Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Where To Now For Ken Henry?

By Graham HandMarket OverviewFeb 18, 2019 15:58
au.investing.com/analysis/ken-forgot-it-was-kenneths-stage-200199696
Where To Now For Ken Henry?
By Graham Hand   |  Feb 18, 2019 15:58
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Originally published by Cuffelinks

In March 1976, Ken Henry and I, both aged 18, started our commerce degrees at the University of New South Wales. Some 42 years later in November 2018, Ken stepped into the witness box at the Financial Services Royal Commission. What had happened over four decades of an incredibly successful public career that led Ken to give evidence in such an incendiary way that two months later, he would be forced to resign as Chair of National Australia Bank (AX:NAB)?

Under the steely glare of Commissioner Kenneth Hayne, Counsel Assisting Rowena Orr had been interrogating witnesses since the beginning of 2018, drawing embarrassing admissions from cowering senior executives. Ken Henry would have none of that. He had been Treasury Secretary for 10 years, facing off senators in Estimates Committees and imposing his policy views on the nation’s finances. He had seen bank executives at the Commission forced into humbling one-word answers, but that was not his style.

So when Rowena Orr pushed him on the poor performance of NAB’s board, of which he had been a member for seven years, he could barely control his disdain:

Orr: Do you accept that the board should have stepped in earlier?

Henry: I wish we had, let me put it that way. I wish we had – I still don’t know.

Orr: I would like you to answer my question, Dr Henry. Do you accept that the board should have stepped in earlier?

Henry: I have answered the question how I can answer the question.

Orr: I’m sorry. Is it a yes or a no, Dr Henry?

Henry: I’ve answered the question the way I choose to answer the question.

Looking on, Kenneth Hayne made a mental note. Nobody, but nobody, acts with such disrespect on my stage. Ken Henry forgot who was setting the rules. In the Final Report handed down on 1 February 2019, Hayne delivered a crushing judgement on the Henry performance.

A stellar career began in a humble way

Ken majored in econometrics while I studied economics. The fourth year of the honours course was mainly thesis work, and at the beginning of 1979, I was still finalising my topic. I had a chat with Ken:

Should be a busy year. How are you going with your thesis?” I asked.

Almost finished,” he said. “I’ll submit it soon.”

It was not boastful or arrogant. It was matter-of-fact. I hardly saw him for the rest of the year. While the other five students in the honours year worked on their thesis, Ken was in Canberra, already on the next step of his career. He graduated with First Class Honours.

Many of the comments this week said Ken was ‘always the smartest guy in the room’. He was certainly quick and intelligent, but at university, he faced an equally formidable competitor: Warwick McKibbin. My recollection is that Ken was not close to anyone at university, and there was a friendly but determined rivalry between these two men who would become Australia’s leading economists over the next few decades. The University Medal was awarded to Warwick.

I recall a class where Ken, Warwick and a professor in the first year of his tenure, John Hewson, covered the board with numbers while arguing fiercely. I did not have a clue what they were talking about.

After his undergraduate degree, Ken gained a PhD in 1982 while lecturing at the University of Canterbury, then he joined the Federal Treasury in 1984 and was a Senior Adviser by 1986. He served as an adviser to the then Treasurer Paul Keating for five years until 1991. He was Head of Taxation Policy by 1994 and Secretary to the Treasury in 2001. He stayed in that role for an amazing 10 years, collecting a Companion of the Order of Australia in 2007. He is credited, along with others, for leading Australia’s policy response in the GFC with his famous “Go early, go hard, go households” rescue package.

Ken left Treasury in 2011 and joined the NAB board in the same year and the ASX (AX:ASX) board in 2013. He was appointed NAB Chair in 2015. His other appointments and social contributions are too numerous to list, but include receiving the Centenary Medal in 2001 and chairing the Henry Tax Review from 2008 to 2010.

All this from a boy who grew up on a leased dairy farm near Taree, where his father was a timber cutter. He never lost his interest in wealth distribution and economics after seeing his father work hard for little reward. His Treasury work often focussed on wealth distribution, government funding and taxation reform. He always had a strong sense of social responsibility, including indigenous policy and wildlife welfare.

I have spoken to Ken only once since our university days. Our careers went in different directions. Despite his great success, my judgement is that he’s a reserved, often quiet and perhaps shy person, a view supported by people who know him better now. He was always friendly and personable, but I don’t recall him hanging around the university canteen at the end of a day of studying.

Strong views and 23 Senate Estimates Committees

Over the years, Ken argued economics and policy with McKibbin, Keating, Hewson, Cormann and Howard, to name a few, and fronted 23 Senate Estimates Committees including angry exchanges with Liberal Senators, especially Eric Abetz. At a 2008 meeting, Senator Mitch Fifield accused him of “defying the committee“. The SMH reported, At times during his evidence, Dr Henry groaned audibly” and “This account was W-R-O-N-G, he told the committee, spelling out the letters and adding ‘with an exclamation mark’.”

In 2009, the Crikey Newsletter said of him:

“Henry isn’t always a fan of public debate … has a decidedly unbureaucratic manner of public speaking and a willingness to have a go at critics …”

Facing criticism of the Henry Tax Review in 2010, he said:

“Whenever an idea is ventured publicly by a person, whether that person is a policy advisor or whether it’s a government minister, there’s at least a handful of academics who will contest it. I’ve seen it on both sides of politics – this is not a partisan comment at all – but for governments, government ministers who are seeking to get ideas legislated – it is unbelievably frustrating, incredibly frustrating.”

