Skip navigation

Tag Archives: Ken Henry


Published 12:52 PM, 20 Aug 2012 Last update 3:21 PM, 20 Aug 2012


Former treasury boss Ken Henry has told business the Australian dollar is likely to remain high for the foreseeable future.

Dr Henry told the Australian Industry Group forum in Canberra it would not be prudent to bank on an early sizeable depreciation in the exchange rate.

“There is no silver bullet that is going to rapidly devalue the dollar and make things easier for Australian businesses in the immediate future,” he said.

Many trade-exposed businesses have suffered under the strong currency, which has been lifted by strong demand for the nation’s commodities and economic troubles in the US.

However, Dr Henry said Australia’s economic policy framework – which includes a floating exchange rate, the independent setting of monetary policy and competition policy – had served the nation well.

“These things have helped to protect Australia from the impact of several economic shocks emanating from overseas,” he said.

“It is important that we will build on them and resist the temptation to dismantle parts of the framework, even though we may perceive from that dismantling a short term advantage.”

He also said local businesses must start acting like regional entities, by becoming part of regional supply chains, partnering with similar or complimentary foreign firms or moving parts of their operations to Asia.

Dr Henry conceded that moving components to Asia was not easy because such plans often attracted criticism from unions and local communities.

But he pointed to the example of Australian bootmaker Blundstone, which prospered from moving part of its business offshore despite being criticised.

“It is clear today that if Blundstone had not shifted elements of its manufacturing to Asia five years ago, it would have gone out of business completely,” he said.

Separately, Mr Henry also said his soon to be released Asia white paper will be a strategic plan for the decades ahead, not a shopping list of spending proposals.

Tax debate could improve

The debate about Australia’s tax system needs to be a “hell of a lot better”, Dr Henry believes.

He told the business forum that if governments don’t lead change, change will be forced upon.

“You want to avoid putting yourself on a burning platform,” he said.

“In order to get to the place that we need to get to, we are going to need a hell of a lot better debate.”

Dr Henry agreed with current Treasury Secretary Martin Parkinson, who in a speech last week warned governments may have trouble meeting demands for spending from the existing tax base.

Dr Henry said commonwealth tax revenue, as a ratio to gross domestic product, would not return to where it was before the global financial crisis – at least not under the present system.

He said state revenues were in a much worse position, describing it as “fragile”.

“At the moment, it looks okay for the resource rich states, and for the others it looks desperately bad,” Dr Henry said.

“But even for the resource rich states, at some stage the royalties will deliver less revenue than they have been delivering. They are going to front a grimmer fiscal reality as well.”


May 16, 2012 – 1:14PM

ANZ chief executive Mike Smith said the breakup of the eurozone was “quite likely” as countries in the region’s south would have to decouple from the currency union in order to become competitive.

The comments by the senior Australian banker come as global markets continue to be rattled by the political uncertainty playing out in Greece.

A left-wing party opposed to the austerity pact is leading opinion polls after last week’s elections failed to form a government. Fresh elections may take place in Greece on June 10 – at the earliest.

 “The issues in Europe are going to be very difficult to manage and it’s not clear what the answer will be,” Mr Smith said in an interview with Bloomberg television.

“On the one hand you need a proper transfer union, and that seems very difficult for the German voter to accept,” he said. “Or countries in the south are going to have to become detached from the euro, because otherwise how can they ever become globally competitive,” he said.

“It is the uncertainty and the unknown that is creating a lack of confidence in the market”.

Mr Smith made the comments in Beijing after ANZ last night detailed plans to invest $300 million and more than triple its branch network in China. ANZ’s exposure to the eurozone was small, he said. But those banks that are operating in the region would be working to minimise their cross-border risk, he added. ANZ yesterday said it planned to increase the number of branches in China to 20 in the next five to 10 years, up from six now. The capital increase, which is subject to regulatory approval, is the first since the Australian bank invested $395 million while incorporating its Chinese unit in 2010.

Mr Smith’s was speaking a day after former Australian Treasury secretary Ken Henry said the eurozone was highly unlikely to survive. Dr Henry said he never believed the troubled currency union would work given it allowed countries to run budgets independent of each other.

Read more: