Fabrizio Carmignani

Poll 64

Panelists were asked to comment on two questions: 

Is the budget likely to achieve its aim of getting inflation back within the RBA target band by the end of this year and back to 2.75% by mid next year?

And

On May 14, the government delivered a budget designed, in the Treasurer's words, to "focus on fighting inflation in the near term and then growth in the medium term " - 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/

NO I need to qualify my answer. "No" in this case means that whether or not inflation goes back to target might not depend on this budget. Other domestic and international factors are at play which might have greater weight in the short term. Certainly, if we do the maths, the measures announced by the treasurer will add somewhat to inflationary pressures. But persistent international instability and its effect on energy prices is likely to have a bigger (downward) effect in my view.

C

This is a budget that seems to have tried to strike a compromise between providing some cost of living relief and managing public finances, with of course an eye to next year's election. Achieving such compromise is always going to be difficult and the budget achieves that only to some extent. Overall, the cost of living package could have been better targeted, although one has to be realistic about the feasibility (and administrative cost) of means-testing. The cap on international students, without further details on its implementation, is equivalent to a cap on exports in a sector where domestic demand clearly does not exhaust supply, meaning it is easily supplied. If the concern is the impact that international students have on the housing crisis, then I would say it is the wrong perspective on the crisis. Finally, the budget fails to deliver a vision for the long-term future of Australia. The words "Future Made in Australia" are mentioned frequently in the budget, but it lacks a coherent and consistent framework to support innovation and (true) entrepreneurship.

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: Introduce or increase land taxes (possibly with cut in stamp duty) Equity picks: Wind back franking credits Wind back deductions for negatively geared properties Introduce inheritance taxes

Efficiency comments: Previous studies from the Treasury show that a broad-based land tax has a relatively low marginal excess burden and hence, in this respect, it is more efficient (or less inefficient) than other taxes. Conversely, stamp duties tend to have a relatively high marginal excess burden. On this basis, the introduction or increase of land taxes, accompanied by a reduction of stamp duty, seems to me as the most efficient way to go. As additional measures I suggest winding back franking credits and rental deductions. Equity comments: An inheritance tax can generate large revenues while achieving greater equity. Clearly, the extent to which this happens will depend on the design of the tax and the elasticity of bequests to the tax rate. Under reasonable parameterisations, an inheritance would not seem to generate large reductions in pre-tax bequests, but it would generate potentially large extra revenues, which supports the proposal to introduce an inheritance tax.

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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Targeted support to vulnerable households

Given the nature of the energy shock, it is time to phase out non-targeted measures that act to control or lower the price of energy and move towards targeted support to vulnerable households. Income is of course one criterion to identify vulnerability, but should not be the only one. Other criteria should include housing quality, location and the composition of the household, as recently recommended by the OECD. In other words, government should rely on, and strengthen, social safety nets for vulnerable households.

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

Equal opportunities and pay for women Macroeconomic policy Broader reforms to promote productivity

Broader reforms to promote productivity The well-being of the Australian community in the longer term critically hinges on sustainable productivity growth. This in turn is primarily driven by innovation. It seems to me that this has been neglected for too long, while the policy discussion has often focused on the short-term cycle rather than the long-term trend. We need a policy framework to encourage entrepreneurship, capital ventures, and R&D (noting that entrepreneurship is something different and more than just running and managing a business). And we have to avoid the temptation of "picking winners", i.e. determining ex-ante which sectors or areas of the economy will deliver the next wave of innovation and productivity growth and invest only in those sectors. This type of approach is too much at risk of becoming the type of heavy centralized industrial policy that failed in so many countries between the 1950s and the 1980s. What I think we would need instead is a policy framework to support innovation and new ideas and activities across the economy, allowing for the process of "creative destruction" to take place and accompanying this process with a significant investment in active labour market policies and welfare for workers.

