James Morley

Poll 65

Panellists are unanimous in believing Australia’s housing market is in crisis.

Offered a choice of 14 measures identified by the Economic Society of Australia as likely to restrain prices for buyers and renters, none of the 49 leading economists polled picked: “do nothing, the market will determine appropriate prices”.

Modifying policies that restrict supply is the best way to address high prices and rents. This could also include removing tax incentives for single-investment property landlords.

Home affordability

Replace stamp duty with a broadly based land tax that includes the family homes, Ease planning restrictions, Include the family home in the age pension assets test

Poll 63

April Poll - panellists were asked about the GST deal with Western Australia.  The following two questions were posed: 

"Is the long-standing arrangement broadly the best method of distributing the nationally-collected GST revenue?" and "Should the 2018 changes be kept or scrapped?"

NO - Distribution of the proceeds of a value-added tax like the GST should be proportional to value-added (GDP) of the states, not by population shares or other more complicated formulae. If the federal government seeks to redistribute tax revenues to different states and territories to address inabilities and to fund needed services (such as for the Northern Territories), this should be done from general tax receipts in a transparent way, not as part of a complicated and obscure allocation of GST revenues.

Scrapped

GST revenues should be apportioned based on state-level value-added (GDP). The almost farcical complexity of this "reasonable equalisation" arrangement shows that attempts to conduct redistribution policy within the context of GST apportionment will inevitably lead to more and more complicated arrangements meant to obfuscate the underlying redistribution. Redistribution should be done in a more transparent way to ensure it has backing from the Australian population through the political process.

Poll 62

Panellists were asked "Which of the options set out below best describes the kind of approach the Australian government should take to the US Inflation Reduction Act? (Pick 1)"

To support homegrown emerging green technologies

Provide more grants to innovative firms across the entire economy

It can be challenging for firms to capture the full financial benefits of developing new technologies. So there is some role for subsidies to support research and development, including in green technologies. However, I certainly worry about the design of subsidy programs and whether they will mostly just generate rent-seeking. So a lot will depend on the details of any proposed scheme to support investment in green technologies.

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%.

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

3.6

It would be a big mistake to set a numerical target for "full employment". There are two related problems with such an approach: First, the natural rate of unemployment moves around a lot more than most people (including many policymakers) seem to think. Just as one example of academic research supporting this, see my 2007 paper "In Search of the Natural Rate of Unemployment" (https://doi.org/10.1016/j.jmoneco.2005.11.002). Second, the natural rate does not appear to be impacted by monetary policy. So to require the RBA to achieve a fixed numerical target in terms of the unemployment rate (or other labour market measures such as employment/population ratio) is to set them up for inevitable failure. It is better to have a full employment mandate without a specific numerical target (see my article in The Conversation on a similar discussion in the New Zealand context from a few years ago: https://theconversation.com/why-new-zealand-cant-outsource-employment-policy-to-its-central-bank-87522). This, of course, contrasts with a numerical inflation target given that central banks can influence the long-run level of inflation with monetary policy. My numerical answer that the current natural rate of unemployment in Australia is 3.6% comes with a lot of caveats. This is just an estimate and the uncertainty around the estimate is large (standard uncertainty bands would cover anywhere between 2%-5%). Also, the natural rate is likely to change substantially in the future, just as it has in the past, so I would not treat this as a number that should be legislated or mandated. The particular estimate of 3.6% is based on Okun's law and my current estimate that the Australian output gap is just slightly above zero at 0.15% based on the Beveridge-Nelson filter (this number can be found by entering in data for Australian quarterly real GDP into bnfiltering.com to estimate the output gap). It is a good thing in this case at least that the natural rate changes a lot. It means that it is possible inflation can come back down even though the unemployment rate is so low by historical standards at 3.5%. But it also means that any mandated target that is set in stone would end up being a temporary policy experiment that will end in tears for both the RBA and the current or future Treasurer. In terms of policies to bring down the natural rate of unemployment, my research suggested that policies to facilitate productivity growth and job retraining given structural changes across sectors could help.

