Ken Henry appears to have made the most extraordinary statement at a speech yesterday. I haven’t read the transcript of the speech yet, and perhaps these were answers to questions afterwrds; I think the full context is going to be important.
‘Whenever an idea is ventured publicly by a person, whether that person is a policy adviser or whether it’s a government minister, there’s at least a handful of academics who will contest it.
It is a great strength of economics as a discipline … But I think there are occasions on which economists might, at least for a period, put down their weapons and join a consensus.
I’m not going to comment about the resource super profits tax but I will talk about the emissions trading scheme. Most academic economists accepted, at least behind closed doors, that it was a sound policy idea. Yet there were no end of academics who wanted to say for example, it’s not bad, but a carbon tax would be better. That did not increase at all the chances of a carbon tax being legislated. All it did was reduce the chance of an emissions trading scheme being legislated.
In the way in which political debate occurs in Australia, such statements do enormous damage to the prospects of sensible reform. There are times when it would serve the national interest if economists could just call a halt to the war for a while.
I don’t think that it is appropriate that economists collude with government and conspire with Treasury to produce bad policy. That is not something that economists should do. Henry seems to be suggesting that anything is better than nothing when undertaking policy reform – yet if that were true we wouldn’t need to have Treasury. Good policy does not come from having a monopoly of ideas and thought, good policy comes from debate and a competitive market for ideas.
Update: The AFR (page 6) reports that this was a ‘candid question and answer session after the prewritten speech’.