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

Extend the temporary cut in fuel excise due to expire in September

2-3%

The current inflation push is primarily driven by global (supply) side shocks, including the disruption of supply chains and the geopolitical tensions in Eastern Europe and elsewhere. Even if domestic (more demand-related) factors might be secondary, I still believe that increasing the cash rate is the best available policy response we have at the moment. The challenge for the RBA is to strike a balance between the need to act quickly to anchor inflation expectations and the risk of slowing down the economy too much. In fact, while current data show that the Australian macroeconomy is healthy, there are signs of growing weaknesses both domestically and globally. It seems to me that so far what the RBA is doing is working: inflation expectations implied from financial markets still show inflation within target in the medium term. At the same time the quarter-on-quarter increase in CPI is lower in the first quarter of this year than it in the second quarter, which might indicate that we are approaching the peak of inflation. In terms of other tools, I think that there is limited role for fiscal policy to be used to reduce inflation in this scenario, so my preference goes to continuing the ongoing monetary policy action. RBA should of course now start watching carefully the property market, given the recent decline in values. But again, this is part of the trade-off between disinflation and declining rate of economic activity.

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 about right

The analysis in the intergenerational report shows the benefit of net migration inflows for the Australian economy (see Box 2.1 in particular) https://cdn.theconversation.com/static_files/files/2011/Extract__Intergenerational_Report.pdf I do not see an argument to reduce the intake of permanent migrants below 190,000 at this stage, so, it seems to me that we should stick to the plan to return to 190,000 in 2023-24.

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"

Agree

9

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"

.

8

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"

Disagree

9

While underlying inflation is at 2.1%, inflation expectations based on bond rates are around 1.5%, so there is no sign that financial markets are expecting an immediate surge in inflation. This is understandable given that the current increase in inflation is not due to the economy overheating. This also means that from monetary policy perspective, there is no need to rush into increasing the interest rate. One could argue that the RBA has kept the interest rate too low for too long and still failed to maintain inflation within the target band. This argument however would not take into account the fact that already before COVID, Australia was in a contraction, with a moderately negative output gap (according to IMF estimates) that had persisted for years. Under those macroeconomic conditions, a low interest rate made sense, even though eventually monetary policy ran out of steam. I am unsure about the independent review of the RBA. One of the principles of monetary policy is that the monetary authority should be independent of the fiscal authority: to what extent would the review affect RBA's independence?

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

Vaccine hesitancy has been a problem to a large extent caused by confusing communication (both domestically and internationally). A clear, widespread campaign that addresses hesitancy is therefore necessary. Mandatory vaccinations for higher risk occupations is a measure that should be (in fact: should have been) taken irrespective of any consideration regarding boosting demand. I realise that ethical issues have been raised against mandatory vaccinations, and there is some literature suggesting that this type of non-voluntary interventions can backfire, but given the experience of the last 18 months, it seems that vaccinating people in high-risk occupations is likely to have a significant payoff in terms of preventing further spread. Finally, the question of how cash incentives (or lotteries) affect the incentive to be vaccinated is debated in the literature, with evidence that the effect could go either way. On balance, however, both theoretical and empirical arguments suggest that cash transfers should effectively help (see for instance https://www.medrxiv.org/content/10.1101/2021.07.26.21250865v1) and for this reason I include them in the list of desirable policies.

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;Measures to boost business investment;Maintaining high governm

Boosting productivity is key to sustain long-term wage growth. To some extent, this requires boosting investment, but one should keep in mind that productivity growth is not just a matter of building new physical capital. Innovation stems from investment in human capital, research and development. In this respect, the list of policies should have also included some reference to education, human capital and R&D. Finally, maintaining high government spending is a short term measure and, in terms of wage growth, I think less of a priority than boosting productivity growth.

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 public charging points for electric cars, Make charging points compulsory in new homes and new carparks

9

The government should play an active role, hence my recommendation would be to design and implement a package of measures at federal level (there is still too much dispersion and inconsistency at state level). However, I am not fully convinced about the introduction of a subsidy to the purchase EVs. While in principle a subsidy would make EV more affordable, it could also lead to a situation where the price of these vehicles stays too high for too long. Banning imports is another measure that requries more consideration in terms of design. The rationale is clear, but again the risk ? as with any import ban ? is that in the end the final consumer will bear the welfare loss associated with restrictions to international trade. I therefore favor other measures, including subsidies for public charging points and removing luxury car tax from all EVs. I also support a measure such as the one applied by the ACT government to waive registration fees on the purchase of all electrical cars or other zero emission vehicles.

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

.

