Tuesday, December 08, 2009
Some time before Christmas, after a year and a half of seriously heavy work, after considering hundreds of lengthy submissions from some of our best and brightest, the Henry review will deliver its report to Treasurer Wayne Swan, setting out its plan for tax reform in Australia.
Right now, I would urge the Henry team not to. I suggest some excuse be found to put it off for another year. Maybe there's some more research we ought to do. Coalition Leader Tony Abbott could help come up with some reason to avoid a decision. But why? Because the Henry team's review of the tax system is a once-in-a-generation chance for experts to look at the system in detail, and suggest how it can be made to work better. If they do their job well, there could be big gains for us as a nation.
But to bring out the report before the 2010 election, with the Opposition now opposing everything the Government proposes, would destroy that opportunity. If the Henry report is on schedule, it will be DOA - dead on arrival.
Prime Minister Kevin Rudd is a cautious manager, not a brave reformer. At the best of times, tax reform would need a lot of luck and Opposition support to make it to the runway, let alone get airborne. Under Malcolm Turnbull as leader, it was just possible. Under Abbott, forget it...
If Abbott is willing to try to destroy emissions trading - his party's policy for years - as just ''a great big new tax'', you can imagine what he will do with a report that will inevitably propose some new taxes and tax rises, while other taxes are scrapped or cut. The Henry report will be endless fuel for Opposition attacks. And to avoid damage, Rudd is likely to respond by shelving the whole thing.
That is the problem created by oppositions that see their job as being to declare war on everything. It drags down the policy debate. The ultimate exponent today is Barnaby Joyce, who claimed last month that we won't be able to buy a steak if we have emissions trading. You can always find something to attack, set the hurdles for yourself very low, and clear them with ease.
But an opposition that wants to be taken seriously as a prospective government must set its hurdles higher. It has to propose its own policies as alternatives. We're not mugs. If an opposition leader keeps attacking the government's policies without declaring any of his own, we smell it.
We've seen lots of opposition leaders before who thought their job was to oppose whatever a government proposed. They failed to win credibility, and lost. That credibility comes from doing the hard stuff: carrying the fight to the Government on some issues, lining up with it on others, and coming up with an alternative on the issues where you differ.
Credibility would come from Abbott being what his supporters say he is: a decisive guy who is not afraid to make a tough call, who sees the positives in everything, and who doesn't hide his views, so we know exactly where he stands.
Well, please, could someone find that Tony Abbott and bring him out? The Tony Abbott we've got now is doing just the opposite: on the biggest issue of our time, he is putting off making the tough call until everyone else has done so first. And he's held so many positions on it that no one has a clue what he really thinks, or what an Abbott government would do.
In recent weeks he has declared the scientific arguments on global warming are ''complete crap''. Yet now he tells us he believes them. He urged Turnbull to put off a decision until after this month's Copenhagen summit. Now that it seems that Copenhagen is likely to put us on the path to a global agreement, he wants us to wait until the US Congress has made up its mind. If that happens in the next few months, as some close observers predict, what comes next? Do we wait until Iran or Saudi Arabia decide what to do?
What do we make of this serial indecision on an issue of first-level importance, which we have been debating for years? The Bureau of Meteorology has just reported that last month was the hottest November ever recorded across Australia. This year is likely to end up the second or third hottest on record. The past eight years have all been among the 15 hottest years on record. Yes, there's always a chance the scientists have got the wrong explanation for it, but isn't it better to buy ourselves insurance by acting now than being sorry when it's too late to do anything?
Abbott's denunciation of emissions trading as ''a great big new tax'' ignores the reality that what comes into government as taxes goes out as benefits to people. It ignores the reality that any solution to global warming is going to cost a lot of money - and that emissions trading, if it works as planned, creates incentives for the market to find the lowest-cost way of solving the problem.
And don't be fooled: with 2 per cent annual population growth and rapid mineral development, even Australia's minimal target to cut its emissions in 2020 to 5 per cent below 2000 levels will be hard to achieve, let alone the more ambitious targets we may have to take on if the Copenhagen process results in a global agreement next year. It can be done, but only by tough governments prepared to get on with the job. That's why centre-right governments the world over are backing emissions trading.
If Abbott ever leads the Coalition back into government, he will have to do the same. He will have to run the very scheme he now attacks. There are no soft answers to hard issues.
. "Tony and the people who put him in his job do not want to do anything about climate change..."
. What to expect from Ken Henry
. Ken Henry's grain of mustard seed