John Freebairn

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/

NOT SURE Economic forecasting is subject to considerable uncertainty, including whether inflation by the end of 2024 will fall to the RBA band. Some of the estimated 0.5 drop in the consumer price index attributed to the electricity subsidy and increase in rent assistance subsidy will be offset by the second-round enhanced-income spending effect. Another important source of uncertainty is how increases in nominal wages combined with low productivity growth flow through to higher product prices.

D

For the near term, the forecast budget surplus for 2023-24 and the small deficit for 2024-25 is consistent with the Reserve Bank's and state government's macroeconomic objective of reducing the rate of inflation at the cost of a small increase in unemployment. On the other hand, the budget includes proposals that will not contribute over the medium term to required national productivity growth and to resolving the structural budget issue of expenditure increasing as a share of gross domestic product. The Future Made in Australia idea of "picking winners", supplements to the GST payments to the states and territories, and the lack of interest in resolving overlaps of expenditure programs between the states and Commonwealth on education, health, infrastructure and so forth are examples of policy shortfalls. Social equity objectives are more directly and efficiently met via changes to social security payments and the progressiveness of the income tax system than selected industry subsidies.

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)"

General support for Australian reseasrch and development and learning-by-doing activities which generate external benefits

Provide more grants to innovative firms across the entire economy

Private business investment in research and development and learning-by-doing generate external benefits across most industries. Correcting for the external benefits, and increasing national productivity and living standards, can be facilitated with economy-wide taxation concessions and subsidies. I doubt that the industries involved in the transition to a clean economy experience larger (or smaller) external benefits than other industries. If correct, generally-available subsidies for research and development, and perhaps for learning-by-doing are the appropriate response. Special subsidies to business active investors in the transition to a clean economy is a second-best policy intervention to placing a price on greenhouse gas emissions to correct for the external costs of pollution. The price can be a tax or an emissions trading scheme, and some of the revenue windfall would be recycled to maintain the real incomes of the low-income half of the population. Should the subsidies by governments in other countries, including those of the US Inflation Reduction Act, be considered excessive (relative to the innovation's external benefits), then the subsidised products available for Australia to import are a gift or subsidy transfer to Australia. Yes, the subsidies may cause a contraction or slower growth of the Australian green technologies industries, but Australia's relative comparative advantage has been shifted to other industries.

Poll 61

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

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

Placing a price on carbon emissions, and with an increasing price path for at least the next 25 years, provides the incentives and rewards for most producers and consumers to change decisions to choose lower-cost less polluting options. The more comprehensive the tax base the more effective the policy. Different producers and consumers facing different decision choices and options have the incentives and information to respond by choosing lower-cost pollution-reducing options. Some of the additional government revenue should be recycled to those on lower incomes via lump sum increases in social security grants and low-level income tax cuts to restore equity.

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%.

relaxing industrial relations regulation to allow for greater "flexibility" (as defined by employers), improving the quality of primary and secondary education

4

A unemployment range matches the inflation range, with both to reflect imperfect information and varying general economic circumstances. Also, unemployment is just one of several potential measures, including labour under-utilisation, workforce participation. A focus on enterprise bargaining, together with economy-wide regulations for minimum payments and work conditions, allows for experimentation and competition to develop and implement higher productivity, higher wages and a more fluid labour market with lower frictional and structural unemployment. Higher levels of human capital supported with improved and economy-wide available school education is a basis for a more productive economy which can meet Australia's high and rising wage expectations and adjust to the structural changes associated with, for example, energy transition, world trade evolution, new technology, and an ageing population.