D

The good thing about this budget is that it was not about repairing the deficit and debt accumulated in 2020. Whether this is because of a fundamental change in perspective (i.e. away from the idea that balancing the budget is in itself a goal of fiscal policy towards the idea that the budget is a tool) or more opportunistic electoral reasons is difficult to say. However, most of the specific measures are in my view insufficient or inadequate to support the continued recovery of the economy and to create the basis for longer term growth. For instance, there is in this budget - as often in the past - an almost blind confidence in the power of investment in physical infrastructure to drive future growth and development. In fact, the future prosperity of Australia depends on innovation that requires social rather than physical infrastructures. As for previous budget, the government seems to lack a coherent view of the Australia of the future, e.g. what our society will look like, how to enable the drivers of sustainable prosperity, etc...Similarly, in spite of the narrative, the budget does only the bare minimum in terms of supporting women, even though one has to acknowledge that even this bare minimum is a step forward from the past. The support for aged care is good news, even though the planned investment only partly fills the gap left by years of underinvestment, particularly in relation to staff training. Also, social housing is an important missing item. Needless to say, this budget does very little, if anything at all, to support two critical sectors like tourism and universities that have been badly hit in 2020 and will continue to be badly hit as a result of the decision to keep the borders closed for another 12 months. All in all, I would define this as "the budget of the missed opportunities", hence the low grade.

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 budget provided a rescue package to the economy, which is what is needed in the current context. However, this package failed to address some of the key needs of the economy. I would have liked to see more focus on social housing, an increase in jobseeker, and - for the long-term - a broader framework to support innovation. Some more targeted support to female employment (possibly by redirecting some of the planned investment in/support to construction) would have also been beneficial. I am also concerned that the income tax cuts that have been brought forward are designed in such a way to reduce progressivity at a time when lower-income individuals and households are likely to suffer the most from the recession.

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

The fact that some businesses are unable to fill specific vacancies in certain parts of the country is not necessarily evidence that Jobseeker is too high. In fact, the economics behind the supposed "disincentive-effect" of unemployment benefits (such as Jobseeker) is much more articulated than the simplistic arguments often used in the public debate. People seek employment for many reasons, including personal satisfaction, collegiate relationships, dignity. This means that most (albeit not all) individuals will continue to actively look for a job even when unemployment benefits are in place. Of course, unemployment benefits need to be combined with other labour market policies that facilitate job search, matching, and requalification when needed. Overall, a well designed package of labour market policies should include an unemployment benefit that is significant in terms of supporting the living standard of people without work. In this respect, I would be favorable to increasing job seeker (net of the COVID supplement) to be at least 50% of the minimum wage. I am also strongly concerned by a too early reduction of the supplement, as we know that even if GDP were to rebound as early as late 2020, unemployment is sticky and will remain above pre-crisis level for longer. Finally, in the current context, weekly earnings are probably a more relevant proxy of changes in living costs and I therefore support the indexation of Jobseeker in line with wages.

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, Social housing, More funding for education and training

There are of course many possible, valuable combinations of actions that the government can undertake. I therefore prefer commenting on what, in my view, the government should not do, and that's corporate tax cuts. This always seems to be the preferred solution to any economic problems: cut taxes on corporates and the benefits will trickle down to the rest of the economy. Unfortunately, it is not that easy, the evidence of trickle down effects is very limited, and if anything there is evidence that there is in general no trickle down. Also, the evidence on the association between corporate tax rates and macroeconomic performance/labour market performance is far from conclusive. Ultimately, the argument to support corporate tax cuts is not well grounded theoretically or empirically. In relation to personal income tax cuts, the point there is to ensure progressivity. Evidence suggests that personal income taxation in Australia has become less progressive since the GFC, hence it would be appropriate for the government to consider changes that strengthen progressivity.

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

10

In the current conditions, a flattening of the recession curve can only be achieved through fiscal support.

Poll 39

"A freeze in the minimum wage will support Australia's economic recovery"

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

Disagree

7

The argument that a higher minimum wage increases unemployment does not take into account two important factors. First, the evidence on the relationship between minimum wage and unemployment is mixed. That is, an increase in the minimum wage does not necessarily increase the level of unemployment. Second, in this context, a wage freeze would be contractionary, while a moderate increase would support private consumption and aggregate demand (the potentially adverse effect on profits and business investment would be moderated by the increase in capacity utilisation). All in all, the argument for the minimum wage freeze is not established, theoretically and/or empirically, and therefore I disagree with the statement.

