Friday, February 25, 2011

What a time to leave. Henry quits as we're getting ahead

There's love. I'll post the transcript

Australia's best-known public servant took good news and bad news to his final Senate hearing.

Amid praise from both sides of politics and a warning that it it got any more chummy it would turn into a "group hug" Ken Henry said Australia would raise "several multiples" of what was predicted for the mining tax if resources prices simply stayed where they were, and said the boom would push other firms out of business.

Told this would be his 23rd appearance before a Senate estimates hearing and perhaps remembering some had been unpleasant, the Treasury secretary said he hadn't counted and hadn't thought he would would miss them but added, "there's a chance."

The 53-year old leaves after a decade at the top of Treasury next Friday. He'll take a very long break before deciding what to do with the rest of his life.

Coalition Senators praised him for designing the their Goods and Services Tax, Labor Senators praised him for designing their economic stimulus. Each was anxious not to dwell too much on the Henry Tax Review, its key recommendation opposed by one side and the other recommendations largely ignored by the other.

The report of his review was to be put to a tax summit before the middle of this year as part of the agreement between Labor and the independents to form government. But Dr Henry said he heard the date had been pushed out, although no-one had told him.

Asked how he felt about the mixture of indifference, hysteria and bungling that greeted his report... he replied he remained "very optimistic with respect to the implementation of many of the recommendations, very optimistic".

The mining tax, smaller and more limited than originally proposed, would make far more than any of the published estimates if mining prices merely stayed where they were.

"For prudent budgetary reasons we factor in a very substantial fall in commodity prices over a 10 year period," he said speaking about the numbers published in budget documents and also those obtained under the Freedom of Information Act.

"That isn't to say that will happen. We don't know that prices really are going to trend down over a 10 year period. If instead were they to remain at their present levels, our revenue estimates would be several multiples of what we have published."

The Treasury Secretary released long-term projections under the Freedom of Information Act, because he was obliged to, not because he thought they made sense. "There's something quite unreasonable about producing ten year revenue estimates for a tax measure," he told the committee. "The numbers are of such poor quality that I myself was very reluctant to see them in the public domain."

Although he had no idea how long the resources boom would last he spoke in decades.

"Lets' suppose that in 20 years time commodity prices come off, quite significantly. I would say to you then that the best industrial structure of the Australian economy then, in 20 years time, would be quite different from the one we had 20 or 30 years ago."

Asked by former union leader Doug Cameron whether the mining boom would push firms and industries to the wall, he said some would have to face "the very real question of whether with the exchange rate being where it is they are able to remain in business".

One of his long-term sparing partners Coalition senator Mathias Cormann asked whether he was leaving his job on a high or a low.

"Well, after this morning's questions I would have to say I am leaving on a high," Dr Henry replied.

And they shook hands, posed for photos and almost hugged.

Published in today's SMH and Age

Henry on industrial transformation:

Henry and Treasury Senate Estimates February 24 2011

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