5 days ago
Ken Henry is right to be a bit worked up – he has a solid reform plan ready to go for an emboldened Labor
Ken Henry, the former Treasury boss, slipped up during his address to the National Press Club this week.
Speaking in his capacity as chair of the Australian Climate and Biodiversity Foundation, Henry was asked about his landmark review of the nation's tax system, handed to the Rudd government back in 2010.
Its official title was Australia's Future Tax System Review. Famously, Labor sat on the report and most of its 140 recommendations for bringing the taxation system into the 21st century, with a 40% mining super profits tax the only major element taken up by the government. It sparked a huge lobbying backlash and was quickly consumed by Labor's bitter civil war.
But, with tax reform back on the agenda ahead of next month's productivity roundtable, the more than 1,070-page report has returned to the headlines.
'Every recommendation of the Henry review remains valid,' the reform campaigner said, giving a thumbs up to the crowded club, before catching himself. 'Actually, that's the first time I've ever called it the Henry review. You must have got me excited.'
Henry clarified some of the ideas could benefit from 'sharpening up' but said the suite of measures he recommended then was broadly ready to go for any government prepared to match his excitement for making the system better.
Henry was right to be a bit worked up. He has a lot of the answers to the biggest challenges facing the emboldened Labor government this term.
Since he handed his tax report to then treasurer, Wayne Swan, Henry faced criticism in the banking royal commission. He was forced to quit as chairman of National Australia Bank after the commission's report said he and the then chief executive had not learned the lessons from past failures at the bank, including $100m in fees charged to customers without any service being provided.
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Years later, Henry is fed up with the delay on overhauling Australia's broken environmental laws. Known for his advocacy for threatened species – especially the northern hairy-nosed wombat – he used his speech to endorse Graeme Samuel's review of the Environment Protection and Biodiversity Conservation (EPBC) Act.
At stake is the foundation of all life on earth, Henry warned, pointing to threats to food systems, clean air and water, and vulnerable animal and plant species.
'We have turned nature against us,' Henry said. 'Our destruction of the natural environment now poses an existential threat to everything we value.'
He said Labor should consider the inclusion of a climate trigger in its looming redesign of the nature positive package, requiring approvals for major projects to at least consider any effect on global warming. He suggested Labor should make the case for a new carbon tax, exasperated that the policy had ever been ditched by Tony Abbott's Coalition and describing it as 'the world's best carbon policy'.
Less helpful to the government was Henry's blunt words about the toxic algal bloom now wreaking havoc with the waters off South Australia, an ecological disaster being fuelled by ocean warming. For Henry, the massive destruction of marine life washing up on Adelaide's beaches does not represent an early signal of things to come. He said it was a 'late warning' on the threat to oceans from the actions of humans on land.
Federal Labor is under increasing pressure to act, amid concerns beaches will have to be closed over summer and permanent damage wrought to sea life. Some kind of federal intervention is looking likely in the next few days, potentially from the top levels of the government.
Henry cast changes to the EPBC Act as critical to boosting productivity. The creation of a federal environmental protection agency was delayed before the election over fears of a backlash in resource-rich Western Australia, with Albanese moving to scuttle a deal with the Greens and push the issue into the new term.
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The calibre of the audience for the speech was a strong indication of how important the reforms will be. Among those served Lancashire hotpot was the former Reserve Bank deputy governor, Guy Debelle, now a board member of the Clean Energy Finance Corporation. A few seats away was David Parker, the chair of the Clean Energy Regulator, and a senior member of environment minister Murray Watt's staff. A table of parliamentarians nearby included the independent David Pocock, the Greens' Sarah Hanson-Young, and Labor MPs Alicia Payne and Karen Grogan, the chair of the Senate environment committee.
Henry will have a seat at the table at Jim Chalmers' cabinet room summit in August, as well as at an unofficial preview to the talks set to be hosted by the Wentworth MP, Allegra Spender, next week. That meeting follows the independent's work on tax reform in the last parliament.
Henry noted Australian workers have forfeited as much as $500,000 in lost earnings in the past quarter of a century because of policy paralysis and shoddy productivity. He put road user levies on electric vehicles and moves to scale back the cost of franking credits to shareholders as ideas to help fund a cut to the corporate tax rate.
It's not yet clear just how far Labor is prepared to go on fixing the outdated environmental laws or changing the tax system. The answer could lie somewhere between the politically cautious Albanese and the more ambitious Chalmers. Treasurers and prime ministers can have different objectives, but an effective pairing is a prerequisite for lasting change.
Albanese and Watt look eager to involve business in the redesign of the environmental plan, making sure to have broad buy-in for the changes and force the opposition to the fringes. That approach could guide future work as Albanese seeks to marginalise Sussan Ley and the Coalition to deliver at last the Labor government he has spent decades imagining.
On Friday, speaking from the G20 finance ministers meeting in South Africa, Chalmers endorsed Henry's message and said he viewed proper environmental law reform as part of the solution to Australia's productivity challenge.
It is good the government, MPs across the parliament, the bureaucracy and decision-makers in the community are prepared to listen to informed voices like Henry.
Even if he is is reluctant to use his own name in the branding, he has a solid reform plan ready to go for Albanese, just in the period where his legacy will made or broken.
Tom McIlroy is Guardian Australia's chief political correspondent
