High Integrity Mendicancy

Just when you think the media has finally run out of clowns to opine on the economic issue du jour, out pops another, tumbling out of the circus car.

Saul Eslake was evidently unavailable. Chris Richardson must have been washing his hair.

So out comes Ken Henry from his wombat hole, wearing his “Central Planning and Socialism Can Work, Ask Me How” t-shirt, arms in the air, yelling look at me, look at me.

His latest contribution, in 4 paragraphs reported in the Australian:

Former Treasury boss Ken Henry says the current GST carve-up which favours Western Australia is “stupid”, disavowing WA Premier Roger Cook’s attacks on the Productivity Commission for recommending the Commonwealth ditch the deal.

Calling on the federal government to stand up to “bullying and intimidation from Western Australian premiers”, Dr Henry claimed the current GST carve-up had undermined Australia’s system of horizontal fiscal equalisation.

“If the wealthiest state in the nation, can come to Canberra with a begging bowl and get the rest of the country to put money into that begging bowl … if that’s how this system is going to work then this system is going to fail,” he told Radio National.

“One day the system is going to break and without a high-integrity system of fiscal equalisation, the Australian federation is going to face some pretty serious challenges.”

Well Ken Ken the Windbag Man, if you feel this strongly, from the comfort of a publicly funded and taxpayer guaranteed defined benefit pension, that the Commonwealth Government simply must do something, then nominate.

Put your name on a ballot paper and face on a corflute, and go win the argument in front of people who are allowed to sack you. We can guess the colour you will be running on.

But no. Much easier to pontificate and we get the retired mandarin’s venue of choice, the publicly funded and guaranteed ABC, where the chairs are soft, the questions are softer, and nobody ever asks the guest who built the machine he is now complaining about.

Henry offers an ominous warning.

One day the system is going to break, he says, and without a high-integrity system of fiscal equalisation, the Australian federation is going to face some pretty serious challenges.

Sparty’s view. Good. Even great. Fricken great.

Break it. Break it up and sell the pieces for scrap.

Because let us say plainly what horizontal fiscal equalisation actually is - from each state according to its capacity, to each state according to its need.

That is not clever federal plumbing. This is textbook Marxian socialism which has been running as national policy for decades while pretending the Commonwealth Grants Commission’s modelling turns it into something respectable.

It does not. It is central planning with footnotes and a relativity table.

Of course Henry defends it. Beyond handing Canberra a permanent lever to ride roughshod over the states, he helped pour the foundations.

He was in the engine room for the Howard and Costello GST architecture and the distribution formula bolted onto it, the one that turned Australian federalism into a permanent audition for sympathy.

The incentives worked exactly as designed. Tasmania, the ACT, the Northern Territory, South Australia and now Victoria worked out long ago that the reliable route to GST revenue share is not building an economy, it is cultivating a grievance.

Why approve a mine, or a gas field, or anything that generates actual taxable activity, when having a feeble fiscal capacity is the very thing that gets you paid?

That is what Henry calls high-integrity. A system that rewards mendicancy and fines the states doing the digging, the shipping and the earning.

And here is the bit the mendicant choral singers will never say out loud, because saying it ruins the act.

WA is not asking anyone to subsidise it. It subsidises the rest of you and all it has asked is to subsidise you slightly less.

That is the outrage, apparently.

So perhaps Ken Ken the Windbag Man, take your begging bowl and put it over your head. Better yet. Over your mouth.