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Author's Name: Craig Emerson
Date: Wed 06 May 2020

Craig Emerson

Dr Craig Emerson

Dr Craig Emerson is an eminent economist with 35 years’ experience in public policy, politics and public service. He is Managing Director of Craig Emerson Economics Pty Ltd, providing professional services to governments and the business community. He is a Distinguished Fellow at The Australian National University, Director of the APEC Study Centre at RMIT, Adjunct Professor at Victoria University, Chair of the McKell Institute and a columnist with The Australian Financial Review.

Dr Emerson was Australia’s Minister for Trade and Competitiveness from 2010 to 2013. Prior to that he was Minister for Small Business and Minister for Competition Policy and Consumer Affairs. He was the architect of the 2012 White Paper on Australia in the Asian Century and was appointed Minister Assisting the Prime Minister on Asian Century Policy. He is also a former Minister for Tertiary Education, Skills, Science and Research and Chair of the Productivity Committee of Cabinet.

Dr Emerson was economic, trade and environmental adviser to Prime Minister Bob Hawke in the 1980s. He has also held the positions of Assistant Secretary in the Department of the Prime Minister and Cabinet, Director-General of the Queensland Department of Environment and Heritage and Policy Analyst at the United Nations in Bangkok.
Dr Emerson has a PhD in Economics from the Australian National University, and a Master of Economics degree and a Bachelor of Economics (Honours) degree from the University of Sydney.

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Responses (23)

Transition to net zero - ape the US Inflation Reduction Act?

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)"


Subsidies generate rent-seeking and are inefficient | To support homegrown emerging green technologies

Provide access to credit for firms in industries that will supply the US projects, such as nickel an

Sharing the risks of projects in which Australia has a comparative advantage has the advantage over cash subsidies of projects being self-identifying as potentially competitive. A second advantage is that this is off-budget, although it would appear in a statement of risks. Providing cash subsidies runs the risk of projects being selected by ministers who are not businesspeople to support projects that might sound appealing politically but which are not in accordance with Australia's comparative advantage; for example, nuclear power.

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%.


improving the quality of employment services, improving the quality of primary and secondary education, increasing enrolments in tertiary education


Previously the RBA had estimated the NAIRU at 5 per cent but subsequently reduced its estimate to 4.5 per cent. Reserve Bank estimates of the NAIRU are based on economic modelling utilising numbers derived from historical experience. But recent history includes the Great Recession of 2008, the rise of China's massive middle class with high savings rates that have put downward pressure on global interest rates, and the worst pandemic in more than a century. Further, the Australian wage-fixing system is much more deregulated, with union membership less than 15 per cent of the workforce compared with around 50 per cent in the early 1980s. The NAIRU is the rate of unemployment that is sufficient to prevent a wage-price spiral like that of the early-1980s. There is no evidence of a wage-price spiral now. We are not living in the 1970s. Rather than estimating the NAURU from history, the right approach is to bring unemployment down to the lowest level consistent with inflation not taking off. That's not 4.5 per cent, it's evidently not even 3.5 per cent. There will always be some frictional unemployment as people leave jobs or locations without immediately finding a new job. For those workers harder to place, the privatisation of the job search network might have been a mistake. Are private provider paid for activity rather than for success? And yes, higher educational attainment at school and post-school would increase the employment prospects of vulnerable workers.

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 -


Overall rating: A - Keeping inflationary pressures in check: B


OVERALL COMMENTS: This is the best budget I can remember. It is economic responsible, compassionate and aspirational. The trebling of the bulk billing incentive for general practitioners begins the repair of the primary health system. INFLATION COMMENTS: The 2022-23 surplus is slightly contractionary, while the small projected deficit for 2023-24 will not have a material effect on aggregate demand.

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: Introduce inheritance taxes Increase resource taxes Introduce or increase land taxes (possibly with cut in stamp duty) Equity picks: Introduce inheritance taxes Introduce or increase land taxes (possibly with cut in stamp duty) Increase resource taxes

Efficiency comments: These three taxes, properly designed, can be neutral; that is, they don't create inefficiencies that weaken the economy and reduce the tax base. Equity comments: These three taxes collect revenue from those with the greatest capacity to pay while exempting the poor.

