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Author's Name: Harry Bloch
Date: Tue 12 Feb 2019

Harry Bloch

Professor Harry Bloch

Harry Bloch is currently John Curtin Distinguished Emeritus at Curtin University. He was previously Professor of Economics (1997 to 2012) and Dean for Research and Development (2012) in the Curtin Business School as well as founding director of Director of the Centre for Research in Applied Economics (2006 to 2009). He previously held academic positions at the University of Tasmania, University of Denver (USA), University of Manitoba (Canada) and University of British Columbia (Canada). He has a BA from the University of Michigan and MA and PhD from the University of Chicago. He has been editor of the Economic Record (2002 to 2006); a member of the Australian Research Council, College of Experts, Social, Behavioural and Economics panel (2008-2010) and Laureates Selection Advisory Committee (2013). He is a Fellow of the Academy of the Social Sciences in Australia and an Honorary Fellow of the Economic Society of Australia.

Subject Area Expertise

Industrial organisation, international trade, development economics and the history of economic thought.

Website

http://business.curtin.edu.au/contact/staff_directory/index.cfm/Harry.Bloch


Responses (50)


Transition to net zero - ape the US Inflation Reduction Act?

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 support homegrown emerging green technologies

Provide more grants to innovative firms across the entire economy

Australia has been a laggard in the commercialisation of new technologies. There is no local access to capital comparable to venture capitalists in the US. Grants can provide funding for proof-in-concept development of new products and technologies, which may then attract private finance.


We can and should keep unemployment below 4%, says our survey of top economists

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%.

 

increasing enrolments in tertiary education, improving the quality of primary and secondary education, improving the quality of employment services

2

Two percent might strike some as unachievable level of unemployment, especially without soaring inflation. However, such unemployment rates were regularly achieved in the 1950s and 1960s along with low rates of inflation. Historically, rates of unemployment and rates of inflation don't have much relationship either across time or across countries. The idea of a "natural rate' of unemployment is a myth fostered on the economic profession and then onto the wider business community by a group of monetarist economists associated with the University of Chicago. I know because I was there as a student during the formative years of the myth in the 1960s. In its extreme form the myth is that any unemployment rate above the "natural rate" leads to ever accelerating inflation. No empirical evidence was adduced to support this proposition at the time and only feeble attempts have been made since. The proponents of the myth were keen to fight back against interventionist government policy designed to lower unemployment. The current debate about how low unemployment can go without sending inflation soaring is a sign of their success in this regard. The myth always was and still is utter rubbish, which provides an ironic example of the view offered by John Maynard Keynes in the closing paragraphs of The General Theory, 'Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.' A more sensible, although less popular, view proposed by post-Keynesian economists is that the rate of inflation has little to do with the rate of unemployment. This view starts from the observation that companies in manufacturing and service sectors generally operate with substantial excess capacity. Think of wandering through the typical department store at any time but annual clearance sales. They are more than happy to increase output (and employment) without raising prices. Mining and agriculture (primary industries) are different and generally produce whatever their land, mines, plant and equipment allow. Here, demand or supply disruptions, such as those caused by the war in Ukraine, have immediate impact on prices, which are passed through prices of manufactured goods heavily dependent on these raw materials, for example wheat in bread and crude oil in petrol. Inflation follows, but reducing aggregate demand for all goods and services is a stupid way of dealing with this quite specific source of inflation, especially when the goods with large price increases are essentials and the last for which purchases will be reduce. A more constructive approach to dealing with inflation induced by supply shocks is to address the supply shocks directly, such as releasing crude oil from strategic reserves as the US has done. Opening alternative delivery routes for Ukrainian grain should also be high on the list, as should facilitating expansion in planting of grain crops anywhere in the world that is able to help. Imposing excess profit taxes on energy producers and using the proceeds to subsidise retail energy prices helps restrain inflation, but doesn't address the direct cause and is only available to energy producing countries. Most important is to recognise that these sort of supply shocks are temporary and that prices tend to return to pre-shock level, providing a deflationary influence in future years (as has already happened with petrol prices). This leaves the question of how to get unemployment down to two percent, regardless of whether the unemployment rate is connected to inflation. Here, the most important consideration the heterogeneity of labour and labour markets. Plumbers are not easily substituted by academics nor do workers move across the country for small wage differences. In the current "labour market" there are many occupations in which vacancies exceed applicants and many where applicants exceed vacancies. Some of this is unavoidable in a constantly changing economy, but greater effort to better match skills and jobs through education and training will help. Especially, important given the impact of rapidly changing technology on job requirements is a greater focus on retraining, which seems largely ignored in government policy and left to the vagaries of individual initiative and the desperation companies that can't obtain critical skills.


