distasteful that it will never fall into the trap of holding such an inquiry again. But even if it is, it is a major change from the way previous Governments have done business, and Rudd and Swan are to be applauded for it. They may be using Henry as a shield, but on taxation they’re going to have to follow him if they want to stay in his shadow — not the other way around. |
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11 Comments
AS a retired tax agent who has spent many years dealing with the tax office I am surprised that Ken Henry is going to fix the problem that has been created by the public servants themselves.Good luck but my bet it will be another failure.The problem is the Australian mentality.If there is a loophole everyone will be onto it and then the government stops the so called rort with complexity.
At a recent tax conference I asked a question of a tax panel and suggested the whole system be simplified .Everyone looked at me in horror as all our workload would be reduced with say a flat tax with no deductions.So there is a vested interest in keeping it complicated
Maybe this will be different but it will have to be radical to make a difference
Very astute piece Bernard. Some of the Rudd fatigue is justified, but his technocratic tendency towards advice is clearly something that is commendable. Obama will face some of the same kind of problems with long term burrowing as Rudd did - doubtful either was really in a position to win the day with a great purge.
I my opinion We need a political conception about the role of the public service that is somewhere between The Thick of It and the West Wing. Some healthy cynicism is one thing, but free and fearless advice from experts is nothing that should be scorned, and denigration of the public service is a pugnacious and self-destructive myopia.
Very sycophantic, like the remainder of the press gallery in relation to the Rudd government.
This is off point. If as many would agree “The Howard years witnessed a steady politicisation of the Australian Public Service, under the mantra of “responsiveness”. Then, I would suppose that its current opposition’s recent experience with manipulation of the public service that underlies the assertion of manipulation in the forecast figures. I do like Ken Henry. Perhaps he could be parachuted into cabinet? If he is not practically there already.
Rex ,”like the remainder of the press gallery”, includes the Australian as well I suppose?
Back on topic, any idea when this review is due? It seems a HUGE question, and one that would be a nightmare in an exam. “The tax system is big and complex. Review.”
At least no-one will end up dead, no-one will be giving $300 million to a brutal dictator to kill people with, no children will be tortured in concentration camps and no Indian Doctors will be fitted up.
All we get is a much needed tax review.
A very good and unbiased piece. To the list of “shameful performance” participants from the previous government, I would like to respectfully add the names of Philip Ruddock and Kevin Andrews.
I do not see any confidence lacking in the Treasure or Prime Minister, I think it is a genuine attempt
to bring an inderpendant policy to the table. Something that was lacking for 11 long long years.
It may have nothing to do with confidence etc, perhaps is has more to do with inderpenance.
I dont See Mr. Rudd lacking any confidence at all.
Presumably Denise meant ‘independent’ both times but policy independent of whom? The democratically elected government?
Gee I wonder if there is anything else the Left could possibly reinvent or dream up that they might however improbably, even now, pin on Howard?
Ian Vagg has made an excellent point. Simplicity means all of us get a set percentage of our income paid as tax and there are no deductions. I’m all for it. But it’s not going to happen.
Whilst i agree with Bernard that a serious review after detailed and informed discussions with stakeholders and offering framework alternates is a good thing Ken Henry has moved from being a Public Servant to being a political animal. And his review does not sound like the type of one I just alluded to.
Moreover Ken Henry’s advice on Oct 11 did not seem particularly competent just 3 days later and nothing much has changed.
I read the connection to old smirk and mirrrors comements on the position for public servic advice in the government and I thought how typical. Peter just took their advice or not and acted as if he knew all about the position in Australai and was all wise. He seemed to have missed the signs of the current crisis which were apparent a long time ago. He and his sorry mob simply dragooned the dragoonable into being seen to do their bidding abd to hell with an independent Westminister style public service. Rudd and his mob are reinstating thie independent concept so we might hope for it to return pemanently if the Conservatives ever learn for what Rudd is doing. At a time like this it should be all hands to the piumps not an ignorant crarping crew playing everthing to show how unfit they are for office as are Turnbull and Co.