Poll 59

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

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

Overall rating: C - Keeping inflationary pressures in check: D

C

OVERALL COMMENTS: In a short term context the budget goes some way in reducing government aggregate demand and complements monetary policy to reduce the rate of inflation. It provides limited assistance to many on low incomes, but not for low income taxpayers who lose from bracket creep because of failure to index or increase the tax brackets. In terms of addressing longer term structural growth of government expenditure relative to revenue, and the need for reforms to stimulate national productivity growth, the budget says very little. INFLATION COMMENTS: I can see some direct benefits from a reduction in government net aggregate demand for the current year, but I have concerns about the net positive increase of aggregate government demand in future years under optimistic projections for future inflation and employment. In fairness to government, as information on future performance of the economy becomes available, fiscal policy can and will be adjusted to the changed conditions. My major concern that the budget offers little in the form of a more efficient tax system, improved productivity of government expenditures, and changes in regulations and incentives to assist improved private sector productivity growth.

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: Tax windfall profits Introduce or increase land taxes Increase the GST

Replacing stamp duty on transfer of property, and current narrow base land tax, with an annual broad base land tax offers large efficiency gains and better utilisation of the stock of property. A revenue-neutral reform package would also provide horizontal equity benefits. A positive-revenue reform package would act as a non distorting wealth tax. Only gradually increase the replacement broad base annual property tax above the aggregate revenue neutral rate in order to cushion the lower asset price increase of property over a transition period. Addition of a business income windfall profits tax, such as an allowance for equity ("ACE"), captures not only a share of resources rent income, but also a share of monopoly profits and the quasi-rents of successful innovations. A larger GST, say along the lines of the New Zealand model, has lower distortion costs than an increase of income tax, and would bring Australia more in line with other western economies (except the US).

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

.

Government should not intervene

Economic theory, and the experience of microeconomic reform in the 1980s, explain why Australian productivity and higher living standards are improved if we allow variations of international prices to also vary in Australia. This is as true for gas as for milk, grains etc which we export and for oil and other products we import. Further, the regulated price would be arbitrary, chosen in a context of much uncertainty about prices in the future. Legitimate society equity concerns for higher electricity prices, food prices, interest rates and so forth are best addressed by direct income transfers via the social security payments and the income tax systems. Arguably a better system of special taxation of the mining sector discussed in the Henry Review of 2010, and many others, should be implemented to increase the government share of above-normal economic rents generated by companies granted licences to mine Australian-owned deposits. For example, a 40% PPRT along with the 30% corporate income tax would return 58% of above-normal returns to the government.

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

Industrial relations Broader reforms to promote productivity Education and skills

Industrial relations Reforms to facilitate effective enterprise bargaining between individual businesses and their employees in order to seek, sometimes experiment with, and then adopt new technology and market opportunities is vital to raise productivity in the private sector to fund higher wages and incomes. A return to industry agreements stifles the incentives and rewards for individual businesses to innovate. Government can set minimum standards, including minimum wage rates, safety, and other attributes.

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

Wind back government spending

2.5%

Reducing inflation requires a multi-prong set of policies. These include: . tightening monetary policy with an interest up to the 2-3% inflation target plus 1-2% for the real interest rate . to provide a strong starting point to respond to a future recession; tightening fiscal policy, including reducing expenditure, and primarily via substantial improvement in the efficiency of government provided goods and services, and removing inefficiencies and inequities in the tax system . providing a simpler and logic-based set of rules and regulations for operation of the private sector to choose socially beneficial increases of productivity. . for reasons of equity at the bottom, and to reduce the risks of wages-driven inflation, considering short term additional income support as a trade-off for some reduction of nominal wage growth.

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

.

