Monday, December 20, 2010

Ken Henry resigns

Bernard Keane is great in Crikey on Ken Henry's resignation:

"It was on Rudd’s watch that Henry performed his greatest service to the nation. He had worked in Paul Keating’s office through the boom of the 1980s and into the savage recession that followed. He had seen, first hand -- indeed, been a part of -- an historic failure by Australian policymakers: a recession that, coupled with the Government’s embrace of micro-economic reform and the failures of state-owned banks, gouged deep holes in our social fabric that took a decade to repair.

Treasury’s response to the impact of the GFC, coupled with that of the Reserve Bank, made amends for that failure, to the extent that anything ever could. They stabilised our banking system, kept credit flowing, and launched two waves of stimulus that put a floor under falling consumer confidence and employment. Henry’s advice to Rudd and Swan "go hard, go early, go households" was the playbook for a spectacular policy success, mitigated only by some terrible implementation of one stimulus program by the Department of the Environment. But hundreds of thousands of Australians have jobs that wouldn’t have them if Henry, Stevens and their teams had repeated the errors of the late ‘80s and early ‘90s – chiefly using the levers of monetary and fiscal policy too late and ineffectively.

Between that and Henry's work on the GST -- first for Paul Keating in the Hawke years, then the real thing under Peter Costello -- he can lay claim to having been present at most of the key moments in recent Australian economic history.

Those hundreds and thousands of Australians remain entirely oblivious to their fate if Henry and Stevens hadn't got it right. Few of them would know who either was. Indeed, as is the way of things Henry’s reward for this remarkable feat -- not achieved anywhere else in the world – has been froth-mouthed abuse from conservatives, who first insisted stimulus wouldn't work and then insisted it wasn't necessary when it did work, none of them apparently equipped with the slightest understanding of or interest in the social and economic impacts of unemployment."

The stimulus was the right thing to do economically, morally and politically. We are lucky that Henry pushed so forcefully for its adoption.


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