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Sky News AU
4 days ago
- Business
- Sky News AU
Labor will be forced to 'raise taxes quite significantly' or cut spending if productivity stalls, Ken Henry declares
Labor has been warned it will be forced to hike taxes quite significantly if productivity continues to stall as the Albanese government powers on with its second term economic agenda. Former Treasury secretary Ken Henry faced the National Press Club on Wednesday where he weighed in on the economic challenges facing Australia. Mr Henry, who authored a highly recognised white paper on tax reform in 2010, warned Labor that lagging productivity would mean the government will be forced to either hike taxes or cut spending. It comes as Labor faces growing fiscal pressures on the budget such as the ballooning NDIS and demands for Australia to increase defence spending. 'If the budget is to meet these growing spending pressures, then we've got two options: We either increase taxes as a share of GDP, or we grow the economy faster,' Mr Henry told National Press Club on Wednesday. He said the slump in productivity that continues to plague Australia's economy would force the government to find revenue elsewhere. 'Over the decade of the 1990s, average productivity growth was 2.31 per cent a year,' Mr Henry said. 'Over the past 25 years, it's averaged 0.98 per cent a year. That's a pretty fundamental difference. 'If we continue on that trajectory … we will have no option but to raise taxes. And quite significantly, by several percentage points of GDP ... or cut spending.' Mr Henry also voiced concerns about the Environment Protection and Biodiversity Conservation Act (EPBC) during his address, which he said needed an overhaul to boost productivity. 'I can think of other reforms to boost productivity. Some even harder, though none more important. And if we can't achieve environmental law reform, then we should stop dreaming about more challenging options,' Mr Henry said. He argued changes to legislation are critical for Labor as it wants to balance environmental concerns with ambitious projects, including delivering 1.2 million new homes and continuing with the Future Made in Australia plan. It would also mean changes to laws surrounding mining and critical minerals projects. 'The Australian government has an ambition to massively increase critical minerals exports and downstream processing here in Australia,' Mr Henry said. 'This means more mines, new industrial facilities, and more pressure being loaded onto broken EPBC project assessment and approval processes.' Labor is considering a raft of changes to boost productivity. The nation's economy will take centre stage at the productivity roundtable in August where leaders across business, economics, politics and unions will come together. A coalition of 28 businesses and industry groups have listed overhauling the EPBC as a major priority. Australia's enormous superannuation sector, alongside major industries including artificial intelligence and manufacturing, will also come under the microscope.
Perth Now
4 days ago
- Business
- Perth Now
‘Mind boggles': Big call to bring back old tax
Former Treasury boss Ken Henry has renewed calls for a carbon tax, lashing former governments for dropping the tax. He said 'it still boggles the mind that we had the world's best carbon policy' and questioned: 'Why the hell did we ever drop it?' The carbon pricing scheme was introduced by Labor in 2012 and placed on about 500 of Australia's largest polluters. Under the policy, companies had to purchase credits to offset the amount of carbon produced, with the funds generated form the levy returned through tax cuts and increases to welfare payments. The measure was later repealed by the Abbott government in July 2014 and replaced with an offset scheme to incentivise companies to avoid emitting CO2 by earning carbon credits. Speaking at the National Press Club on Wednesday, Mr Henry, who was the Treasury secretary from 2001 to 2011, criticised the scrapping of the tax. 'It still boggles the mind that we had the world's best carbon policy and then, for purely political reasons, decided that we can afford to do without it,' he said, speaking as the chair of not-for-profit Australian Climate and Biodiversity Foundation. Former Treasury boss Ken Henry said 'why the hell did we ever drop it? when asked about the carbon tax. NewsWire/ Martin Ollman Credit: News Corp Australia 'A country that's capable of creating the best and then decides that it doesn't need anything at all – well, my God, of course we need a carbon tax.' Mr Henry urged the government to not 'give up' and fix Australia's 'broken' environmental laws, taking aim at the 'not fit for purpose' and outdated Environment Protection and Biodiversity Conservation Act 1999 (EPBC). 'Report after report tells the same story. The environment is not being protected. Biodiversity is not being conserved. Nature is in systemic decline,' he said. 'Of particular concern, they are incapable of supporting an economy in transition to net zero, and they are undermining productivity.' He noted that the government's pledge to erect 1.2 million homes by 2030 would require more land and transport, meaning more interaction with EPBC assessments. In strong criticism, he said there was 'no point in building a faster highway to hell', and while approvals needed to be granted faster, the environment needed to be protected. 'These projects, be they wind farms, solar farms, transmission lines, new housing developments, land-based carbon sequestration projects, new and enhanced transport corridors or critical minerals extraction and processing plants, must be delivered quickly and efficiently,' he said. Speaking more broadly about government spending, Dr Henry, who authored the Henry Tax Review in 2010 to guide tax reforms over the next 10 to 20 years, said there needed to be more 'spending discipline'. 'If the budget is to meet these growing spending pressures, then we've got two options. We either increase taxes, as a share of GDP, or we grow the economy faster,' he said, noting productivity growth had slumped from an average of 2.31 per cent in the '90s to 0.98 per cent in the last 25 years. 'That's a pretty fundamental difference. 'If we continue on that trajectory, as we said in 2002, we will have no option but to raise taxes, and quite significantly, by several percentage points of GDP … or cut spending.'
