New outcomes measurement needed: Henry

The future wellbeing of Australians will be improved by a better method of measuring
how effective governments are with their spending and taxing, Treasury Secretary
Ken Henry says.

Dr Henry said the Whitlam government (1972-1975) could be seen as being responsible
for a permanent increase in the scope and size of the Australian government
following spending on social, health, education and welfare reforms.
Delivering a speech to the Whitlam Institute in Sydney on Monday, Dr Henry said
there had been a lot of interest over the past several decades about the economic
consequences of the Whitlam government and the appropriate role of fiscal policy in
the modern economy.
"One reason for this is the growing interest in the micro economics of the national
budget," Dr Henry said.
"That growing interest is a good thing.
"Currently it's being hampered significantly by deficiencies in measurement,
deficiencies in measuring inputs, outputs and most importantly outcomes.
"There is a need for better measurement."
Federal government spending grew from about 20 per cent of GDP to 25 per cent under
Whitlam government and this proportion has been maintained by successive
governments.
Generations of economists had pointed to deficiencies of measurement, particularly
in the services sector, Dr Henry said.
"There has been a growing interest around the world in the value of growth.
"Associated with that, there has been some re-questioning of some concerns that have
been around in the economics profession ... about the extent to which the national
accounts provide a sufficient indicator of economic progress."
Dr Henry will soon release his review of Australian taxation.
From a Treasury perspective, he said all of the micro level detailing of spending
and taxation decisions in the national budget were relevant to the wellbeing of
Australians.
"They should be intended to contribute to the ability of Australians to build
capabilities that will allow them to choose lives that they have reason to value,"
Dr Henry said.
"Reforms we implement today build the capacity for governments of the future to
assist Australians in this way."
He said Treasury regularly discussed challenges of poverty and the "poverty of
capability".
"The reason that we discuss it quite a lot is that in some areas, it is difficult, I
think, to argue that the poverty, or the indicators of poverty, that exist are
simply due to the fact that the government's not throwing enough money at the
problem, in some areas."