Our single best academic macroeconomist, Prof. Warwick McKibbin, who also sits on the Board of the RBA, unloads both twelve-gauge barrels on the Rudd Government and Ken Henry. It is a withering attack. And McKibbin is as independent, bi-partisan and smart as they come. Media supporters of the RSPT should take heed of his words (HT: Peter Martin):
"I have enormous respect for Ken Henry, but he can't believe that you should have consensus because it is better to have bad policy that everyone agrees with than eventually get god policy that will work...
I also disagreed with the scale of the stimulus package, and I would say I was right... It wasn't evidence-based policy, they panicked. The government put the money into school buildings, they put it in insulation, they put it in stuff they could never reverse...
The government rammed those decisions through the economy even though they were fraught with risk. No-one was consulted about an alternative view and if you did say anything you were attacked by the the Treasurer and the Prime Minister in public...
The stimulus created a problem. The government overspent...so they come up with a really badly designed resource tax to try and get the position to look good three years from now, and in the middle of a sovereign risk crisis exposed the economy to a reassessment of sovereign risk...
I am stunned that the Treasury keeps supporting the government.The review of the tax system should have been independent of the Treasury and then critiqued by it and other economic agencies...
The government has ceased to use the Productivity Commission for sensitive questions. It should have been critiquing the National Broadband Network which is a gigantic white elephant waiting to happen.
Treasury as far as I can tell has become an arm of political policy...
You see Treasury officials producing what I consider to be fairly politically-based evidence in support of particular political policy, not economic policy."
