Former Treasury boss Ken Henry has lashed out at the dysfunction of Australian politics, saying it stands in marked contrast to earlier periods of policy success.
The now-chair of National Australia Bank told a conference in Canberra almost every major infrastructure project in the past decade has been subject to political wrangling and every government proposal to reform the tax system has failed.
“Our politicians have dug themselves into deep trenches from which they fire insults designed merely to cause political embarrassment,” he told the Committee for Economic Development of Australia conference.
He said businesses would not invest or create jobs unless they had confidence in Australia’s economic future and its place in the world.
“It’s up to business to make the case for change and lead,” he said.
He said while the company tax rate should be much lower, it must be achieved more quickly than the 10-year plan put forward by the Turnbull government.
Stamp duties should also be removed for all residential properties, state royalties overhauled and the GST broadened and its rate increased were among what he described a minimum set of long-overdue reforms.
Dr Henry’s critique came as Treasurer Scott Morrison painted a more optimistic position for Australia.
He believes because the government had been up front about the budget position in the mid-year review it played out well in financial markets.
He said it gave all three global rating agencies – Standard & Poor’s, Moody’s Investors Service and Fitch Ratings – the confidence to reaffirm Australia’s triple-A rating in December.
However, S&P still has the rating on a negative outlook.
Mr Morrison said investor confidence in Australia was why $20 billion of bids were chasing a new $11 billion, 11-year Australian government bond that was up for offer this week.
“The debt markets themselves are making their own judgement … the better rating from anywhere,” he told CNBC television.
Noting the recent surge in the iron ore prices, he said the budget wasn’t framed around the fortunes of commodity prices.
“You don’t chase it up the hill and you don’t chase it down in the valley when you are trying to structure a budget,” he said.
The iron ore price struck its highest level since mid-2014 this week at more than $US90 per tonne, potentially adding billions of dollars to the budget bottom line through increased tax revenues.
In December’s mid-year budget review, Treasury assumed an iron ore price of $US68, easing to $US55 by the September quarter.
Mr Morrison says if the price rise is sustained it would provide support for the budget.
“But that’s not a license to go out and spend money,” he said.