Sue Richardson AM

Poll 63

April Poll - panellists were asked about the GST deal with Western Australia.  The following two questions were posed: 

"Is the long-standing arrangement broadly the best method of distributing the nationally-collected GST revenue?" and "Should the 2018 changes be kept or scrapped?"

YES -

Scrapped

The natural resources with which WA is endowed are a matter of luck, even acknowledging that it takes skill and effort to extract them. They are a national, not a local, resource and it undermines the integrity of the nation to have one region receive a highly disproportionate share of this national resource.

Poll 62

Panellists were asked "Which of the options set out below best describes the kind of approach the Australian government should take to the US Inflation Reduction Act? (Pick 1)"

To ensure Australia can be part of newly-developing US-linked supply chains

Provide access to credit for firms in industries that will supply the US projects, such as nickel an

In terms of climate impact, it does not matter where in the world the green transition is happening. It makes sense to join with the strength, which in Australia is likely to extend beyond just mining. There are many other sensible things that the government can be doing, apart from spending taxpayer dollars. These include setting the rules around carbon emissions, making the most of consumer energy resources (eg solar panels and electric vehicles), and promoting the development of the necessary skills and research to underpin this new frontier.

Poll 61

Worried economists call for a carbon price, a tax on coal exports, and ‘green tariffs’ to get Australia on the path to net zero

Phase out non-electric vehicles | Introduce an economy-wide cap and trade carbon price | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price

It is clear that the most efficient and effective way to reduce greenhouse gas emissions is to make those who emit them pay a price for the right to emit, and then enable these rights to be traded, in some fashion. But this sensible approach has few friends among policymakers, so the next best option is a much-expanded safeguard mechanism. Ground transport is a major source of emissions and electric vehicles and trucks are becoming steadily more available and at lower cost. Their adoption requires a transport revolution and that in turn warrants active policy support. Australia has so much sun, wind and land that by comparison, nuclear would be too slow and too expensive as a means to reduce emissions.

Poll 60

Australia’s leading economists believe Australia can sustain an unemployment rate as low as 3.75% – much lower than the latest Reserve Bank estimate of 4.25% and the Treasury’s latest estimate of 4.5%.

running the economy "hot" for a period (i.e. through low interest rates) in order to give more potential workers some work experience, increase their employability in the long term, improving the quality of employment services, cutting immigration

3

Working holiday makers and international students work mainly in entry level jobs: they compete directly ( and successfully) with longer term unemployed. This is not the case for permanent migrants, so cuts to immigration need to be tailored to the objectives of such cuts. The path that the economy has taken to the current level of unemployment influences the employability of the current unemployed: the longer a person is unemployed, the harder it is to find a job. Thus longer periods of relatively high unemployment very probably increase the NAIRU and longer periods of low unemployment reduce it. High quality job matching services both increase labour productivity (because people are a good fit for their job) and reduce unemployment. It is likely that people who are not at the top of the employability queue are also not the most skilled at finding a job, so will benefit most from a high quality employment service.

Poll 59

Our panellists were asked the following 2023 budget question: "On May 9, the government delivered a budget designed, in the Treasurer's words, to strike a balance between relief, repair and restraint'.  What grade would you give the budget, given that objective: A, B, C, D, E or F?"

Wes Mountain/The Conversation, CC BY-ND - https://creativecommons.org/licenses/by-nd/4.0/

Overall rating: B - Keeping inflationary pressures in check: B

B

OVERALL COMMENTS: I thought that the targeting of cost of living relief was smart, but still too mean. The steps to reduce the shocking housing crisis, while in the right direction, are still far from adequate. I support the direction of the 'repair', including accelerating action on reducing greenhouse gas emissions, but the measures are too timid. As examples, the change to the operation of the Petroleum Resource Rent Tax should have been bolder and the scope of the Emissions Safeguard Mechanism should have been widened. There needs to be much wider and bolder tax reform. INFLATION COMMENTS: A bigger surplus would have helped to reduce inflationary pressures. But in the absence of major tax reform, and the unwillingness to forgo the Stage 3 tax cuts, it would have come at the expense of vulnerable people or action on climate change and in my view that would not have been desirable.

Poll 58

When panellests were asked to find an extra A$20 billion per year to fund government priorities like building nuclear submarines and responding to climate change, Australia’s top economists overwhelmingly back land tax, increased resource taxes, an attack on negative gearing and extending the scope of the goods and services tax.

