The real Ken Henry has stood up at last:
While Dr Henry was scathing of the overall fiscal policy settings in the budget, he saved his particular wrath for the bank tax announced in last week’s budget, which he says has been proposed without comprehending its impact on financial system stability and governance or the fact it represents a massive step backwards in tax policy.
Dr Henry says the government now has to urgently review the governance arrangements for the financial system as the bank tax – along with measures that allow regulators to have bankers sacked – has completed a process of disrupting the roles of the Reserve Bank of Australia, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission which must now be addressed.
…On Monday, Dr Henry said the “thing that surprised me is that this bank tax is the financial institutions duty and when I saw it in the budget I thought ‘1982’.
“The reason I thought 1982 was that was when the old FID was introduced [by the states] and then the same year the bank accounts debit tax was introduced [by the federal government by the then treasurer John Howard].
…”Financial institutions have been given two business days to consult before the legislation is rushed out,” he said.
“What has come out of the consultation is that it was very hurriedly put together. I can’t believe the government consulted with APRA.
“In other words, most of the core elements of financial system governance are going to be concentrated in APRA.
“This isn’t a consequence of any deep reflection or consultation process.
…”So I think we’re now at the point where the government needs to initiate a review into the governance of the financial system.”
“That is an issue that such a review could usefully focus on,” he said
“If that argument is correct then APRA has no reason at all to ask banks to put extra funds into capital adequacy.”
Asked about a further argument used in recent days by the government that the bank tax helped even the playing field between the big banks and smaller banks, Dr Henry asked “how does it enhance competitiveness?”
“That only works if we have no option but to put up rates. What the Treasurer has been saying is we should not pass the tax on to customers.”
Jeez, Ken, what twaddle. There have been countless studies on why a Tobin tax on wholesale liabilities is a good idea. There have been countless inquiries into why the too-big-to-fail banks hold an unfair advantage. There have been countless discussions about the need to either restore risk to the banks or make them pay for the privilege of having the tax-payer guarantee it. My advice is go read some of them.
Sure, the implementation isn’t perfect. And there is no medium term fiscal strategy, no. But in this world of rabid rent-seeking, an imperfect policy ambush looks pretty good as a tool of execution. As Dr Henry knows very well, when you put forth perfect policy process in this country it is only fuel for a rentier bonfire. The bank levy is a good result that contributes appropriately to Budget repair and delivers structural reform to boot.
The simple fact is that Dr Henry and the banks swallowed their own spin. They furiously recruited from senior government ranks to form a fake government, including Dr Henry, former premiers, former regulators and former public servants. They cooked up fake inquiries, fake media and fake reform with fake rules. That they thought this was a sustainable form of governance tells you all you need to know about bank competence and ethics. They are deluded and good on the government for refusing to throw that blanket of lies over the Australian people.
And here’s the clincher, via The Australian:
National Australia Bank chairman Ken Henry has demanded a full public inquiry into the federal government’s $6.2 billion bank levy, as he warns the shock tax will have to be passed on to customers to replace funds “confiscated” by Canberra.
The former Treasury boss accused Malcolm Turnbull and Scott Morrison of misleading voters by pretending customers could escape the cost of their levy, saying they were taking tax policy “right back to the 1970s” with a rushed idea that would damage the economy.
Dr Henry told The Australian the policy, which could cost NAB more than $300 million a year, would wreck efforts to strengthen the industry for a future crisis because the tax take would ruin months of work by the prudential regulator to make sure banks had “unquestionably strong” reserves.
Good one, Ken! Having just heavily invested in fake government to distort, destroy and derail public inquiries – with Dr Henry’s own NAB CEO at the forefront via his governorship of the Australian Banker’s Association – the good Dr Henry now wants a public inquiry into the levy!
Good job for at last standing up and giving us the real you, Ken, banker, rent-seeker and doyen of fake policy, not the public interest titan of old. Hopefully this episode has delivered one final much needed reform, the severing of that totally inappropriate hot line you have to prime minster.
