May 15

Treasury head raises eyebrows

Under the Westminster system, the public service is expected to be non-political. This has been undermined in recent years by governments of both sides, but it remains an important constitutional principle which provides a significant public benefit.

The Treasury Secretary Ken Henry’s statement that the proposed Resource Super Profits Tax will” grow” the economy caused some raised eyebrows.  The Treasurer was replying to reports which said the Treasury was understood to believe the loss of mining projects could have macroeconomic benefits by easing pressures in the national economy. This seems to be a view supported by the Deputy Governor of the Reserve Bank.  Dr. Henry does not agree.

…political debate…


The debate about the tax and its effect on the economy will probably be central to the coming election. 

Had Dr. Henry been asked his views at, say, Senate Estimates, he would have been entitled to respond.  But to issue a press release is at the very least unorthodox, and could be intepreted as siding with one party and entering a political debate. 

…regrettable entry….

The Henry tax review recently released by the government did recommend a resources rent tax on onshore mineral extraction to replace the State’s royalties. It included  modelling which suggested  the tax as proposed would not hinder future investment. 

The government has announced a tax which is not identical to that recommended.  Now a well known and respected former head of the Treasury, Mr. John Stone, says it was unfortunate that Dr Henry had become involved this week in the fierce public debate about the resource super-profits tax. (“Henry should 'stay quiet'” Nicola Berkovic The Australian 15/5)

"I think it regrettable that the secretary of the Treasury should enter into what is now clearly a political debate,” he said.


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