How economists would raise $20 billion per year

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: Wind back deductions for negatively geared properties Increase resource taxes Wind back superannuation tax concessions Equity picks: Wind back deductions for negatively geared properties Wind back superannuation tax concessions Increase resource taxes

Efficiency comments: In considering issues of economic efficiency it is important to look beyond immediate impacts on the allocation of scarce resources. Taxation impacts on the health and well-being of society, affecting worker productivity in the short run as well as family formation and population growth longer term. Shifting the impact of taxation on the working population (who have limited access to tax concessions) to those living off the proceeds of capital (with the tax concessions identified in my choices above) should contribute to a happier, healthier and more productive labour force. It may also encourage a shift from rentals to owner-occupied housing. Equity comments: As I explained in my response to the efficiency question, the distinction between efficiency and equity is overblown. It is widely used by apologists for capitalist elites to justify policies that are not only inequitable but detrimental to long-run economic development.


Leading economists back Federal Government action to curb rising gas and electricity prices

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

 

.

Reserve domestic gas equivalent to 15% of LNG production from each LNG export project (ie making the

International prices for natural gas and coal have soared in response to the impact on supply chains from the war in Ukraine. Domestic prices for coal and natural gas (outside of WA) have risen in parallel, which in turn has contributed to rising prices for electricity and gas at the retail level. Coal and natural gas producers are receiving windfall profits, whether they supply the domestic or international market. While investment decisions for existing coal and natural gas producers were made under then existing royalty and export licensing arrangements, they were also made on the basis of lower expected product prices. Reserving part of the output from gas wells for the domestic market would ensure domestic supply and at the proposed 15% share would also put downward pressure on domestic prices, directly for retail gas and indirectly for retail electricity. Importantly, this would help to keep retail prices closer to current levels, avoiding a difficult and unexpected burden for consumers.


'It’s important not to overreact’: Australia’s top economists on how to fix high inflation

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

 

Increase immigration Boost childcare subsidies Increase education and training Support expansion of domestic manufacturing

3%

Increases in energy and food prices are major drivers of the current inflation, along with supply chain disruptions associated with the pandemic. While these are "temporary" factors, they will impact prices for some time going forward as increases in energy and raw material prices are passed on by manufacturers and retailers. We can only hope rate increases by central banks in the US and Europe will reduce demand for energy, food and items impacted by supply chain disruptions and offset the "temporary" factors, as raising interest rates in Australia doesn't have much impact. However, failure to raise rates here would lead to an outflow of capital and put downward pressure on the value of the Aussie dollar, which would drive up local prices of imported goods. Over the longer term, raising domestic production through programs like higher immigration, boosting childcare subsidies, improved education and expansion of domestic manufacturing would help lower domestic production costs and provide some insulation for the domestic economy from the impact of foreign shocks.


Prioritising issues for the incoming Government

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

 

.

Health and education are fundamental to having a productive economy. Not all families are in a position to make adequate provision for the health and education of themselves and their children, so governments must act if society is to function properly. The same argument extends to aged care, housing and social support in general, but without such direct links to productivity. Recent fires and extreme weather events demonstrate the importance of limiting climate change if Australia is to avoid catastrophe becoming a regular feature of everyday life. government support and coordination enhances the effectiveness of individual actions on climate change.


Top Economists see no prolonged high inflation, no rate hike next year (Q4)

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"

 

Disagree


Top Economists see no prolonged high inflation, no rate hike next year (Q3)

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"

 

Disagree

8


Top Economists see no prolonged high inflation, no rate hike next year (Q2)

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"

 

.

