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2010-06-23

Henry's nice wish but wrong view

Dr Ken Henry, the Secretary of Australian Federal Treasury and the head of the Henry Tax Review which handed its final report to the government in December 2009, is reported saying that the contest of ideas was important for economists, particularly academics, but that had hampered the political debate on reform in the past, particularly on the former carbon pollution reduction scheme (CPRS) and pleading for economists to aid the implementation of major tax reforms by seeking to reach consensus viewpoints. See AAP report "No govt backdown on RSPT: Henry", 21/06/2010, http://www.businessspectator.com.au/bs.nsf/Article/No-govt-backdown-on-RSPT-Henry-pd20100621-6M8L5?OpenDocument&src=srch

That is a nice wish, but a wrong view from the government top economic advisor.

He should concentrate on how to get policy design right, rather than wishing economists supporting his flawed designs, including both the government's troubled RSPT and failed ETS scheme.

As Mikibbin noted, the government responded to the crisis with much too excessive spending or cash handouts which was influenced and a direct consequence by Dr Henry's famous remark of "go early, go hard and go households".

Today's AFR (page 8) also reports some critiques from academics on Dr Henry's view on economists' critiques. Geoff Winestock reports (Henry lets slip the fog of war) John Roskam, the executive director of the Institute of Public Affairs, saying that "just as some natinal leaders have a political shelf-life, Hen Henry has passed the use-by date. His advice has become erratic and error-ridden. He seems more interested in partisan politics than rigorors policy analysis."

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