Author's Name: Ken Clements Date: Tue 12 Feb 2019 |
Ken Clements
Professor Ken Clements
Ken Clements has been at UWA since 1981 as Professor of Economics, and more recently as BHP Research Fellow. He is a generalist economist with interests in international finance, monetary economics and applied micro, including index numbers. His research has been supported by a series of grants from the Australian Research Council and he has published widely including the book Currencies, Commodities and Consumption (Cambridge University Press, 2013, 2015). Since its inception in 1987, he has been active in the annual PhD Conference in Economics and Business, a joint venture between ANU, the University of Melbourne, UQ and UWA.
Subject Area Expertise
International finance; monetary economics; applied micro; index numbers.
Responses (40)
Housing Reform
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”.
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Home affordability
Replace stamp duty with a broadly based land tax that includes the family homes, Remove barriers to building prefabricated homes, Include the family home in the age pension assets test
Western Australian GST deal
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 - We should distribute GST revenue to the states on a per capita basis. This would help mitigate the perverse incentives promoted by the current system. At the same time, the opportunity should be taken to eliminate many of the exceptions to GST, as well as raising the overall rate in order to decrease other taxes.
Not sure
Reintroduction of the Carbon Price
Poll 61
Worried economists call for a carbon price, a tax on coal exports, and ‘green tariffs’ to get Australia on the path to net zero
Introduce an economy-wide cap and trade carbon price | Expedite the development of nuclear energy
We can and should keep unemployment below 4%, says our survey of top economists
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, relaxing industrial relations regulation to allow for greater "flexibility" (as defined by employers), running the economy "hot" for a period (i.e. through low interest rates) in order to give more potential workers some work experience, increase their employability in the long term
Budget 2023
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: E
E
OVERALL COMMENTS: There is substantial scope for improvement of the budget process. Defence, aged care, the NDIS, retirement incomes, resource taxation, electricity prices, and on it goes. All this in addition to macroeconomic issues of debts and deficits. The process is too cluttered for the transparency needed for good public policy. Treasury must have a large team of economists working under great pressures to meet the all-or-nothing deadline. And there are armies of analysts in the market trying to unpick the budget to work out what it means (for them). Rather than a single announcement coving such a sweeping array of areas, a staggered approach would lead to better public understanding, and a freeing up of some of the resources now consumed by the process. It may also lead to better policy and a better-performing economy.
How economists would raise $20 billion per year
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: Broaden the set of goods and services captured by the GST Wind back the capital gains exemptions on the family home Wind back deductions for negatively geared properties
Equity is such a slippery concept that it means anything goes when it comes to public policy. Why is my personal option of equity any better/worse than yours?
Leading economists back Federal Government action to curb rising gas and electricity prices
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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Unrestricted cash transfers
Western Australia's 15% reservation policy should be scrapped. It is roughly equivalent to an export tax with all the usual distortionary impact. Better to have high energy prices to encourage conservation and look after the environment. If necessary, unrestricted cash transfers would be a lower-cost way to compensate households. Earlier this year the WA government transferred $400 to all residential electricity accounts ? not an unrestricted cash transfer, but it is a move in that direction.
'It’s important not to overreact’: Australia’s top economists on how to fix high inflation
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
Reduce the rate of monetary expansion
2%
Most items on your list are non-monetary causes of inflation. These blur the distinction between changes in relative prices and changes in the price level (properly measured). In the longer-term, it is not real factors but monetary factors that determine inflation, such as the ?quantitative easing? (aka monetary expansion) followed by central banks around the world.
Intake of permanent migrants
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"
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190,000 is about right
Top Economists see no prolonged high inflation, no rate hike next year (Q4)
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
Top Economists see no prolonged high inflation, no rate hike next year (Q3)
Poll 51
Our panellists were asked whether rate hikes would be necessitated in the United States, Britain and Australia.
Despite appearances – especially in the United States – the era of high inflation isn’t set for a comeback in the view of Australia’s leading economists, and most see no need for the Reserve Bank to lift interest rates next year.
Question 3
"The Reserve Bank has, over the past 5 years, effectively used the tools available to it to achieve its goals of "maintaining the stability of the currency, ensuring full employment and furthering the 'economic prosperity and welfare of the people of Australia'."
