Dr Ken Henry says lack of action on tax reform is robbing the next generation. Photo: National Library of Australia.
Former Treasury boss Ken Henry has made a latter-day career out of being a voice in the wilderness about the need for tax reform and the abrogation by elected leaders of their responsibilities to those coming after them.
Dr Henry was at it again at the Per Capita Tax Summit in Melbourne last week, not mincing his words about how self-interest and short-termism were robbing the next generation.
He argued that the country’s tax settings since the Howard government had fuelled inequality and left further generations and young workers “to pick up the tab”.
Our youth were being denied a reasonable prospect of home ownership, burdened by the punishing costs of securing a tertiary education, and would be handed the bill for catastrophic environmental destruction and the increasing costs of carbon abatement and climate change adaptation.
Dr Henry said this was hardly accidental but more like “wilful acts of bastardry”.
He attacked the kowtowing to the mining and native forest logging industries, which collectively only employed about 2 per cent of the labour force.
“We have political leaders who insist that mining and forestry underwrite Australian prosperity. I will state it plainly. Those who believe this nonsense cannot be trusted with the well-being of future generations,” he said.
Dr Henry said the plunder of natural capital, including non-renewable resources, and environmental degradation, underinvestment in infrastructure, and “public debt accumulated to finance current spending” were the key drivers of inter-generational theft.
This growing inequality should be tackled by broadening the GST, reforming payroll tax and removing taxes on insurance, which stop people from taking out cover.
Capital gains tax should be overhauled to make property more affordable and a greater tax on economic rents, like the high profits of resources, was needed.
He also called for the reinstatement of a carbon tax on Australia’s fossil fuel exports before importing countries did it.
Whether you agree with everything Dr Henry advocates or not, it’s hard to disagree that our major political parties have squibbed when it comes to taking a long-term view, adopting big-picture policies that have the public good at heart and leaving a positive legacy for coming generations.
Rent-seeking constituencies have flourished to the point that any reasonable reform to the tax system is impossible. For example, Labor’s relatively minor changes to capital gains tax, negative gearing and franking credits in 2019 were met with a furious response from vested interests.
We’ve got to the point where the well-off are only rewarded more, despite the impacts on the budget and any sense of actual fairness, and they continue to hold the rest of the nation, especially the young, to ransom.
Labor had six years to undo some of the worst excesses of the Howard-Costello largess, including implementing Dr Henry’s tax review, but didn’t. Traumatised by the 2019 election loss, it has dumped any idea of being a party of reform.
The Coalition remains obsessed with culture wars, cutting taxes, protecting the fossil fuel industry and guardrailing welfare for the rich rather than thinking too deeply about the future. Unless you consider raiding super for house deposits and developing an expensive nuclear power program sometime decades hence visionary thinking.
Labor seems focused on being competent administrators, appearing to be doing something about global warming and not frightening the horses too much to stay in power.
Politics seems to be a game of making a lot of noise but doing as little as possible to warm the treasury benches.
Many of our leaders have done very well, thank you, over the past 20 years, as evidenced by the number of them on all sides of politics with multiple homes.
If I were a young person today, wondering how to buy a home in a capital city market with median prices of a million or more dollars, with a uni debt, an environment going to hell and being a frog in the pot as global warming wreaks havoc, I would be feeling not just angry but betrayed.
And that’s a positive scenario. What if I were unskilled, enslaved to extortionate rents and virtually disenfranchised?
There is the danger.
In an age of social media-fuelled disinformation, populist demagoguery and blame-seeking, disengaged and alienated youth are ripe for extremism and criminal pursuits.
The antipathy towards getting something as basic as the tax system right as part of good public policy-making is playing with fire.
We need the Ken Henrys to remind our leaders that, in the end, they will be dead, but their works will live on, for better or worse.
We need leaders more like those who returned from a war against fascism determined to build inclusive societies in which everyone had a chance to prosper.
Our young people deserve not just a chance for their own place in the sun but to see that their elders can think about what they leave behind rather than just themselves.
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