Rachel Ong

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 the development of alternative fuels such as hydrogen | Expedite building new transmission lines to connect renewable energy

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%.

creating more incentives for business R&D, reducing out-of-pocket costs of childcare for families, improving the quality of primary and secondary education

4

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: E

C

OVERALL COMMENTS: The Budget contains some measures to deliver much-needed relief for low-income households from cost-of-living pressures such as the 15% increase to the maximum rate of Commonwealth Rent Assistance. However, it does not deliver the structural reforms needed to repair the budget. More disciplined fiscal policy and reforms to boost productivity are needed. INFLATION COMMENTS: There are no obvious measures in the budget to rein in government spending. This budget runs the risk of fuelling inflation and more interest rate rises by the RBA. In the rental market, this in turn risks eroding the effectiveness of measures such as the increase in rent assistance if landlords continue to pass on interest rate rises to tenants in the form of increased rents.

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

.

Reserve domestic gas equivalent to 15% of LNG production from each LNG export project (ie making the

I don't think there is any scope in the budget (given the huge deficit) to go down the path of subsidies for consumers. The issue is primarily a supply problem amplified by global uncertainties in supply flows. The appropriate way of tackling this would therefore be to secure domestic supply.

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 Care jobs Workforce participation

Workforce participation Especially among mature age jobseekers, this is an important priority. The population is aging and unemployment rates are at historically low levels. Yet, there remain significant barriers to workforce participation by older persons.

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

Boost childcare subsidies Reserve a portion of gas and other commodities for domestic use Wind back government spending

2.5%

Policies will need to be implemented to scale back demand for goods and services while securing the supply of essential goods against global supply chain disruptions. Non-discretionary inflation has risen more sharply than discretionary inflation, so while government spending will need to be scaled back, care needs to be taken to ensure that low-income households are not plunged any further into financial distress. Given labour market shortages, a boost to childcare subsidies may increase the capacity for workforce participation by those with childcare responsibilities, which would further ease cost-push inflationary pressures.

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

.

We need some long-term policy thinking to address the intergenerational transmission of our huge debt burden. This can be done through tax reform that shifts away from preferential treatment of non-productive assets and at the same time increases work incentives. Policies that promote long-term productivity and wage growth should also be prioritised. These policies combined should have long-term positive flow-on effects on housing affordability as wage growth catches up with housing price growth.

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"

Uncertain

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

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

2022

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

There is in fact a limited range of tools available to the RBA, so I would say they have done the best they can with what they have. However, a spillover consequence of prolonged periods of low interest rate is the the huge impact this has had on housing demand, pushing up house prices and worsening home purchase affordability for would-be homebuyers. The RBA have repeatedly indicated that these are outside the scope of their remit. However, I would argue that housing affordability plays a particularly important role in supporting the economic prosperity and welfare of the Australian people. So if there was to be a review, I would strongly propose that this idea that housing is outside the scope of the RBA be challenged.

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;Reforming industrial rel

In reality, Australia?s productivity levels were already lower than desired prior to COVID-19. So I think driving increases in productivity would be the most direct way of addressing the crux of the wage problem. Other than that, it was difficult finding two other measures that I could fully support. Demand-side measures are secondary as we do not have a problem with low demand, so boosting demand at the expense of a growing budget deficit is undesirable. I doubt that restricting labour supply through reduced immigration will have meaningful impacts at this time, given already historically low immigration levels during the past year. Perhaps if immigration levels were currently high, there would be scope to look at reducing immigration. Reducing the international students intake will only further harm a large export sector (international education) which will in turn depress aggregate demand (and wages). Increasing the bargaining power of trade unions may assist specific sectors where union representation is widespread, but we will not see broad increases in wages across the economy.

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 only the purchase of non-luxury all-electric cars

6

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

.

C

In general, the budget struck the right emphasis on economic recovery and jobs. However, the size of the budget deficit is worrying. The schemes designed to assist home purchase are merely band-aid solutions to a massive housing affordability problem that requires genuine structural reform.

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 

Uncertain

8

Governments should be very careful about suddenly removing fiscal support suddenly until the economy embarks on a steady trajectory of recovery. However, they should look at reducing the level of fiscal support incrementally as soon as possible.

Poll 39

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

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

Agree

8

The level at which the minimum wage should be set has remained a contentious issue for policymakers. Central to the policy dilemma is the extent to which increases in the minimum wage might reduce the demand for labour. Australia is likely facing a prolonged period of economic recovery with high unemployment rates for the foreseeable future. Hence, policymakers should be wary that raising the minimum wages may potentially further depress labour demand and offset efforts to reduce the unemployment rate in a weak economic environment. Concerns regarding these trade-offs are less relevant under strong economic conditions. Unfortunately, the current economic reality is a sombre one, so the priority should be assisting people to return to work , before consideration can be given to raising the minimum wage. It is also worth noting that unemployment is associated with substantially worse life satisfaction and financial prosperity outcomes than those working in minimum wage jobs. Raising the minimum wage may also lead to relatively small improvements in disposable incomes due to the gradual withdrawal of income-tested welfare benefits that usually accompany wage rises for low-income earners.

Poll 29

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

Disagree

9

Simply building more housing will not make housing cheaper. The problem with high property prices is not purely a supply-side issue. Over the decades, various policy measures have been introduced which would have fuelled demand and competition for housing. These include negative gearing, CGT discounts, First Home Owners Grant, and historically declining interest rates.?All may have contributed to an increase in housing prices.?The problem of a lack of housing affordability in Australia reflects deep seated structural problems within our policy settings that have contributed to an inflationary bias in land and property markets. These problems will not be resolved by simply building more housing. It will take a mix of supply and demand measures to implement the kind of comprehensive reform required to make meaningful improvements to housing affordability in Australia.

Poll 35

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

Disagree

8