Joaquin Vespignani

Poll 64

Panelists were asked to comment on two questions: 

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

And

On May 14, the government delivered a budget designed, in the Treasurer's words, to "focus on fighting inflation in the near term and then growth in the medium term " - What grade would you give the budget, given that objective? A, B, C, D, E or F

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

NO Increasing housing and energy subsidies are both inflationary policies that fail to address underlying supply issues, which are the root of the problem.

E

Subsidising electricity is a bad policy. It leads to higher energy consumption, which in turn necessitates increased energy capacity and results in higher prices in the long run.

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

Expedite the development of nuclear energy | Expedite investment in large battery storage | Expedite building new transmission lines to connect renewable energy

The biggest impediment to achieving global decarbonization targets is the need for more critical minerals supply for both clean energy production and storage. Australia's most significant contribution to reaching global net zero by 2050 is to increase the extraction and production of critical minerals, as Australia has more than 20% of the global Critical minerals proven reserves. State and federal governments should heavily invest in critical mineral production via tax deductions.

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%.

reducing taxes and regulations facing businesses, increasing enrolments in tertiary education, improving the quality of primary and secondary education

4

Obtaining education is crucial in reducing the natural rate of unemployment. By receiving education at all levels, workers can secure long-term employment and decrease the length of time they are unemployed.

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: The budget falls short on enhancing productivity through improving education at all levels and upskilling Australian for the jobs of the future. Productivity is the primary mechanism to protect real wages. INFLATION COMMENTS: The budget will be ineffective in keeping inflationary pressure in check. Many policies, such as increasing JobSeeker payments, increasing rental assistance and increasing expenditure, may be necessary but are also inflationary. A surprise inflationary policy for Tasmania is building a new AFL stadium for Hobart when house affordability is a major problem and the construction workforce is already scarce.

Poll 58

When panellests were asked to find an extra A$20 billion per year to fund government priorities like building nuclear submarines and responding to climate change, Australia’s top economists overwhelmingly back land tax, increased resource taxes, an attack on negative gearing and extending the scope of the goods and services tax.

Photo credit by Joshua Hoehne on Unsplash

Efficiency picks: Wind back deductions for negatively geared properties Introduce or increase land taxes (possibly with cut in stamp duty) Equity picks: Introduce or increase land taxes (possibly with cut in stamp duty) Wind back the capital gains exemptions on the family home

Land taxes and wind-back deductions for the negatively geared property are the most efficient way to collect more taxes without a low impact on economic growth. Both taxes may also help to deal with the looming housing crisis.

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

Education and skills

Education and skills Improving education policies and skills for the labor force is critical for the long-term prosperity of Australia. The Organisation for Economic Cooperation and Development?s recent studies show that a high level of education is associated with greater satisfaction with life, more robust civic engagement, and better-perceived health. According to the latest OECD Programme for International Student Assessment (PISA), which assesses the quality of education, Australia is quite behind other developed comparable countries. Australia ranked globally only 29th, 17th and 16th in mathematics, reading and science, which are vital skills for the future labor force.

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 Push for below-inflation wage rises in the Fair Work Commission Increase immigration

2-4%

Unfortunately, around 65-75% of the current increase in inflation in Australia is because of international supply shocks (supply chain disruptions and energy prices). Both monetary and fiscal policies are ineffective in easing these shocks. Therefore, high inflation is inevitable and will last at least another year. Once supply chain disruptions and energy prices normalize, inflation will return to 2-3%.

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

.

The housing affordability is reaching a critical point with median house prices more than 25% higher than in 2020. I urge policymakers to rethink the Australian taxation system, as more and more young Australians have lost any hope of buying a house in a country with one of the lowest population densities in the world.

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

The number of permanent migrants should increase beyond 190,000 and is critical for sustainable economic growth in Australia. In 2021, the net migration in Australia was a net loss of 88,000, meaning that if the previous level of permanent migration was adequate, the number of permanent visas should increase way above 190,000. According to the RBA, the unemployment rate is expected to fall below 4%, supporting the case for further higher migration intake to ensure there is no labour shortage.

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 4

"Following the next Federal election, the incoming Federal Government should commission an independent Review of the Reserve Bank of Australia."

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

Agree

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 3 

"The Reserve Bank has, over the past 5 years, effectively used the tools available to it to achieve its goals of "maintaining the stability of the currency, ensuring full employment and furthering the 'economic prosperity and welfare of the people of Australia'."

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

Agree

9

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 2

"When do you expect the Reserve Bank of Australia to next lift its cash rate?"

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

.

9

2023

Poll 51

Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.

Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.

Question 1

"The current combination of Australian fiscal and monetary policy poses a serious risk of prolonged above-target inflation."

