Peter Smith

Ken Henry killed the king

Knocked out by an economist

A prime minister is not rudely dethroned for one single reason, short of some major personal indiscretion. But make no mistake about the final blow that knocked out Kevin Rudd. It was delivered by Ken Henry, wrapped up in the guise of the RSPT.

Public servants can and do wield enormous power in the background but hardly ever this kind of power.

A combination of circumstances needed to prevail to set up the knockout blow. First Rudd had to have no factional power base in the Labor Party. Second there needed to be a credible pretender. Third, he needed be in a weakened state of his own making. This he accomplished through what might be called ‘sins’ of omission and commission.

Where John Howard had been strong on border protection, Rudd has been increasingly portrayed as weak as the boats arrive in larger and larger numbers with no policy in sight to reduce those numbers.

There was a series of back-downs. His policy back-downs on monitoring fuel and grocery prices set the scene early in the piece. They were minor in the scheme of things, but he had made much of them in the election campaign. More significant was his back-down on taking over public hospitals, on building one stop childminding centres and on carbon reduction legislation.

These were all ‘sins’ of omission if you like, but then came the sins of commission all of which stemmed from the obvious difficulty he had with consultation and collegiate and considered decision-making. We had the decision to commit to the NBN without a cost benefit study combined with the heavy-handed and threatening treatment of Telstra and its many shareholders. We had the ceiling insulation fiasco. We had the school building rorting led by our new Prime Minister.

All of this weakened Rudd but none of it would have proved fatal and prevented him from leading Labor to the next election and probably winning. He needed to be unlucky and, as luck would have it, a fatal blow was waiting in the wings. That was the RSPT in the hands of Ken Henry, bearing the gift of many billions of dollars in revenue.

A number of things needed to be in place as is so often the case when disaster strikes. The RSPT itself needed to be onerous and punitive on Australia’s most important industry. Henry needed to be ideologically wedded to the redistributive nature of the tax and captive of economic modelling. He had to believe the unbelievable that whatever the rate off the RSPT, even it were up to 90 percent and more, it would do no damage. Wayne Swan, now Deputy Prime Minister, had to be so gullible that he would accept such nonsense. It is true that Rudd might still have saved himself if he’d had an instinct for collegiate decision-making and consultation, but nevertheless he was unlucky.

You couldn’t write about a head of treasury – the top economist in the country – who would actually promote an enormous tax increase on any industry and claim ‘scientifically’ that it would have no deleterious effect on that industry. It defies common sense to such an astounding degree that Henry must have enormous powers of persuasion even taking account of gullibility on the other side. My wife’s family live in Lithgow NSW, a coal mining town, they saw the idiocy of the tax and Wayne Swan didn’t?

No, Rudd made lots of mistakes but in the end result he was undone by a so-called economist. Who says economics and economists aren’t important. Mind you after this, who is going to listen to one?

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