Ken Henry has a natural remedy for productivity

Jim Chalmers is getting his wish for a long list of provocative ideas for his tax reform and productivity roundtable. The ideas include a new carbon tax (pushed by the ACTU), changes to the rate and distribution of the GST, a cap on superannuation, and to prioritise personal income tax cuts over lower business taxes.

Former Treasury secretary Ken Henry has entered the debate with a sweeping reform proposal to boost productivity by finally delivering a revised set of national environmental laws. Dr Henry knows a lot about the cost to ordinary Australians of our low productivity malaise, something he estimates has cost average workers $500,000 each across the past 25 years. He also knows well the difficulty politicians have acting on considered advice on big-concept change. Many of the recommendations that were overlooked in the Henry tax review to the Rudd government are still relevant today.

The challenge Dr Henry has thrown to the federal Treasurer is of a similar scope. Dr Henry believes the Environment Protection and Biodiversity Conservation Act reform agenda set out in a review by former competition boss Graeme Samuel provides a blueprint for a much bigger restructure of how government works across all levels. The starting premise is that business is being disadvantaged and natural capital is being depleted because of duplication in decision-making that is made on the basis of individual projects. The remedy is to undertake a stocktake of where housing, industry and major projects are appropriate and where they should be out of bounds. Once this has been done, decision-making can be made clearer and more certain and properly enforced.

The need for EPBC reform is common ground across business, environment groups and government. The Samuel EPBC Act review was commissioned by Sussan Ley when she was environment minister in the Coalition government. Labor environment minister Tanya Plibersek was unable to deliver reform during the Albanese government’s first term after it became hostage to unreasonable demands by the Greens, including the need for a climate trigger that would dramatically increase the scope of federal government oversight.

Dr Henry says the devil is still in the detail. This will include issues such as compensation for the concentration of environmental powers with the federal government, how climate change is considered, and the extent to which a federal environmental protection agency will be independent of government. There is a danger in the fact that Dr Henry’s plan is so firmly rooted in meeting a net-zero transition that includes the delivery of renewable energy projects at scale. He does not accept that the industrialisation of rural landscapes is necessarily incompatible with nature preservation and is a big supporter of the use of carbon offsets. A key part of Dr Henry’s plan is to “enable the operation of natural capital markets for net zero and nature”. This is in essence an extension of the carbon market to help fund activities that improve and preserve nature.

There is common agreement that nature is worth saving. But Dr Henry’s plans also represent a dramatic bureaucratisation of things that rightly should be functions of government. Dr Chalmers has a lot to work with but he must stay focused on political reality and the productivity benefits that can be won. The federal government must prioritise getting bipartisan support for any changes to the EPBC Act this term rather than expose itself to the anti-industry demands of the Greens.