Future governments face at least four sets of structural reform challenges; structural budget deficit; low national productivity; increasing inequity; climate change. A structural budget deficit concerns planned expenditure increasing as a share of GDP, for example on defence, aged care, NDIS, while arguing for no increase in the tax share. One or both sides require reform. Australia's productivity is behind world best practice, and the growth rate has been very low for at least a decade. Productivity growth is key to budget repair and meeting demands for higher real incomes. Governments have key roles in sensible regulations, less distorting taxes and greater efficiency of own expenditure, including commonwealth/state financial arrangements. The growth of income and wealth inequality, and not only of disposable income but also access to education and health, is of concern for equity, social safety and productivity reasons. A more proactive set of policies to encourage investment in both mitigation and adaptation to climate change is demanded globally and for Australia,

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 about right

Migration brings benefits and costs. If, as seems likely, we can assume historical migration levels approximately equated marginal benefits and costs, and the next few years will be similar to recent years, points to future migration levels about the same as recent years. The economic and social benefits of migration include several dimensions: a larger population and economy to capture economies of scale and scope; an approximate similar increase in labour demand and labour supply at the aggregate level, which at the same time helps fill gaps in particular high skill and low skill jobs (caused by labour market rigidities and failures in our human capital creation institutions); net budget contributions with taxes generated exceeding extra government outlays; a more dynamic and interesting multicultural society, and, support a broader migration package with a component for humanitarian migration as a global citizen. The costs of migration include: required additional investment by the private sector and by the public sector for a larger population; additional pressures on limited environment resources and amenity aggravated by somewhat ineffective and lagged policy.

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

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

7

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"

.

4

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"

Uncertain

5

There are many sources of uncertainty about the future path of the Australian economy, and then for appropriate fiscal and monetary policy. As each month and quarter roles by, new information becomes available about the state of the economy and its prospects. Government policy should adapt to the forthcoming information. Accepting broad policy objectives such as employment and inflation levels, in this adaptive policy world, setting policy interventions such as interest rates and budget deficit/surplus for a year or several years into the future makes little sense. In particular this strategy rules out sensible adjustments as changes in economic conditions are revealed. I would rank a review of the RBA which requires scarce economics skills and political support as much lower priority than other issues, including review and reform of commonwealth-state financial arrangements, energy policy, and industrial relations.

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"

.

Disagree

Re Q1. Taking a global perspective, ideally a welfare maximising reduction of greenhouse gas pollution would equate marginal abatement cost with the marginal external cost of climate change net of adaptation marginal costs. It is not clear that the global optimum involves (a) zero emissions and (b) then a zero target by 2050. Then, from the Australian perspective, it's okay to follow the global optimum if there is a cooperative agreement across the globe. But, and as seems likely, if significant greenhouse gas emission countries lag and/or do not meet the agreed global target, Australia following the target would involve a net cost with marginal cost to Australia exceeding marginal benefit to Australia, unless offset by utility for feeling good. Re Q2. Because there are multiple sources of market failure in reducing greenhouse gas emissions, multiple policy interventions with different attributes need to be invoked to reduce emissions at lowest cost. A carbon price on a comprehensive greenhouse gas emissions base, either a tax or an emissions trading scheme, provides incentives for most business and household producers and consumers across the economy to find the least cost ways to reduce pollution. And, most of the revenue windfall can be recycled as direct payments to households to offset the regressive effects of the carbon price. But, this carbon price model assumes rational decision making by all. The behavioural economics ideas of short termism, attraction to current decision choices, and so forth reduce the effectiveness of the carbon price policy, and open the door for regulations on energy efficiency of motor vehicles, household appliances and some business production methods. Technical change for less greenhouse gas emission intensity production and consumption methods, Greenhouse gas emissions capture and so on requires much research and development and its adoption. These search and development activities involve large external benefits, and arguments for government support via own funded research, subsidies for private funded search and development, and patents on new inventions.

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"

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

Vaccination to reduce the effects of COVID-19 provides private benefits and external benefits. External benefits include lower rates of transmission to other members of society and less call on public funded health services. Higher transmission rates with risks to employees and customers happen with the high risk occupations and settings. Information is important for both private decisions and for government intervention. I question expenditure on additional cash incentives and lotteries. Provision of free vaccination is a subsidy already. It seems 70% plus are happy to comply with no further subsidy, and government have many other higher priority fund claims.