Anyone who manages the nation’s finances for 10 years under no less a person than Paul Keating and holds a formidable public record of policy implementation must become familiar with power, dominating arguments and convincing people to understand his position. And with this comes an impatience when other people are too slow or too narrow to appreciate his view.

NAB was already on notice

The Royal Commission was particularly punishing for NAB long before Ken Henry reached the witness box. NAB’s wealth management business in MLC and NULIS was a prime offender in the ‘fees for no service’ disaster which became one of Kenneth Hayne’s biggest targets. As Chair of the Board, Ken must have watched the evidence of his executives in horror, including a severe dressing down for the QC who was supposed to be guiding NAB’s witnesses.

At one stage, Neil Young QC, questioned Kenneth Hayne on why his client needed to return the next day. Young said, “On our instruction, her answer will be that she had no involvement in these matters.

Hayne hit the roof. “You will not give her her answer, Mr Young. You will not. Do you understand me?” he said as he jabbed a pointed finger towards Young.

What to make of Ken’s Royal Commission performance

On the ABC programme The Drum on 8 February 2019, veteran journalist Geraldine Doogue responded to a question on why the behaviour that had pushed Ken to the top of the public and private sectors now lead to his downfall. She said:

“I’m a real fan of Ken Henry. What he did in the GFC was an incredible contribution to Australia. I’m in the minority but I heard that interchange with Rowena Orr. I didn’t like her style at all. Others rolled over, people like Shayne Elliott said ‘I plead guilty, sir. Don’t send me to the colonies.’ He (Ken) just didn’t play that game. He did say ‘I wish we had’. Did he have to do it exactly with the tone? … it was a star chamber, and if you didn’t exactly deliver the tone as requested, you paid a price.

Will the NAB be well-served by the departure of those two men, in terms of trying to get themselves in a new position? The reporting has been bloodsoaked and I don’t like a lot of the reporting.”

We could examine Ken’s entire testimony line-by-line, and there’s no doubt he was in a bombastic and impatient mood. But consider the extract at the start of this article. Rowena Orr asked if the board should have stepped in earlier. Ken replied with “I wish we had.” That was a solid answer. He added “I still don’t know.” Fair enough, he did not know why they did not act. Then Ms Orr demanded he answer her question with a yes or no. This was more point-scoring than genuine enquiry. She had what she needed without demanding a yes or no.

In the Final Report, Kenneth Hayne attacked Ken Henry, including:

“I was not persuaded that NAB is willing to accept the necessary responsibility for deciding, for itself, what is the right thing to do, and then having its staff act accordingly. I thought it telling that Dr Henry seemed unwilling to accept criticism of how the board had dealt with some issues.”

There. Judge and jury. Guilty. Henry then issued a reply which in the eyes of many people proved the Commissioner was right:

“Commissioner Hayne said I seemed unwilling to accept criticism of how the board had dealt with some of the issues raised by the Commission. I am disappointed the Commissioner formed this view. I know that it is not so.”

Which was Ken Henry true to form. Disappointed by the Commissioner. Ken knew better. Same as in 23 Senate Estimates Committees. He was still not reading his predicament well, but he had won these arguments for 42 years. Kenneth Hayne would not even need to defend his position. His work was done and there would be no follow up.

By the end of the week, both Henry and his Managing Director, Andrew Thorburn, had resigned, and Henry gave an interview to Leigh Sales on ABC’s 7.30. He was humble and contrite, but it was two months too late. He said of his brief time at the Commission:

“I can’t tell you how many times I’ve re-lived that appearance. I really should have performed quite differently. I should have been much more open.”

Where to now for Ken Henry?

Ken’s achievements and contribution to the country are too significant to allow a poorly-judged appearance to dominate his legacy. It is highly doubtful he achieved what he hoped for at NAB, but Kenneth Hayne could have looked beyond the hearings for evidence of Ken’s values and intentions. For example, in a speech on the future of banking on 5 April 2016, he said:

“The importance of a deep interest in the aspirations of our customers is being driven, Board down, through our business. We are determined to be customer-focussed. We know that this is what will drive our success.

Successful businesses put the customer at the centre of everything they do. In a successful business the customer drives product design and the suite of products offered. No customer is encouraged to buy something they don’t need or charged more than they need to be charged to cover the cost of providing the product. No customer of a successful business buys something that they don’t understand well enough to have a high degree of confidence that the product will deliver what they want, when they want it.”

In a speech in December 2009, he mused that his generation had not delivered on the social ideals of its university days:

How else might one explain our failures? How do we explain the failure to prevent the continuing destruction of habitat, vital to the survival of many of our endangered species of native flora and fauna? And how do we explain the failure in dithering for decades about an appropriate response to climate change?”

Do we want our leaders to take instructions from QCs who tell their clients to cower to a Commissioner, or rather, to stand up for what they believe and speak their minds? After watching many bank executives unable to explain the decisions they made and resort to one-word answers, I know which I prefer to hear.

Where To Now For Ken Henry?
 

Related Articles

Jeffrey Halley
Choking On An Apple By Jeffrey Halley - Oct 29, 2021 1

Asian markets were handed a Wall Street hospital pass this morning as Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) both missed quarterly earnings expectations in after-market...

Where To Now For Ken Henry?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email