Photo credit by Joshua Hoehne on Unsplash

Efficiency picks: Increase the GST Equity picks: Wind back superannuation tax concessions

Efficiency comments: The GST already exists. A broad based tax on consumption favours production, savings and investment and has relatively small opportunity for avoidance. Equity comments: Superannuation tax concessions are weighted heavily in favour of those who can save a substantial amount. They are also having a large, negative, impact on the budget revenue. They are being used as a tax minimisation strategy by those for whom it pays to employ expensive tax advice.

Poll 57

Australia’s top economists have overwhelmingly endorsed intervention to restrain gas and electricity prices, with only three of the 47 leading economists surveyed believing the best thing the government can do is to leave things to the market.

Photo credit: Wes Mountain/The Conversation, CC BY-ND

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Cap the price at which producers can sell gas domestically (for already agreed supply)

Capping the price of domestic gas has the benefit of both reducing the impact on inflation and reducing the gas and electricity bills to businesses and households. The gas price directly affects the price of electricity when gas turbines are the last to be despatched as suppliers of electricity.

Poll 56

Investing in Australians’ education is far more important than immigration in resolving the nation’s skills shortages, according to leading economists surveyed in the lead-up to this week’s jobs and skills summit.

The 50 top Australian economists polled by the Economic Society of Australia and The Conversation are recognised by their peers as leaders in their fields, including economic modelling, labour markets and public policy.

Wes Mountain/The Conversation, CC BY-ND

Migration policy Broader reforms to promote productivity Education and skills

Migration policy In my view, Australia has relied much too heavily on migration as a solution to any labour supply problem. It always seems to be a cheap and easy fix, but there is no evidence that I am aware of that migration increases productivity or per capita GDP. It does increase aggregate GDP, but that is just because the population is bigger. It also enables employers and our skills development system to avoid a close examination of why we do not generate the skills that we need, and what needs to be done to ensure that we do. I am also of the view that migration is not just about providing workers for employers. It has a much greater impact on our society than that. I think that judicious migration is very beneficial to the economic and social life of Australia. But it should not be used as an easy short term fix to labour/skill shortages.

Poll 55

Australia’s top economists are divided about how to tackle ballooning inflation of 6.1% that’s forecast to climb to a three-decade high of 7.75% by the end of the year.

Wes Mountain/The Conversation, CC BY-ND

Reserve a portion of gas and other commodities for domestic use Super profits tax on fossil fuel producers with revenue used to reduce cost of services

2.5%

Much of the current inflation is being driven by international forces and supply chain constraints. To that extent, reducing demand is not the solution. But a key task is to prevent expectation of high inflation becoming embedded in price and wage fixing.

Poll 52

"What do you think the intake of permanent migrants should be in coming years"

Australia’s leading economists have overwhelmingly endorsed a return to the highest immigration intake on record, saying Australia should aim for at least 190,000 migrants per year as it opens its borders, up from the target of 160,000 per year set ahead of COVID.

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

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Less than 160,000

Recent rates of immigration have meant that about 60% of Australia?s population growth has come from migration. I think that this puts social cohesion at risk; puts protection of the natural environment at risk as it drives the ever-expanding urban envelope; and imposes substantial costs of urban congestion on current residents: infrastructure of all types has not kept pace with the expanding population. I think that the rationale for a high level of migration is poorly articulated and centres mainly about the short term economic, including budgetary, impacts. This is a sadly narrow and materialist view of the overall consequences of high migration levels. It is also lazy economic policy. Even on its own terms, there is no evidence of which I am aware that high levels of migration increase GDP per person, as distinct from total GDP. In terms of living standards, it is the per capita measure that matters. And it should be adjusted for increased traffic congestion, urban density and pressures on the health and other important social systems.

Poll 50

Ahead of November’s Glasgow climate talks, our panellists were asked

"Australia would likely benefit overall from the national economy transitioning to net-zero emissions by 2050"

