Former Treasury Secretary Ken Henry has taken a swipe at both major parties' approach to restoring the budget's health, backing greater bipartisanship in a wide-ranging critique of political leadership around the world.
After the economy's shock contraction during the September quarter this week, Dr Henry also joined business calls for more public investment in infrastructure, which he described as the "elephant in the room."
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Economy goes backward
GDP contracted 0.5 per cent in the September quarter. The Treasurer points the finger at weak business investment.
Speaking in Sydney on Thursday night, Dr Henry, chairman of National Australia Bank, said his big hope for the next year was that the Coalition and Labor could figure out a way to deal with the country's "fiscal mess."
 "My hope, and this is the most immediate challenge I can think for our political leaders, is that they can find a bi-partisan way of dealing with the fiscal mess that we've got," Dr Henry said at an Australia Israel Chamber of Commerce event.
![Ken Henry has blasted both sides of politics for the nation's fiscal mess.](/web/20161209011308im_/http://www.theage.com.au/content/dam/images/g/n/z/1/x/0/image.related.articleLeadwide.620x349.gt728i.png/1481233816379.jpg)
"Both sides of politics claim to be committed, absolutely committed, to the same medium term fiscal strategy, of balance on average over the cycle. You certainly would not know it from their behaviour."
"They are both committed to the same strategy. That is not the same thing, obviously, as bipartisan support for the strategy, otherwise it would have happened by now," he said.
World leaders fail
Dr Henry, who was speaking alongside ANZ Bank chairman David Gonski, also despaired at what he said was a failure of world leaders to deal with challenging issues.
He said he was "quite obsessed" about the "truly bad" failure of political leaders to confront challenges that were not as great as those of past decades, after a year of shock political events including the election of Donald Trump as US President and Brexit.
![David Gonski was more optimistic about the challenges facing Australia.](/web/20161209011308im_/http://www.theage.com.au/content/dam/images/g/s/b/a/d/k/image.related.articleLeadwide.620x349.gt728i.png/1481233816379.jpg)
"I think we have as a country lost the ability to talk openly and optimistically about challenges that we confront," Dr Henry said.
"We should not allow ourselves to fall into the trap of believing that it's all too damn hard, it is not," he said.
Mr Gonski had a more optimistic view on the political turmoil of 2016, saying the various shock poll results were a "demonstration of democracy."
"I don't think any of us should be saying well that's right, or that's wrong, we have to understand that that's where we are in terms of history," Mr Gonski said.
On the economy, Dr Henry highlighted that business investment was bound to be more volatile because mining investment was accounting for a much bigger share of capital expenditure than in the past.
However, he argued the weakness in residential construction that dragged on the GDP result would be temporary, because of the demands created by a fast-growing population.
With Australia growing by about 400,000 people a year, he argued national leaders needed to focus much more on how to accommodate the extra people without adding further to urban congestion and rising property prices.
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