Got an Idea?
University of Western Australia
Bio to follow
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
Equal opportunities and pay for women
The last few decades has seen considerable change in the composition of the labour market.
Since 2000 there has been a marked decline in manufacturing and a market increase in employment within the Health Care and Social Assistance sector.
The latter is now the largest in terms of employment numbers. Women account for nearly 80% of the Health Care and Social Assistance workforce. Their employment conditions (job quality, working hour arrangements and wages) require urgent attention if labour is to be attracted and retained in this sector.
The Work + Family Policy Roundtable (W+FPR) proposes numerous measures that would materially deliver better outcomes for Australians.
. improving working time security
. improving wages
. minimising the need for multiple jobholding
. extending the current parental leave scheme to 26 weeks with incentives for partners to share in caring, properly fund quality care
. setting, monitoring and regulating employment standards of service providers
. ensuring decent wages and career pathways
. progressing equal pay and ensuring women?s contributions in care jobs are properly valued
. eschewing any requirement of comparisons of feminised and masculinised work
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.
Wind back government spending
Increase income taxes with revenue used to reduce cost of services
Reserve a portion of gas and other commodities for domestic use
Super profits tax on fossil fuel producers with revenue used to reduce cost of services
Within macroeconomics there is some debate as to whether inflation targeting should be pursued or not.
Rightly or wrongly Australia has pursued an inflation target (underlying inflation target of 2%-3% over the longer-term).
The importance of the inflation target is that it helps anchor price expectations and anchoring price or inflation expectations is key to managing inflation.
Temporary (short-term) changes in inflation expectations can be managed.
The problem arises when the expectations become unanchored with the risk of wage-price spirals.
We are told that the current inflationary pressures are largely being driven by factors such as breaks in the supply chains in some sectors and energy and food prices as a result of the Ukraine war. The expectation is that these price pressures may peter out over the next year.
For the meantime there is therefore a strong argument to try to hold to present long-term underlying inflation anchor or expectation band of 2-3%.
There is no question that the current situation is complex. The government needs to also step up and do its part in helping address the inflation problem. This means not overly relying on monetary policy. It means recognising that fiscal policy also has a part to play in stabilising the economy and inflation.
As part of this they should reverse the planned income tax cuts as they will only add fuel to the fire. Money saved needs to be invested in social programs and priority needs to be given to reducing the rising inequality in Australia.
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".
Rising inequality is already a serious problem in Australia and without interventions to address slow wage growth at bottom end of the labour market, the growth of insecure and precarious jobs and the gender wage gap inequality will continue to be a problem.
Inequality hurts the economy, undermines skills development and economic opportunity and contributes to other problems presently observed in Australia (e.g. housing affordability, inadequate resources in the care sector etc.)
"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"
190,000 is about right
There is an established literature showing that migration has a positive effect on economic growth.
The risks of not returning the target to 190,000 per year is constrained economic growth as a result of skill shortages and shortages of workers in key areas such as nursing; the risks of more than190,000 year are further pressure on housing costs and on existing infrastructure.
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.
"Following the next Federal election, the incoming Federal Government should commission an independent Review of the Reserve Bank of Australia."
"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'."
"When do you expect the Reserve Bank of Australia to next lift its cash rate?"
"The current combination of Australian fiscal and monetary policy poses a serious risk of prolonged above-target inflation."
There are concerns that inflation may be running high but a commonly held view (e.g. IMF) is that it is temporary and that it is under control.
What is unclear in Australia is how the Stage 3 tax cuts (due to kick in July 2024) will affect demand and inflationary pressures and what might happen to prices in response to climate policy. That said, I still have confidence in the Reserve Bank?s ability to keep inflation under control.
Do I think there is a need for an independent review of the RBA?
Based on the commentary of some former RBA Board members (such as Prof. Warwick McKibbin) it would seem that there is a case for an independent review of the structure and the role of the RBA Board.
McKibbin, for example, advocates that the Secretary of the Treasury should not have a voting role on the RBA Board to avoid conflicts of interest.
"What measures should Australian governments adopt to promote demand for vaccination once supply is no longer a constraint?"
Mandatory vaccination for higher risk occupations;Vaccine passports for higher-risk settings (eg. flights, restaurants, major events);National advertising campaigns
Not in favour of cash / prize incentives. The majority will 'do the right thing' and get vaccinated and, as we keep hearing, the likelihood is we will need boosters which, if we go down the cash incentive path may see this turn out to be a costly and unnecessary policy.
I do favour mandatory vaccination for 'higher risk' occupations, although, of course, it will come down to what we mean by 'higher risk'.
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".
Measures to boost productivity growth;Reforming industrial relations to increase the use of enterpri
Slow wage growth in recent decades fundamentally relates to changes in bargaining arrangements, insecure employment arrangements and to reforms that have circumscribed the bargaining power of trade unions. State and federal industrial relations commission currently have the capacity to make higher minimum wage determinations should they wish.
A policy option not in the list presented would be for governments (federal and state) to agree to faster wage growth for public sector employees.
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"
Remove the luxury car tax from all-electric cars, Subsidise public charging points for electric cars, Set a date to ban the import of petrol and diesel cars, Make charging points compulsory in new homes and new carparks
The auto industry recognises that its future is in electric and has begun the transition to meet emission standards in Europe, China etc.
Demand for electric vehicles (EVs) in Australia is low, hampered by taxes, cost, charging infrastructure, range anxiety, a lack of understanding as to what EVs offer and concerns about the environmental costs associated with batteries, scrapping etc.
Meanwhile demand for new petrol/diesel cars grows, driven by generous government subsidies in the last budget.
If we wish to see more EVs on the road and less conventional cars then policy settings will need to change and a specific vision/strategy enunciated.
"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 2021 Commonwealth budget is low on vision and does little to nothing to address current and future concerns such as climate change and social infrastructure.
Increased financial support for the care-economy is an important start but ?building for the future? requires government also pay attention to the needs of the care workforce (wages, hours, employment security).
The care economy is highly feminised and is struggling to attract and retain workers. Why? Working arrangements which are unappealing and relatively low pay. The government missed an opportunity to provide important leadership in this area (eg. funding to help raise wages).