Do you have trouble understanding superannuation? Some government backbenchers are urging Scott Morrison to abandon or at least postpone the plan to phase-up the compulsory employer contribution from 9.5 per cent to 12 per cent of salary over the four years to July 2025. Good idea, or another attempt to cheat the worker?
One new backbencher has proposed that, since many low income-earners have a lot of demands on their budgets,...
Wednesday, July 31, 2019
Monday, July 29, 2019
Memo PM: governing goes better with a sharp public service
For good or ill, much of the attitudes and strategies of the modern Liberal Party have been shaped by its greatest leader since Menzies, newly turned octogenarian John Howard.
After Bob Hawke defeated Malcolm Fraser as prime minister in 1983, Howard, his treasurer, reflected unhappily on how little the Fraser ministers had achieved during their seven years in office. Why was that? Because, Howard concluded, the public servants...
Saturday, July 27, 2019
Money is created by the banks, not the government
Just for a change, let’s talk about money. What? Don’t economists always talk about money? Well, yes, in the sense that almost all the things they talk about are valued in monetary terms. But otherwise, no, they rare talk about money as such.
Sometimes I think economics is about finding a host of synonyms for the word "money". Why do you go to work? To make money, of course. But economists prefer to say you earn a wage. Or,...
Wednesday, July 24, 2019
Want the jobless to find jobs? Then increase the dole
It’s so familiar a part of political economy you could call it Galbraith’s Law, after John Kenneth Galbraith, the literary Canadian-American economist who put it into words. As the late senator John Button paraphrased it: the rich need more money as an incentive and the poor need less money as an incentive.
Consider the first actions of the re-elected Scott Morrison and his government. First, pushing through its three-stage...
Monday, July 22, 2019
Despite the photo-op, RBA knows we need fiscal stimulus
Never fear, Reserve Bank governor Dr Philip Lowe may have stumbled on the optics of agreeing to a photo-op with Treasurer Josh Frydenberg the other week, but the Reserve’s independence remains intact and our weak economy remains in need of budgetary stimulus.
Politicians have damaged our trust so badly that they like having respected econocrats appearing beside them to bolster their credibility. But central bank governors who...
Saturday, July 20, 2019
Change is inevitable. If we embrace it we win; resist it we lose
Will Australia’s future over the next 40 years be bright or pretty ordinary? It could go either way, depending on how we respond to the challenges facing us. So what do we have to do to rise to the occasion?
The challenges, choices and likely consequence we face are spelt out in the report, Australian National Outlook 2019, produced by the CSIRO in consultation with 50 leaders from companies, universities and non-profits. The...
Wednesday, June 26, 2019
News from the shopping trolley: retailers are doing it tough
If I told you that a big reason we're feeling such cost-of-living pressure is the increasing profits of the big supermarket chains, department stores, discount stores and other retailers, would you believe me? A lot of people would.
But that would just show how little we understand of the strange things happening in the economy in recent years. The economy in which we live and work keeps changing and getting more complicated,...
Monday, June 24, 2019
Poor Josh Frydenberg: on the wrong tram, heading for trouble
It’s not my policy to feel sorry for any politician – they’re all hugely ambitious volunteers – but I do feel sympathy for Treasurer Josh Frydenberg. He’s not the first treasurer to be strong on party dogma but light on economic understanding, but he’s among the first to be heading into stormy weather light on expert advice from a confident and competent Treasury.
There he was, thinking his first budget would be his last, primping...
Saturday, June 22, 2019
How to multiply the bang from your budget buck
Years ago, I came to a strong conclusion: the politician who could resist the temptation to use the budget to prop up the economy when it’s falling in a heap and making voters hugely dissatisfied has yet to be born.
So let me make a fearless prediction: whatever they’re saying now, sooner or later Treasurer Josh Frydenberg and his boss Scott Morrison will use “fiscal policy” (aka the budget) to help counter the sharp slowdown...
