Henry review taxing patience
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CANBERRA, March 12 AAP
March 12 2010, 2:58PM
It would seem changing taxes is just as unpalatable as paying them.
The much anticipated Henry Tax Review appears to be gathering dust in a pending tray somewhere in the ministerial wing of Parliament House, and it is far from clear when it will be brushed off and presented for wider consumption.
"Tonight, I confirm the most comprehensive review of Australia's tax system since World War II," lauded Treasurer Wayne Swan in his 2008/09 May budget speech.
"We need a tax system that is fairer, that is simpler, that better rewards people for their hard work, that responds to our environmental and demographic challenges, that makes us internationally competitive."
All fine and dandy.
But what now?
Treasury secretary Ken Henry handed over his review just before Christmas.
The government initially said it would read the report over the Christmas break and respond to it early in 2010.
It is now approaching the middle of March.
It is also unclear who has actually seen it other than Mr Swan.
Deputy Prime Minister Julia Gillard wouldn't say whether she had seen the report or not, in response to a question during Thursday's labour force data press conference.
"I'm not going to comment on Cabinet processes," she said.
It would seem odd that the second most senior member of government hasn't at least had a peek.
After all, a number of journalists claim to have seen it.
Apparently, it's 500 pages thick. Or is it 1000 pages? Or 10 centimetres?
Of course, size isn't everything.
Among its recommendations in the more important content of the review, it will scrap the need for annual tax returns, cut company tax for non-resource firms and make the wealthier pay more.
It will also tax motorists on how far they drive and provide incentives for people to come off welfare and work longer.
The list goes on. And some of it may actually be true.
Much of the speculation surrounding the report's contents comes from comments made by Dr Henry as he travelled the country trying to get to grips with the 125 or so taxes that currently operate in the three tiers of government - federal, state and local.
Whether his thoughts actually formed into recommendations, or even made it into the review itself, remains to be seen.
And of course the government will cherry pick what it wants to implement, so the full review may never see the light of day.
Ironically, the only tax not included in the review, GST, is the only tax that looks set to change so far - at least the way it is distributed.
Under the government's new health funding scheme proposal, a third of GST revenue will be redirected to hospitals rather than all being distributed to the states as under current legislation.
Whether this gets the go-ahead will be thrashed out at the Council of Australian Governments meeting on April 11.
But more importantly, the rate of GST will stay at 10 per cent.
"I certainly rule out any increase in the GST," Mr Swan told parliament this week.
So why is it taking so long to release the Henry review?
Prime Minister Kevin Rudd says he has been too "busy" saving the nation's health system.
Finance Minister Lindsay Tanner says there's been a lot going on.
There's been the Copenhagen conference on climate change, the "complete turmoil and mayhem" over the opposition's leadership battle, and there's been the holiday season, when the prime minister had a well earned rest, he said.
"So we've got a lot on. I don't accept that there has been undue delay," Mr Tanner told ABC Television.
At least the dog didn't eat it, after all Dr Henry's hard work.
Opposition treasury spokesman Joe Hockey, who has been demanding to see the review since December, said all of this was "serious spin from a panicked government".
"Stop making excuses and release the Henry review now," he said in a statement this week.
Mr Tanner says there will be plenty of time to debate the review and its recommendations before this year's election.
"I have no doubt that prior to the election we'll be giving a full indication of what our position with respect to taxation is, right across the board," he said.
So it is still not clear whether the review will be released before or after the May 11 budget. Or with it.
But the government could actually be dotting the i's and crossing the t's of its response to the review right now.
Remember, one Sunday Mr Rudd said sorting out the health system was proving more difficult than he had expected.
But by the following Wednesday the National Health and Hospital Network was born.
Still, the opposition hasn't been so forthcoming when it comes to divulging a tax review either.
Remember the Ergas tax review?
Perhaps not. It was a long time ago.
This review was announced by then opposition treasury spokesman Malcolm Turnbull back in April 2008.
It was to be conducted by former Organisation for Economic Co-operation and Development economist Professor Henry Ergas, and was due to be completed by the end of 2008.
Deputy opposition leader Julie Bishop was asked on ABC TV's Lateline last Friday why it wasn't made public.
"It was always going to be dependent upon what we were able to receive from the Henry review because the Henry review's got all the Treasury costings, all the modelling, we assume, and we will be able to respond," Ms Bishop said.
Strange, Mr Turnbull never mentioned that when he commissioned the review.
Probably because the idea of the Henry review was not announced until a month later.
By Colin Brinsden, Economics Correspondent
