Rise in living standard set to slow

It's a funny thing about the awful truth: people are much more inclined to talk about it after elections than before. And it seems as though, of late, our top economists have done little but tell us our economic future is a lot more "challenging" than was contemplated during the election campaign. The first sobering message is that getting the budget back to balance won't be as easy as it suited both sides to pretend in...

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Election well over, now for the truth

For three years Tony Abbott and company told us all our political problems were caused by Labor, and if only we elected the Coalition our problems would be no more. For three years Labor told us the budget would be back to ever-growing surpluses in next to no time. And for six years - which coincided with our biggest boom since the Gold Rush - both sides of politics told us Australian families were...

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Budget will test Abbott's mettle

Will the Abbott government ultimately be judged a great reforming government or the worst money manager since Whitlam? In a delicious irony considering all the phoney outrage Abbott & Co expressed on the subject in opposition, this judgment will turn on how they respond to the budget's deep structural problems. That conclusion leaps out from John Daley's latest budget report for the Grattan Institute. Normally, governments...

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Outlook for us and the world is sombre

Australia and the world are experiencing a Micawber moment. The economic prospects aren't reassuring, but there's not a lot we can do except hope something will turn up. Wherever you turn, the outlook is for continuing sub-par growth. According to Dr Min Zhu, a deputy managing director of the International Monetary Fund, in Australia this week, the post-global crisis growth cycle may be coming to an end. At the peak of ...

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How we lost our way on climate change - sorry, kids

I don't have grandchildren but I'm hoping for some, someday, so this column is for them. I want you to know that although, in the mid-teens of this century, Australians elected a government that wasn't genuine in its commitment to combating the effects of climate change, and that even abolished the main instrument economists invented for that purpose, I never accepted this complacency. Partly because that government's predecessors...

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Rent-seeking stymies genuine reform

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Miners pinch company tax-cut kitty

Let me make a fearless prediction: big business will get no cut in the rate of company tax in Tony Abbott's first term, and probably not in a second term, either. What you see before you now is all you're likely to get. I doubt whether Abbott will break his promise to cut the company tax rate by 1.5 percentage points to 28.5 per cent from July 2015. But, of course, big businesses will get nothing from that. They'll be paying ...

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Governments should be pro-market, not pro-business

A fundamental question facing the Abbott government is whether it will succumb to the General Motors syndrome: what's good for big business is good for Australia. Does its slogan that Australia's now "open for business" actually mean open slather for business? Will it run the country to please its business backers or to benefit all of us? Because the notion that what big business wants of government always coincides with...

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Gas lobby working a scam on NSW citizens

The gas industry is working a scam on the people of NSW, in collusion with other business lobby groups and federal and state politicians. It's trying to frighten us into agreeing to remove restrictions on the exploitation of coal seam gas deposits. Failing that, the various parties want to be able to lay the blame for an inevitable jump in the price of natural gas on the greenies and farmers. According to the gas lobby,...

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Our ever-rarer elixir: restraint

There's a paradox at the heart of modern capitalist economies: if they really worked the way economists think they work, they wouldn't work for long, they'd seize up. And as the Yanks have been busy demonstrating, it's a similar story for modern democracies. Economists believe the motivating force driving market economies is self-interest: businesses and consumers do what they do purely for their own benefit. But the "invisible...

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Economist proposes a socio-economic model

What can economists tell us about love and power, why people are loyal, how groups form and how they get their members to abide by the group's norms of acceptable behaviour? Not much. Everyone knows conventional economics is built on a stick-figure conception of humans and the way they work.   Until now. An economics professor at the University of Queensland, Paul Frijters, has attempted the remarkably ambitious project...

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THE POLITICAL ECONOMY OUTLOOK FOR REFORM

Australian National Conference on Resources and Energy, Talk to conference dinner, Canberra, Wednesday, October 3, 2013 I suppose I should start by warning you I’m an adherent to the Paddy McGuinness school of public speaking, which holds that there’s no point in speaking to an audience unless you say something that makes them sit up, challenges their comfortable assumptions and gives them something uncomfortable to think about....

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