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;Reforming industrial rel

As commonly argued, in the long run higher wages primarily come from higher productivity. Higher productivity can be supported by: private sector innovation and investment; improved productivity in government expenditures, and include sorting out messy commonwealth and state overlaps in expenditures on health and education, and choice of infrastructure projects; more comprehensive tax bases and lower rate reform packages; a coherent energy policy. Reform of industrial relations to choose more productive work practices can generate gains for both employees and employers. Restricting labour supply, including immigration and female and mature age participation, has minimal net effects on wages with reductions in supply roughly offset with reductions in demand. Given expenditure projections in the recent IGR, and by others, cutting tax revenue as a share of GDP is not a sustainable long term policy, and productivity is about structural changes.

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"

.

8

Subsidising electric vehicles is a very second-best way to reduce greenhouse gas emissions. For the next decade it is likely that more than a half of electricity generated in Australia will continue to use fossil fuels and associated pollution. In the context of current government taxes and charges for the use of motor vehicles, and the social costs of the use of motor vehicles, electric vehicles receive a large effective subsidy in the form of non-payment of the 44 cents per litre fuel excise on on-road use of petroleum products relative to conventional motor vehicles. Approximately, revenue collected from the fuel excise plus state taxes on motor vehicles match government expenditures on investment in road infrastructure and its maintenance, although not hypothecated. Without additional electric vehicle subsidies, electric vehicles would be subsidised in the sense of under-pricing of government provided road services. And, no congestion charges. An additional subsidy for electric vehicles would exaggerate the distortions associated with under-pricing of road usage by such vehicles. Ideally, commonwealth and state governments should cooperate to develop a logical system of user charges for conventional vehicles and electric vehicles. This would include a road usage charge for provided infrastructure and its maintenance, external pollution costs, and for congestion.

Poll 46

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

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

.

C

A for short term fiscal stimulus in recognition of unemployment, and more so the high labour underutilisation rate, low inflation, and to complement the constrained ability of monetary policy to provide further stimulus. On the other hand a D for failure to grab the opportunity for longer term structural reforms to support productivity growth necessary for higher wages and living standards, payment of aged care and child care initiatives, and repayment of debt. Potential longer term reforms include taxation, rationalising commonwealth/state expenditures, energy policy, industrial relations.

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 builds on short term stimulus to aggregate demand and employment and to improve equity in response to the COVID-19 shock, but it missed an opportunity to develop and implement necessary structural reforms for greater productivity, participation and growth over the medium and long term. For the next year or two, budget measures will phase out many of the initial stimuli, including JobKeeper, withdrawal of superannuation funds, and replaces them with support for increased private sector demand and choice of investment and jobs in a rapidly evolving economy, including JobMaker, business tax concessions, additional infrastructure outlays and return of bracket creep. Clearly, there are pro and con views about the aggregate demand and equity benefits of the specific programs versus alternatives. Appropriately, the government recognises extreme uncertainty and flags willingness to revise the budget in the light of forthcoming information. Importantly, most of the tax and expenditure changes in the budget do not grab the opportunity for structural reforms required to reverse Australia's low productivity growth over the last decade. A larger and more productive economy is key to higher living standards and to reducing the debt and its repayment. Overdue required structural reforms include: the tax system; interaction of the tax and social security systems; commonwealth/state financial relations, including simplifying and clarifying the expenditure roles and responsibilities of each level of government to reduce the overlaps, waste, duplication, blame shifting and lack of accountability.

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

Suggest JobSeeker or Newstart be raised to about 50% of average weekly earnings as a minimum income support for equity, and that this be sustained over time by indexing to a wage index. Clearly the current level is very challenging, and it has fallen relative to other social security measures over the last thirty years, including Disability. Concerns about disincentives to seek employment are important, but are more directly supported via the work test. Index to wages would maintain comparability to other social security payments and relative to incomes of many others in society.

