Infrastructure spending isn't good if it's just vote-buying

There's a great weakness in the (otherwise sound) argument that borrowing for infrastructure is a good thing, adding to demand in the short term and improving productivity and supply in the medium term. We should be doing a lot more of it, which would impose no unfair burden on our children. That weakness has been exposed by the election campaign. Marion Terrill, of the Grattan Institute, has looked at the parties' promises...

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Parties' similarities and differences on economics

I get criticised by rusted-on supporters of both sides of politics when I say this, but that doesn't stop it being true: there are differences between the two sides' policies, but they're not as great as they want us to believe (and their supporters do believe). So let's identify the main points of agreement and disagreement. Most argument in election campaigns is about economic issues, with much less disagreement on other issues. On...

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Business lobbies sell out Aussie shareholders

One thing we've learnt from this election campaign: whoever's interests our business lobby groups represent, it's not Australian shareholders. That's clear from their vociferous defence of Malcolm Turnbull's hugely costly promise to cut the company tax rate from 30 to 25 per cent, even though our system of dividend imputation means local shareholders have little to gain from the cut. Local shareholders would have the present...

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Productivity and fairness should go together

They say we get the politicians we deserve but recent weeks convince me we also get the election campaigns we deserve. When we're moved more by scare campaigns than by policy debate, guess what the pollies give us? To the extent that we have been debating policy choices, we've had economic policy but much less social policy. That's pretty standard for elections. The Coalition's offering has been mainly about its "plan for jobs...

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Baird's budget is the model of conservatism, not reform

If, in these strange times, you have ever wondered what a genuinely conservative government would look like, consider the Baird government as revealed by its budget. Premier Mike Baird and his Treasurer, Gladys Berejiklian, are cautious and responsible to a fault, putting retention of the government's AAA credit rating above all other objectives. But, almost by definition, this makes them complacent, unimaginative and lacking...

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How not to cut government spending

The bloke who really runs the economy, Reserve Bank governor Glenn Stevens, has spoken: "There are quite some years of hard repair work ahead for whoever is the government over the period ahead." He was endorsing the earlier warning of Treasury secretary John Fraser and Finance Department secretary Jane Halton that, given the Turnbull government's professed commitment to limiting the growth in tax collections, getting the budget...

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Economists' faith in cutting company tax found wanting

Malcolm Turnbull and the many economists supporting his plan for a 10-year phased cut in the rate of company tax have failed to make the case that this expensive measure would deliver a significant increase in "growth and jobs". Economists are meant to be too hard-headed to believe in the existence of a magic bullet – the single measure that will work wonders in solving our problems. Yet economists throughout the world have...

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Shorten gains tactical advantage over Turnbull

Various of the tax changes the Coalition government is taking to the election are things it earlier said it wouldn't do. And various of the tax changes it now says it wouldn't dream of doing are things it earlier dreamt of doing. What's more, various of the tax increases it ended up copying from Labor – the further swingeing increases in the excise on tobacco, the crackdown on multinational tax shirkers and the cutbacks in superannuation...

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Econocrats’ report card: Turnbull not really trying

Economically and fiscally, the Turnbull government is flying by the seat of its pants. It hasn't done enough to secure future "jobs and growth", nor to get the budget balance improving strongly and government debt falling in coming years. That's the conclusion you draw from the econocrats' oh-so-politely worded commentary in their "pre-election economic and fiscal outlook" issued on Friday, independently of the elected government,...

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Why wage growth is so weak

Are we waiting with ever-growing impatience for the economy to get back to normal, or has the economy shifted to a "new normal"? I think that's the central question in macro-economics today – not just in Oz but throughout the developed world. To put that question in econospeak, are the changes we see before us "cyclical" – just part of the normal ups and downs of the business cycle – or are they "structural", a lasting change...

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THE 2016 FEDERAL GOVERNMENT BUDGET

Talk to Economics and Business Educators NSW annual conference, BurwoodIn this talk I’m not going to give you the basic budget details that you could get - and probably already have got - from many other sources. Rather, I’m going to focus on just a couple of analytical issues about the budget that are new, tricky and contentious. My hope is that, by doing so, I’ll be giving you something new or newish to think about and also...

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