Beth Webster

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”.

None of the 49 leading economists polled in the latest Economic Society of Australia survey said they believed the market was delivering good outcomes.

Home affordability

Provide more public housing, Ease planning restrictions, Replace stamp duty with a broadly based land tax that includes the family homes

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?"

YES - All federations that share a common currency need to equalise services and infrastructure across regions to cater for the fact that economically weaker regions cannot deflate their currency to restore economic prosperity. Otherwise, the federation will fall apart and we get the Greek-in-EU style problems.

Scrapped

Equalisation is necessary to prevent vicious cycles of economic decline. The 2018 measures weaken forces that prevent some states and territories from falling into decline.

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 ensure Australia can be part of newly-developing US-linked supply chains | To support homegrown emerging green technologies | The payoff to clean-energy innovation has increased

Provide more grants to innovative firms across the entire economy

We need to urgently invest in improved technologies for the production of green iron from our large hematite iron ore reserves in the Pilbara. Given Australia?s potential to provide large-scale wind and solar energy for a green hydrogen industry, we are in a prime position to become leaders in the manufacture of green iron but the cost of processing green iron is too high at present. Without this investment, we will lose iron ore markets to Brazil and Africa.

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

Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price | Expedite the development of alternative fuels such as hydrogen

Even a second-best carbon price, such as the safeguard mechanism, will do more for incentives to invest than subsidies. The pull always works better than the push. Hydrogen has the potential to be an alternative fuel for peaking power and base-load power and should be seriously considered. There is consistent evidence that doing nothing will not get us to a containable temperature.

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

2

More public sector supported employment options for people with social and disability issues would assist the very long-term unemployed participate more fully in society.

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: A

B

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) Tax windfall profits Equity picks: Wind back superannuation tax concessions Tax windfall profits Introduce or increase land taxes (possibly with cut in stamp duty)

Efficiency comments: Windfall profits, most cleanly measured on mining stocks, do little than reward shareholders ?many of whom are foreign ? for being lucky. There is no evidence that these recent profits have enhanced investment spending. Moving to simplified and consistent (unimproved) land tax would have no effect on investment or production and would be the most efficient tax we could have. Equity comments: Australia has been acclaimed internationally as having a best-practice income retirement approach: entitled public pension; compulsory superannuation and private savings. However, without caps on tax concessions, the scheme loses equity and efficiency points. Allowing concessions to go to extremely wealthy people may undermine public confidence in the system and lead to its un-doing.

Poll 57

Australia’s top economists have overwhelmingly endorsed intervention to restrain gas and electricity prices, with only three of the 47 leading economists surveyed believing the best thing the government can do is to leave things to the market.

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

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Increase taxation of resource rents for gas producers and use proceeds to support low income househo

The government should not interfere with price signals that reflect the true cost of energy. High prices will encourage consumers to conserve energy and switch to cheaper renewables. They will also boost R&D and infrastructure spending on renewable energy. The best way to mitigate the unequal burden on low-income households is through direct payments to households - probably through the pension and benefits scheme. On the other hand, the windfall gains to energy companies from the current situation should not go to shareholders, many of which are foreign, but to a sovereign wealth fund or a fund to benefit national priorities such as relief for Australians on low incomes.

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

Green jobs Broader reforms to promote productivity Digital jobs

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

Super profits tax on fossil fuel producers with revenue used to reduce cost of services Increase income taxes with revenue used to reduce cost of services

4%

The wage share of GDP is at an historic low and we need to ensure that wage increases, modest as they are, are not transferred as price rises. To prevent this, we need a hard product market environment. Keeping import prices low, through a high exchange rate and high interest rate will contribute to a hard product market environment as well as keeping a lid on inflation.

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

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Having a clear focused plan to transition to net zero is essential for our long-term survival. Climate change is a threat to both economic and political stability. Social support has been neglected for eight years, which undermines civil society. Business need support to hasten the transition to net zero carbon. Commercialising the type of risky innovations needed to transition the economy will be too slow in an unsupported market environment.

Poll 51

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

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

Question 4

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

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

Agree

Poll 51

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

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

Question 3 

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

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

Disagree

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"

.

7

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

7

The current risk of prolonged above target inflation is very low. Although there are signs of higher inflation in the US and inflation can be imported, Australia has its own labour market institutions and own set of policy tools and is therefore not totally beholden to world events. Even before the pandemic, the RBA was undershooting their target and was not hitting the zero lower bound. An independent review is needed because the undershooting went on for about 5 years. Most central bank boards are more dominated by economists than the RBA. A refocus on unemployment would better serve the people of Australia.