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"

Agree

9

A policy that ensures R<1 is preferable to a policy that ensures R>1, because with the latter the disease continues to spread and this increases economic costs in the long-term. Social distancing and other non pharmaceutical interventions however need to be accompanied by a "rescue package" to (i) strengthen the capacity of the health care system (ii) ensure that workers stay employed and collect their wages (or alternatively receive income support) (iii) prevent bankruptcies of solvent businesses (iv) ensure the stability of the banking sector

Poll 31

Proposition 1: "The best economic policy instrument available to policy makers seeking to address obesity and related health issues in Australia is the introduction of a tax on sugar sweetened beverages (SSBs)."

Proposition 2: "The health and non-health benefits from a tax on SSBs are likely to outweigh the possible costs felt elsewhere in the economy."

1 - Uncertain (neither agree nor disagree)

2 - Agree

1 - It is difficult to say that the tax is the "best" available instrument. It is certainly an instrument that should be considered and used, but it is not a silver bullet and should probably be seen as part of a broader package of measures targeting consumption habits. So, while I am strongly in support of the introduction of the tax, I cannot equally strongly agree with the statement that the tax is the best instruments available.

2 - There is a voluminous empirical evidence suggesting that these taxes are effective in reducing obesity. On the other hand, this tax is probably regressive. In practice, given the weight of SSB in the consumption basket of individuals, the adverse effect on poorer individuals should be small and most likely recovered through improved health outcomes. Producers also claim that the tax would result in a loss of jobs due to reduced demand. I am not aware of specific estimates in this sense, but one could argue that if the expenditure is reallocated from SSBs to other products, then increased demand for these other products should also lead to increased labour demand, so that the net effect of the tax on total employment should be in the end negligible.

Poll 36

Proposition 1: "Professional accreditation for the economics profession would attract more people to economics as a career."

Proposition 2: "The benefits of professional accreditation for current and prospective economists would exceed any possible costs"

Part 1 - Disagree

8

Part 2 - Uncertain (neither agree nor disagree)

6

In relation to proposition 1, my view is that attracting more people to economics as a career is not (primarily) a matter of establishing a professional accreditation. This does not mean that a professional accreditation could not help, but certainly it would not be a game changer. The key to attract more people to economics lies elsewhere, i.e. in our ability as economists to explain to the community, employers, and general public what we do and why; in our ability to show that the skills and logic acquired through studying economics can be applied to a large variety of professions and industries. I do not think that just establishing a professional accreditation would help us do that. In relation to proposition 2, I am uncertain because the balance between costs and benefits would significantly depend on how we design the professional accreditation, particularly in terms of enforcement mechanisms. Thinking about costs and benefits in abstract is a bit difficult and hence I am not comfortable providing a more specific answer.

Poll 27

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

Agree

8

Investment in Australia is mostly driven by factors other than taxation. For instance, mining companies invest in Australia because we have minerals and a change in the US tax rate is not going to alter this. Therefore, the worst possible thing that we could do is to decide that we need to cut our own corporate tax rate in order to make our economy more attractive to foreign investment. This would not increase our competitiveness by one bit, but it would surely have a negative impact on the budget and lead to a cut in the supply of public goods and services. The ultimate result would be more inequality and slower growth.

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 - Uncertain (neither agree nor disagree)

2 - Agree

1 - While of course nobody would claim that we should let the debt to GDP ratio grow, theory and empirical evidence suggest that out current level of debt to GDP ratio is (i) sustainable and (ii) well below the threshold past which debt could slow down economic growth. In this regard, slowing the growth of the ratio is not a top "priority" for the government.

2 - If the choice is between slowing the growth of the debt to GDP ratio and cutting taxes, then the debt to GDP ratio comes first. This is because cutting taxes is not a priority, particularly company taxes. However, I should remark that both the debt to GDP ratio and cutting taxes are significantly less of a priority than increasing spending on public goods and infrastructure. According to poll reported in The Australian on 24 April, voters seem to be very clear about this order of priorities.

Poll 33

Proposition 1: "There is a significant risk that, either as a result of the findings and recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry or as a result of the financial institutions' response to those findings, credit will become less readily available to Australian households or businesses."

Proposition 2: "Assuming credit becomes less readily available to Australian households or businesses, this will in turn have adverse consequences for the performance of the Australian economy."