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 

Bring forward legislated personal income tax cuts, Permanently boosting JobSeeker (Newstart) beyond December 31, 2020, Infrastructure projects, Social housing

Boost JobSeeker. Plus: equity with no real increase since 1993 and many on Newstart in poverty; aggregate demand stimulus with marginal propensity to consume close to unity. Exceeds downsides: for some an added disincentive to seek and accept employment; additional long term budget cost. Infrastructure projects. Important, assume project choice involves choice of longer term beneficial projects with evidence of explicit, transparent and public available business case assessment (rather than ad hoc political choices like "sports gate"). Then plus: short and medium term stimulus to aggregate demand, and in large part for resources previously allocated for capital for population growth largely driven by immigration; longer term contribution to national productivity for higher living standards and capacity to repay debt. Social housing. Plus: short to medium term stimulus to aggregate demand, and much directed at resources previously allocated for private housing for a larger population driven by immigration; contribute to equity, and perhaps to longer term productivity of many disadvantaged members of society. Bring forward legislated personal income tax reductions. In reality, the changes primarily offset the failure to index tax brackets, and in the process restore personal income tax as a share of the economy and retain similar marginal and average effective tax rates. Plus: maintain incentives for employment, saving and investment; some stimulus to aggregate demand, and for portion saved a reduction in very high household debt to income ratios. If more income tax revenue is required, reform for a broader and more comprehensive tax is a better option than allowing effective tax rates to rise with inflation.

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 

Be abandoned

8

The superannuation guarantee is a form of compulsory reallocation of current income to be saved for retirement consumption. Its rationale is to offset behaviour economics failures of current consumption time preferences. But, it comes at costs including: other forms of desirable saving for retirement, including owner occupied housing; precautionary and flexible saving such as riding out the current pandemic, unemployment and poor health. Arguably, these other savings needs mean the super guarantee has gone far enough. Further, there are more important required reforms. First and foremost, the excessive fees charged by super funds should be reduced to world best practice, and in this way generate greater retirement incomes rather than via an increase in the levy rate. Second, the vertical inequity of taxation of superannuation, and high effective tax rates associated with means testing of the Aged Pension, should be higher on the for-reform list.

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

A debt funded fiscal stimulus will help to counter insufficient aggregate demand associated with the pandemic driven sharp drop in household consumption, business investment and international trade, and in recognition of the limited available stimulus which can be provided by monetary policy.

Poll 39

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

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

Strongly agree

8

A freeze of labour costs, together with expected very low inflation, would provide a key element of certainty in what is a very uncertain world facing decision makers in households, businesses and governments. Claims that a higher minimum wage would stimulate household income and aggregate expenditure are hollow. Higher wages do not come as manor from heaven; they come as lower incomes for others. Many on minimum wages are members of medium and high income households. Reductions in business returns have adverse indirect effects on confidence and investment decisions which adversely effect employment over the medium and longer term. Increases in social security payments, including Newstart, and reductions in income taxes at lower levels are better targeted ways to stimulate increased consumption expenditure by low income households. While there is on-going uncertainty about the elasticity of demand for labour in general and for low skilled labour and minimum wages in particular, both in theory and in econometrics, the policy priority to reduce unemployment to increase social welfare in my view supports a cautious strategy to not increase Australia's very high minimum wage in the current environment of record high unemployment and underemployment.

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"

Uncertain

4

The appropriate answer is a level and intensity of restrictions that equates marginal benefits of improved health outcomes with the marginal cost of loss of economic activity. As with road usage, we compare deaths, etc of accidents with benefits of transport of people and of goods and services. There is imperfect information about benefits and costs. For benefits; production function linking reduced deaths and other adverse health effects (including mental health costs and costs of postponed elective surgery) to length and severity of restrictions; and the value to be placed on lives saved, lower morbidity and anxiety, which is controversial -- such as quality of life years probabilities and costs of second -- and subsequent-round outbreak waves. For costs; first-round supply closures and loss of production and employment, and addition to inequity; recovery stage effects of slow re-build of aggregate demand to return towards full employment and production,; threats to international trade and loss of efficiency and productivity. Reality is one of forthcoming information on both the benefit and supply sides. Hence, an adaptive decision making strategy which involves experimentation, some failures with hindsight, and decision adjustments in response to new information.