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

Disagree

9

I believe that an independent review of the RBA is necessary. The review should also consider the role of the Australian Prudential Regulation Authority (APRA) in stabilising house prices. The current problem is that the Australian cash rate is consistent with the inflation target and low unemployment mandate. However, this low-interest rate has created a bubble in the housing market which is not consistent with ?Economic prosperity and welfare of the Australian people ? also stipulated in the RBA mandate. APRA should follow a clear rule to move the minimum interest rate buffer using ?House prices inflation-target?. This could substantially reduce the risk of a boom and bust scenario in the housing market by curving house price expectations, helping the RBA to focus only on inflation target and employment. Concerning current inflation, I expect higher inflation until the second quarter of 2022 (temporary shock). Afterwards, most disruptions in the supply chain (which are the cause of high inflation globally) will subside. The RBA reading of this inflation shock is correct in my opinion.

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"

Government support to develop and roll out emissions-reducing technologies

Uncertain

Government support for research and development of new technologies is critical for a country with large reserves of coal such as Australia.

Poll 49

"What measures should Australian governments adopt to promote demand for vaccination once supply is no longer a constraint?"

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

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

With more than 2.3 billion vaccines (from different brands) already applied (worldwide), and no evidence of important side effects, there is no good reason to be unvaccinated in a truly global pandemic. People who choose not to be vaccinated are adding an enormous social and economic cost to the rest of the Australian and the global communities. Therefore, policies which restrict the circulation of the virus should be burdened mostly by unvaccinated people.

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

Wage?s growth should be enhanced only by an increase in productivity, any other incentive or mechanism to increase wages would be costly for society (e.g. higher unemployment). Microeconomics and education reforms to boost productivity are the key elements to be considered for a long-term increase in wages and 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"

.

9

In Australia, the environmental benefits of electric cars are not very well understood: First, about 80% of electricity in Australia is produced using fossil fuels (such as coal, gas, and oil), therefore the benefit of using electric cars is largely offset by the source of electricity production. Secondly, electric cars are substantially less environmentally friendly during manufacturing and at the end of their life cycle (lithium batteries are not efficiently recycled). In short, environmental policies in Australia should focus on producing clean electricity before encourage the purchases of electric cars.

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

In general, the budget was very good. However, I believe that the budget fell short in terms of supporting education (most notably; tertiary education). In my opinion, the challenge for the next 2-3 years will be the unmatched skills in the labor force that most economies will face after the unprecedented disruption caused by the Covid-19 pandemic. Consequently, I believe that countries with more education/skills attained will attract significant more investment in new and emerging sectors (hence economic growth).

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

I think that is a very good budget overall. Although, the funding for education (as % of GDP) still low compared to other OECD countries. Education is critical for long term growth and to reduce long term unemployment.

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."

Remain indexed in line with the CPI

Jobseeker rates should be sufficient for an unemployed recipient to pay their basic needs, but not high enough to discourage active job hunting. To maintain a low level of structural unemployment increasing rates beyond the pandemic crisis is not recommended. However, it is not clear to me that the effect of the pandemic will subside by march (when the additional support is withdrawn). Regarding indexation, I believe that the cost of living of each state should be considered, therefore the jobseeker payment should be index by the major cities CPI indexes to properly account for the state-specific inflation.

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

At this stage of the crisis, is important to consider mid-term policies such as heavily investing in tertiary education to upskilled the labour force. This will be both, efficient (in terms of resources reallocation), but also fair in terms of intergenerational equality. This is because people who get the benefit of upskilling themself will contribute to higher income and taxes in the future.

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 deferred

9

This is not a time to encourage saving. It would be a contradiction to have unprecedented expansionary monetary and fiscal policy while increasing superannuation contribution. On the contrary, I think that superannuation contributions should be temporarily suspended until this unprecedented economic crisis subside (perhaps for 6 to 12 months). This will boost the economy in such an unprecedented crisis and will not significantly affect individual superannuation funds in the long run.

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

Poll 38

"The benefits to Australian society of maintaining social distancing measures sufficient to keep R<1 for COVID-19 are likely to exceed the costs"

Strongly agree

9

International evidence from Denmark, New Zealand, Honk Kong and Taiwan shows that social distance measure work well, meaning that the economy may re-open relative sooner after strict social distance measures. The social and economic cost of not implementing social distance policies, lead to a much higher cost for countries which delay the social distance restrictions (e.g. Sweden, Russia, the U.S. amongst others). The reality is that there is not health system prepare for such as severe pandemic, and therefore social distance measures are required. The relaxation of these measures should be gradual, and some outbreaks are also expected in the process, as we learn more about the virus.

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 -Uncertain (neither agree nor disagree)

6

Part 2 - Uncertain (neither agree nor disagree)

6

Poll 29

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

Agree

9

There is an evident lack of supply of housing in Australia, in particular in Sydney and Melbourne. The fact that house prices have increased more rapidly than household income in the last decade supports the hypothesis of lack of housing supply.

Poll 35

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

Disagree

8

Increase competition: I believe that more competition from international banks is a key factor to improve good behaviour from domestic banks as in general international banks have tighter internal regulations to ensure all branches worldwide complaint with domestic regulations. The concentration of the financial industry in Australia is not helpful to protect retail consumers. Refine regulations: We all know that regulations and markets are not perfect, and constant review of good practices is a key element to ensure better consumer protection. Although, misconduct exist in almost any sector; it is important to note that things have improved substantially over the long period. In this sense is important to have historical perspective.