1 - Uncertain (neither agree nor disagree)

2 - Disagree

1 - Uncertain here is the average between two considerations of opposite sign. First, yes there is a risk of credit becoming less readily available to Australian households and business. (But) Second, I do not think that the Royal Commission is the main factor driving this "credit crunch". The borrowing capacity of property investors was declining well before the publication of the interim report. Also, the report points to very important misconduct issues whose correction will have long-term benefits. The possible tightening of credit conditions in the short term is the price to pay for this necessary correction. Finally, part of the short term decline in the volume of credit available from banks might be offset by an increase in credit from other (non-bank) financial institutions.

2 - Following from my answer above, I do not see how the report in itself can have major, long-lasting negative effects on the performance of the Australian economy. This does not mean that the outlook for the Australian economy is without risks, but these are not primarily arising from the report.

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 - Agree

2 - Agree

1 - I agree with the general principle embedded in the proposition. The value of quality journalism as a public good now that there is such widespread access to incorrect and fake information through social media is even higher than in the past. However, I also have to acknowledge that implementing the principle of the proposition is difficult: who establishes what quality/good journalism is? How do we guarantee the plurality of views?

2 - For the same reasons, and with the same qualifications provided in my comment to proposition 1.

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"

Disagree

8

The statement is problematic in two respects. First, borrowing to finance infrastructure is not just a matter of opportunity relative to the level of the interest rate. It is also a matter of quality of the available investment projects: the government (federal or local) should borrow "more" if there are good investment projects in which to invest; not just because the interest rate is low. This also means that if the interest rate werre to increase, but good infrastructure projects are still available, then the government should continue to borrow to finance those projects. Second, the question seems to build on the idea that the only "good" debt is the debt incurred to finance infrastructure. I am not comfortable with this idea. Again, whether the debt incurred to pay for infrastructure is good or bad depends on the quality of the infrastructure projects; it is not always good and it is not always bad. At the same time, there can be plenty of "good" debt that is not related to investment in infrastructure.

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."

Agree

8

Government intervention is necessary, I agree. However, the issue is then what kind of government intervention should be used. For instance, quotas in my view do not necessarily address the cultural change that is required in male-dominated industries. I am strongly in favour of interventions that (i) eliminate any form of discrimination in the recruitment and selection process and (ii) support women's participation in the labour market, thus giving them equal opportunities as men to be selected for any jobs.

Poll 15

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

Disagree

8

It is an interesting question with no simple answer. If we are talking about a first year course in a Bachelor of Economics, then the answer is probably yes: micro first and then macro is likely to be more effective, albeit I would still devote the first couple of sessions of this course to the presentation of a broader macro picture of economics. But if instead we are talking about a first year course that goes into programmes like the Bachelor of Commerce or the Bachelor of Business, then the answer is no: micro first is not necessarily the best approach. This is because for most of the students in the BCom or the BBus, the first year course in economics will be their only exposure to economics. In that case, I think it would be better to have a course that tackles the "big" issues: growth, unemployment, inflation, debt, etc..., and this necessarily will have to be a more macro course, with possibly a few sessions on the micro fundations of the big issues.

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

We should find ways to improve Treasury's forecasts rather than outsourcing forecasts to other agencies/offices, which could also make significant mistakes. I also do not believe that outsourcing is necessary to address an issue of 'independence', because the very notion of independence here is vague and controversial. This of course does not mean that the forecasts of the Treasury should not be analyzed, discussed and compared with forecasts from other offices or agencies. But, again, this discussion ought to be constructive and help the Treasury improve their forecasting models.

Poll 13

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

Agree

9

Even if the effects of US economic policy on Australia are indirect and probably less strong than the effects of Chinese and (possibly) Japanese economic policy, I think that the question is relevant. The answer is unambiguous: Hillary Clinton is the superior candidate. Period. Donald Trump's economic policy plan (at least for what we have seen and heard in this campaign) is a mix of autarchy and tax cuts which will damage the US economy, increase inequality, and ultimately send a disrupting shock wave across the global economy. Australia (or the rest of the world, for that matter) certainly does not need that.

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

Strongly agree

9

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

8

Behavioural economics is a tool, so the only relevant question is whether this tool is used to improve social welfare or not. In this sense, the use of behavioural economics is not ethical or unethical in absolute sense.

PART 2 - Disagree

8

Behavioural economics is a tool, so the only relevant question is whether this tool is used to improve social welfare or not. In this sense, the use of behavioural economics is not ethical or unethical in absolute sense.

