One of Australia's most respected economists has lashed Treasurer Joe Hockey for his criticism of Treasury secretary Martin Parkinson, warned that Australia cannot afford new social policies without tax reform and predicted the GST will have to rise to tackle structural holes in the budget.

A day after Fairfax Media revealed former prime minister John Howard and treasurer Peter Costello both urged Mr Hockey to keep Dr Parkinson in one of the nation's top economic roles - a call ignored by Prime Minister Tony Abbott - former Treasury secretary Ken Henry lashed the present government for its treatment of his Treasury successor.

And he said the exit of Dr Parkinson - which is due mid-year, though speculation is mounting the current Treasury chief could now stay on until the end of the year - was unprecedented.