6

2022


Top Economists see no prolonged high inflation, no rate hike next year (Q1)

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"

 

Disagree

8

Australia has a small open economy with limited influence on world prices. The main channel through which fiscal and monetary policy in Australia influence prices of imports and goods that compete with imports is through the foreign exchange rate. The RBA could influence the foreign exchange rate through changing interest rates compared to corresponding foreign rates, but it has generally avoided doing this to avoid destabilising the foreign exchange rate and financial markets. The goal of stabilising the currency has taken precedence over other economic goals, which is appropriate given the RBA is best positioned to handle this particular economic goal. Prices of services, as opposed to goods, are less dependent on world prices, instead being most influenced by domestic wage rates. Wage rates in turn are influenced by labour market conditions including unemployment, bargaining strength of unions and government wage setting policies. While there has been talk of the need to increase wage growth, over the past five years governments at all levels have generally worked to suppress wage growth especially through limiting wage increases to their own employees. Inflation will eventually increase in Australia due to increases in world inflation pushing up prices of imports. The rising cost of living will increase pressure on governments to end suppression of wages of their own workers and to support improvements in the bargaining power of private-sector workers, leading to further inflation through increased prices for services. The rate of unemployment will play only a minor role role in this process as has been the case for the past two decades at least.


Australia’s top economists back carbon price, say benefits of net-zero outweigh cost

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

Australians will not only benefit from reducing environmental harm from global warming, but from participating in the development of new technologies that have substantial potential to generate income and create jobs (e.g. green hydrogen, energy storage and home energy conversation). A broadly applicable policy, such as having a price on carbon, offers the widest possible incentive for developing new technologies that may not have yet been conceived.


Promoting vaccination uptake in Australia

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"

 

National advertising campaigns;Cash incentives for vaccination;Mandatory vaccination for higher risk occupations;Lotteries with cash or prizes for the vaccinated;Vaccine passports for higher-risk settings (eg. flights, restaurants, major events)

All of the listed options can help in persuading at least some people to get vaccinated, but the effects of each are likely to be small. Consistent messaging from governments concerning the public and private benefits from vaccination and from following public health advice on complying with public health orders would be even more useful. Of course, access to vaccines is the most important and making vaccination convenient and easy once the vaccines are available would help much more than buckets of cash and coercion.


Policies to deliver higher wage growth

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"

 

.

Maintaining high government spending in order to boost aggregate demand;Reforming industrial relatio


Transition to electric cars

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"

 

Subsidise only the purchase of non-luxury all-electric cars, Subsidise public charging points for electric cars

10

Electric cars are the future. The sooner Australia gets up to scale with distribution and even production of electric cars, the fewer dinosaurs will be left on the road in twenty years time. If the market for electric cars gets large enough quickly enough, there is a potential for domestic production as the scale requirements for competitive production cost is still low relative to petrol or diesel vehicles. Subsidies are preferable to mandates given the technological uncertainties.


Top economists want JobSeeker boosted by $100+ per week and tied to wages

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."

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

 

Be indexed in line with wages

Do people who are unemployed have lower needs than those who are receiving the aged pension? Justifying a low rate of Job Seeker by claiming that higher benefits are a disincentive to work ignores the absence of sufficient demand for labour to achieve full employment. Current policy is akin to maintaining a reserve army of unemployed in order to prevent wages from rising, a very odd policy for a government that claims to be trying to lift the rate of increase in wages.


Does the budget rebuild our economy and create jobs?

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

Acceptance of the need for deficit spending to keep the economy from slipping into depression is good, but the jobs impact is diminished by the choice of tax cuts and investment incentives over expenditure that would lead more directly to employment , such as social housing and enhanced access to child care. With the economy operating well below capacity, any increase in investment may be biased towards saving on costs rather than increasing output capacity. The largest cost for most businesses is labour, so incentives for increasing investment can have the unintended side effect of decreasing employment. There is also the longer term problem that tax cuts financed by large deficits mean more saving by wealthy individuals, further aggravating inequality in wealth and income going forward.