Poll 10

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

Strongly disagree

9

The RBA (or any central bank for that matter) should certainly not be tasked with targeting long-term growth (nominal or real). This is such a well established result in the academic literature and policymaking practice that I do not think anyone can realistically argue the opposite. If instead we refer to the short-term, then the RBA might play a role in stabilizing output; that is, in using the monetary policy instrument counter-cyclically to smoothen cyclical fluctuations. But even then, this does not mean targeting nominal growth rather than inflation. Finally, the RBA has already done a lot to stimulate the business cycle in this phase of contraction. Further interest rate cuts are unlikely to have any significant impact on output. Instead, it is now up to the government to do more to support the recovery and, even more importantly, to create conditions for sustained long-term growth.

Poll 9

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

Strongly disagree

9

There is simply no valid economic argument (theoretical or empirical) to support this statement. Brexit advocates have produced some estimates based on highly simplistic (and somewhat unrealistic) post-Brexit scenarios and very generous assumptions on gains from reduced trade diversion and reduced contributions to EU budget. Instead, a more comprehensive, realistic, and theory-based analysis by the UK Treasury shows that Brexit will result in significant GDP losses in the long-term.

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

9

One thing about the premise of the question: spending on education and cutting business taxes do not have to be mutually exclusive. They become mutually exclusive only if take the view that fiscal policy is about minimizing government and stabilizing the budget at every single point in time. If instead we acknowledge that the ultimate purpose of fiscal policy is to increase the welfare of the community, then the trade-off between spending on public goods and supporting businesses disappears. Having said that, if hypothetically we had to make a choice between the two, then it seems to me that the empirical evidence is quite clear. Expenditure in education has a larger payoff (in fact, the empirical evidence on the growth and welfare benefits of cutting business taxes is very weak). More and better public education fosters the process of innovation (which drives economic growth in the long term) and leads to a dynamically efficient redistribution of opportunities (which guarantees that growth is inclusive).

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

10

The obsession for balancing the budget has made already enough damage (in Australia and overseas). The fiscal multiplier in Australia is greater than 1, so fiscal policy should be run counter-cyclically and the budget should stay in deficit as long as the economy is in a contraction (as it is the case now: the output gap is still significantly negative). Those who urge the government to balance the budget make two mistakes. First, they forget that the budget is a tool; hence balancing the budget cannot be the ultimate goal of fiscal policy. Second, they forget that debt sustainability is a matter of economic growth. The only thing that could make debt unsustainable in Australia today would be the decision to rebalance the budget in a time of economic contraction.

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

9

I agree, but with an important qualification. The transition of China towards a consumption-led economy with a growing middle-class will not automatically result in a windfall for Australia. The potential for a windfall is there (Chinese demand for Australian services is growing at an impressive rate and the value-added in services exports is higher than from other sectors), but there is also strong and growing international competition ready to take advantage of increased demand for services coming out of China. Australian policymakers need to acknowledge that this time is not going to be as easy as it was for resources. I wish to acknowledge discussion with James Laurenceson at the Australia-China Relations Institute on these issues.

Poll 4

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

Disagree

9

Tax incentives are not necessarily inefficient; hence my disagreement with the statement. Obviously, depending on how incentives are designed and implemented, they might be inefficient. This is particularly the case when the government uses selected incentives to pick winners ex-ante and/or when incentives are not linked to some form of performance assessment based on clear and transparent benchmarks. So, in my view, the point is not whether tax incentives are efficient or inefficient in absolute terms, but rather how they are designed and what kind of governance mechanisms are established to support their implementation.

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."

Disagree

8

I think there is not enough evidence in the PC draft report (or anywhere else) to conclude that Sunday penalty rates should be lowered. The fact that there is increasing demand for services on Sunday does not imply that workers should be paid less to provide those services. In fact, one would argue that workers should be paid even more. If the logic underlying the PC's draft report were applied to emergency services (which citizen would like to access 24/7), then what should the salary of a doctor in the ER or a policeman on duty on Sunday be ? I have an additional concern: if longer opening hours on Sundays imply that consumers spend more time and money at cafes and restaurants on Sundays, then the volume of business of these shops in weekdays might decline. If this happens, than the net effect on employment becomes even more difficult to predict.