Former Wesfarmers CEO Michael Chaney has
replaced Hugh Morgan as President of the Business Council and
immediately gone on the front foot, accusing Peter Costello and Federal
Treasury of deliberately under-estimating the strength of the budget
and claiming this has undermined the case for comprehensive tax reform.

Chaney gave his story to the papers on Sunday and attracted front-page treatment, but Cossie didn’t take it lying down, allowing Treasury Secretary Dr Ken Henry to reply with a detailed three page letter.

Chaney
is certainly right about the serial inaccuracy of Treasury’s forecasts,
but linking this with the failure to reform the tax system is debatable,
although it is generally accepted that any comprehensive reform
requires billions of dollars to smooth the way.

The Howard
Cabinet is more available to the media than any other in the world, so
it was quite unusual for Cossie to hide behind his chief bureaucrat
yesterday, although Chaney’s attack was aimed at both the Treasury and
Treasurer.

Cossie is clearly annoyed about the tax campaign which has been led by The Australian and Malcolm Turnbull. The Australian
has certainly received no favours from Treasury over its FOI campaign
which will be decided by the High Court in Sydney on Friday.

As for Malcolm Turnbull, well he was famously laughed at by Cossie on the Today show last year and has now been effectively gagged on tax in his new role as the PM’s parliamentary secretary.

So
what does that mean for Michael Chaney, the new chairman of National
Australia Bank and chairman-in-waiting of Woodside Petroleum, the very
company that Costello controversially protected from a Shell takeover
in 2001.

Well, how ironic is it that Chaney was yesterday
telling NAB shareholders at the AGM in Sydney that Cossie’s APRA has
been playing it very tough with the regulatory straitjacket, applied after the
$360 million foreign exchange disasters, that will remain in place for at
least another year.

NAB was hoping to be free by now, but only
65% of APRA’s 81 demands have been met and another 28 remain in force and
this is contributing to its market capitalisation deficit behind our
new biggest bank, CBA, which was last night capitalised at $57.3
billion, compared with $53.8 billion for NAB.

Chaney would be
well advised not to pay Costello a visit to try and heavy APRA at the
moment. And if the Treasurer really wanted to put Chaney in his place,
he could help fund comprehensive tax reform in the budget by lifting
the resource rent tax holiday enjoyed by Woodside’s giant North-West
Shelf project. Now that would really hurt!

Whether its petty
things like banning Crikey from last year’s budget lock-up, or his
notorious call to a bank CEO threatening adverse regulatory outcomes if
his chief economist wasn’t hauled into line, a glass jaw is now widely
known to be a key character flaw of our wannabe prime minister.

This
extends to never admitting mistakes. He refused to take a backward step
during the Rob Gerard affair and also appears to be holding out against
comprehensive tax reform, probably because it would be an admission
that not enough has been done in the previous 10 budgets.

The problem
with taking on Chaney is that he’s backed by the top 100 CEOs in the
country through the BCA. Any open warfare would then hit Liberal Party
corporate donations, which will be revealed for 2004-05 in all their
glory at 9am tomorrow on the AEC website.

Cossie should remember
that comprehensive tax reform would deliver a flood of donations and
the Liberal Party certainly needs them with 5 state elections coming up
in the next 15 months.

Peter Fray

Get your first 12 weeks of Crikey for $12.

Without subscribers, Crikey can’t do what it does. Fortunately, our support base is growing.

Every day, Crikey aims to bring new and challenging insights into politics, business, national affairs, media and society. We lift up the rocks that other news media largely ignore. Without your support, more of those rocks – and the secrets beneath them — will remain lodged in the dirt.

Join today and get your first 12 weeks of Crikey for just $12.

 

Peter Fray
Editor-in-chief of Crikey

JOIN NOW