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: B - Keeping inflationary pressures in check: C

B

OVERALL COMMENTS: The budget displays a fair degree of restraint given the improved fiscal position due to higher than expected tax revenues and a lower path for the debt/GDP ratio. There is net new spending versus taxes, which keeps the surplus small corresponding to a 'structural deficit'. The new spending seems to be targeted to help those particularly struggling with high cost-of-living shocks, such as pensioners. The budget clearly 'kicks the can down the road' in terms of how to contain NDIS costs. It also puts off any reneging on Stage 3 tax cuts closer to the next election, meaning that addressing bracket creep is likely to happen after all, even if the Treasurer might give in to temptation and modify the Stage 3 cuts a bit. All in all, it seemed much less like a 'special interests' budget than from the previous two treasurers. INFLATION COMMENTS: The main item in terms of ?cost of living? relief involved subsidies to reduce energy bills for pensioners and those on payments (and some small businesses). As a technical matter, this will actually lower headline inflation from what it would have been otherwise. So at the margin, this will put less pressure on the RBA to raise rates. The RBA had already been signalling it would ?look through? some of the coming inflation due to retail energy prices and rents as being reflective of relative price shocks that have to do with supply constraints. But if these are going to be as large and persistent as the RBA is forecasting, it would put pressure on them to raise rates if inflation suddenly bounces back up after a likely decline over the next quarter or two. However, one problem with the energy bill subsidies is that they are not really all that different than giving the same households a transfer payment to offset their higher energy bills. The only real difference is in what is implied for the measure of inflation, not in the real economic impact. For the real economic impact, what matters with the budget is an overall net change in new spending versus new taxes. On this score, the budget is actually slightly expansionary and the RBA is likely to respond to that by having a somewhat greater bias towards further interest rate increases to offset the macroeconomic effects of the stimulus. The fact that interest payments on future debt are projected to be lower given the surprise improvement in tax revenues given higher nominal GDP growth provides further room for the RBA to raise rates without worrying about the fiscal implications. In terms of rents as another source of persistent inflation over the next couple of years, the increased rental support in the budget does not do much to lessen that. The initiatives to boost supply in rental housing could obviously help in principle, but are likely to take a long time to have much effect on rents. So I don?t see these initiatives as particularly relevant for the RBA?s decisions about how to respond to inflation over the next year. All in all, I would say the budget increases the probability of future rate increases compared to a budget without new net spending relative to taxes. But, as the treasurer said, it does so less than if more of the surprise boost in tax revenues had been spent in the budget. And it is not a highly stimulative budget, just moderately so. So the RBA is likely to pay more attention to other drivers of inflation, such as what is happening to inflation and economic activity overseas, in its decision about whether this last increase in rates was really the last for a while. I think it will be very data-driven over the next few meetings about future rate increases more than responding to the budget per se.

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) Wind back deductions for negatively geared properties Increase resource taxes Equity picks: Wind back franking credits Wind back deductible work-related expenses

Efficiency picks: Land taxes are very efficient ways to tax wealth. For one thing, they are hard to evade. Also, they are certainly better than stamp duties in allowing more flexibility for people to move when needed (including downsizing when not being able to refinance a mortgage at higher interest rates). I would also think a resource tax would be efficient and help offset and minimize damage done by resource extraction and use. Getting rid of negative gearing seems a perennial easy win. There are better (more efficient) ways to incentivise and support the building of new housing units. Equity picks: There must be fairer ways to mitigate double taxation of capital than the franking credit approach which very directly treats foreign and domestic shareholders differently. Harmonizing with overseas treatment of dividend taxes would seem like a good starting point. As far as I can tell, tax deductions for work-related expenses seem to somehow favour ute dealers. No doubt other groups benefit disproportionately from these tax deductions too. Some reform here or at least not having it as a perennial vote-buying lever of tax policy would make sense.

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

.

Targeted subsidies for low income consumers

Poll 56

Investing in Australians’ education is far more important than immigration in resolving the nation’s skills shortages, according to leading economists surveyed in the lead-up to this week’s jobs and skills summit.

The 50 top Australian economists polled by the Economic Society of Australia and The Conversation are recognised by their peers as leaders in their fields, including economic modelling, labour markets and public policy.

Wes Mountain/The Conversation, CC BY-ND

Migration policy Broader reforms to promote productivity Macroeconomic policy

Migration policy Historically, Australia has done well from an economic point of view out of being open to migration and with a focus on skills of migrants. Such policies are always at risk of being stopped by nativist, populist political considerations. I hope the summit reaffirms support for keeping Australia on the path of being an open country with a highly diverse and skilled migrant population.

