Why Turnbull's Google tax would be reasonably effective

So, Malcolm Turnbull and Scott Morrison are introducing a "Google tax" to ensure multinational companies "pay their fair share of tax in Australia". Really? You could be forgiven for being sceptical. Does the Coalition really want to crack down on their generous mates at the big end of town? And, even if they do, how do we know a Google tax will work? My sceptical mind (professionally trained by 40 years of living and breathing...

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Hard-working Aussies help pay for company tax cut

I often think Scott Morrison does a remarkably good Joe Hockey impression, but in this budget he's performed a Wayne Swan sleight-of-hand that's better than Swanny ever did. Consider this. Big business has been desperate for a higher goods and services tax. Why? Because this was the only way the government could afford to grant them their longed for cut in company tax. So when Malcolm Turnbull balked at increasing the GST,...

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How the budget stacks up as tax reform

When politicians announce a tax cut to be delivered after they've been re-elected, there are no prizes for guessing it's an electoral bribe. But they never fail to sanctify the exercise by assuring the lucky recipients that the money they're getting will do wonders for the economy. Malcolm Turnbull is going into this election promising a pathetically small tax cut to the top quarter of taxpayers, which starts – officially, anyway...

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Why Turnbull's super changes are sorely needed

I'll never forget the budget of May 2006. It was during the first half of the resources boom, before the global financial crisis. The economy was booming, tax dollars were pouring into the government's coffers and it was embarrassed at the way the budget surplus kept piling up. John Howard and Peter Costello were competing with each other to shovel money back out the door. Howard liked spending it on middle-class welfare, whereas...

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How to unspin the budget

You can't look hard at the budget and its glitzy packaging without being reminded of Rob Sitch's highly educational TV show, Utopia. My colleague Peter Martin has detected that the Turnbull government, as distinct from its Coalition predecessor, is less ideological and more evidence-based in its policy making. Its reforms to superannuation and Work for the Dole are prime examples. That's good news. Even so, the more intelligent...

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Just where are all the jobs and growth in the budget?

As you may have heard Scott Morrison mention a time or two this week, this isn't an ordinary budget, it's an economic plan for "jobs and growth". Sorry, Scott, that's what they all say. Jobs and growth – without worsening inflation – are the objective of what economists call "macro-economic management". And, along with monetary policy (the manipulation of interest rates), budgets (fiscal policy) are the instruments they use. The...

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Budget more about politics than jobs and growth

You get the feeling this budget was pulled together with the use of a checklist. "We've got to have something on super, bracket creep, women, company tax, cities, multinationals, infrastructure . . ." It involves a lot of imminent-election tidying up of loose ends from projects the government has supposedly been working on for three years, plus much squaring away of key interest groups. What it's not is any kind of carefully...

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What not be believe in the budget

Like every budget, Tuesday's will be a combination of measures and arguments, each with political and economic dimensions and motivations.  Distinguishing the politics from the economics will be the hard part. It promises to be a budget in which the government does a lot of crying poor. That's partly because Malcolm Turnbull is likely to call an election within a week of the budget, but is prevented mainly for political...

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The prospect for workers is brighter than many think

A lot of people are convinced it's just going to get worse and worse for workers in coming years. A lot of oldies think that and, unfortunately, too many youngsters believe them. Many older people worry that, with the decline of manufacturing in Australia, and the end of the mining boom as well, they just can't see where the jobs will come from. Young people, on the other hand, believe jobs are getting ever harder to find and,...

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An independent assessment on negative gearing

Labor claims its "reforms" to "negative gearing" would do wonders to make home ownership more affordable for our kids. But Malcolm Turnbull says vote for high-taxing Labor and the value of your home will crash, while rents soar. Many voters have strong views for or against negative gearing. But when rival politicians fall to arguing about their policies, most of us find we don't know enough to decide who's right. We need someone...

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Is the world ruled by ideas or by interests?

Most economists believe John Maynard Keynes (rhymes with "brains" not "beans") was the greatest economist of the 20th century. But his most famous quote is one I've never been sure I agree with. He claimed that "the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. "Indeed, the world is ruled by little else. Practical men, who...

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How behavioural economics got started

One night in 1975, Richard Thaler invited a bunch of his graduate economics student mates over for dinner. While they waited for the cooking to finish he put out a bowl of cashews. But noticing everyone was getting stuck in, he decided he'd better take them away. His mates thanked him for doing it. It was a lightbulb moment for the young economist. Why? Because the assumptions of the conventional economics they were studying...

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Herald's move to explanatory journalism is its future

How has the Herald changed in 185 years? How should I know – I've been working for it for less than a quarter of that time. But I dare to claim that, of all the change since 1831, most of it has occurred since I started in 1974. A few years back, at a staff function to celebrate those of us who'd hung around longer than could reasonably be expected, someone had the idea of presenting us not with a pen or a watch – I'd already...

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Why the banks' activities should be constrained

Is there any justification for a royal commission into the conduct of the banks? Is it just a political stunt? All royal commissions are called for political reasons and many are stunts, in the sense that their primary objective is just to bring particular issues into the public spotlight. To me, the best justification for an inquiry into the banks is that they still don't seem to have got the message. They've been caught treating...

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WHAT DOES THE FUTURE HOLD FOR THE ECONOMY?

Talk to Athenaeum Club, Melbourne, Wednesday, April 20, 2016Today I want to ask: what does the future hold for the economy? The honest answer to such a question is - no one knows, certainly not me. But I doubt if you find such an answer very satisfying, so I’m happy to give you some opinions. They’re highly likely to be wrong since, as Donald Rumsfeld reminded us, our predictions are likely to be confounded by “unknown unknowns”....

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