Guyonne Kalb

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%.

relaxing industrial relations regulation to allow for greater "flexibility" (as defined by employers), reducing out-of-pocket costs of childcare for families, better targeting immigration

3.5

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: Wind back the capital gains exemptions on the family home Wind back deductions for negatively geared properties Introduce inheritance taxes Equity picks: Wind back deductions for negatively geared properties Wind back superannuation tax concessions Wind back franking credits

Efficiency comments: Although these actions would have an impact on what people do, in my view these would be positive impacts. The housing market needs an overhaul so that it becomes more broadly affordable and is not viewed as a way to make money. I can see no reason for subsidising people to invest in the property market through negative gearing. Originally, the thinking behind this may have been a hope that it would ensure sufficient numbers of affordable rental properties would be available, but that does no longer seem to work (if it ever worked). Although I selected inheritance taxes, this cannot be done in isolation. For this to work, other intra-family transfers of money would also need to be taxed (egifts over a certain amount to children, family trusts, etc.) otherwise people will just change the way intra-family transfers are made. Equity comments: These all tend to be taxes faced by people on higher incomes who can afford to pay more tax, so that this would ensure a more narrow income distribution and less inequality after tax (compared to before tax income distribution and inequality). However, the most important tax policy (in my view) is not listed amongst the options from which we could choose. Not introducing the planned reduction in tax rate (from 37% to 32.5%) for individuals earning between $120,000 and $200,000 would avoid the inequitable step of providing tax relief to people who do not need it (with the largest reductions in tax provided to people earning $200,000 or more) while lower-income Australians (and especially those on allowances and pensions) are struggling with the cost of living. Letting this policy go ahead would increase inequality and reduce tax revenue that could have been used to support people in need. Reducing tax for people at this income level will also not have much/any positive impact on labour supply; if we want to encourage labour force participation and hours worked, research has shown that we need to reduce tax at the lower end of the income distribution not at the high end.

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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Cap the price at which producers can sell gas domestically (for already agreed supply)

This is a short-term response only to ease the cost of living in the short term. Longer term action will require ensuring a smooth (and quick) transition to alternative renewable energy resources.

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

Workforce participation Migration policy Equal opportunities and pay for women

Equal opportunities and pay for women Better pay for caring jobs (nursing, childcare, aged care, disability care) would go a long way in increasing female workforce participation, and ensure fairer payment for the people working in these jobs, many of whom are women. Better payment and conditions would make these jobs better career options and provide better opportunities for women leading to reduced financial vulnerability. At the same time it would be easier to attract people into these careers which is likely to ease the current work pressure and further improve work conditions.

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

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Climate and environment is an issue of global importance, and this is acknowledged by many (most?) voters but seemingly not to the same degree by the current Australian government. Australia is very vulnerable to climate disasters and its population would like to see stronger action by the government. There is so much that can be done, especially in terms of renewable energy that we are not doing at the moment. It is important for our survival and would benefit Australia's economy as well. Being the last to use an outdated technology is never wise if it can be avoided. There should be no need for people to be homeless in a country like Australia. Housing is a fundamental human right and necessary condition for doing well in terms of other outcomes such as health, education and employment. There is a shortage of affordable housing especially in well-located areas close to employment, transport, schools. Without access to stable good-quality housing, it is difficult to improve any other outcomes for individuals like health, education or employment and income. In addition to affordable housing there should be better protection for renters than what is currently in place. Tax reform should not be about reducing taxation, but about ensuring taxation is distributed equitably across individuals. As an example, high-income earners should pay more tax in absolute and relative terms than low-income earners. Tax reform should consider how income taxation and income support withdrawal rates interact to avoid high effective tax rates for low-income earners and especially for secondary earners who tend to be affected by withdrawal of family payments and childcare subsidy on top of income tax rates, creating unnecessarily high hurdles for many to enter the labour force or increase hours in work. Relative taxes should be lower at the point of entrance in the labour force than at 50 hours for the same individual (i.e. it should be increasing with income of the individual). This would ensure labour force participation is as high as it can be while ensuring there is revenue to pay for health, education, infrastructure and social support.

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 not enough

There are two main reasons for thinking 190,000 is not enough. The first reason is that we have not only had less people coming in over the last two years, we have actually lost people who have migrated out of Australia. It is clear that our labour market is now very tight as a result for a range of occupations. We would therefore need to start by catching up, first letting in people who have been patiently waiting during the pandemic as well as attract new migrants. The required size of the combined group of "backlog" and new applicants is likely to be well over the annual pre-COVID intake, especially in the first two to three years. The second reason is that the Australian government's treatment of temporary student and work visa holders has shown little empathy with the difficulties that this group has found itself in during the COVID-19 crisis, and provided no support to this group. As a result, future migrants may be hesitant to come to Australia on temporary visa but may require access to permanent visa with the protections that these offer. Therefore a larger number of permanent visa per year may be needed if Australia wants to be able to attract enough skilled workers back to Australia. While I believe Australia will need to increase its migrant intake to ensure employers can hire the workers they need, at the same time the labour shortages are also an opportunity to up-skill young and disadvantaged Australians to enable them to fill some of these positions as well, and gain valuable work experience while competition for jobs is relatively low in the next few months to one or two years.

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"

Government support to develop and roll out emissions-reducing technologies

Agree

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"

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

What I like about vaccine passports is that they are likely to make higher-risk settings like flights, eating out and events safer (and therefore possible) while at the same time encouraging people to be vaccinated. Of course, there need to be exemptions for people who cannot be vaccinated for medical reasons, but in my view it is important to keep the number of exemptions relatively limited, otherwise it will not work. A national advertising campaign is important and should focus on providing people with relevant information regarding the risks of being unvaccinated and the very small risks of vaccination. More attention could be given to what we are losing out on by our low vaccination rate. Opening up borders is not just important for social reasons given the many migrants in Australia, but also for economic reasons, with tourism and international students being major contributors to our economy. In addition, skilled migration into Australia is as good as non-existent at the moment, and there is already a brain-drain happening due to existing migrants choosing to return to their home country as the border closure continues. Mandatory vaccination for higher risk occupations are likely to be relatively limited and so would not contribute substantially to encouraging overall vaccination rates, but it is very important to keep workers and those they come in contact with as safe as possible.

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, Set a date to ban the import of petrol and diesel cars, Make charging points compulsory in new homes and new carparks

10

Australia lags behind Europe and the US in the take-up of this cleaner type of car. Not taking action to catch up is likely going to be a disadvantage to Australia as more and more other countries move towards electric cars, and towards banning petrol and diesel cars. In addition, transitioning to more electric car use would help in reducing Australia's CO2 emissions substantially. Ensuring that electric cars are not unnecessarily more expensive than petrol cars, and ensuring that facilities are in place to make electric car use more feasible for more people, especially in high-density metropolitan areas, are two crucial steps towards ensuring that electric car use becomes viable for more Australians. This is not my area of expertise, but I do not understand why there is so much opposition from the government to a broad range of cleaner technologies: from renewable energy to electric cars. These are clearly the future and will not go away. Not joining in now means Australia may be caught out some time in the (near) future, and we may then need to rush a transition to these new technologies as the old ones become obsolete.