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Australia will benefit from shifting to net zero greenhouse gas emissions by 2050 (actually, it needs to be faster than that to help the world to avoid major damage from the changing climate). But this does not mean that the shift will be costless. Currently, 94% of all energy used in Australia comes from fossil fuels (including energy used in transport, agriculture, manufacturing, mining). The shift to net zero will require replacing one whole energy system with another. This is a huge task. The main benefit will be reduced harm to the climate. But since the harm that is currently being done is an externality that is not measured in GDP, the removal of this harm will not appear in the national accounts as a benefit. Australia will also benefit from being extremely well placed to meet the global demand for zero emissions energy, exported directly or embodied in energy-intensive products. As Ross Garnaut put it so well, Australia can become a renewable energy superpower. On the second point, there is no single policy that can or should do all the work to reduce emissions. But if we want to manage this enormous challenge in the most cost-efficient way, then we must stop permitting enterprises from being able to emit greenhouse gases without limit and without cost: there must be either a price or a tax on emissions, to reflect the external damage that they do. A price/tax would provide enterprises with a direct incentive to search for ways to reduce emissions; it would harness the energy and ingenuity of the market to find new ways to produce and new products that are low or zero emissions (by making it profitable to do so); it would be efficient, as the lowest cost forms of abatement would be identified by enterprises and adopted first; it would draw on decentralised knowledge and decision making by enterprises, guided by the price/tax, rather than rely on the directions of (necessarily less-informed) government; it would hasten the adoption of new technologies and thus be a stimulus to innovation--it is only when they are adopted that they actually reduce emissions; and it would not have to be paid for by the taxpayer, except to the extent that they emit greenhouse gases.

Poll 49

"What measures should Australian governments adopt to promote demand for vaccination once supply is no longer a constraint?"

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

Vaccine passports for higher-risk settings (eg. flights, restaurants, major events);National advertising campaigns

The first thing that should be done is to make access to the vaccine widely accessible--it must be easy to get from a place where people are comfortable to be. Then we should take active steps to increase vaccination rates. Advertising campaigns need to be clever and engaging, especially for younger people. Give the topic to the Gruen Project! Use the evidence. Many strategies have been tried in other countries and we should study these carefully to see what we can learn from them. Appeal to the greater good, not just to one's own safety. Ads need to be tailored to the different demographics and reasons for reluctance to get vaccinated.

Poll 48

Our panellists were asked

"Higher wages growth is now a top priority of the RBA in its efforts to sustain stronger economic growth. Please identify the three of these government policies you think would best help deliver higher wages growth".  

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

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Restraining growth in labour supply by cutting temporary migration (including international students

Changes in the wage/profit share have some influence on the level of wage growth. Systematic and sustained efforts to reduce union power have been successful and are probably part of the reason for low wage growth. But over time, the biggest influence is the growth in labour productivity

Poll 47

This month, our panellists were asked whether Australia should take action to speed the transition to electric cars.

"As part of efforts to reduce carbon emissions, Australian governments should take action to accelerate the take up, or take no action to accelerate the take up of electric cars"

Photo credit "Wes Mountain/The Conversation, CC BY-ND"

Remove the luxury car tax from all-electric cars, Subsidise the purchase of all all-electric cars, Subsidise public charging points for electric cars, Set a date to ban the import of petrol and diesel cars

10

The most important and first thing that Australian governments should do is to put serious limits on tailpipe emissions of new cars. At present, Australia is unusual among developed nations in not having such a limit. It means that car makers around the world send their high emission cars to Australia, and do not send their electric cars. Electric cars are used by car makers to reduce the average emissions of all the cars that they sell in a country, to meet country emission limits. Since there are no such limits in Australia, they save their electric cars for elsewhere. Petrol and diesel cars emit particulates that are harmful to health. They also emit CO2. Both of these are harmful externalities that are not paid for by the user. It is efficient to charge an additional tax for petrol/diesel cars, or to subsidise electric ones, to account for the externalities. To reduce the impact of transport on greenhouse gas emissions, it is necessary for the electricity that is available at charging stations to be from non-fossil fuel sources.

Poll 46

"On May 11, the government delivered a budget designed, in the Treasurer's words, to 'secure Australia's economic recovery and build for the future'.  What grade would you give the budget given that objective, A, B, C, D, E, F?"

Photo credit Wes Mountain/The Conversation, CC BY-ND

.

C

I was tossing up between C and D. I chose C because the budget at last turns its back on the ?debt and deficit? mantra, that was never justified. This will assist with the ?economic recovery?. The commitment to a more ambitious notion of full employment is also very welcome. The spending on aged care is also a big contribution towards a decent future for our growing number of elders. The big fail, is that it is a budget for the past, not for the future. There is a very large expenditure on small business, which on the whole is not the engine of growth. The infrastructure spending is mostly on the very traditional ?roads and ports?. The future is one of zero net greenhouse gas emissions. The transformation of the energy, agricultural, transport and manufacturing systems that this requires is enormous, will require unprecedented levels of investment and needs to start now. There is little in the budget that supports this transformation. It is an extraordinary lost opportunity. Related to this, there is very little to support the large scale adaptation to the coming hotter and more dangerous climate that is now unavoidable. Finally, the future for Australia implied in this budget includes even greater loss of our unique plants and animals, as they succumb to ?development?, land clearing and invasive pests and animals. Apart from the very welcome extension of marine parks, there is little in this budget to give hope for an end to the further destruction of nature.

