Henry is obviously a smart guy, but I have no idea what his ideological motive is. And everyone thought Alan Greenspan was smart pre GFC.
If mining benefits the broader economy, it is via higher tax revenue. I would argue mining contributed significantly to the surplus we had going into GFC, which Henry conveniently omits. The surplus was also a result of the Coalition running down public infrastructure, via not spending to upgrade, and the ongoing sell off of fed and state public assets to foreigners.
IMHO, the two prime reasons Australia didn't collapse were:
1.
Our economy is 70% services. And unlike the recession Henry says our export industries experienced, domestic consumption was buffered by ongoing loose credit sloshing around. If consumer credit hadn't loosened drastically, house prices would have fallen significantly, consumer confidence would have suffered, and consumption cut dramatically. This was the US and UK experience.
In my view, tighter credit and loss of consumer confidence leads a fall in consumption of services. Export industries, on the other hand, are led by foreign demand.
However, loose credit wouldn't have sustained things for long. Unemployment was rising and gdp falling, helped by a cut in commercial credit. Only a quick restoration of foreign confidence stopped this trend, which was due to China's and the US's massive loosening of credit via quant easing....basically a devaluing of their currencies, a shift of bad debt from private to public interest, and a debilitating burden well into the future.
2.
credit was partially maintained by the bank guarantee; but more importantly by the bank's minimal exposure to the sub prime fiasco, strong balance sheets leading into GFC, and comparatively good credit ratings.
What helped us, and the rest of the world from going into a depression was continuing to fund the party via loose credit. Eventually, debts will have to be written off, currencies re-valued, and consumption reduced to match production. This is why I believe there's still a rocky road ahead.
Why I am suspicious of Henry is because he wants to collect more tax.
Rudd and Swan have revealed how compellingly and profoundly inefficient govt is at allocating capital. I see no reason to give them more.
If Henry has a problem with mining profits going offshore, he should apply his brain to seeing more Aussie dollars invested in mining, and less in housing. That could include reformation of our super industry and a review of why housing investment has performed more strongly than mining.