Wednesday, June 19, 2019
Kiwis go one up and bring happiness to the budget
Like the past, New Zealand is a foreign country. They do things differently there. While we’ve just had a budget promising what seems like the world’s biggest tax cut, the Kiwis have just had what may be the world’s first “wellbeing budget”. Bit of a contrast.
I’ve long believed that all government politicians everywhere, when they’re not simply delivering for their backers, are trying to make voters happy and thus get themselves...
Tuesday, June 18, 2019
Perrottet uses no-probs rhetoric to hide fiscal stimulus
If you’ve ever got a dodgy proposition you want spruiked, see if you can get NSW Treasurer Dominic Perrottet to do it.
His budget offers the most optimistic view of the next four years, leading our state to a new Golden Century (and here was me thinking the Golden Century was where Sussex Street Labor went for a Chinese meal).
Behind all Perrottet’s bravado, however, he has taken his lumps, using his budget to absorb some of...
Monday, June 17, 2019
Economic reform is stalled until politicians get back our trust
For those who care more about good policy than party politics, there are unpleasant conclusions to be drawn from the federal election. The obvious one is that it was a case of policy overreach leading to failure.
The less obvious one is that decades of misbehaviour by both sides have alienated so many people from the political process and turned election campaigns into such a cesspit of misrepresentation and dishonesty that,...
Saturday, June 15, 2019
It's the budget, not interest rates, that must save the economy
According to a leading American economist, there are two views of the way governments should use their budgets ("fiscal policy") in their efforts to manage the macro economy as it moves through the business cycle: the old view – which is now wrong, wrong, wrong – and the new view, which is now right.
In late 2016, not long before he stepped down as chairman of President Obama’s Council of Economic Advisers and returned to his...
Wednesday, June 12, 2019
For every problem there’s a job, and no shortage of problems
With the economy subsiding in a heap within days of Scott Morrison winning re-election thanks to the Coalition’s superior economic management skills, he and his ministers are being swamped with helpful hints about how they can get things moving again.
The business lobby groups are proffering some novel solutions: what would do the trick is to cut the rate of company tax and reform industrial relations so the unions are no longer...
Monday, June 10, 2019
ABBA was right: Rockonomics shows the winner takes it all
Why do we live in the era of superstars – whether people or businesses? Why is there such a thing as winner-take-all markets? Why do the top 1 per cent of households get an ever-bigger slice of the pie?
Short answer: because the digital revolution is disrupting far more of the economy than we realise.
It’s explained in the new book, Rockonomics: What the music industry can teach us about economics and life, by Alan Krueger,...
Saturday, June 8, 2019
Election hype about strong growth now back to grim reality
The grim news this week is that the weakening in the economy continued for the third quarter in row, with economic activity needing to be propped up by government spending.
The Australian Bureau of Statistics’ “national accounts” showed real gross domestic product – the nation’s production of market goods and services – grew by just 0.3 per cent in the September quarter of last year, 0.2 per cent in the December quarter and...
Tuesday, June 4, 2019
Interest rate cuts may not do much to counter slowdown
This won’t be the only cut in interest rates we see in coming months – which may be good news for people with mortgages, but it’s a bad sign for the economy in which we live and work.
The Reserve Bank is cutting rates because the economy’s growth has slowed sharply, with weak consumer spending and early signs that unemployment is rising.
In such circumstances, cutting interest rates to encourage greater borrowing and spending...
Monday, June 3, 2019
How to dud manufacturing: be the world’s biggest gas exporter
Did you know Australia has now overtaken Qatar to be the largest exporter of natural gas in the world? But, thanks to private profiteering and government bungling, this seeming triumph comes at the risk of further diminishing manufacturing industry in NSW and Victoria.
It’s yet another example of naive economic reformers stuffing things up because real-world markets don’t work the way they do in textbooks.
Last week Dow Chemical...
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