Poll 50

Ahead of November’s Glasgow climate talks, our panellists were asked

"Australia would likely benefit overall from the national economy transitioning to net-zero emissions by 2050"

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

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

The price mechanism is a well-known and proven mechanism for getting many small and large behavioural and technological changes across the economy. People respond quickly to forces that directly affect their wallets. Subsidies and other forms of support for low emission technologies will support a transition, but will take a long time or a very large budget to be as effective as a price on carbon.

Poll 48

Our panellists were asked

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

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

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Maintaining high government spending in order to boost aggregate demand;Reforming industrial relatio

The wage share of GDP is low historically and this will affect business sales and investment if consumers are not able buy their goods and services. There is no point pumping business investment if the consumer market is lacklustre. Furthermore, continuing to see wage rises only at the top end, will lead to a fractured society of the ilk we have been seeing in the USA for many years. In the end, we all lose.

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, Set a date to ban the import of petrol and diesel cars

8

If there was a price on carbon, incentives to buy cars based on renewable energy would provide the optimal incentives and we would not be having this discussion.

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

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B

It a credit to the Treasurer that he has abandoned the illogical obsession with a budget surplus given we have unemployment and low inflation. However, given the windfall gain to the Treasury coffers from the iron ore price surge, the question is: has he spent this bonus wisely? On the plus side, he has released a number of large grants for catalysing the next generation of industrial growth and new forms of comparative advantage. Essentially de-risking development of long-term technological advantage. One the downside, he has missed an opportunity to remove consumption and production subsidies for diesel and increase consumption taxes for petrol. Money gained from these taxes should go towards solar and wind installations that will enable us to produce green steel and green hydrogen and thus become a leader in new export industries.

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

The most important response to a severe negative economic event is for a government to support aggregate demand and the federal government has certainly done this. It was the lack of demand stimulus, and a desire to balance the budget, that cause the 1929 stock market crash to turn into a depression. The Government and opposition should be commended for abandoning a destructive budget surplus target. But we should not waste an opportunity. Spending should be on activities that promote a strong civil society and underpin long-run improvement in well-being. The Government has gone some way towards encouraging businesses to upgrade their technological capacity via the Modern Manufacturing Strategy but the funding is only about $400m a year. Spread over many priority areas, it is not a lot. We expect to see a large increase in demand for higher education as young people defer labour market entry, but an additional 12,000 places is small compared with a national student population of 1.3 million. Lack of spending on social housing is a missed opportunity given the declining rates of public housing over past decades and the concerning number of homelessness.

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."

Other

This is an opportunity to reduce the taper rate (the rate at which benefits cut out as people take up part-time work). A high taper rate is a disincentive to work. This not only makes poverty worse but also excludes people from participating in the economy. Potentially, part-time work is a stepping stone to full-time work. Clearly, it is nonviable for people to live a proper life on the current level of benefits, especially if they are living alone.

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 

Expanded investment allowance, Social housing, Incentives for renewable energy, Funding higher quality aged care

The COVID stimulus is a great opportunity to focus on areas that have been neglected in the past. There are two areas: first, aged care and social housing (the need being well illustrated by the excessive COVID infection rates) and second, spending that is vital for future prosperity such as renewable energy and investment into new technologies under the industry 4.0 umbrella. The latter is important to enable Australia to hedge against unreliable supply chains and to broaden the range of foreign customers.

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

Deferring the 2.5% employment cost is unlikely to affect wages. It is more likely to reduce employment costs by 2.5% on what would otherwise would be the case. The question then becomes: Do slightly lower employment costs stimulate jobs? Many empirical studies suggest no. The biggest factor in hiring new people is the confidence people have that investment and exports are on the rise and this depends on how well the (Federal) Government and exports will stimulate the economy.

Poll 40

"Governments should provide ongoing fiscal support to boost aggregate demand during the economic crisis and recovery, even if it means a substantial increase in public debt"

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

Strongly agree

10

The natural limit to national government spending is the creation of high and damaging inflation.

Poll 39

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

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

Agree

9

The economy is likely to shrink over the next year, and as such all income recipients should expect to take a reduced income -- profits as well as wages. Although the wage share of total income has been low in recent years, this is not the time to address this issue. Instead it is a good time to scrutinise the payments of under award wages by some employers and improve the quality of Australian wage integrity institutions.

Poll 37

Proposition 1: "Without changes to existing public policy or private sector practice in Australia, motherhood will always negatively affect a woman's career."

Proposition 2: "In Australia, fathers are more restricted than mothers in fulfilling a caring role while in employment."

