Chris Edmond

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

Care jobs Industrial relations Equal opportunities and pay for women

Industrial relations Reviving enterprise bargaining would enable increases in productivity that are fairly shared.

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"

.

190,000 is not enough

If we had per capita immigration at the same rate as Canada we would have a permanent migrant intake of about 250,000 people per year.

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"

Agree

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

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

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

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

To be clear, these policies are to large extent complementary, if I could I'd pursue some version of all of them.

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"

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

Poll 48

Our panellists were asked

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

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

.

Measures to boost productivity growth;Measures to boost business investment;Maintaining high governm

In the long run, the key to stronger wage growth is stronger labour productivity growth, through total factor productivity growth, investment, or allocative efficiency. In the short run, we need expansionary fiscal policy that drive us towards full employment. The question asks about wage *growth*. The industrial relations policies listed are more likely to increase labour's *share* of national income, this might help wage growth in the short run but seem less likely to lead to permanently higher wage growth. Although not listed as an option, policies that reduce product market power (monopoly) might similarly lead to an increase in labour's share of national income and hence increase wage growth in the short run. The evidence on immigration and wages provides no reason to think lower migration would sustainably increase economy-wide wages. Lower migration reduces labour supply *and* labour demand.

Poll 47

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

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

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

Remove the luxury car tax from all-electric cars, Subsidise the purchase of all all-electric cars, Subsidise public charging points for electric cars

10

I favour aggressive subsidies to encourage Australian households to substitute towards electric vehicles. I would prefer *very* aggressive subsidies instead of making charging points compulsory or banning the import of petrol and diesel cars. Given widespread adoption of electric vehicles, I think private charging points (as opposed to public ones) would be rapidly installed in private homes and carparks without further compulsion. Similarly, in the presence of very aggressive subsidies for electric vehicles an outright ban of imported petrol and diesel cars would rapidly become unnecessary.

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

Overall this is a disappointing budget, but it could have been much worse. The budget fails to think strategically about the economic situation confronting Australia right now. First, there can be no proper recovery unless we beat the pandemic. Because of that, one of the things the budget should be doing is facilitating massive investment in public health, in particular investment in testing and tracing capacity. By simply assuming a widespread effective vaccine will be available next year and not otherwise thinking hard about how to beat the pandemic, the government is being very optimistic. Second, while it is good to see the government no longer shy about running large deficits in an effort to prevent further economic collapse, the instruments being used are not the most effective forms of stimulus. (eg if you just want spending, cash transfers to households, especially low-income households, would be more effective than tax incentives for businesses) but more importantly the stimulus is not well targeted given the unusual nature of this recession. In particular, the brunt of this recession is being felt disproportionately by women and in service sectors, especially tourism and hospitality and higher education. It is disappointing to see little in the way of targeted assistance to those sectors and households most hurt by the economic collapse.

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 JobSeeker allowance should be grow at the same rate as average real wages (roughly inflation plus productivity growth) and there should be a significant one-time level adjustment to make up for the many years of growing only with the consumer price index.

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, Expanded investment allowance, Wage subsidies or hiring bonuses (beyond JobKeeper), Increasing subsidies for child care

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

7

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

The Australian economy is going through a severe recession. The Reserve Bank predicts GDP will contract by around 10% and will not regain its pre-recession levels for several years to come. And that forecast is built around the current extensive levels of fiscal support. Prematurely unwinding that fiscal support is a serious threat to the recovery.

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

As we come out of the more "exotic" lockdown-influenced phase of the crisis into the more "conventional" phase of the crisis, the main thing holding back job creation is *demand*. If business cash flow increases, jobs will follow. A freeze in the minimum wage won't help on this front, it might well hurt. To be clear, the usual economic arguments against a minimum wage are implicitly *full-employment* arguments, whatever else one might think about those arguments (and the vast empirical literature on the employment effects of the minimum wage) those circumstances clearly do not apply right now.

