The news from last week's national accounts seemed very clear and very worrying: the economy was splitting in two, with the mining-boom states of Queensland and Western Australia roaring off into the future, leaving the rest of Australia going nowhere fast.
Over the year to December, state final demand grew by more than 11 per cent in WA and by 10 per cent in Queensland, but by about 1.5 per cent in the rest of Australia.
Fortunately,...
Saturday, March 17, 2012
Wednesday, March 14, 2012
Why we should pay more tax
In the early 1980s, not long after I got into the economic commentary business, Maggie Thatcher and Ronald Reagan were riding high and the great enthusiasm of the moment was the need for Smaller Government.
Thirty years later, government is no smaller but the attraction of the idea is undiminished.
Its latest champion is Tony Abbott, who promises to eliminate government waste and cut taxes - and return the budget to surplus....
Monday, March 12, 2012
Abbott's audit will find all the cuts he won't make
What do punters and economists have in common? Both like to delude themselves budgets can be balanced by relatively painless cuts in government "waste" and "profligacy" without resorting to unspeakable, unthinkable tax increases.
Both like to imagine wasteful and unnecessary government spending is almost infinite and easy to identify and eliminate. Both don't like to admit the obvious: that what's wasteful to my eyes is vitally...
Sunday, March 11, 2012
WRITING A COLUMN
Speech to trainees
Neroli has asked me to talk to you about writing a column, but also to say something about my career path and how I got into journalism, so I’ll start with that.
Thirty-five years ago I decided to take a break from my career as a chartered accountant, spend a year doing something interesting and then resume my accounting career. I spent the time doing the first year of what’s now the BA (Communications) at...
Saturday, March 10, 2012
Economy slows though consumers spend
For weeks the Reserve Bank has been telling us the economy is growing at "close to trend", but the indicators we got this week leave little doubt we're travelling at below trend.
Had the Reserve's forecast of growth in real gross domestic product of 2.75 per cent over the year to December been achieved, this would indeed have meant the economy was expanding at close to its medium-term trend rate of growth.
But this week's national...
Wednesday, March 7, 2012
Don't let on, but property crime is down
Wow. Did you see the latest figures for the falling crime rate? Pretty good, eh? What's that, you didn't see the figures? No one told you, eh.
It's true. Despite the best efforts of the federal Minister for Justice, Jason Clare, on Sunday, the Australian Institute of Criminology's latest compilation of statistics got remarkably little attention.
Why? One reason could be that it's old news. Levels of property crime have been...
Monday, March 5, 2012
Want better productivity? Try better education
The American con man Bernie Cornfeld's sales pitch was, "Do you sincerely want to be rich?" That is, are you prepared to pay a price to be rich? The question for Australia's business people is, do you sincerely want to raise our productivity?
It seems just about all our senior business people have taken to preaching sermons about the need to improve our flagging rate of productivity improvement, but I'm not sure how sincere...
Saturday, March 3, 2012
All work creates wealth
You'll find this hard to believe but not every reader of my columns agrees with everything I write. And when I wrote recently that jobs lost in manufacturing would be offset by jobs gained in other parts of the economy, one reader emailed to say he could see a gaping hole in my argument.
My point was that the high dollar wouldn't destroy jobs so much as "displace" them: shift them from contracting industries to expanding industries.
This...
Wednesday, February 29, 2012
Education is mainly about teachers
Thank goodness for that. David Gonski and his committee have produced a comprehensive review of school funding without setting off a bitter debate between the proponents of government and non-government schools.
They've done it by focusing not on how the lolly is divided between the rival systems but on the needs of students, with greater funding to be shifted over time to those suffering disadvantage.
Their report has been...
Monday, February 27, 2012
How manufacturing will survive the high dollar
Beware of dire predictions that manufacturers will be wiped out by the strong dollar unless they're propped up by the government. All our experience says it won't happen.
Manufacturers and their (highly vociferous) unions gave us the same warning in the 1980s when the Hawke-Keating government decided to take away their protection from imports. It didn't happen - the industry adapted, and survived to complain another day.
Though...
Saturday, February 25, 2012
Jobs aren't lost, just moved
As the media keep reminding us, the many pressures for change in the structure of our economy are causing some workers to be thrown out of their jobs. But this is unlikely to cause a decline in overall employment. Huh?
The structure of the economy - as represented by the relative sizes of the various industry sectors - is always changing. Normally the rate of change is so slow we don't notice it. At present, however, the pace...
Wednesday, February 22, 2012
Yes, there is more to life than happiness
Fed up with all the wrangling and speculation over who should be leading the Labor Party? Want something more substantial? How about the meaning of life - that weighty enough for you?
The question has been an object of contemplation by clerics and philosophers throughout the ages, of course, but in more recent times many psychologists and even a few economists have taken to studying it.
Psychologists' traditional focus has...
Monday, February 20, 2012
High dollar’s job losses will raise productivity
If your goal is to raise Australians' material standard of living, the debate about what must be done to increase our flagging productivity is vitally important. But if we want the debate to achieve something, we should stop talking so much weak-headed nonsense.
People are talking about productivity as if it's motherhood for businessmen - all fluffy and soft. Sorry, productivity is more nasty than nice. Sometimes it's red in...
Saturday, February 18, 2012
Herd behaviour, fashion and status seeking
Think for more than a moment about the causes of the global financial crisis - the fallout from which is still hurting the US and Europe - and you realise herd behaviour had a lot to do with it.
People paid extraordinarily high prices for houses because they felt they were trailing the Joneses. Brokers sold unsound mortgages because they had to keep up with rival brokers. Funds managers - remunerated according to their relative...
Wednesday, February 15, 2012
Jobs market isn't nearly as bad as you think
Economists don't have a good record on forecasting what will happen to the economy, but here's a prediction I make with great confidence: whatever happens, it won't be as bad as you think it is. That applies particularly to the jobs market.
Consider this. One day you pick up a newspaper and on page five you read a small story saying employment grew by 10,000 last month, leaving the rate of unemployment unchanged at 5.2 per cent....
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