Poll 43

"On 6 October, the Government delivered a budget designed, in the Treasurer's words, to 'rebuild our economy and create jobs'.  What grade would you give the budget given the objective?  A, B, C, D, E, F"

Photo Credit: Wes Mountain/The Conversation, CC BY-ND 

C

The level of deficit spending was probably commensurate with the size of the macro-economic task. But it is risky, because it is relying on the private sector and households to do the job creation, by responding in the hoped for way to the economic incentives in the budget. Further, the very high levels of government spending seem to be intended largely to recreate the economy of the past, rather than invest in the economy of the future. The economy of the future will, among other things, need to have much lower greenhouse gas emissions and much greater ability to cope with the unavoidable damage arising from climate change. As a recent paper from Oxford University concludes: "The recovery package can either set the global economy on a pathway towards net-zero emissions--or lock us into a fossil fuel system from which it will be nearly impossible to escape." It goes on to conclude that there is a higher short run employment multiplier from renewable energy investments, and from energy-efficiency projects, than from traditional forms of stimulus. [C Hepburn, J Stiglitz et al, Oxford Review of Economic Policy 36 (S1) May 2020]

Poll 44

"Ahead of a decision about any permanent increase expected early next year, The Conversation and the Economic Society of Australia asked 45 of Australia’s leading economists where they thought JobSeeker should settle."

Be indexed in line with wages

Keeping jobseeker payments so low that people lose dignity, hope and suffer real material deprivation is unnecessarily punitive in our wealthy country. It is very harmful for the many thousands of children in unemployed households. I know of no evidence that it is an effective way of increasing the likelihood of an unemployed person getting and keeping a job.

Poll 42 

"The October budget will see the government announce additional policies to support recovery.  Please nominate the four programs you think would be the most effective (for an intervention of a given size) over the next two years"

Photo Credit: Wes Mountain/The Conversation, CC BY-ND 

Permanently boosting JobSeeker (Newstart) beyond December 31, 2020, Social housing, More funding for education and training, Funding higher quality aged care

I take "supporting economic activity" to mean increasing jobs. At the same time, it is sensible to pursue expenditure that provides a longer lasting economic and social benefit. To increase employment, expenditure should be on activities the have a high local labour content, such as aged care. Boosting Jobseeker will increase consumer demand, while also reducing poverty. Social housing is sorely needed and will employ blue collar men, while aged care will employ lower education women. Education and training is quite labour intensive and will help the younger people who have been severely hit by the pandemic: better for them to be developing skills, than being unemployed.

Poll 41

"The legislated increases in compulsory super contributions, which are set to climb from 9.5% of wages to 12% over the next five years should...."

Photo Credit: Wes Mountain/The Conversation, CC BY-ND 

Proceed as planned

8

9.5% is not enough to have the desired effect of providing an adequate retirement income. It is unlikely that there would be an equivalent rise in wages should the increase be deferred. Small steady increases are better than occasional large ones, so a deferral would be hard to recoup. Compulsory super would be much improved by making its benefits less concentrated at the top end of incomes.

Poll 40

"Governments should provide ongoing fiscal support to boost aggregate demand during the economic crisis and recovery, even if it means a substantial increase in public debt"

Photo Credit: Wes Mountain/The Conversation, CC BY-ND 

Strongly agree

9

The problems that face the economy are mainly lack of demand, caused by shut downs and people?s caution about exposing themselves to the virus. They include also disruption to supply chains and increased uncertainty and costs of operating in a Covid-safe way.

Poll 38

"The benefits to Australian society of maintaining social distancing measures sufficient to keep R<1 for COVID-19 are likely to exceed the costs"

Strongly agree

7

If the infection rate was widespread and growing, I think that individuals would themselves take steps to distance and isolate themselves, regardless of what the rules were. I think it is very unlikely that people would behave, as consumers and as workers, as they did before the pandemic, if there was widespread transmission occurring. That is, a return to 'normal' is not an available option.