Sky News AU
4 days ago
- Business
- Sky News AU
Fix environmental laws to productivity boost, Australian Climate and Biodiversity Foundation chair Ken Henry tells Labor
Fixing national environmental laws holds the key to boosting productivity in Australia, a leading environmental expert has told the Albanese government. Ken Henry, the former Treasury secretary who handed down a highly recognised white paper on tax reform, now serves as chair to the Australian Climate and Biodiversity Foundation and will address the nation's flailing productivity at the National Press Club on Wednesday. Productivity has become a major focus point for the Albanese government in its second term as it looks to bolster Australia's growth. Mr Henry will tell attendees the Environment Protection and Biodiversity Conservation Act (EPBC) - Australia's main environment legislation - needs a radical overhaul. 'I can think of other reforms to boost productivity. Some even harder, though none more important. And if we can't achieve environmental law reform, then we should stop dreaming about more challenging options,' Mr Henry will say. He will says changes to legislation are critical for Labor as it wants to balance environmental concerns with ambitious projects, including delivering 1.2 million new homes and continuing with the Future Made in Australia plan. This also includes changes to laws surrounding mining and critical minerals projects. 'The Australian government has an ambition to massively increase critical minerals exports and downstream processing here in Australia,' Mr Henry will say. 'This means more mines, new industrial facilities, and more pressure being loaded onto broken EPBC project assessment and approval processes.' He will call for a 'quick and efficient' delivery of the ambitious projects in a 'way that not only protects, but restores, nature' as Labor attempts to reduce carbon emissions. 'To put it bluntly, there is no chance of Australia meeting stated targets for net zero, renewable energy, critical minerals development, housing and transport infrastructure without very high-quality national laws that set clear environmental standards for major projects, a strong national decision maker respected by all parties, and significant improvement not only in Commonwealth environmental protection systems, but also in those of the States and territories,' Mr Henry will say. 'And all these projects will be critical to enhancing economic resilience and lifting flagging productivity growth. 'Boosting productivity and resilience relies upon environmental law reform.' Labor is considering a raft of changes to boost productivity. The nation's economy will take centre stage at the productivity roundtable in August where leaders across business, economics, politics and unions will come together. A coalition of 28 businesses and industry groups have listed overhauling the EPBC as a major priority. Australia's enormous superannuation sector, alongside major industries including artificial intelligence and manufacturing, will also come under the microscope.
The Guardian
5 days ago
- Business
- The Guardian
Fixing Australia's broken environment laws hold key to productivity, ex-Treasury head says
Fixing the nation's broken environment protection laws is the most important reform the Albanese government can pursue to boost productivity, and holds the key to meeting climate and housing targets, according to former treasury secretary Ken Henry. Henry, now the chair of the Australian Climate and Biodiversity Foundation, will use a speech to the National Press Club as a rallying cry to federal parliament to finally agree on a rewrite of the quarter-century old Environment Protection and Biodiversity Conservation (EPBC) Act. 'We have had all the reviews we need. All of us have had our say. It is now up to parliament. Let's just get this done,' Henry will say in Wednesday's speech, according to extracts supplied to Guardian Australia. The environment minister, Murray Watt, is designing a new package of federal nature laws after Anthony Albanese shelved the earlier version ahead of the election amid lobbying from miners and the Western Australian government. In the speech, Henry will cast EPBC reform as critical to boosting productivity – the economic priority of Labor's second term. 'Reforming our broken environmental laws is an obvious lever to enhance resilience and lift moribund productivity growth. And reforms provide an opportunity to dramatically cut the cost to government,' he will say. 'Of course, I can think of other reforms to boost productivity. Some even harder, though none more important. And if we can't achieve environmental law reform, then we should stop dreaming about more challenging options.' Sign up for Guardian Australia's breaking news email Henry is best known as the author of the 2010 tax review for the Rudd government, which inspired the short-lived mining super profits tax. He has also advocated for a carbon price as the least economically damaging method to reduce greenhouse gas emissions. The idea of a carbon price has again been put on the agenda as the Productivity Commission examines options to lower the cost of hitting climate targets. In submissions to the inquiry, the Australian Council of Trade Unions said the commission should examine 'carbon pricing policies' for different parts of the economy, and the Australian Energy Council called for a carbon price to be modelled to help inform emission reduction policies. With most large-scale infrastructure developments requiring approval under the EPBC Act, from renewable energy projects to housing estates, Henry will argue the government will fail to reach its targets of net zero by 2050 and building 1.2m homes by 2030 without 'high-quality' national nature laws. 