Part 1 - Agree

10

Fathers who take time out of their careers to care for young children (or other family members) often do not receive respect at workplaces from their male peers. The default position should be that both parents take some energy from their careers while they have young children rather than the other way around. Workplaces can encourage this by offering parents who resume full-time (full energy) work, additional opportunities to advance their career. The tradition of the macho man who works like a machine for 40 years, often relying on their wife to keep the household together, should die out. Its not healthy for themselves, their partners or their children.

Part 2 - Strongly agree

10

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 - Agree

2 - Strongly agree

1 - Saying 'best' may be too strong but the evidence is that prices do affect consumer behaviour, especially for products with immediate benefits such as a drink. We clearly have a health problem on our hands and few policies to date have reduced the problem.

2 - The list of chronic health problems from obesity is long and growing.

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

Price is a better rationing device for these types of commercial goods and services.

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 disagree

2 - Uncertain (neither agree nor disagree)

1 - Australia ran almost continual budget deficits after WWII and it led to the golden decades of low unemployment and low inflation. National governments can monetise debt and do not have to repay it.

2 - Neither have a lot to offer. Corporate tax cuts as a means of promoting investment is like pushing on a string.

Poll 35

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

Strongly disagree

9

It is a matter of changing the business culture first by making it easier to punish banks who clearly violate codes of ethics and integrity. Second by making the senior management more accountable for the incentives they create in their organisation and the conduct of their employees.

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 agree

9

Australia largely avoided the low-wage US-style secondary labour markets post-WWII due to policies of strong minimum employment conditions and large Government budget deficits. Without both these conditions, we are likely to follow the US path. Strong employment conditions may have a small effect on demand for workers but this can be countered by an expansionary monetary and fiscal policy stance.

Poll 25

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

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

1 - Agree

2 - Strongly agree

1 - Clearly every one is in favour of quality journalism, but the problem has been that even before the rise of social media, much of the conventional media was not quality and erred on the side of sensationalism and bias. There was limited accountability for this and the self-regulation of the media industry was weak and slow.

2 - The oversight of publicly funded media needs to be bipartisan and above the control of the government of the day.

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."

Agree

8

The economic effects of legalisation same sex marriage will be to enhance Australia's reputation as a respectful and accepting society. This will further enhance Australia's ability to recruit talented and mobile workers. However, its hard to quantify the size of this effect.

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 - Strongly agree

Whereas potentially, artificial intelligence can deliver strong benefits to our residents, whether it will or not depends on how well we use this technology to increase our exports and position in global value chains; measures governments take to support well-paid jobs; and the collective efforts of civil society to dampen extreme wage inequality. A growth in low-paid, low-hours jobs is a more likely scenario than a growth in unemployment. Training programs with no end job do not have a track record for helping the unemployed. Its best to get people into jobs or enable them to start new businesses before you train them.

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

7

With 700,000 unemployed (and another 700,000 underemployed) the Australian economy needs some demand side stimulation. It is unclear that it need be financed through public borrowings. With record low inflation, our economy can easily tolerate monetisation of debt.

Poll 20

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

Disagree

8

It depends on the oversight from independent regulatory bodies and the culture of the professions working in the organisations. As we have seen from the unprofessional behaviour in the training sector, if ethical standards are poor, considerable harm can be done to students. This can be a problem in both the for-profit and not for-profit sectors.

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

The mandating of equal pay for women in 1972 is a case in point. Prior to this legislation, introduced by the Whitlam Government, women were paid a lower wage than their male counterparts for doing exactly the same job. Economic theory claimed that businesses which paid men above their 'marginal productivity' would go out of business. It therefore followed that lower pay for women reflected their lesser contribution and was a market equilibrium.The experience of legislated equal pay showed the error of this theory. Women did not suffer a fall in employment post-1972 but continued their steady rise in workforce participation. Economic theory needs a more nuanced understanding of the sociology of the people they are seeking to model. Legislation and other forms of intervention can change attitudes and behaviours in the labour market in a beneficial way.

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."

Agree

9

Generally, the average of multiple independent forecasts are more accurate than one forecast - but in the case of the budget, this can be empirically verified. To do this, Treasury would need to commission several independent expert assessors (including university experts). The Treasury would have to make detailed budget data available to independent experts. This would also bring transparency and confidence to the public discussion about budgets and spending.

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."

Uncertain (neither agree nor disagree)

5

Australian gas producers are preferencing export markets because they can get contracts with certain prices. If we, the Australian consumer, want certainty over our gas supplies, we also need to offer these contracts. Offering these contracts will also give companies the confidence to invest in new gas fields. Offering these contracts will not solve our problems in the short term but is a longer term solution.