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%

The RBA should keep its current inflation target range of 2-3%. Longer-term expectations, including in the bond market (see the 10-year break even rate, which was 2.3% in June) assume this target range will persist. To change the target range just because inflation is currently outside of it would be disruptive. It should be noted that the target range is supposed to be achieved over time, not at every instant. The recent higher inflation means that average inflation over the past five years will be within the target range, rather than below. I expect the current high inflation will come down next year. The key is that longer-term expectations remain anchored. In addition to the unwinding of supply-chain issues, it would be helpful for fiscal policy to be less stimulative in order to bring inflation back to the target range in a timely manner.

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

.

Australia needs to take action on implementing a price on carbon in order to provide incentives to households and firms to use energy more efficiently. Subsidies for green energy use make sense as well. Productivity growth remains low in Australia, but is crucial for our future standards of living. Public investment in education at all levels is needed to help boost future productivity and will also generate high social returns. Australia has benefited immensely from immigration and has the capacity to increase the number of migrants significantly after negative net migration during the pandemic. More immigration will also help boost productivity and address demographic issues related to an ageing population. Unfortunately, I fear nativism and anti-immigrant sentiments will be common across party lines in the upcoming election.

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

Australia benefits from migration and will especially need more net migration as our population ages. Given the cut in allowed levels in 2019-20 and negative net migration in the last couple of years due to COVID, it makes sense to increase the intake well above 190,000. This is less than 1% of the population and, importantly, is not a target for *net* migration, so the effect on total population growth will be less than it might seem. Given low birth rates, but a need for balanced demographics and not too high of a dependency ratio, I suspect Australia should target permanent visas numbers closer to 1.25% of the current population (about 320,000 given a population of 25.7 million).

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"

Uncertain

10

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

2024

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

10

The main risk for the Australian economy is not that there will be above-target inflation, rather it is below-target inflation. Even though year-on-year headline inflation was 3.0% to September 2021, the annualised rate of inflation over the two years since September 2019 is only 1.8% per year. The 10-year break-even inflation rate in the bond market is 1.9%. Underlying measures of inflation are back in the 2-3% target range, but at the low end at 2.1% and they could easily fall back below 2% when the base effects of the low inflation during 2020 from the Covid crisis wear off. I would take the RBA at its word in terms of its latest forward guidance that lift-off will most likely occur at the beginning of 2024. The main risk I see to this would be the need for a delay in lift-off to later in 2024 if inflation is running below the target range at the end of 2023. Even if inflation is somehow at the high end of the target range or even slightly above in mid 2023, the RBA will want to re-establish its credibility with financial markets, which are currently expecting a much earlier lift-off, by sticking to its stated plans. The only thing I could see that would bring lift-off earlier would be if the 10-year break-even inflation rate exceeded the 2-3% target range for a sustained period of more than quarter or two before the end of 2023. However, I think this is only a remote possibility. When the 10-year break-even inflation rate fell persistently below 2% in late 2018 and through 2019, the RBA should have engaged in forward guidance at the time to make clear the primacy of achieving its inflation target rather than other goals that could be at odds with doing so. With the Covid crisis, the RBA responded quickly, with much clearer communication around unconventional policies. However, there is still a credibility gap given that many financial market participants expect lift-off much sooner than the RBA. The recent abandoning of yield-curve-control risks that credibility further, with the corresponding increase in certain interest rates by the banks being counter-productive to the RBA bringing inflation sustainably back into its target range. The RBA needs to be more definitive with its communication strategy and make clear its commitment to keeping rates "lower for longer". Planning to and keeping the OCR at the effective lower bound until the beginning of 2024 will be important in getting financial market expectations to converge to the RBA's expectations. The RBA needs to make it crystal clear that its expectations are not influenced by financial market expectations, but rather by the best path for policy to bring inflation sustainably back into the target range. I think the RBA should follow other central banks such as the Bank of Canada that carry out 5-year reviews of their policy framework. Such reviews should evaluate what worked and didn't work with past policies, as well as considering what would have happened under alternative policy frameworks such as nominal GDP targeting or price level targeting. I personally believe that, compared to these alternatives, flexible inflation targeting is the preferred framework given its transparency and comparative ease of communication (i.e., people actually form expectations about inflation, not so much nominal GDP growth given there is generally a fair amount of heterogeneity in nominal income growth for households depending on age and sectoral changes in the economy). A central bank should always be conducting research into the viability and costs/benefits of alternative frameworks. An important aspect of a formal review of a policy framework is that it needs to have outside expert input and not be politicised. My worry with having an "independent" commission into the RBA is that it will be highly politicised and lead to unrealistic expectations about what monetary policy can and should do. Politicians could become too easily enamoured with fiscal-policy-by-proxy ideas about monetary policy, rather than take their own fiscal responsibilities under democratic oversight seriously. It would be too easy for such a commission to become a blame-shifting exercise and lead to counterproductive restrictions on the ability of the RBA to achieve objectives such as low and stable inflation in the future. But the RBA does need to demonstrate that it engages in serious self-reflection of its monetary policy practices and consideration of viable alternatives to its current policy framework. A regular 5-year review of their policy framework that involved Bank staff and outside experts, again such as done by the Bank of Canada and other central banks, would be a useful means of improving the practice of monetary policy. For reference, information on the Bank of Canada's periodic 5-year review is available at https://www.bankofcanada.ca/toward-2021-renewing-the-monetary-policy-framework/.