'These projects, be they windfarms, solar farms, transmission lines, new housing developments, land-based carbon sequestration projects, new and enhanced transport corridors or critical minerals extraction and processing plants, must be delivered quickly and efficiently,' Henry will say. 'And they must be delivered in a way that not only protects, but restores, nature.' The prospects for Labor's housing target are already under renewed scrutiny after Treasury officials conceded it 'will not be met' in advice to Jim Chalmers accidentally released to the ABC and published this week. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion The government has recommitted to establishing a federal environmental protection agency but Watt has yet decide the scope of its powers. The fate of the main recommendation from Graeme Samuel's review of the EPBC Act – national environmental standards – is also unclear as the minister continues consultation with industry and green groups. However, Watt has signalled a desire to pursue the reforms in one package, rather than in multiple tranches as attempted by his predecessor, Tanya Plibersek. In the speech, Henry will back a streamlined approach before outlining what he considers the key elements for new nature laws. These include specific changes to preserve matters of national environmental significance, a suite of national standards, an independent EPA and 'genuine cooperation' between the commonwealth, state and territories. Henry will also call for a rethink of how the principle of ecologically sustainable development (ESD) is applied under federal nature laws. 'It cannot be applied project by project, in the manner anticipated by the act. Project by project application of ESD is simply nuts,' he will argue. 'It is time we stopped pretending we have the cognitive discipline to choose a sustainable balance among economic, social and environmental goals, project by project.'
Perth Now
5 days ago
- Business
- Perth Now
One thing missing to fix Aussie crisis
Urgent reform of Australia's 'broken' environmental laws would dramatically cut government costs and lift productivity growth, a leading environment expert claims. The Albanese government has faced continued pressure over Australia's sluggish productivity growth, which is among the worst in the developed world. Australian Climate and Biodiversity Foundation chair Ken Henry said sweeping environmental reform could be the solution. The former Treasury secretary will tell the National Press Club in Canberra on Wednesday there is 'no chance' the Labor government will meet its net-zero target while also delivering upon housing and infrastructure commitments without reform to state and federal environmental protection laws. 'The Australian government has an ambition to massively increase critical minerals exports and downstream processing here in Australia,' Dr Henry is expected to state. 'This means more mines, new industrial facilities, and more pressure being loaded onto broken EPBC project assessment and approval processes.' The Environment Protection and Biodiversity Conservation Act, or EPBC, is Australia's main national environmental legislation. Australian Climate and Biodiversity Foundation chair Ken Henry says environmental reform would boost productivity. NewsWire / Martin Ollman Credit: News Corp Australia Dr Henry said the government's pledge to erect 1.2 million homes by 2030 would require more land and transport, meaning more interaction with EPBC assessments. 'These projects, be they wind farms, solar farms, transmission lines, new housing developments, land-based carbon sequestration projects, new and enhanced transport corridors or critical minerals extraction and processing plants, must be delivered quickly and efficiently,' Dr Henry will tell the NPC. 'All these projects will be critical to enhancing economic resilience and lifting flagging productivity growth. 'Boosting productivity and resilience relies upon environmental law reform. 'But the biggest threat to future productivity growth comes from nature itself; more particularly, from its destruction.' Dr Henry will urge for a breaking of the 'deadlock' to deliver sweeping reforms in a single package. They would include protecting Matters of National Environmental Significance guidelines by shifting the focus to regional planning, urgent finalisation of the effective national environmental standards, and formation of a national environmental protection agency. Environment Minister Murray Watt said legislating a federal environment protection agency was a 'very high and immediate' priority. NewsWire / Martin Ollman Credit: News Corp Australia He will also urge for 'genuine co-operation and a shared purpose' between business and environmental groups as well as between the states and federal government. 'Environmental law reform provides an opportunity to reconstruct the co-operative federal reform capability we developed in the 1990s but have since lost,' Dr Henry will state. 'A strong federal reform capability will be required to deliver other, even more challenging economic reforms. Environmental law reform can provide the template.' Dr Henry said there was 'no point in building a faster highway to hell', and while approvals needed to be granted faster, the environment needed to be protected. 'In reforming the EPBC Act, we can get this right. We have had all the reviews we need,' he will say. 'All of us have had our say. It is now up to parliament. Let's just get this done.' The Labor government is contending with a raft of proposals to fix productivity, from superannuation reform to artificial intelligence and disability inclusion. At the same time, Environment Minister Murray Watt said in May that legislating a federal environment protection agency was a 'very high and immediate' priority.
