Treasury Ken Henry (public servant)

1 treasury

1.1 climate change
1.2 consumption tax modelling
1.3 pre 2007 election speech
1.4 bank deposit guarantee scheme
1.5 stimulus package
1.6 henry tax review
1.7 resource super profits tax

treasury
climate change

in 2004, henry recommended national emissions trading scheme thwart climate change, advice @ time ignored. recommendations have since been praised.

consumption tax modelling

ken henry has been criticised role in modelling hewson liberal opposition reform package known fightback!. package contained central element goods , services tax, similar both option c developed henry hawke labor government in 1985, , gst developed howard liberal government in 1997. henry rejects claim treasury acted improperly, saying rejected charge @ time. reject it. there nothing improper in did. did concede, case our work used government attack publicly opposition policy. in reference option c modelling had worked on, henry said:

it 1985 on again. in other ways couldn’t have been more different … …but unlike 1985 in sense not helping government develop positive package. kerin had never said department, ‘i’m going use monster hewson’s tax package when gets out.’ although he’d never said that, knew, obviously, going used do. knew hewson’s package going include broad based consumption tax, thing in 1985 helping government design. our hearts not in job. nevertheless had instruction government. ‘you it’.

when fightback! came out, model team had developed enabled identification of major failing in package. income tax bracket creep had been used fund package bracket creep had not been used in analysis of after tax income various taxpayers receive. treasury accused coalition of having acted improperly.

pre 2007 election speech

in april 2007, australian financial review s laura tingle ran story henry’s semi-annual speech staff. in wake of howard government s development of a$10 billion policy proposal, henry reported saying there greater usual risk of development of policy proposals are, frankly, bad in lead-up federal election.’ former howard government ministers suggested deliberate attempt have henry’s critical views aired publicly detriment of howard government, , called ‘a deliberate piece of political positioning henry’ prior 2007 federal election. following initial controversy, henry released full text of speech, along clarification. said, in part, that:

the government, our ministers , other agencies under no compulsion rely on our advice. in respect of water, point obvious. competing influence other central agencies, line agencies , independent policy advisers, such think-tanks, commentators , consultants.... have noted on other occasions, have never known treasurer not welcome frank , honest advice when provided in-confidence , in faith.

bank deposit guarantee scheme

immediately prior henry s appearance @ senate hearing rudd government’s unlimited bank deposit guarantee scheme, email governor of reserve bank of australia, glenn stevens, henry reported on in media. no text published, australian newspaper alleged email expressed concerns of reserve bank ‘flight safety’ caused unlimited guarantee of deposits in authorised deposit-taking institutions, , consequent loss of liquidity in secondary credit markets. claimed stevens called cap on amount of deposit guarantee ‘...the lower better’ , said ‘if situation allowed continue, foreign bank branches not able source funding in local market flight guaranteed deposits occurs.’

in senate hearing, henry denied there had been disagreement between treasury , reserve bank, , 2 bodies ‘of 1 mind’ on bank deposit guarantee scheme. henry said opposition s claim mr rudd had ignored reserve bank warnings based on report in australian newspaper. dr henry called report unfortunate, fallacious, unhelpful, , w-r-o-n-g

the reserve bank governor backed henry, stating steps in these directions, in context of other countries doing, sensible, , rba supports them.

stimulus package

treasury, under henry, gave advice supporting rudd government’s stimulus package, designed lessen size of economic recession in australia following global financial crisis. package has been described nobel prize–winning economist joseph stiglitz 1 of impressive economic policies ve seen, ever . stimulus package foreshadowed $42 billion in spending measures. classical keynesian response embodied in stimulus package, desire maintain expenditure in economy, , desire avoid destruction of human capital recession encapsulated in phrase attributed henry:

go early, go hard , go households.

henry stated stimulus package either reduce future government spending or drive taxes, said occur in period of faster growth in private sector activity , judgment has been made in circumstances . . . government have ability repay debt without doing damage gross domestic product growth .

henry provided advice rudd government without continuation of stimulus package, 100,000 jobs lost, , gdp reduce 1.5 per cent. no modeling made public support either of these contentions. after release of advice, shadow treasurer , minister in former howard government, joe hockey, commented had never seen piece of treasury advice designed released media.

further, graphs subsequently printed in budget papers purporting show there statistically significant correlation size of g20 member countries stimulus packages , respective economic performances, data had been cherry picked , 11 g20 economies had been included in analysis. when g20 economies analyzed, no correlation existed. treasury later withdrew graph. imf research showed statistically significant links between form of stimulus, , success or otherwise of various countries through recession.

notwithstanding criticism, raft of economic advice , analysis has subsequently supported australia s actions. oecd s 2009 employment outlook said while have not had strong effect in cushioning initial decline in employment caused crisis...australia notable exception. australia s unemployment figures remain 3% lower oecd average, , avoided recession throughout gfc.

henry s advice throughout gfc has been characterised within mainstream of economic orthodoxy . of december 2009, australia s unemployment rate thought have peaked @ 5.8 percent after several months of job growth. lower previous treasury estimates of 8.5 percent

henry tax review

the australian government released contents of henry tax review on 2 may 2010. review proposed changes superannuation, resource rent tax on mining sector , tax reform small businesses. resource super profits tax (rspt) proposed henry proposed tax super profits of mining companies.

following criticisms of measures proposed in henry tax review, henry said:

whenever idea ventured publicly person, whether person policy advisor or whether s government minister, there s @ least handful of academics contest it. ve seen on both sides of politics - not partisan comment @ - governments, government ministers seeking ideas legislated - unbelievably frustrating, incredibly frustrating. think there occasions on economists might, @ least period, put down weapons , join consensus.

henry criticized wanting avoid debate of ideas.

resource super profits tax

ken henry proposed resource super profits tax (rspt) on mining companies super profits. government claimed miners paid little 17 per cent tax on profits, mining companies claimed paid 43%, australian taxation office figures indicate average tax take across mining industry 27 per cent many paying less this.

during negotiations mining companies, henry advised initial estimates of a$12 billion had been revised a$24 billion due higher commodity price estimates in 2 months since release of initial rspt proposal.