One of the features of Parliament House that received no attention in last week’s 20th anniversary celebrations was the recently installed spotlight attached to the giant flagpole. This enormous 5 KW light is operated directly from the Prime Minister’s office and is used to project a giant “R” into the Canberra sky whenever danger threatens. It is the Government’s “bat-signal” to Heather Ridout that she is urgently needed for a review.

Unlikely? Well, what else can explain the ubiquity of the chief executive of the Australian Industry Group, who is a sort of 21st Cabinet member? Julia Gillard’s first task as Deputy Prime Minister back in December was to address Ridout’s organisation, praising the AIG for working well with Labor in Opposition. Since then, Ridout has scored a number of important Government gigs.

She was already a member of the National Workplace Relations Consultative Council, the statutory IR consultative body set up by the previous Government, as well as Business-Industry-Higher Education Collaboration Council. But in February, she agreed to join the Business Advisory Group, advising the Government on its longer-term IR legislative drafting. This was only days after she was appointed to Skills Australia, Labor’s new training advisory body. And last month, Ridout was an enthusiastic participant in the 2020 Summit.

Now she’s part of the not-quite-so-root-and-branch tax review announced, after a fashion, by the Government yesterday.

Ridout and the AIG were notable last year for refusing to join the disastrous business-funded advertising campaign in support of WorkChoices, which was supposed to be politically neutral but which was unfortunately developed by Liberal pollsters Crosby-Textor. As part of the Government’s no-retribution agenda, Gillard declared in her speech to AIG that she “extended the hand of cooperation to all of the employer organisations who took part in the debate over WorkChoices”.

This was apparently genuinely meant, except in the case of the Australian Chamber of Commerce and Industry’s Peter Hendy, for whom there was less a hand of cooperation than a clenched fist ready to deck him. Hendy took the hint and became Brendan Nelson’s chief of staff (now there’s a long-term job) shortly after the election.

But there’s “extending the hand of cooperation” and there’s rewarding those smart enough to see where things were heading last year. For Ridout’s good judgement, AIG now has top-level access to the new Government and a key role in policy development across the critical areas of IR reform, skills and productivity and tax. Bob Hawke might have had Peter Abeles, but no employer group has ever had such a formal role in the central policy process of a Labor Government. In exchange, the Government gets the credibility and political coverage of a major employer group. Given her role, Ridout isn’t so much inside the tent as helping hold the thing up.

Malcolm Turnbull has complained that having a review headed by Ken Henry (and including Jeff Harmer, Secretary of unhealthily pronounceable FAHCSIA) may not be independent. That’s rich coming from someone who hired Telstra and the Liberal Party’s favourite economist, Henry Ergas, to conduct the Opposition’s tax review, especially given the caning. Ergas copped from the Australian Competition Tribunal on the  very issue of impartiality in 2004. Nevertheless, the presence of Ken Henry, Harmer and Ridout raises questions about how difficult it would be for UNSW’s John Piggott and tax expert Greg Smith (himself a former Treasury Dep Sec) to push a proposal the Government won’t like.

Rudd knows his Yes, Minister, and Sir Humphrey’s warning not to set up inquiries unless you know what its findings will be. The GST and super is already off-limits. What else is?

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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