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 - Disagree

2 - Disagree

1 - See below

2 - SSBs contribute only a portion of external and internality costs of excess consumption of sugar, other food products and lack of exercise. Better to tax sugar input to encourage changes in product mix, including sugar content per SSB, as well as consumption of SSB. For many consumers, at least a third and perhaps a half, with moderate consumption of SSB and other sugar products, and minimal to no external costs, a SSB causes a loss of consumer welfare. That is, product and consumer heterogeneity needs to be recognised in the tax design. Where inadequate information is a part of the market failure problem, education and provision of product information should be a component of the policy packages.

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

9

Part 2 - Strongly disagree

10

Where to draw the accreditation line is arbitrary, vague, and unlikely to provide additional signals. For many employers and employees, an honours degree, or a graduate degree, in economics is an informed and well-understood signal of skill. Suppose we go to the three-year undergraduate degrees in economics, business and commerce, what would be the accreditation line; x subjects at level three, and then the minimum of core micro, macro and econometrics subjects, or electives? Any accreditation measure will be arbitrary, and provide limited if any additional information to potential employers. Given the wide range of career paths taken by graduates who have included economics subjects in their studies, together with the likely small if any additional information provided by the arbitrary accreditation measure, I do not see accreditation inducing an increase in demand for economists. Similarly, it is difficult to argue that accreditation would shift outwards the supply curve for students to study economics. The combination of no shifts in demand and supply means no changes in remuneration or quantity.

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."

Strongly agree

10

In the short run and for available capacity, setting congestion charges would better allocate scarce capacity from less valued to higher valued uses for a net efficiency gain. In the longer run, the information on congestion prices and usage would better signal the choice of national productivity investments to create additional capacity. For the case of roads, current special taxes on motor vehicles, including Commonwealth excise on petroleum products, and state taxes, including registration, transfer duty and city parking levies, are poorly correlated with vehicle use of government funded roads, pollution and congestion. As proposed by the Henry Review, and many others, an aggregate revenue neutral reform package would replace these taxes with a road user fee, a pollution tax and a congestion fee.

Poll 27

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

Strongly disagree

10

There are many global investors located in many countries looking for the best after-tax return on their funds. The USA corporate tax changes will increase the after-tax return on investments in the USA. Some global investors will shift some of their funds from elsewhere, including from Australia, to chase the higher returns in the USA, and accept a lower pre-tax return but still receive a higher after-tax return on the funds switched to USA investments.

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 agree

2 - Uncertain (neither agree nor disagree)

1 - All indicators point to an underlying structural deficit, e.g. IGR; unfunded NDIS, education, defence, foreign aid, etc expenditures; bracket creep is not an acceptable route for higher taxation; inevitable risks of a future recession and need for a strong fiscal position.

2 - The underlying structural budget problem requires fundamental rethinking across all areas of expenditure and taxation. Playing with bits and pieces of the bigger puzzle is unlikely to solve the challenge. Income tax reform is much more than changing tax rates.

Poll 29

"A sustained increase in the number of new homes constructed each year, all else equal, will make housing cheaper than otherwise."

Strongly agree

10

So long as demand is less than perfectly elastic, as is supported by many studies, an outwards shift of supply brings a lower price, ceteris paribus.

Poll 30

"Pricing of road-use for electric vehicles should be the same as fossil fuel-powered vehicles."

