Paul Frijters

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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Increased resource rent taxation spent on keeping up the purchasing power of the poorest.

Increasing resource rent taxation is important to repair the budget. You don't want to interfere with prices as they give incentives, but you do want to shield the poorest from extreme hardship.

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 Education and skills

Education and skills The government is directly involved in the production of education, setting of curricula, and migration rules so that's where it can make the most difference. On migration, reopening the doors to skilled migration and ditching all the COVID-theater that makes living in Australia like a prison experience is a no-brainer. On education, I suggest a few technically easy, but politically extremely hard, reforms: . level the playing field between public and private schools (so ditching the many subsidies to private) . ban the presence of social media (mobiles, etc.) in schools and universities . allow children with low grades to repeat classes (instead of having standards low enough that everyone can always follow) . renew the content of the curriculum . raise curriculum and exam levels across the board so as to increase expectations and learning habits . cut out the profiteers in universities and other tertiary institutions (most of its management and ministry staff) In the other areas mentioned in the poll the government has far less influence than in the production of education and migration rules.

Poll 54

Panellists were asked: 

"From this list, please pick the three issues you think will be the most important for the incoming government and should be the most important in the election".

Wes Mountain/The Conversation, CC BY-ND

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Lockdowns and run-away corruption have lead to unprecented drops in mental health, worsening educational outcomes (particularly among the poor) and large increases in government debt. The immediate task of the government will be to get more taxation out of large corporations and the super-rich, which will be a political battle. The second is to undo the damage of lockdowns and thus invest in mental health services and higher quality primary and secondary education. Neither of those priorities require more money, but do require shifts away from inefficient current spending in those areas. The longer-term political challenge will be to push back the expansion of the state and the enormous degree of corruption in all areas of government.

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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190,000 is not enough

From Australia's point of view, the more high-skill migrants the better the next five years. Given the collapse of migration in 2020-2022 and the abysmal state of the own education system, I think Australia could easily let in 300,000 a year the next five to ten years. Of course, I dont expect so many skilled would want to come anymore after the public's treatment of Djokovic and the extremely high hurdles the last two years faced by those wanting to come to Australia or leave it. The brand has been seriously damaged I think. On top of getting a reputation for mindless authoritarianism, the economic downturn and conflict with China also makes Australia less attractive. Still, I do think Australia's interests lie in high migration numbers, so it should open the borders and make an effort to repair the brand.

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 4

"Following the next Federal election, the incoming Federal Government should commission an independent Review of the Reserve Bank of Australia."

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

Uncertain

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 3 

"The Reserve Bank has, over the past 5 years, effectively used the tools available to it to achieve its goals of "maintaining the stability of the currency, ensuring full employment and furthering the 'economic prosperity and welfare of the people of Australia'."

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

Uncertain

3

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 2

"When do you expect the Reserve Bank of Australia to next lift its cash rate?"

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

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3

2023

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 1

"The current combination of Australian fiscal and monetary policy poses a serious risk of prolonged above-target inflation."

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

Agree

6

The RBA uses its own ("underlying") inflation rate which is lower than the main inflation rate to make these decisions, now about 3%. https://tradingeconomics.com/australia/inflation-cpi). Its inflation rate also misses much of the current housing price increase which is where much of the extra money printed during the great covid panic has gone. So the RBA cooks the books to avoid having to increase interest rates. Why it does this is a bit mysterious, probably reflecting the power of the property lobby, but it means that guessing the cash rate and interest rate becomes a game of guessing the politics rather than the economics. Independent reviews in the politics of Australia have proven not to be independent, nor are any politically painful findings implemented. Just think of the last Royal Commission on banking. So given the present quite maffiosi state of Australian politics, I can see no point in an independent review of anything.