'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


Boost childcare subsidies No need, inflation will fall back to an acceptable level without the need for any government action to back up the RBA


Much of the present inflation is transitory, caused by supply problems that should ease. Crushing demand to deal with supply problems seems idiotic. There is no evidence of a 1970s-style wage-price spiral. The August data on the Wage Price Index should be a guide, not anecdotes about huge wage increases.

Prioritising issues for the incoming Government

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



Social cohesion will depend on workers sharing in productivity gains. it is unsustainable for the benefits of any productivity growth to accrue mostly to shareholders at the expense of workers. Wages of health workers are too low to assure quality services. Aged care workers receive wages close to the minimum wage yet they are essential for quality care. Nurses, too, are poorly paid. it is unsurprising, then, that there are shortages of aged care workers and nurses. The transition to a low-carbon future needs to be faster and more orderly. Ad hoc interventions and sudden changes in policy have been hindering the transition.

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"



160,000 is about right

More important than the number is the composition of the intake. A high-skill intake but with a decent humanitarian program can help deal with skill shortages, lifting both participation and productivity, while a low-skill intake is more likely to depress the wages of low-skilled Australian workers.

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"



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"




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"





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"




The RBA has consistently undershot the 2% lower bound of its inflation target causing an unnecessarily high exchange rate and unnecessarily high unemployment and low wages growth. It should not have set its monetary policy on the basis of its projections of inflation but on actual inflation, since its projections of inflation were wrong.

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"


Support for negative emissions technologies that draw down carbon dioxide from the atmosphere and store it


Australia has a clear comparative advantage in carbon removal through such practices as reforestation, storing carbon in soil, savanna burning. Australia can also be a major global producer of zero-emissions hydrogen, which can be exported directly or used domestically to produce green steel. If Australia transitions to zero net emissions by 2050 it will be in a position to utilise that comparative advantage for domestic jobs and prosperity while also contributing to global emission reductions. If zero net emissions by 2050 were achieved that would mean only that humankind was no longer adding carbon to the atmosphere - but would not be subtracting it either. Yet there is already too much carbon in the atmosphere. So the process of decarbonising would have only just begun in 2050. Carbon removal is imperative if we are to succeed in limiting human-induced global warming.

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"


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

The Grim Reaper AIDS campaign was very effective in the early 1990s. A faltering COVID-19 campaign showing a distressed young woman with an assisted breathing apparatus was inaccurate and was abandoned owing to lack of vaccine supply. A new campaign would need to be medically realistic and multilingual. Vaccine passports will be necessary if inter-state travel is to be opened up; high-vaccination states will not accept visitors from low-vaccination states. Mandatory vaccination should apply to high-risk occupations such as health care, aged care and disability care.

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"



Restraining growth in labour supply by cutting temporary migration (including international students

Measures to boost productivity growth are essential for the longer term but, even if implemented soon, would take years to yield their benefits in higher wages. The Pacific Islander program of temporary migration should be retained but Australia should not resume the high pre-pandemic levels of temporary, low-skilled migration through the working holiday visa and related programs. The questionnaire included international students, but I would separate them (as long as they are engaged in genuine higher education programs) from temporary, low-skilled migration and do not agree their numbers should be cut. OECD, US and Reserve Bank reports have all identified loss of union bargaining power as contributing to weak wages growth.

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"


Subsidise only the purchase of non-luxury all-electric cars, Subsidise public charging points for electric cars


The luxury car tax should be removed for EVs that are above the existing price threshold but below the top-of-the line EVs. Federal government support for fast-charging stations would reduce range anxiety and send a strong positive official message. The federal government should embrace EVs in its public statements and refrain from claiming they can't pull a boat and will wipe out the Aussie weekend as we know it.

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




The continued fiscal support is necessary and welcome, but fiscal support alone cannot make the economy more productive on a sustainable basis. On the current policy settings, the best we can hope for is a return to the pre-pandemic economy of slow economic growth, weak productivity growth and stagnant real wages. In fact, the budget's forecasts are for reductions in real wages. Australia needs a new, comprehensive program of microeconomic reform. Other than some welcome but modest deregulation measure there is no indication in the budget papers of any serious attempt at microeconomic reform. Any thought of economic reform has been deferred until after the next election, but if the Coalition were re-elected it could not claim a mandate for such reform.