Strongly agree

10

The whole gamut of current taxes on motor vehicles should be reformed as proposed by the Henry Review and others. Current fuel excise, luxury car tax, and state registration, conveyance duty, and others should be replaced with (i) a road use charge based on weight per axle times kilometres travelled, (ii) a congestion fee based on location and time of day, if not actual congestion, and (iii) marginal pollution costs. For (iii) a lower excise is appropriate for fossil fuel vehicles and a similar tax on fossil fuel supplied electricity used by electric vehicles. The luxury car tax is both distorting and inequitable: why tax luxury cars but not luxury boats, holidays, clothing, etc?

Poll 32

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

Disagree

8

The society optimum waste quantity would equate marginal social benefits with marginal social costs, and then for different categories of wastes. Social costs of landfill include opportunity value of sites, disposal costs and any external costs associated with pollution to water and air and neighbourhood comfort. Including regulations and their costs, most local councils seem to set fees equal to or greater than marginal social cost.It should be important to recognise the heterogeneity of the vast array of different waste products sent to landfill, and their different marginal social costs and benefits. And, technological changes are and will continue to shift both curves over time.

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 - Disagree

2 - Strongly disagree

1 - Hopefully, a revised set of better applied simpler and more transparent rules, as suggested by BRC, will reduce low value products now provided via information asymmetry market failures. Apart from some short term fines, costs of providing valued services will not rise.

2 - Disagree that valued credit will become less available or more costly as argued for Proposition 1.

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."

Disagree

8

As argued by Jeff Borland and Mick Coelli in December 2017 edition of the Australian Economic Review, structural changes of the Australian labour market are roughly the same over the last decade as in previous decades-for example, changes in industry and occupation mixes, job turnover and experience. Assuming close to a full employment economy, competition and the ability of employees to pick and choose across established and new type jobs should force similar working conditions across the labour market. Current general economy labour market protection policies seem more effective than the suggested option of additional "new industry specific" policy interventions.

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 - Uncertain

B - Disagree

Robots and AI is likely to be a game of "job destruction and creation" along the lines of the steam engine, electricity, mechanisation,telephone, TV, etc of history. Automation and AI will be introduced if they offer lower cost ways of production and new or better products than the replaced technology in a positive sum game. The surplus generated by the positive sum game of lower production costs and more utility per dollar spent finds its way into additional outlays and some job creation.
Yes, the process of job destruction and job creation also involves devaluation of some skills and additional demands for other skills creating structural unemployment. Government taxation of a share of the additional real income generated by adoption of robots and IA provides additional resources for short term income support and retraining of displaced employees to better adjust to the additional new jobs created. But, this increase of funds is limited.

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."

Disagree

9

Pollution can be reduced by changing decisions in the production of electricity and decisions on the use of electricity, including energy intensity and mix of energy intensive versus extensive products. Finkel proposal and emissions tax roughly similar in cost effective reduction of pollution intensive generation methods. But, the greater price flow-through effect for emissions tax means equality of marginal abatement costs across decisions options available to electricity users as well as electricity generators;  Finkel proposal will not incentivise many of the low cost electricity user decision changes. Further, the government revenue windfall gain of an emissions tax can be recycled as lump sum compensation for the higher electricity prices to maintain distributional equity, e.g. increases of social security payments and target reductions in marginal income tax rates.

Poll 15

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

Uncertain (neither agree nor disagree)

10

Provided a general introduction about the economics discipline is provided, coherent subjects for either microeconomics or macroeconomics can be offerred as the initial subject. While there are overlaps of questions and methodologies, and there is a compelling case for students to understand both micro and macro, one does not necessarily require the other as a prerequisite.

Poll 14

"The social costs of gambling exceed the benefits (including consumer surplus from recreational gambling and tax revenue for governments)."

