Australia’s Treasury Secretary, Dr Ken Henry, said Australia’s quick response last year to the global financial crisis was a big contributor to avoiding the scale of the recession experienced in the United States.
Speaking at a capacity, Meet the CEO, an Australian School of Business alumni event, Australia’s most senior economics official said Australia’s quick response last year to the global financial crisis was a big contributor to avoiding the scale of the recession experienced in the United States.
"The pivotal point has been Australia’s response to the global crisis.
"The essential lesson is that once you decide there really is a problem - don’t waste time addressing it," Dr Henry said.
Dr Henry, a UNSW economics graduate and an Australian School of Business Alumni Leader, said the Rudd government’s immediate announcement of the $10.1 billion fiscal stimulation package, was "timely, targeted and temporary."
"History may judge the first fiscal stimulation package was too early, history may judge it was too large, history may judge the configuration of it was wrong. But my view was we needed to do something, it needed to be big, and we needed to do it quickly.
"What informed that was I had lived through – as a policy advisor – the recession of the early 1990s.
"The government in a recession cannot tolerate inaction – the population cannot tolerate inaction on the part of the government. The government needed to do something."
Dr Henry said Australia’s rapid response to the most recent global financial crisis, was the same during the Asian financial crisis.
"This turned out to be not much of a crisis at all for Australia," he said.
"But it posed a very significant challenge for policy advisors and central banks. Not all Central banks responded in entirely the right way. Those that did apply the appropriate degree of judgment like us – managed to get through the Asian financial crisis quite well. You do get these crises coming along – you can prepare for them to some extent. But the best capability you bring to a crisis at the time is your experience and the conceptual framework that you’ve got."
At the event, attended by over 500 Australian School of Business alumni, Dr Henry warned the upcoming review of Australia’s taxation system which he is overseeing, will not recommend capital gains tax exemptions for the owner/occupier home be removed.
The 18-month review of our tax system found it needs to be "brought back to a more human scale" he said.
"When you do international comparisons our system is not bad – it’s not broken. It’s just horrendously complex," said Dr Henry who was appointed Secretary to the Treasury in 2001 and who sits of the Board of the Reserve Bank, which will meet next week.
"I fully expect when the review is received by the government, the government’s reaction to the review will be mixed."
Watch the full interview