Top economists want JobSeeker boosted by $100+ per week and tied to wages

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."

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


Be indexed in line with wages

The JobSeeker rate includes an allowance for job search costs such as clothing, grooming and travel to employer locations for interviews. When the true unemployment rate is the highest in living memory the job search component should be commensurately higher. On equity grounds, unemployed Australians meeting the activity test are no less in need and no less worthy than age pensioners. The Jobseeker rate should be the same as the age pension rate and should be indexed at the same rate.

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 


Expanded investment allowance, Permanently boosting JobSeeker (Newstart) beyond December 31, 2020, More funding for education and training, Increasing subsidies for child care

The job-search component of the old Newstart will need boosting to facilitate what will be a far more difficult process of seeking work, with so many jobseekers chasing so few jobs. Reform of the Child Care Subsidy is essential to reducing the punishing workforce disincentive rates of 75-120 per cent confronting working mothers who want to help repair household budgets. Australia's universities are being smashed by the restrictions on the entry of international students, with the UK and Canada enjoying a big advantage by flying in students, decimating Australia's third-biggest export industry. An expanded investment allowance that could later be converted to a cash flow tax would greatly increase investment incentives at a time when productivity-raising investment will otherwise be deeply depressed.

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 



Aggregate fiscal support is strong but uncertainty about the future of JobKeeper and Jobseeker is economically and socially damaging. Government and RBA insistence on repayment of every dollar of the debt is damaging to expectations of a successful recovery. The budget turned down an opportunity to reform the Child Care Subsidy to boost both productivity and workforce participation. Not much forward signalling of productivity-raising reform, making achievement of even trend GDP growth of 2.75% on a sustainable basis unlikely. Much stronger growth than that would be needed to pay down the debt if it is all to be repaid as the Government is insisting.

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 


Proceed as planned


A Superannuation Guarantee rate frozen at 9.5 per cent would provide a retirement income that is considered inadequate by the burgeoning retiree population. With its strong voting power, the retiree population would successfully demand increased pension levels from the Commonwealth. This would require increased taxation as a percentage of GDP, which would have to be funded by increased personal tax on working-age Australians or a large increase in the GST rate towards the 20-25 per cent of European economies. With population ageing we are heading towards just 2.7 working-age Australians earnings the incomes and paying the taxes to support each retiree, down from 7.3 in the mid-1970s. Freezing the contributions rate at 9.5 per cent is a policy for an expanded welfare state.

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 


Strongly agree


Interest rates on public debt are at record lows and in a deflationary world are expected to remain low indefinitely.

Wage freeze for economic recovery

Poll 39

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

Photo credit: Wes Mountain/The ConversationCC BY-ND 


Strongly disagree


A fundamental weakness in the Australian economy before the COVID-19 crisis was weak wages growth and the decoupling of labour productivity growth and wages growth. This has adversely affected consumption, which comprises 57 per cent of gross domestic product. When the pandemic is over, workers will have even weaker bargaining power. Without a statutory increase in wages, there will be little or no wages growth going forward, guaranteeing that any recovery will be feeble. The federal government's industrial relations roundtables with unions and business organisations might improve the enterprise bargaining system, but in the absence of a statutory increase in the minimum wage the prospects of cooperation between unions and employer organisations will be severely compromised.

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"




The economic challenge during the COVID-19 pandemic is to maintain as much as practicable the links between employees and their employing businesses and between those businesses and the economy. The longer the restrictions are in place the greater will be the likelihood of those links being broken - leading to severe economic hardship, business failures, mortgage defaults, domestic violence, mental health problems, suicide and long-term unemployment, particularly for the young. In this deepest recession since the Great Depression, the worst affected are young people and especially young women. Keeping R at less than 1 as an absolutely binding constraint could lead to all these hardships. It nevertheless should be a key, non-binding, guiding principle but not a rule.