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"

Government support to develop and roll out emissions-reducing technologies

Agree

Australia could be a solar powerhouse by 2050, exporting energy intensive products here that replace high-carbon products elsewhere. This could replace the coal industry and much of the local fossil-fuel energy production. For that transition to happen, the technology of solar and storage of solar needs to further improve and get cheaper, which will depend on international R&D of which Australia is a tiny amount (so not in our hands). The main thing we can do is to set up the infrastructure for huge solar farms, which is a regulatory issue. Another thing is to get into strategic partnerships with the large firms and research institutes at the forefront of developing solar and those that use intermittent solar energy for industrial purposes. Carbon prices, direct action, and carbon-extraction, have so far proven to be magnets for political corruption, totally useless when it comes to actual carbon-emissions. We should not fall for the hot air of those who lobby for them.

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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Measures to boost productivity growth;Reforming industrial relations to boost the bargaining power o

In the long-run, what matters is productivity and the bargaining power of labour. Governments can improve productivity by reforming the education system so as to provide high-level education. This would require major reforms, though it would not require money. Bargaining power of labour can also be increased such as by making it easier for labour to organise in more effective trade unions, and via increased minimum wages. All the other measures mentioned reduce real wages in the longer run. Restricting migration is clearly bad for long-run wage growth because foreign migrants have complementary skills to those educated in Australia, so restricting their inflow reduces the productivity of those living here. Lowering taxes means lowering government expenditure on productivity-improving investments. 'Boost business investment' is an empty gimmick phrase. Etc. So I see only two measures that governments can actually take that would increase real wages in the longer-run: the bargaining power of unions and productivity improvements. The other ones are either not up to government, do not work, or have opposite effects.

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"

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9

This is an opportunity to tax. So one should tax luxury cars, electric cars, charging points, the lot. The idea that one should subsidise everything is a version of 'free money'.

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?"

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D

I pity the treasury economists that had to come up with this one. They have been forced to pretend there is an unlimited amount of money to spend with no need to worry about debt, investments in education, or tax evasion. I particularly had to laugh about the plans to attract skilled migrants and students to Australia whilst it has turned itself into a prison camp that does not allow visits to family overseas. Good luck with that. It seems the treasury is being forced to make the best of an unsustainable situation in the hope the public comes to its senses on corona. The only saving grace has been the huge increase in iron ore prices that has rescued the balance of payments. Talk about 'lucky'!

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 

D

The Treasury didn't do the one thing recommended by most economists, which is to start a social housing program to make housing affordable and create jobs. Instead, it basically gave out lots of money to the rich that it didnt have. So debt will sky-rocket with few jobs created since the continued covid-related restrictions mean production and commerce remain repressed. The budget is hence like pushing the gas pedal and the brake at the same time, which just means loss of fuel and spent breaks. There was also no long-run orientation in this budget. No plans to overhaul the tax system to ensure a return to surplus and no plans to improve education and training. It was just about boosting demand and pleasing supporters. A waste.

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 

One-off cash transfers to households, Social housing

For the government to build affordable social housing is a good policy at almost any time, but particularly now with high unemployment. One-off transfers help reduce inequality and are a form of welfare increase, which is not too bad at this time. All the other 10 are either counter-productive because they simply mean more problems down the line, or they happen to be useless at this point in time. By far the best thing to do is to lift lock downs, travel restrictions, and social distancing rules, which do much more damage than any measure can repair. There is little point at providing band-aids whilst continuing to saw off the leg.

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 

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9

I regard Cameron Murray as one of the main experts on this now. Several public sector and private sector reports over the last 10 years, as well as our joint work in the booklet "Game of Mates" showed that compulsory super is largely a scam. The overhead is so large as to easily take 30-50% off people's super, straight into the pockets of the union bosses and employers running the schemes as directors of these compulsory funds. The main way it works is that the union bosses and big employers coordinate on the funds they "allow" their workers to choose from, as well as the particular defaults and charges in those funds, herding the workers into the fleecing stations. Expansion of the compulsory super element is thus a straightforward grab by corrupted groups for an even bigger slice of the wages of the population. Their running excuse is bogus, which is that people cannot look after themselves or that the scheme could not be run much cheaper. Both are simply untrue.

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 

Disagree

5

In a normal depression, I'd say "of course" because when hit by an outside economic shock, you want to stimulate aggregate demand in order to minimise unemployment whilst businesses adapt to the changed environment.