October Budget 2020 - preferred four programs

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 

 

Wage subsidies or hiring bonuses (beyond JobKeeper), Permanently boosting JobSeeker (Newstart) beyond December 31, 2020, Funding higher quality aged care, Increasing subsidies for child care

Stimulating consumer demand should be the highest priority, especially the demand for services that has fallen off dramatically during the pandemic. This can be achieved by increasing the income flow to unemployed and low-wage workers, who have high propensities to spend their extra income. Attempts to boost investment spending through investment incentives or cutting corporate taxes, are less likely to be effective when there is ample excess capacity in the economy. Cash handouts and personal tax cuts may be largely saved unless very carefully targeted to groups who are most likely to spend.


The legislated increases in compulsory super contributions should...

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

The 12% super contribution rate is designed to provide an adequate retirement income for the average wage earner employed over an average working life. Anything less exposes the majority of the working population to a lower standard of living or depending on whatever standard of living is provided to future generations through an old-age pension. Further, the larger the proportion of the population who can't provide from themselves in retirement, the more difficultly future governments will have in financing the old-age pension at a reasonable level. Sound public policy is best served by ensuring most of the population can provide for themselves in retirement.


Government Debt during the COVID19 Crisis

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

Inadequate aggregate demand leads to reduced output and unemployment, with adverse consequences for individuals and society as a whole.


Social Distancing Measures, May 2020

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

8

Based on the experience to date of countries across the globe, some form of social-distancing measures appear necessary to avoid overwhelming health systems. Some countries, such as Australia, have acted before their health systems are challenged, while others have waited until infections are out of control. The economic pain as well as the number of infections and deaths appear higher with acting later on social distancing (compare the experience of Australia and the US). Extrapolating from this experience, a second wave of infections would be more costly in terms of the economy and health than keeping new infections under control, which roughly equates to keeping R<1 most of the time. With low numbers of new cases, R is likely to occasionally exceed 1, but R>1 for a sustained period would inevitably lead to the reintroduction of strict controls on social and business activity as well as increased deaths and compromised health systems.


Congestion pricing - November 2018

 

Agree

8


US corporate tax cuts - March 2018

Poll 27

"The recent US corporate tax cuts will have no impact on investments in and capital flows into Australia."

 

Agree

8

Saying "no" impact is a bit strong, but whatever impact occurs would be too small to be measurable by standard methods. Multinational firms have shown themselves very adept at avoiding profit taxes or at least transferring them to low-profit jurisdictions, whether Google or Apple take their profits in Ireland or the US will have little impact on their activities in Australia.


Australian Federal Budget 2018 - Reduce government debt or provide tax cuts? - April 2018

Poll 28

Proposition 1: "Slowing the growth in the debt to GDP ratio should be a priority for Australian governments."

Proposition 2: "Slowing the growth in the debt to GDP ratio is a higher priority than income or corporate tax cuts."

 

1 - Strongly disagree

2 - Strongly disagree

1 - Australia has among the lowest ratios of national government debt to GDP of all developed countries, which is unusual given the relatively high rate of population growth here. High population growth requires extra infrastructure. Just as a young and growing family generally relies on mortgage debt to provide housing, rapidly growing countries generally incur government debt to provide infrastructure. Growing populations provide growing output and government revenue, which can be used to pay off debt. Having the current population pay for the infrastructure needs of the future is like having parents buy houses for their offspring, not unheard of but not normal.

2 - The most immediate need for government revenues is to provide funding for expensive new programs, including the NDIS and the Gonski reforms to education funding, without stripping funding from other important programs, such as Medicare. Eventually, bracket creep will raise Commonwealth revenues as a share of GDP to a level sufficient to provide proper funding of all these programs and there will be an opportunity for cuts to personal income tax to compensate for bracket creep.


Waste Policy - August 2018

Poll 32

"There are clear net benefits for Australians from (further) increasing the diversion of waste from Australian landfills."

 

Strongly agree

10

There is a standard market failure argument that householders and at least some businesses don't pay the incremental pecuniary costs of the waste they have picked up from their premises, much less any of the substantial environmental costs. Even where waste removal charges are separately indicated on council rate notices, the charge is compulsory (no opt-out provision) and is independent of the quantity of waste picked up from the premise.


Gig economy and worker welfare - February 2018

Poll 26

"The wages and conditions of Australian workers providing services in sectors affected by the rapid growth of digital on-demand subcontracting platforms will, on average, be expected to fall without further government intervention."

