Former Treasury secretary Ken Henry has blasted Australia’s federal political leaders saying the reform agenda has been buried by the politics of fear and anger.
He urged Australian business to fill the leadership vacuum, saying if companies wanted greater certainty they would have to start delivering it themselves.
In a caustic speech at the National Press Club on Thursday, Henry decried the state of climate change policy, saying it was “quite extraordinary” how shambolic it was when our politicians had been told – at least 14 years ago – that there was an urgent need to develop long-term policies to address carbon emissions.
He said the biggest challenge confronting the energy sector was that climate change policy in Australia was a “shambles.”
He said political leaders were told years ago that there was an urgent need to address the crisis in business confidence.
“It is quite extraordinary, but nevertheless true, that things are very much worse today,” he said.
“Topics that we have traditionally assumed to be in the domain of public policy, and not the stuff of business, are going to have to become our constant preoccupation,” he said.
“The leadership task is urgent.”
The now-NAB chairman told an audience of business and political leaders that Australians used to be proud of a country that pioneered world’s-best policy and nurtured leading institutions: “But nobody any longer looks to Australia to see how it should be done,” he said.
He wondered why consecutive federal governments had even bothered commissioning important reports – such as four intergenerational reports over the past 15 years – when they then ignored them.
Henry criticised modern political parties for digging themselves into “deep trenches” from which they fired insults, with “populism supplying the munitions,” saying the country that Australians want “cannot even be imagined from these trenches.”
“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.
It was Henry’s most scathing public assessment of the state of politics since he left Treasury in 2011.
His speech followed a few months in which blackouts in South Australia pushed energy security and climate change policy to centre-stage politically.
Malcolm Turnbull was criticised in September for linking the SA blackout to the state’s use of renewable energy by calling the blackout a “wake-up call” for state leaders who were trying to meet “completely unrealistic” renewable targets.
Labor was recently pilloried for being unable to explain clearly its own renewable energy target.
Henry said there were four policy challenges demanding immediate attention, including: budget repair; the need to plan for an ageing population; the need for a settled policy framework for climate change mitigation and energy security; and to ensure we make the most of the Asian century.
On the federal budget, he said the government had utterly failed to reduce the deficit and spending: “Australia’s current tax system was designed to achieve a reduction in the size of government over time, forcing spending below the average 24.1% of GDP recorded by the Howard government. But that hasn’t happened.
“While payments were at 24.1% of GDP in 2012-13, the most recent MYEFO reveals that they had risen to 25.6% of GDP by 2015-16, and are projected to be 25.2% of GDP from 2016-17 out to 2019-20.
“According to the most recent budget, payments will then rise further, partly as a consequence of population ageing.
“This is bigger government, not smaller government. And bigger government must be paid for.”
Henry said Australia needed a minimum set of long-overdue reforms, including:
- A much lower company tax rate
- The removal of stamp duties on residential property.
- An overhaul of state-based royalties.
- Market-based price signals to guide climate change mitigation and long-term investment in the energy sector.
- A broader base and higher rate of GST.
- A substantial adjustment to roles and responsibilities between the Commonwealth and the states.
“Of course, I have no confidence that this list of urgent and essential reforms will be achieved by today’s parliaments,” he said.
“In recent months, the National Australia Bank has surveyed our business customers and the broader community about their attitudes to Australia.
“While 90% of the Australians we surveyed consider Australia to be a great place to live today, only half think it will still be a great place a decade from now,” he said.
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