Uncertain (neither agree nor disagree)

3

For most recreational gamblers and about a half of dollars spent, gambling is one of many recreation choice options with no problem gambling costs; the other half spent by problem gamblers involves spill-over costs on third parties and personal costs inconsistent with rational choice (Productivity Commission, 2010). To selectively tax or regulate against recreational gamblers, but not other forms of recreation such as restaurants and concerts, distorts these decisions.These distortions have to be balanced against the external costs and individual poor choice decisions by problem gamblers. Numbers to make the comparison are uncertain.Selective taxation of gambling primarily involves a transfer from gambler to government. Productivity Commission (2010) analysis shows this to be a highly regressive tax. Also, the tax fails horizontal equity with those choosing gambling over alternative recreation and other pursuits on similar incomes/expenditures pay different tax burdens.

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

9

Economic forecasting is difficult and always with error. No one organisation or person has shown repeated success at being the best forecaster.The sooner government and the wider community accept inevitable errors with economic forecasts the better. Current Treasury scenario work should be given greater prominence.There is no evidence that the Treasury in its forecasts is swayed by the wishes of the government.In aggregate, there is no evidence that PBO would develop better forecasts than Treasury. Just another Canberra empire funded by the taxpayer.

Poll 13

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

Agree

8

It is very hard to know what Trump really proposes, and then what he might activate if elected and what economic policies Congress would support. Therefore much uncertainty. His anti-trade and immigration views would put a brake on international trade. His incoherent budget strategy is likely to become an adverse global economic shock. On the other hand, the very-much more of the same Clinton economic strategy if followed seems unlikely to overcome the many economic challenges facing the US and world economies, with adverse flow on-effects to the Australian economy.

Poll 12

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

Agree

6

The answer involves trade-offs, endogenous public and private decisions, and more generally the composition of migrants can be important (even if the question refers to the current mix). On the benefit side, a larger and more diverse economy and society. On the cost  side, and to date Australia has been mediocre, require both private and public investment to support the larger economy and society. To date, public investment seems to be driven more by political opportunism than logical assessment of infrastructure and other investment options, and deficit fetishness has ruled against borrowing to finance good  investments and to be repaid by better-off beneficiaries.

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."

Strongly disagree

8

Over the many years of the lives of gas projects market forces are more likely to select quantities to maximise OZ wellbeing than governments. The real world of the future will be one of changes in domestic gas supply, domestic demand and export demand, and of course prices, and there is much uncertainty about these variables. Almost certainly, government choices of the reservation gas quantity for the domestic market will result in a mixture of large effective subsidies/taxes which misallocate gas resources.

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

Strongly agree

9

Ideas such as endowment effects, inconsistent time preferences provide different explanations and predictions of behaviour compared with the neoclassical model. Often the behavioural economics explanation is a better approximation to a complex reality.

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

For example, to promote availability of organ transplants, a nudge would say default is to allow rather than the alternative option of requiring a positive family request

PART 2 - Disagree

8

For example, to promote availability of organ transplants, a nudge would say default is to allow rather than the alternative option of requiring a positive family request

Poll 9

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

Disagree

7

In the short run, uncertainty, and the loss of confidence and of animal spirits reduce aggregate demand. Over medium term, likely additional restrictions on free trade and loss of mobility of inputs with likely negotiated separation to add to adjustment costs and reduce opportunities for trade.

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."

Disagree

5

Yes China will provide a significant shift in demand. But also, other export countries and China itself will increase supply capacity. Result, a larger market and more sales with a relatively small price premium.

Poll 5

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

Disagree

5

Most of the benefits and costs of major sport events are private with relatively small external spillovers. Government investment requires transfer of scarce funds and resources from alternative valued uses.

Poll 3

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

Agree

8

While generally agree that U($) ≥ U(a specific good or service), some gifters and recipients attach additional utility with the specific good or service transferred.

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

9

A first round story assumes (i) labour supply for Sunday similar to Saturday, which seems reasonable, and (ii) no other changes to labour remuneration, which seems both unreasonable and unlikely. For second round, offsetting compensation will have little effect on Sunday services and would reduce magnitude of first round employment increase.