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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)

Disagree

Reducing emissions is a public good game played globally. It is necessary for a country like Australia to play its part to support the global effort to limit emissions. It is a priori unlikely that reducing emissions in Australia will benefit Australians directly (though not impossible via technological progress and reduction of local pollution). But Australians, are and will be impacted by global warming if nothing is done globally.

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

The growth rate of wages may differ across categories of population for the different measures listed. Distributive considerations matter to choose among them. Several of the options have political implications which would have to be taken into account, beyond the goal of wage 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"

Subsidise public charging points for electric cars

6

It is difficult question. The ability of electric vehicles to reduce emissions depends on the propensity of the country to produce electricity with limited carbon emissions. Unfortunately, in Australia, the production of electricity is mostly relying on coal and gas. As a consequence the production of electricity is the largest source of emission of CO2 in Australia (33% of its total in 2019). The nature of the energy mix of the country is critically relevant to assess the likely impact of electric vehicles on the reduction of carbon emissions. The spread of electric vehicles in Australia would not have the same impact on the reduction of emissions as it would have in countries whose production of electricity relies more on nuclear energy and renewables.

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 

Agree

8

Australia?s public debt is relative low among OECD countries. It is reasonable to think that a cautious fiscal policy in good times is to allow deficits in bad times to support the economy. Australia can, and I believe should, use this possibility.

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

Research consistently shows that the main driver of differential careers between men and women is the asymmetric effects parenthood has for them. Motherhood takes a physical toll on women, before and after birth. In competitive industries, the work interruptions it entails can have long-term consequences, setting women back in the race for promotions. In addition, in the work-life balance trade-off, women are often allocating more of their time to the family when becoming mothers. Part of this pattern may come from preferences and part of it may come from constraints. In both cases, improvements can be made to help women in their choices. In the case of women choosing to invest more time at home. Such a choice in the short term can make it difficult to re-enter a career-oriented job at a later stage. A key issue to address for gender equality is allowing women to re-enter the job market after having been a household carer for several years, with minimal penalty. Programs such as temporary subsidies to employers who hire mothers after a career interruption or a long period on part time could be one angle to consider. In the case of women willing to come back rapidly in the workforce after birth, many constraints make it difficult. In many places there is a lack of daycare places, leading to waiting lists. Improving the availability of daycare places, in particular close or on the workplace would make a difference. In some industries, there is a reticence to grant fathers extended parental leave. Such practices are de facto discriminatory and should be curtailed. Overall, industries should be encouraged to adopt guidelines about how to limit the motherhood penalty in career progression. In Australian universities, it is for instance common to have a rule stating that promotion decisions should consider the "opportunities" the candidate had and the interruptions associated with parenthood. It is a start. But it leaves unclear, how and how much should parenthood be compensated in the process (and not just the interruptions). Finally, economists should stress an obvious fact: in competitive markets, firms have an interest to simply chase the best looking CVs without regard for social goals such as helping mothers having a fair go. One solution often preferred in public discussions is to regulate and constrain the companies to take more women/mothers on board. Another solution worth investigating is to resolve this issue by incentivising firms to give more opportunities to mothers to work and continue a career after birth.

Part 2 - Agree

8

Poll 30

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

Disagree

7

The gain in reduction of negative externalities from using electric vehicles should first be estimated. Provided that the manufacturing and use of electric vehicles reduce air pollution (and noise pollution) enough, taxation should reflect these smaller negative externalities and be more beneficial to electric vehicles users. A sound policy requires a good assessment of the full environmental footprint of the use of electric vehicles, including the fact that, in Australia, they often use grid electricity generated by coal power generators.

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 - Agree

1 - On social media, rumours based on unchecked assertions spread fast. It is important for the public to be able to have access to serious and credible news sources with a high standard of fact checking. This is a public good and it therefore justifies public support.

2 - Some of the best investigative journalism is carried by the ABC and SBS in Australia. It is a key contribution to the Australian democratic debate. Private media news are often shallower due to incentives not necessarily favourable to quality journalism. Furthermore, Australia’s media ownership concentration is among the highest in the world. Quality, independent public news coverage is important in that regard.

Public news coverage should be independent of private and government influence, and politically neutral.

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."

Disagree

8

I don't see a clear reason why allowing a broader category of people to marry should have a long term impact on the economy. Same sex marriage is a good thing. It is the extension of the freedom to access marriage as an institutional recognition of a loving partnership. It is an added freedom for some which does not impede on the rights of others. It is not clear though that it should have an economic impact. It has been argued that there may be more marriages over the next years. But marriages generate non productive spending, they will substitute to other possible spending or savings. Overall, in all likelihood, the impact of same sex marriage on the economy will be negligible or null. But, saying that does not make the case for same sex marriage weaker. As economists we should be careful not to conform to the demand from the media to find that good policies have necessarily economic benefits. Some policies can be good for non economic reasons.

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

Robots and AI will offer opportunities but also challenges. Part of the work force will see lower demand for the skills which could foster structural unemployment. At the same time the simplification of tasks associated with these technical changes could facilitate transitions to new activities.
In any case, new opportunities for economic activities are bound to appear. The associated gains for the economy should make it possible to compensate the workers who are negatively affected (e.g. early retirement, welfare benefits). A problem though that this win-win scenario has often failed to eventuate in the past.

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

It is important to be careful about public spending not being wasteful and about public debt staying under control. Having said that, the debate on the public debt in Australia would seem strange to many foreign economists. Our previous PM Tony Abbott painted a picture of overblown public debt which is at odds with reality.  The level of public debt in Australia is at 46% GDP compared with 69% in Germany, 74% in the USA, 96.5% in France, 99% in Canada, 132% in Italy and 235% in Japan (CIA & IMF figures). It surely does not mean that any public debt is good, but the debate on the public debt has to bear in mind the fact that Australia has one of the lowest levels of public debt in the OECD.That being said, should the federal and state governments borrow more? An argument against this proposition is that Australia has been extremely lucky to experience a prolonged period of sustained growth. A reasonable policy is to reduce public debt in periods of growth to have healthy public finances when tougher times come. Such a policy can allow for public spending to provide a contracyclical cushion protecting against abrupt changes in the economic conjuncture.But, in the case of Australia, there is an argument for more public spending. Australia is one of the OECD countries with the highest levels of net immigration per inhabitants (three times more than the USA or the UK, 9 times more than France). This fact creates challenges in terms of urban and transport infrastructure. Old Australian cities are ill designed for population growth spurts. To address these challenges there is a need for substantial public investments in infrastructure.Overall, the second argument trumps the first one in my opinion, hence my support for the proposition to increase public borrowing to invest in infrastructure.