 

Agree

8

The lack of government protections to remuneration and working conditions in the gig economy is likely to lead to continued erratic and substandard incomes for many of the workers who are being treated as independent contractors. This may very well spill over into downward pressure on wages and working conditions for workers who are treated as employees under current regulations, although many of these workers are already receiving close to minimum legal rates of pay and working under insecure arrangements with variable hours of work. Effective action to ensure the gig economy doesn't undermine community standards regarding the conditions of work requires much more research on current practices and conditions to determine the full extent of the threat and devise regulatory regimes to ensure all workers in Australia have a fair go.


Journalism as a public good - January 2018

Poll 25

Proposition 1: "The modern phenomena of information overload and social-media-fuelled 'fake news' bring into focus the value of quality journalism. Quality journalism has a public-good dimension that warrants public support."

Proposition 2: "The Australian government presently provides funding for the ABC and SBS, Australia's independent public broadcasters. The Australian government should increase its financial support of quality journalism."

 

1 - Strongly agree

2 - Agree


Same sex marriage - November 2017

Poll 24

"Assuming that the law will be changed to allow same-sex couples to marry in Australia, this will generate net economic benefits for the nation as a whole over the next 10 years."

 

Strongly agree

8


Robots, artificial intelligence and the 'future of work' - October 2017

Poll 23

Question A: "Holding labor market institutions and job training fixed, rising use of robots and artificial intelligence is likely to increase substantially the number of workers in Australia who are unemployed for long periods."

Question B: "Rising use of robots and artificial intelligence in Australia is likely to create benefits large enough that they could be used to compensate those workers who are substantially negatively affected for their lost wages."

 

A - Strongly disagree

B - Agree


Public borrowing for infrastructure investment - September 2017

Poll 22

"As interest rates are at low levels by historical standards, federal and state governments, despite their public debt levels, should be borrowing more than they currently are to invest in infrastructure"

 

Strongly agree

9

Borrowing to provide infrastructure is justifiable whether interest rates are high or low given that future generations are the primary beneficiaries of improved infrastructure. Moreover, the same argument applies to spending on education and research. The more important issue is whether the infrastructure is worthy in terms of those future benefits versus the current costs in terms of foregone opportunities.


The Finkel Review - August 2017

Poll 21

"The Finkel Review has recommended a mandatory certificate scheme that obliges electricity retailers to purchase a certain proportion of the electricity they sell from sources of electricity whose emission intensity is below a defined level. This is preferable to conventional approaches to the pricing of externalities, such as an emission tax or cap and trade scheme."

 

Agree

7

A major advantage of the mandatory certificate scheme is that it is likely to encourage investment in renewable energy generation. Both retailers and energy suppliers will have incentives to enter into long-term contracts for the supply of renewable energy sufficient to meet the mandatory certificate requirements. If the terms on offer for renewable energy and more favourable than those available for non-renewable energy, retailers have the option to contract for more than the mandated requirements. Uncertainty about the future price of electricity under possible emissions taxes or cap and trade schemes are contributing to the current negative investment climate for energy production from both renewable and non-renewable sources. This adds to the negative impact on investment from the  political impasse regarding the adoption of a sustainable policy for emissions control.


Does privatisation of human services hurt outcomes? - July 2017

Poll 20

"For-profit provision of human services like health and education leads to poor client outcomes and high costs to government."

 

Agree

7

This is a strong statement on an issue that has, unfortunately, not been subject to systematic evaluation. Governments have too readily relied on ideological suppositions and hidden behind commercial-in-confidence rather than subjecting private provision of education and health services to critical evaluation. There is substantial anecdotal evidence of poor outcomes for clients and high costs to government to weigh against contrary examples. In the absence of systematic evaluation, we are left to choose among anecdotes or rely on more general understanding of the efficiency and efficacy of public and private enterprise.


CGT deductions - March 2017

Poll 16

"Capital gains tax deductions for housing investment should be removed because they overstimulate the housing market, contributing to rising house prices."

