Robert Breunig

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: Increase resource taxes Introduce inheritance taxes Introduce or increase land taxes Equity picks: Increase resource taxes Introduce or increase land taxes (possibly with some reduction of stamp duty) Introduce inheritance taxes

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

Let price adjust to world price and give cash subsidies to low income households.. The biggest enemy of high energy prices is high energy prices.

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

Increase immigration Push for below-inflation wage rises in the Fair Work Commission Wind back government spending

2-3%

Our knowledge that low, predictable inflation is best for the economy has been built up over the past 100 years of macroeconomics. The statement on the RBA webpage remains our best answer to this question: "The Governor and the Treasurer have agreed that the appropriate target for monetary policy in Australia is to achieve an inflation rate of 2?3 per cent, on average, over time. This is a rate of inflation sufficiently low that it does not materially distort economic decisions in the community. Seeking to achieve this rate, on average, provides discipline for monetary policy decision-making, and serves as an anchor for private-sector inflation expectations." There is a tremendous amount of uncertainty around inflation and much of the inflationary pressure comes from things outside the control of Australian policy makers. That suggests that it is important not to overreact and it is important to get our own house in order. This means having a serious plan to slowly and steadily decrease debt and micro-economic reform in the areas of tax and regulation.

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

Selective immigration has been crucial for Australia's productivity and we should try and return to reasonable levels of migration. While keeping immigrants out gives a short-term boost to wages in Australia, it does so at the cost of productivity, growth and better prospects for Australian workers in the future.

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."

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Disagree

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

6

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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6

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

6

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"

Lotteries with cash or prizes for the vaccinated;Vaccine passports for higher-risk settings (eg. flights, restaurants, major events)

I would make vaccine passports optional for those venues that wanted to use them. Consumers could then choose between those venues requiring vaccine passports and those who don't. One could consider lotteries which have been successful in other places. I'm also comfortable with no other measures. Once there is sufficient supply, the government could simply announce that in three months everything will be open again. That will provide an incentive for people to get vaccinated. Will some people free ride?. Yes. Will this impose excess costs on the health system? Yes. One response might be to deny health care services to the non-vaccinated; another might be to get rid of the national health care system. I support neither of those; we don't deny service to obese people, for example. There are real trade-offs between health, well-being and freedom that need to be weighed up. Reasonable people can disagree about the weights to give these things.

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

Ultimately, wage growth is linked to productivity. Short term wage growth can be created by cutting immigration, but overall immigrants appear to add to productivity rather than detract from it, so this seems like a bad policy for generating sustained productivity growth. Reducing regulatory burden, IR reform and improving the tax mix (lowering taxes on corporate and personal income and increasing taxes on consumption and land) are the types of micro-economic reform which will enable productivity increases which will lead to higher wages. It is important to remember three things: (1) low wage growth is a widespread OECD-country phenomenon so the forces driving it are probably not Australian-specific; (2) investment remains very low despite very cheap money being available; (3) productivity is about individuals and firms making decisions and government can create the conditions for it to happen but can't ultimately control what people decide to do.

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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10

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"

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B

Overall, the budget is balanced and non-ideological. It pushes required stimulus into the economy and shows a genuine concern for getting the economy going again. On the downside, wage subsidies are generally a poor way to generate additional employment and this one has several poor design features. The cap on total child care benefit receipt creates a well-documented cliff for second earners (mostly women) which makes it difficult for some people to achieve their desired working hours. This is a known problem and an easy fix. The Australian economy is in need of structural reform in order to create better conditions for growth and prosperity. This is particularly true in the tax area. This is not necessarily something that is appropriate for the current budget, but I would like to see the government signal its intention to tackle this issue in the medium-term.

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 

One-off cash transfers to households, Infrastructure projects, More funding for education and training

It's not clear to me that the question is the right question. I would happily have policies that led to greater economic growth over 20-30 years even if they had little impact in the next two years.

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...."

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Be deferred

10

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"

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Disagree

5

Governments should provide targeted fiscal support that doesn?t make debt go up too much. Untargeted splashing of extra money is unlikely to be productive and will harm the economy in the medium term.

Poll 39

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

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Strongly agree

10

There is very little downside to doing this and large potential upside. Prices are stable or deflationary so there is no erosion in real wages by a wage freeze, and if it leads to even some small employment increase, that is unambiguously good.

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"

Disagree

8

Low rates of COVID-19 and very low rates of transmission in the population co-exist with government continuing to enforce very strict rules that damage the economy. Few lives will be saved relative to the huge costs to the economy.