Photo credit "Wes Mountain/The Conversation, CC BY-ND"
Agree
7
Top Economists see no prolonged high inflation, no rate hike next year (Q2)
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"
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1
Top Economists see no prolonged high inflation, no rate hike next year (Q1)
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"
Agree
9
The RBA has substantial economic capabilities, and a reasonably good track record. But a major problem has been monetarising the deficit which threatens the independence of the Bank from government of the day. To maintain independence and credibility, the RBA needs to focus on one thing and one thing only, low and steady inflation. Forget month-to-month gyrations in unemployment, housing booms and busts, the "mood" of the bond market, and all other distractions from what the Bank can control -- inflation over the long term. One item for any Review of the RBA is the composition of the Board. It would benefit from more outside expertise in monetary economics to test, challenge and improve analysis presented by Bank officials.
Australia’s top economists back carbon price, say benefits of net-zero outweigh cost
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
Promoting vaccination uptake in 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"
Mandatory vaccination for higher risk occupations;Vaccine passports for higher-risk settings (eg. flights, restaurants, major events);National advertising campaigns;Cash incentives for vaccination;Lotteries with cash or prizes for the vaccinated
Policies to deliver higher wage growth
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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Measures to boost productivity growth;Measures to boost business investment;Reforming industrial rel
Transition to electric cars
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"
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9
A tax on carbon emissions is the first-best policy. Subsidies/taxes on cars involve a higher social cost.
The Federal Budget May 2021
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
.
E
Does the budget rebuild our economy and create jobs?
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
October Budget 2020 - preferred four programs
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, Corporate tax cuts, Infrastructure projects, More funding for education and training
The legislated increases in compulsory super contributions should...
Poll 41
"The legislated increases in compulsory super contributions, which are set to climb from 9.5% of wages to 12% over the next five years should...."
Photo Credit: Wes Mountain/The Conversation, CC BY-ND
Be abandoned
8
Government Debt during the COVID19 Crisis
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
9
Wage freeze for economic recovery
Poll 39
"A freeze in the minimum wage will support Australia's economic recovery"
Photo credit: Wes Mountain/The Conversation, CC BY-ND
Strongly agree
9
Social Distancing Measures, May 2020
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
Motherhood, caring and the careers of Australian women - April 2019
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 - Uncertain (neither agree nor disagree)
6
Part 2 - Uncertain (neither agree nor disagree)
6
Sugar sweetened beverage tax for Australia - July 2018
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 - Strongly disagree
2 - Strongly disagree
Professional Accreditation of Economists - March 2019
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 - Strongly disagree
9
Part 2 - Strongly disagree
9
Congestion pricing - November 2018
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
9
US corporate tax cuts - March 2018
Poll 27
"The recent US corporate tax cuts will have no impact on investments in and capital flows into Australia."
Strongly agree
10
Australian Federal Budget 2018 - Reduce government debt or provide tax cuts? - April 2018
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 - Disagree
2 - Strongly disagree
Electric vehicles and road-use pricing - June 2018
Poll 30
"Pricing of road-use for electric vehicles should be the same as fossil fuel-powered vehicles."
Strongly agree
10
Banking Royal Commission and the Credit Crunch - October 2018
Poll 33
Proposition 1: "There is a significant risk that, either as a result of the findings and recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry or as a result of the financial institutions' response to those findings, credit will become less readily available to Australian households or businesses."
Proposition 2: "Assuming credit becomes less readily available to Australian households or businesses, this will in turn have adverse consequences for the performance of the Australian economy."
1 - Strongly agree
2 - Strongly agree
Gig economy and worker welfare - February 2018
Poll 26
"The wages and conditions of Australian workers providing services in sectors affected by the rapid growth of digital on-demand subcontracting platforms will, on average, be expected to fall without further government intervention."
Disagree
5
Journalism as a public good - January 2018
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 - Uncertain (neither agree nor disagree)
Same sex marriage - November 2017
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."
Uncertain (neither agree nor disagree)
6
Robots, artificial intelligence and the 'future of work' - October 2017
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 - Disagree
B - Agree
Public borrowing for infrastructure investment - September 2017
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"
Strongly agree
10
The Finkel Review - August 2017
Poll 21
"The Finkel Review has recommended a mandatory certificate scheme that obliges electricity retailers to purchase a certain proportion of the electricity they sell from sources of electricity whose emission intensity is below a defined level. This is preferable to conventional approaches to the pricing of externalities, such as an emission tax or cap and trade scheme."
Disagree
10