 

Agree

10

My reason for agreeing with removal of capital gains tax concessions for housing investments is based on equity considerations rather than the nebulous idea that the housing market is "overstimulated". I'd be surprised if the capital gains concessions have much impact on the quantity of housing available, although perhaps some impact on its composition. There is an important concession available to all investors in capital assets through not having to declare any income until the asset is sold. That benefit and the use of negative gearing likely have much more impact on individual decisions to invest in housing than does the capital gains tax concession. Paying a bit more tax when the houses are eventually sold seems a modest contribution from investors to the public purse.


Gender diversity in the workplace - role of government? - June 2017

Poll 19

"The recent Parliamentary Inquiry into "Gender segregation in the workplace and its impact on women's economic equality" was asked to examine measures to encourage women?s participation in male-dominated occupations and industries. Although there is growing awareness of the productivity gains of gender diversity, the private market alone is unlikely to steer the Australian labour market toward gender equality in male-dominated industries. Breaking down gender segregation in the labour market can only be achieved with some degree of government intervention."

 

Strongly agree

8

The statement is overly dogmatic in insisting that gender equality can "only" be achieved with government intervention, but government intervention would certainly be useful for achieving this highly desirable objective.


Economics teaching - micro before macro - February 2017

Poll 15

"It is more effective to teach an introductory course in micro-economics first before an introductory course in macro-economics."

 

Strongly disagree

8


Australian Federal Budget 2017 - Outsourcing Economic Forecasting - May 2017

Poll 18

"Given the Commonwealth Treasury?s ongoing difficulty in making accurate forecasts of some of the key economic variables underpinning the Budget ? in particular nominal GDP growth ? the Government should ?outsource? the economic forecasts used in framing the Budget to an independent agency (such as the Parliamentary Budget Office), as now happens in the United Kingdom."

 

Disagree

8


2016 US Election - November 2016

Poll 13

"Hillary Clinton is likely to be the superior US presidential candidate for the Australian economy and for Australia."

 

Strongly agree

8

Australian exports to the US are exposed to the threat of protectionist policies promised by Trump to say nothing of the potential for unsettling world financial markets.


Immigration - November 2016

Poll 12

'The total benefit of current levels* of migration to Australia will outweigh the total costs to Australia's economy'.

 

Strongly agree

8


Energy shortages - reserving Australian gas - April 2017

Poll 17

"In response to energy shortages around Australia, government policies requiring gas producers to reserve some production for domestic consumption are a good way to ensure that Australian consumers have access to sufficient gas supplies while still allowing for gas exports."

 

Agree

8

Australia is suffering the effects of poor planning in the energy sector, especially with regards to the approval of export LNG plants without assurance of sufficient supplies of natural gas. This leaves the country exposed to the ironic position of being a major exporter of gas even though domestic customers are faced with prices far exceeding those paid by customers in gas-importing countries. Requiring a substantial proportion of any new gas supply be provided to the domestic market is a second-best solution to this situation and could have some disincentive effect on developing new gas fields (although not if the domestic prices remains above the export price). The alternative of doing nothing would jeopardise the international competitiveness of domestic manufacturers who are heavy users of natural gas as a fuel source or feedstock.


Part 1: 'Behavioural economics provides new and useful insights into individual behaviour.' Part 2: 'It is unethical for governments to use behavioural economics to

The total benefit of current levels* of migration to Australia will outweigh the total costs to Australia's economy.

 

Strongly agree

9

We need to better understand the drivers and complexities of individual behaviour.


Behavioural economics - September 2016

Poll 11

Part 1: 'Behavioural economics provides new and useful insights into individual behaviour.'

Part 2: 'It is unethical for governments to use behavioural economics to "nudge" citizens.'

 

PART 1 - Disagree

7

No clear difference between nudging and using taxes or subsidies to influence behaviour.

PART 2 - Disagree

7

No clear difference between nudging and using taxes or subsidies to influence behaviour.


RBA economic growth targets - August 2016

Poll 10

"The Reserve Bank of Australia should be tasked with targeting nominal economic growth rather than inflation."

 

Disagree

7

A target in terms of real economic growth would be a reasonable alternative to a target in terms of inflation for it is real economic growth that delivers the goods to support a improved standard of living. Of course, whether the RBA is able to exert more than a weak and indirect influence on either the inflation rate or real economic growth is open to serious doubt.