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)

Uncertain

Whether "Australians will likely benefit overall" clearly depends on which policies are enacted to achieve the goal (i.e., a carbon tax is clearly much more efficient than subsidizing/rewarding polluters to reduce emissions) and if Australia's participation in the process is part of what leads to a coordinated global effort to reduce emissions.

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);Cash incentives for vaccination;National advertising campaigns

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;Cutting taxes in order t

It is hard to pick anything on this list other than "boosting productivity growth". It is the only thing that would reliably increase the *growth* of (real) wages. Restrictions on supply of labour or regulatory changes in wage bargaining rules might temporarily increase the *level* of real wages, but it is hard to see how they would increase the growth of wages and, indeed, it is unlikely that labour supply restrictions in particular would even increase the level of wages in the long run (e.g., cuts to migration would seem more likely to reduce productivity and put downward pressure on real wages in the long run). Because I had to pick three of the options, I also selected "boosting business investment" and "cutting taxes" as they could, if well-designed, influence productivity growth in a positive way. The proviso that the tax cuts are supposed to boost aggregate demand again suggests that they might only increase the level of wages given current slack in the economy, but not growth of wages. However, maybe there would be an unintended consequence to the tax cuts that could boost wages growth by positively affecting 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

7

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

.

B

As with the previous budget, this one gets the "big picture" right in terms of sustaining fiscal support for the economy to offset headwinds from COVID. Yes, many economies, including Australia's, are bouncing back at impressive rates. But this has been underpinned by fiscal support and is also quite fragile. Crucially, we don't know exactly where we will land over the next five-year horizon compared to the previous path for the economy, except that it is likely to be lower than would have been projected before the recession (as is often the case with recessions) and the quicker a move to fiscal austerity, the lower the likely path. Having a more ambitious (i.e., lower) forecast for the unemployment rate is a fine feature of the budget and makes it clear that sustained fiscal support is needed for the Australian economy given current unemployment is still clearly elevated as a result of the COVID crisis. However, Treasury should avoid getting into too much of a guessing game about the exact value of the natural rate of unemployment, which tends to move around over time for a variety of reasons. It is a bit disappointing, but not surprising, to see the "culture war" aspects of the budget with real cuts to public media and university funding per domestic student. Also, beyond supporting the economy through the COVID crisis, it would have been better to have included a more ambitious plan to accelerate the vaccine rollout (and ongoing vaccination programs that will be needed for the next few years), expand remote quarantine facilities and repatriation flights that are, after all, the constitutional responsibility of the Commonwealth government, and develop other initiatives to reopen borders as soon as possible (like supporting and funding separate quarantine programs to bring back international students from countries with very lower ongoing incidence of COVID-19).

