The week ahead with Michael Pascoe
Between the Henry review fizzer, an RBA board meeting, several interesting statistics and results from Westpac and NAB, this is looking to be a big week.
On the strength of yesterday's circus, you might wonder if the Prime Minister and Treasurer even read the executive summary of the Henry review. It had nothing to do with the tax and superannuation changes they announced.
The main superannuation change of increasing the super levy went specifically against the Henry recommendations. The business tax rate trimming and small business write-off sweetener were mere shadows of Henry's suggested improvements.
And they didn't need all that analysis of the taxation system to dream up the idea of slogging the big miners with a commodities boom tax – that's been on the cards ever since they realised they'd have to find an extra revenue source to pay for their election promises.
But there is in fact evidence that Kev and Wayne at least had a skim of the excellent document: they must have looked to be able to specifically rule out considering so much of it.
There's a telling paragraph in the final report, one that goes to the heart of the politicians' inability to be brave:
“The Panel sees no value in ignoring those features of the present system it strongly believes have no place in a 21st century architecture, for no better reason than some Australians currently gain more than others from those features.”
It seems politicians out to protect their own jobs do see value in just that.
And make no mistake in thinking that the current Liberal and National Parties are any less gormless. The main difference between the two sides is that Abbott wouldn't have been politically silly enough to commission the review in the first place.
Again on the strength of yesterday's performance, that this was the best Swan and Rudd could come up with after sitting on the report for so long, the Henry tax review appears doomed to go the way of GroceryWatch, Pink Batts and something about carbon – they all seemed like a good idea at the time.
The labour of the Henry panel and its secretariat deserves much more as it actually is a good idea, particularly at this time. The review's stated vision is worth reading, if only to see what our politicians run away from:
“A 21st century tax and transfer system should meet its purposes efficiently, equitably, transparently and effectively. Critically, it would support per capita income growth rates at the upper end of developed country experience by encouraging high workforce participation, a more efficient pattern of saving, and stronger investment in education and physical capital. It would be robust, capable of supporting large structural change, dealing with unforeseeable external shocks and encouraging patterns of economic activity that prove fiscally and environmentally sustainable. It would support economic dynamism and diversity. Through both its direct and indirect effects, it would support the commitment to Australian values of fairness, and support for those who are disadvantaged. It would exploit opportunities to reduce compliance costs and make interactions with the tax and transfer system easier, more certain, and more understandable. It would enhance the accountability of governments to their citizens.”
It seems we have no politician game to aspire to such standards.
There's a chance the government might cherry-pick a couple of voter-friendly ideas from the review for an airing on budget night. Heck, they might try some actual reform once the election is out of the way – but I wouldn't bet on it.
Michael Pascoe is a BusinessDay contributing editor.
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