The Brexit - impact on UK citizens - July 2016

Poll 9

"Assuming it is implemented, Brexit will deliver net economic benefits, on average, to UK citizens within its first 5 years."

 

Disagree

7

London's role as an international financial centre will almost surely decline. Whether there will be any offsetting gains from a cheaper pound remains to be seen.


Spend on education or business tax cut - June 2016

Poll 8

"Australia will receive a bigger economic growth dividend in the long-run by spending on education than offering an equivalent amount of money on a tax cut to business."

 

Agree

8

In the intermediate run, the relative impact on growth of education spending and tax cuts depends on their respective impact on productivity. Education increases the ability of the future labour force to function effectively in the workplace and, critically, to imagine better ways of doing things (innovation). Tax cuts may stimulate more investment, which can expand production and increase the effectiveness of labour. Given that we have experienced a long period in which human ingenuity has apparently contributed more to economic growth than accumulation of machines, my bet is on a smarter population rather than more machines. The long run is not a particularly useful concept for policy analysis as by the time it arrives the world will be fundamentally different than what was expected. Hence, Keynes' famous comment that in the long run we are all dead.


Budget 2016-17 - Returning to surplus - May 2016

Poll 7

"The recently released 2016-17 Commonwealth Budget projects that the Australian Government's underlying cash balance will return to surplus by 2020?21*. Australian politicians should rebalance the budget with greater urgency."

 

Strongly disagree

8

The time to repair government budgets is when the private economy is growing strongly, not when it is stagnating. Now is the time for investing in the nation's future, particularly in education as a well educated population is central to both productivity and creativity. Infrastructure investment is also important, but this is mostly hidden from the budget bottom line.


China services boom for Australia? - April 2016

Poll 6

"As the Chinese economy makes its transition from investment-led to consumption led growth, the Australian service sector which currently accounts for around 20% of total exports, will produce a second 'Chinese economic windfall' for Australians."

 

Agree

8

There are already substantial service exports to China in the form of inbound tourism and Chinese students studying in Australia. There is little doubt that both export streams will continue to expand over the next few years. There are also opportunities in business, financial and legal services as China becomes more integrated into the global economy. However, Australia's comparative advantage in exporting these services is less clear than in the case of the resource exports.


Efficiency of tax Government investments in major sporting events - February/March 2016

Poll 5

"Government investments in major sporting events usually generate net benefits for the city or region where the investment is made."

 

No opinion

5


Efficiency of tax incentives - February 2016

Poll 4

"New tax incentives for investments in technology and innovation businesses and start-ups are likely to be inefficient."

 

Strongly disagree

10

The statement that "the incentives are likely to be inefficient" is purely ideological. The standard theory of the efficiency of the allocation of scarce resources among competing assumes market mechanisms that are well informed and competitive. Investments in technology and start-up businesses are plagued with fundamental uncertainty, asymmetric information, moral hazard and underdeveloped markets. Thus, the standard theory provides no scientific basis for assessing the efficiency of tax incentives for such investments.


Bah Humbug Australia - December 2015

Poll 3

"Giving specific presents as holiday gifts is inefficient, because recipients could satisfy their preferences much better with cash."

 

Strongly disagree

10

As we approach the silly season, it is appropriate to have a silly question. Applying efficiency evaluation to gift giving demonstrates brilliantly the limits of the homo economics conception. Imposing restrictions on the recipient's use of purchasing power is inefficient in this conception. Human beings are more complex, they have emotions and emotional intelligence. Through choosing a gift, the giver demonstrates an understanding of the interests and needs of the recipient, thereby indicating regard, perhaps even love, for the recipient. A gift of purchasing power shows a low level of emotional engagement.


Penalty Rates Reform - November 2015

Poll 2

"Aligning Sunday penalty rates for hospitality, entertainment and retailing industries with the current levels for Saturday, as proposed in the Productivity Commission's draft report, will lead to more employment and greater availability of services in these industries on Sundays."

 

Agree

7

The question ignores the potential impacts elsewhere in the economy. Declining penalty rates reduce the income and expenditure of those already working on Sundays unless fully compensated by higher hours. Also, higher trading on Sundays may simply divert expenditures from other days, leading to employment losses on those days.