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

9

Australia will be better off with policies that keep R<1. We need to always remember that the choice is not between a deep recession or a public health catastrophe. It is a choice between 1) a deep recession vs. 2) a deep recession *and* a public health catastrophe - as in the US, UK, Italy etc. The best prospects for the economic recovery involve comprehensively beating the pandemic, eradication or something close to it. Think of it as an investment that pays off in the future. Absent near-eradication or a vaccine, lifting social-distancing restrictions will not let the economy bounce back to near-normal because people, fearing for their health, will still refrain from many kinds of economic activity. They still won't go back to bars and restaurants at normal rates. Low-margin businesses will still struggle to be viable. In other words, this approach risks the worst of all worlds, compromising our public health goals and at the same time not getting a proper economic recovery. An analogy from macroeconomics may help. Friedman and Phelps argued that although there may appear to be a short-run Phillips curve tradeoff between unemployment and inflation, there is no such trade-off in the long run. Attempts to keep unemployment low at the price of higher inflation simply lead in the long run to more inflation and unemployment that ends up being no lower. In a similar way, there is no long run trade off between public health and the health of the economy in responding to the COVID-19 crisis.

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 - Disagree

9

This is a silly idea.

Poll 34

"In general, using more congestion charges in crowded transportation networks — such as higher tolls during peak travel times in cities, and peak fees for airplane takeoff and landing slots — and using the proceeds to lower other taxes would make citizens on average better off."

Agree

8

Agree, but it really depends which taxes are being cut. To my mind a better policy would be for the revenue raised from such congestion charges to be rebated to households in a progressive manner (since the burden of such congestion charges falls disproportionately on those with low incomes who tend to have fewer margins of adjustment).

Poll 35

"There is no way to significantly increase the degree to which Australian retail banks act in the interests of consumers."

Strongly disagree

8

Poll 15

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

Agree

8

Poll 13

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

Strongly agree

9

I believe that Trump would be an unmitigated disaster for the US and the global economy. I can't see any realistic scenario by which Australia would benefit from such a calamity. I truly hope that Trump is resoundingly defeated on Nov 8. That this dangerous, appalling, unstable individual has won the Republican primary and has come so close to winning the presidency fills me with dread.

Poll 12

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

Strongly agree

8

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

Agree

8

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

PART 2 - Disagree

8

Poll 10

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

Disagree

7

From a theoretical point of view, targeting the path of nominal income makes a lot of sense (for the reasons outlined by prominent monetary economists like Mike Woodford, amongst others). In particular, such a target implies an important degree of "history dependence" (e.g. you can have more expansionary policy going forward to make up for past mistakes, etc). I should note at this point that a nominal income growth target (as stated in the poll question) does not have these theoretical benefits and is a more contentious suggestion. Putting the distinction between level and growth targets aside, my guess is that the magnitude of the gains from moving from a flexible inflation target like we have to a well-functioning nominal income target are likely to be fairly small. From a practical point of view, there are a host of tricky implementation issues that would have to be addressed and that would likely diminish the gains from changing the monetary policy target. For example, for a small open economy like Australia it would be untenable for monetary policy to respond to high-frequency nominal terms of trade movements (which are notoriously volatile). We would end up having to target some notion of "core nominal income" to strip out such volatility. In short, my view is that in practice such a change is unlikely to yield large gains for society. Indeed, many of the concerns with the existing inflation targeting regime (the current proximity to the effective lower bound on nominal interest rates; scepticism about the efficacy of conventional monetary policy, etc) would be of much less concern if fiscal policy was doing its job. That's where the focus should be.

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 no conceivable scenario under which any form of Brexit will deliver net economic benefits to UK citizens at any horizon, let alone within the next 5 years (when the pain of transition is likely to be most pronounced). Brexit negotiations may lead to harm mitigation (from the UK's point of view) but that's about the best that can be hoped for. And all of this is of course putting aside the within-UK political complexities (renewed push for Scottish independence, etc).

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."

Strongly agree

9

According to the modelling commissioned by the Commonwealth Treasury for the government's company tax changes, the predicted change in the level of real GDP is about 1.2% over a long horizon. Not only is this a very small effect given the size of the changes in company tax, it's also a "one-off" level effect and so has no long-run growth dividend at all! (as Chris Murphy's modelling for the Treasury makes very clear for anyone who cares to look). By contrast, an equivalent spend on education, by supporting human capital accumulation, has a very real prospect of increasing the growth rate of real GDP over an extended period. Even a small permanent increase in the growth rate of real GDP will dominate the level effect from changing company tax.

Poll 3

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

Strongly disagree

8

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

8

I agree with the statement, but want to note that this statement only speaks to potential benefits from such a policy change and does not even mention the various costs. My agreement with the statement should not be taken to imply that I believe such a policy change is socially desirable.