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 

B

Maybe I'm too easy of a marker by giving a "B", but I think it is also possible to lose the forest for the trees when only evaluating the budget on its specifics. The big picture is that deficit-financed fiscal stimulus was needed given constraints on conventional monetary policy and this budget provided deficit-financed stimulus much more than might have been expected given the ideological predilections of the Treasury and the "Morrison Government" he kept referring to in his speech. Empirical evidence, including from my own research with US data, suggests both spending and tax cuts can be effective stimulus when there is a lot of economic slack. This budget delivers on the stimulus. I also think the forward guidance that puts off "budget repair" until after the unemployment rate falls below 6% is a strong feature of this budget, even if one could ask why the "6%" number in particular. This type of forward guidance makes it clear that the stimulus will be sustained and should make it much more effective than if households and firms thought measures could be quickly reversed. Of course, the government may have to learn the importance for reputation of sticking to its commitments given that the unemployment rate could take much longer than expected to come back down (although the apparent robust recovery in China is likely good news for Australia, even give current political tensions). The details of the budget are much less inspiring than the big picture and, indeed, it was clearly a tin-eared "blokey" budget that was not well targeted given that Australia is an largely urban/services-based economy and the crisis hit the service sector and women particularly hard. The specific initiatives (like the $61m to an expanded chaplaincy program, just to take an example) seem much more a "partisan targeting/rewarding particular voters" budget than a "visionary/governing-the-whole-country" budget to deal with what is hopefully a once-in-a-lifetime global pandemic/economic crisis. The more one looks at the details, the more one wants to significantly mark down the grade for budget. But I will still give it a "B" because the big picture is on the right track and I will just hope the Treasurer somehow becomes an "A" student in the future.

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

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, Incentives for renewable energy, More funding for education and training, 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

8

It is doubtful that COVID-19 has changed the fact that many people do not voluntarily save enough for retirement. This change will help ensure that more people save enough given longer expected lifespans.

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

If governments do not provide ongoing fiscal support, the global economy risks a debt-deflationary spiral (lower wages/prices, higher real debt/default), similar to the Great Depression.

Poll 39

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

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

Disagree

8

A freeze in the minimum wage would mostly just lock in lower inflation expectations and lower the real incomes of those subject to minimum wages. Both effects would hurt the economic recovery because they would result in higher real interest rates, higher real debt burdens, and lower aggregate demand. The presumption in the question is that a freeze would stop the real minimum wage from going up by such an amount that employers would respond by reducing their workforce. However, the impact of, say, a nominal 3% increase in the minimum wage on the quantity of labour demanded is likely to be far less than would be the impact of the fall in aggregate demand due to a freeze in the minimum wage.

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

10

Taking a dynamic perspective of the tradeoffs involved, it is clear that the future economic and social costs of COVID-19 if a medical crisis is averted are far less than the counterfactual economic and social costs associated with allowing a highly contagious and deadly virus to spread with R>0. Many of the social costs some economists link to social distancing restrictions would actually be worse given the economic fallout from a more severe recession following a mass outbreak of the virus. Furthermore, other policies should be used as much as possible to address economic and social costs of COVID-19. Social distancing restrictions should only be relaxed to the extent medical advice suggests it would keep R<1. I have written about these tradeoffs and the need to consider other policies at [Inside Story]( https://insidestory.org.au/covid-19-trade-offs-the-full-story/) and [The Conversation](https://theconversation.com/its-just-started-well-need-war-bonds-and-stimulus-on-a-scale-not-seen-in-our-lifetimes-137155).

Poll 27

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

Disagree

10

Surely they will have some impact. There are a lot of factors that drive capital flows, with corporate tax rates only being one of them. But it would be extreme to think there would be no impact.

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

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

Poll 35

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

Strongly disagree

10

There are many ways to change incentives for banks. One would be to separate out retail banking from other financial services, as under Glass-Steagall for the US from 1933-1999. Another would be to explicitly mandate that bankers should act in the interest of retail clients and have severe sanctions for failure to do so (e.g., loss of banking license if found by the regulator to have deliberately acted against the interest of retail clients). The list could go on.

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."

Strongly disagree

8

Real wage growth for the Australian economy has been slow in recent years, as part of the "secular stagnation" phenomenon. But that is unlikely due to the so-called "gig economy", which really doesn't employ that many people. A more plausible explanation is slow aggregate productivity growth and a continuing weakness in domestic and global labour markets following the GFC. As the US economy recovers further and given a lower unemployment rate in Australia, we can expect wage pressures to pick up. As for the gig economy, wages (and working conditions) are poor for, say, bicyclists delivering food. But why would they fall further? Are more people really going to sign up to become poorly paid bicyclists than already have? And why on earth would we think government intervention to prop up wages of bicyclists delivering food is a good idea? I can see some regulation of working conditions for those poor bicyclists (although there's not much the government can do about early sunsets, hills, and driving skills in certain capital cities). But wage regulation sounds like a bonkers idea in response to the gig economy.

Poll 25

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

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

1 - Strongly agree

2 - Strongly agree

Poll 24

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

Strongly agree

10

It will raise utility for many without actually lowering it for others. This has been seen in other countries that have allowed same-sex marriage.

Poll 23

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

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

A - Strongly disagree

B - No opinion

It seems highly unlikely to me that AI will lead to a big increase in long-term structural unemployment. The realms in which AI can substitute for labour are quite limited in comparison to the size of the current economy (meanwhile, if AI non-trivially increases the size of the economy, that will just lead to more and/or better paying jobs). Also, most of any workers displaced by AI are likely to have transferable skills and don't live in the equivalent of the U.S. mid western rust-belt. Instead, they live in large dynamic cities with other employment opportunities... This whole "robots-taking-white-collar-jobs" scenario is overblown science fiction. Its only benefit is to focus minds on the value of general skills education rather than specific professional training.

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"

Agree

8

The return on investment to society is likely to be higher than the cost of borrowing given low real interest rates. So, yes, there should be more investment in public goods. But there should be some consideration to making sure large deficit-financed spending is not overly stimulative to the macroeconomy. That is, monetary policy may need to react to such fiscal stimulus by, ironically, raising interest rates. But this is only if the commitment to infrastructure investment by federal and state governments is clear.

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."

Strongly disagree

8

This proposal sounds inefficient compared to a Pigouvian tax or Cap and Trade.

Poll 20

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

Uncertain (neither agree nor disagree)

10

Sometimes yes, sometimes no.

Poll 19

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

Strongly agree

10

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)

7

Samuelson's classic textbook started with macro. People seemed quite capable of learning economics well enough when his text was ubiquitous. But I think people are just as capable learning economics if they start with micro. I have yet to see a compelling pedagogical argument for a specific ordering. My guess is that it is only people who don't really believe macro exists who would suggest it is essential to start with micro. I'm not one of those people.

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)

5

It is difficult to measure social costs or consumer surplus. Gambling provides some utility to its participants, but it is also addictive. In saying definitively whether the costs exceed the benefits, I would worry about implying either support for outright prohibition of all forms of gambling or support for a completely unregulated market. I would think many limits should be placed on gambling to reduce its ability to lead to financial ruin (e.g., allow low-stakes gambling like community-hall bingo, but tax or limit participation in higher-stakes contests). For risk-lovers who particularly seek out high-stakes gambles, there are always financial markets available to participate in and these markets even sometimes have positive expected returns, making them a far superior, if less glamorous, option for satisfying their needs. Also, a Pigouvian tax that helps cover some of the costs placed on society could make sense. But gambling will occur regardless of whether it is in a legal market. So outright prohibition really isn't the solution.

Poll 13

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

Strongly agree

10

Poll 12

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

Strongly agree

10

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

10

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

Agree

5

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

8

A nominal GDP target is effectively a price level target (since the RBA cannot control real GDP in the long run). Such a target would be harder to communicate to the general public (and, therefore, shape their expectations) than an inflation target. It is also more sensitive to measurement problems than an inflation target. An inflation target that is achieved over a 1-3 year horizon is easier to communicate and implement. So I would recommend sticking with what has been a very successful policy framework rather than adopting this proposed alternative.

Poll 9

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

Disagree

7

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

8

Estimates on returns to education are larger and more precise than estimates on the effects of tax cuts on investment and long-run growth.

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."

Disagree

9

Fiscal policy should be conducted in a way that helps achieve stable macroeconomic outcomes, while at the same time being consistent with debt sustainability. It is important to note that this conduct could be entirely consistent with an absence of a budget surplus between now and 2020-21. The appropriate level of the budget balance will depend on a number of factors and, subject to current expectations about the debt-to-GDP ratio, should not be dogmatically set to surplus if it is at the cost of achieving stable macroeconomic outcomes.

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."

Uncertain (neither agree nor disagree)

5

Assuming higher education is a big component of the 20% of total Australian exports related to the services sector, I don't think there is likely to be an increase in demand from China. But there may well be other service exports (financial services?) that could grow at a faster rate.

Poll 5

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

Disagree

8

Poll 4

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

Strongly agree

10

These incentives will lead to more investment in projects with lower rates of return rather than projects with "public good" spillovers such as produced by basic research.

Poll 3

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

Disagree

7

Economists are (in)famous for disliking the dead-weight loss of Christmas, and it is a legitimate concern. But gift giving can also serve the useful social purpose of influencing preferences.

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."

Strongly agree

8

A casual glance at experiences in other countries with similar cultural histories (e.g., Canada) would suggest that this is so.